Lawrence Summers, National Economic Council director to the President will leave the post after the November congressional elections. His departure leaves Treasury Secretary Timothy Geithner as the only member of President Obama’s original economic team.
Summers was Treasury Secretary under former President Bill Clinton and served from 1999-2001. He left the Clinton administration to become president of Harvard University where he came under fire for his comments that women displayed inherently less aptitude in the sciences and math then their male peers, and that lack of aptitude could explain some employment disparities.
Summers has received a lot of criticism, both prior to joining the administration, and then after he took the reigns in crafting the administration’s economic policy. He’s got deep ties to the business community and has advocated for leniency towards Wall Street in its response to the financial crisis. He pushed back against efforts to limit banks from engaging in proprietary trading and was reluctant to spend money in economic stimulus unless it flowed directly to the private sector.
Given the results of the Summers approach, this announcement is nothing short of great news for those hoping for a change in direction from the Obama administration in responding to the financial crisis. Much of the restraint exercised by the administration in dealing with jobs creation and government spending came at the behest of Summers’ advice and to the contrary of the majority of economists that said direct stimulus spending, not Wall Street incentivising, was needed to kick start the economy. There’s no doubt that Summers cozy ties with the business community directly shaped the administration’s initial response to the crisis, and that response needs changing. With the Summers announcement coming on the heels of the Elizabeth Warren nomination, it looks like such a change in direction is on its way.
It is not entirely clear that Summers is leaving voluntarily, though neither the administration nor Summers would actually admit to it if he was asked to leave.
And not to waste any time, speculation is already mounting as to just who will replace Summers. Reports are that the administration is eager to find a woman to fill the role. That too would be a welcome addition.
photo courtesy of World Economic Forum via Flickr