Replacing the Irreplaceable
One point that I think is worth making as we ponder the turnover in the Obama economic team is that to an extent you can’t just “replace” people by looking at their job titles. According to Ezra Klein “The early word is that Obama would like a CEO and a woman, and there are rumors about former Xerox CEO Amy Mulcahy.” That’s a bit silly if you ask me, but the larger issue is that influence in a White House staff job comes from the President deciding he wants to listen to what you have to say so if Summers was wielding a lot of influence you can’t “replace” that influence by bringing in someone from the outside who the President doesn’t know and who was picked because his political team thought it would “look better” to bring in a woman CEO.
Obviously it’s possible that over time someone like that could gain the President’s confidence and become a trusted advisor. After all, it’s not as if Summers and Obama had some incredibly long history together. But at a first blush the President is going to listen to people who he put in jobs because he wanted to hear what they had to say over people who he put in jobs because he mistaken thought that appointing a CEO to a job would induce rich businessmen to stop complaining that the government ought to cater more to the interests of rich businessmen. It’s worth paying attention to Sheryl Gay Stolberg’s account of Summers’ influence:
After Mr. Obama was elected, he persuaded Mr. Summers — who had served as Treasury secretary for Mr. Clinton — to take the lower-profile job of running the National Economic Council, a job that some thought might be beneath him.
He greatly expanded the role by establishing the daily economics briefing, which he controlled and ran. Early on, he ruffled feathers, disagreeing with Mr. Geithner — to whom he had been a mentor — and Ms. Romer, although those differences seemed to abate over time. There was also widespread speculation that he wanted to be chairman of the Federal Reserve, a job he did not get when Mr. Obama reappointed Ben S. Bernanke.
Which is just to say that Summers’ influence came from his personal stature and from a reshaping of the role of the office he held. If it’s the case, as you sometimes hear, that Summers was the most influential member of the team then his “real” replacement in that role is likely to be Timothy Geithner or Austan Goolsbee rather than someone brought in from the outside for odd reasons.
Last, it’s worth saying that in retrospect the decision to stick with Bernanke over Summers at the Fed doesn’t look very good. The Bernanke Fed turned much less aggressive in fighting the recession than it should have been once he was reappointed, Bernanke’s status as a conservative Republican has bought zero political cover for the administration to do anything, and one of the prominent explanations given at the time was that sticking with Bernanke “helped assuage fears in financial markets that a chairman closer to Obama might boost the economy in the short-run at the expense of high inflation” which in retrospect was totally counterproductive. A chairman tied to the administration who was seen as likely to be willing to boost the price level to soak up excess capacity is exactly that the country has needed for the past year and could use going forward.