Cross-posted from New Deal 2.0.
By now we all know that Lawrence H. Summers, head of the Obama administration’s National Economic Council, will leave Washington for his old stomping ground of Harvard at the end of the year. The NEC chief funnels economic info to the Oval office, and is the leading voice in the president’s ear for recovery policy. What does the exit mean for the administration’s economic course? Roosevelt Institute fellows and New Deal 2.0 contributors give their two cents:
From Marshall Auerback, Senior Fellow at the Roosevelt Institute:
Shift from “money manager capitalism?” “It is probably too late for the administration to mitigate the likely electoral carnage anticipated in November’s mid-terms, even with the Summers announcement. The reality is that the President has never really been able to reclaim credibly the “change” mantle after hiring Robert Rubin retreads, such as Larry Summers and Tim Geithner, both of whom were so inextricably linked with the financial bubble’s rise in the 1990s. Under the guidance of both players, policy has consistently served the interests of Wall Street, as opposed to implementing programs that would directly sustain employment and restore states’ finances. To make matters worse, both Summers and Geithner have been unduly preoccupied with “paying for” additional spending through tax hikes or spending cuts elsewhere, even as they extended trillions of dollars in guarantees to the financial sector. This perceived double-standard has both discredited fiscal activism as a legitimate policy tool, as well as engendering a populist backlash manifested in the rise of the Tea Party. Although Summers’ departure is welcome, given that Treasury Secretary Geithner will likely remain as the vicar of economic policy, it’s hard to envisage that this resignation is anything more than a cosmetic gesture designed to soothe the base. That said, the resignation does provide a scintilla of hope that the President will finally shift away from today’s disastrous course of “money manager capitalism” which has heavily constrained the capacity of the non-financial part of the US economy to recover and may lead to a Japanese-style lost decade if not changed.”
From Josh Rosner, New Deal 2.0 contributor:
End to Kick-the-Can Policies? “While I can’t question Summers intent or interest in being part of the solution to this economic crisis his departure, on the eve of a double dip, demonstrates what some of us have known for a while. Yes, the government needed to act, but the kick-the-can policies of the Obama administration have mired us more deeply in a structural morass. Hopefully the President will replace Summers and Geithner with a team that recognizes that sweeping problems under the rug undermines confidence in our economy and markets and doom us to a long contraction driven by a weak banking system. It’s time to address the troubled assets that remain on our banks balance sheets so they can be healthy enough to lend and have confidence that they will again lend.”
From Mike Konczal, Fellow at the Roosevelt Institute:
Opportunity for Progressive Voices: “Where does Obama go with the NEC director from here? This opening would be an excellent opportunity for progressive and alternative voices to be heard within the Obama economic team. For better or worse, the initial team was designed to have insight into the current way the financial sector works. The financial crisis is now over, and the financial reform bill passed. The issue facing the country on the economic front will be a period of high joblessness and anemic growth for years. With Congress becoming deadlocked this next year, someone who can think of bold and aggressive short-term solutions while also visioning the arguments for a broad-based prosperity over the next decade is essential. As Steve Clemons noted, Obama wanted a team of rivals but ended up with a team of Rubins. Now is the exact time to break this.”