Affordable Housing Institute : US

Ever since Henry VIII, watching the pavane of courtiers seeking the sovereign’s approval has been a favorite pastime of any capital’s aristocracy.

And who shall we see in power today?

In today’s electronic democracies, these turf skirmishes are fought in the media, by leak and by proxy.

Let’s get the story out deniably, shall we?

Thus it was with more than a little interest I asked myself, ”why was this article published in the New York Times?” We know the Times to be among the Administration’s most faithful supporters, and yet here was the skeptical, even tacitly critical headline: Obama’s Economic Circle Keeps Tensions High.

From the NYT: Any resemblance to a Politburo is purely coincidental

We’re all friends here

As I studied the article, the reasons for its appearance became clearer. As is often necessary with a newspaper story, if you rearrange the fragments, the puzzle picture becomes clearer. Here we go:

By all accounts, much of the tension derives from the president’s choice of the brilliant but sometimes supercilious Mr. Summers to be the director of the National Economic Council, making him the policy impresario of the team.

I’m not so supercilious if I think you’re not an idiot

Nobody doubts Mr. Summers’ economic brilliance. That statement, or variations thereof, is included like a Homeric epithet in virtually any article or essay about Mr. Summers, and it’s an old debating trick: concede something right away, as a throwaway, before settling down to the business of cutting apart the opposition’s argument.

The widespread assumption, from Washington to Wall Street, was that the job would be Mr. Summers’s way station until the president could name him chairman of the Federal Reserve when Ben S. Bernanke’s term expires early next year.

Although Mr. Bernanke is a holdover from the previous Administration, unlike Secretary Gates he is a holdover by right, having an independent role and appointed to a non-cancellable term. Hence President Obama has not made any decision for or against Mr. Bernanke, and one could easily expect him to want a member of his own team.

And yet, there’s Ben close at hand, and Larry glowering in the distance

Yet readers will recall that Mr. Summers has a flair for the obliviously confrontational remark and a stiff-necked infelicity of tongue in backing out of a political cul-de-sac. It takes some doing to be put under so much pressure you resign as President of Harvard.

When Mr. Obama named his economic team last November, even some within his circle questioned whether Mr. Summers, given his prickly personality, could be an honest broker of other advisers’ ideas, as National Economic Council directors are supposed to be.

I’m not prickly, I’m honest

Reading the Times article, I found three reasons, each in its way compelling, that clearly signal Mr. Summers will not be the next Fed Chairman. (Yes, another AHI exclusive!)

1. The market likes the incumbent, Ben Bernanke

Although I never posted directly on the subject, I thought Ben Bernanke an excellent choice to succeed Alan Greenspan, the more so as he’s one of the nation’s leading experts on the Great Depression.

And besides, I inspire a soothing confidence

But Mr. Bernanke’s aggressive response to the crisis has so improved his reputation that people close to Mr. Obama increasingly suggest the president could well reappoint him in the interests of financial stability —

The markets are skittish enough as it is, particularly with the Administration’s economic recovery projections proving to have been very optimistic and support for the recently-enacted stimulus legislation dropping rapidly.

A graphic that scares the bananas out of me

You don’t change horses in mid-stream remains a political adage, especially when Mr. Bernanke has been the voice of fiscal restraint.

— just as Presidents Ronald Reagan and Bill Clinton retained Fed chiefs who had been picked by predecessors of the other party.

2. Mr. Summers is perceived as erratic and uncontrollable

Bright though he may be, Mr. Summers is not warm and fuzzy.

WASHINGTON — President Obama was getting his daily economic briefing one recent morning when a fly distracted him. The president swatted and missed, just as the pest buzzed near the shoes of Lawrence H. Summers, the chief White House economic adviser. “Couldn’t you aim a little higher?” deadpanned Christina D. Romer, the chairwoman of the Council of Economic Advisers.

Mrs. Romer was joking, she said in an interview, adding, “There are only a few times that I felt like smacking Larry.” Yet few laughed in the president’s presence.

By their camouflage, jokes usually reveal our true feelings.

Along the way, Mr. Summers has forcefully debated the Treasury secretary, his onetime protege Timothy F. Geithner, over what to do with troubled banks.

I’ve already tabbed Mr. Geithner as the right man for the job (his troubles with income tax filings notwithstanding, on which point I’m more forgiving than the Careful Shopper).

Judging by the anecdotes listed in the Times piece, “plays well with others” would not be written on Mr. Summer’s report card.

Notice anything about the captions? All are described as team players except Mr. Summers

He has clashed with Peter R. Orszag, the budget director, over fiscal and health policy issues. He has collided with Austan Goolsbee, an economist on the Council of Economic Advisers, over whether to rescue Chrysler. And he and Mrs. Romer have squabbled over how best to make the economic case for overhauling health care.

Is there anything he hasn’t clashed with? Apparently not. That takes a toll.

His argumentative style has contributed to delaying some actions, officials say, like the Treasury-led overhaul of the bank bailout program that was inherited from the Bush administration and an overhaul of the financial regulatory system, which is now expected later this month.

Among the deadliest executive-washroom phrases, the quickest way to blackball someone from further advancement, are these five words: he’s not a team player.

Some advisers complained that, under Mr. Summers, meetings became “endless debating sessions,” a phrase used separately by two aides who asked not to be named given the delicacy of internal matters.

The ‘delicacy of internal matters’? Another dangerous phrase comes to mind: diva.

Some of us can carry off diva-hood, Larry darling, and some of us can’t

As Mr. Summers sees it, his penchant for debate — he was a standout member of the debate team at the Massachusetts Institute of Technology — fits the job.

“My approach in these things is to always be raising objections and concerns,” he said, “because if you haven’t anticipated the objections and concerns, you haven’t minimized risks.”

All action is fraught with risk. And while I for one am a raving incrementalist, inclined to the side of caution when tinkering with a sputtering economy, there is a time when decisions must be made in the face of uncertainty, in the face of downside. Whatever one may think of President Obama, when he makes up his mind, he pursues a course.

Which means, Larry, that’s when you shut up.

Whether you like it or not

It also means take defeat gracefully, because you are part of a team.

The arguments became so heated that Mr. Summers stormed from one meeting, a witness said.

And include your critics in the discussion.

While he later included Mr. Goolsbee’s objections in a memorandum for Mr. Obama, he excluded Mr. Goolsbee from the decisive meeting with the president.

There, Mrs. Romer expressed the objections from the Council of Economic Advisers, but made a point of naming the absent Mr. Goolsbee. That prompted Mr. Obama to ask, “Where is Austan?” He had the aide summoned to state his case, in what some aides took as a rebuke to Mr. Summers.

Worse than a rebuke, it’s a demonstration that Mr. Summers is not above pettiness, again a cardinal sin in a team under pressure.

I can’t count on you!

3. Somebody in the White house doesn’t like him

Stories do not find their way into New York Times by accident. Somebody wanted this information out there – note how all the quotes are supportive, but confirmatory of the unsourced criticisms of Mr. Summers’ petulance and high-handedness. And this isn’t the only blot on Mr. Summers’ escutcheon. Remember the leaks about Mr. Summers’ seemingly extravagant compensation?

WASHINGTON (April 4, 2009) — Lawrence H. Summers, the top economic adviser to President Obama, earned more than $5 million last year from the hedge fund D. E. Shaw and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money, the White House disclosed Friday in releasing financial information about top officials.

Mr. Summers, the director of the National Economic Council, wields important influence over Mr. Obama’s policy decisions for the troubled financial industry, including firms from which he recently received payments.

I call this journalistic technique libel-by-proximity. Put Facts A, B, and C together in a few sentences and you expect the reader to deduce his own causality.

Last year, he reported making 40 paid appearances, including a $135,000 speech to the investment firm Goldman Sachs, in addition to his earnings from the hedge fund, a sector the administration is trying to regulate.

Back then, I concluded there was nothing whatsoever in this story (the times did not overlap, for one thing) and hence declined to post about it.

It went in one ear and out the other

Now comes this latest smear-by-innuendo, with the obligatory hollow endorsements:

As for Mr. Summers, even as top administration officials acknowledge the occasional strains among economic advisers, they say the president is thrilled with the job Mr. Summers is doing in his current post.

Just say I’m “thrilled,” okay?

Thrilled he may be, but he spurned Mr. Summers’ overtures once.

Mr. Summers also had made it clear that he wanted to be Treasury secretary again, as he was in the Clinton administration.

I liked having my signature on the money

We know that didn’t happen; it went to Mr. Geithner, a fact that Mr. Summers would be incompletely human if he did not privately resent.

Mutual acquaintances say that the longtime friendship between Mr. Summers and the 47-year-old Mr. Geithner has been strained, but that their relationship would be even worse were it not for Mr. Geithner’s even temperament and his history with Mr. Summers. “I am completely comfortable pushing back at him,” Mr. Geithner said in an interview.

We praise Mr. Geithner, so with no praise we damn Mr. Summers, is that it?

Three paces behind and to the left, Larry, okay?

“Larry will come to any issue and say, well, here’s all the 16 reasons why there’s problems with that proposal. If he’s got ideas, particularly if I think they won’t work, I say to him, ‘Well, why don’t you make the case against it, Larry, because you’re pretty good at making the case against anything.’ ”

Meow!

“You can’t assemble a group of really brilliant people, and deal with some of the most complex problems in our lifetimes and not have disagreements,” said David Axelrod, Mr. Obama’s senior political strategist who, with the White House chief of staff, Rahm Emanuel, plays a big role in mediating among the economic advisers and helps shape the decisions.

Who do you want taken care of?

Even colleagues who have tussled with Mr. Summers say the president was right to bring him in to the White House inner circle amid the global crisis.

“Larry Summers is one of the world’s most brilliant economists,” said Mr. Orszag,

There’s that obligatory phrase!

who along with Mr. Geithner, successfully resisted Mr. Summers’s attempts early on to control their access to Mr. Obama.

Mr. Orszag can be gracious, having one his turf skirmish of the right of access.

“He enriches any discussion he participates in, which is particularly valuable given the complexity and importance of the challenges currently facing us.”

Translation: We cannot dump him now, since he’s enthroned and is better inside the tent pissing out.

Point it away from me, okay?

Mr. Summers, the only top economic adviser with a West Wing office, sees the president more than the others and controls the daily economic briefings. By all accounts he has worked hard to disprove early talk that he would not be good at the job, even poking fun at himself.

Just one big happy family, with Summers as the funnyman?

But, Mr. Geithner said, that trait makes Mr. Summers a good director of the economic council because “he is better than anybody else on the planet at framing the case for and against any particular issue and reducing something to a set of concrete options.”

Framing the case for and against? Doesn’t sound like a Fed Chairman to me, sounds like someone the President wants to keep on a close leash.

Somebody doesn’t want Mr. Summers to be Fed Chairman. Maybe that somebody is the President.

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