Larry Summers: Director Of National Economic Council, Top Adviser To Obama

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Updated: Larry Summers was briefly short-listed to be Obama's Treasury Secretary. It was recently announced that he would instead fill the position of director of the National Economic Council.

ABC News reports that Obama has tapped Larry Summers to be his top economic adviser:

ABC News has learned that President-elect Obama has decided to name former Treasury Secretary Larry Summers the director of the National Economic Council, essentially the president's senior economic adviser.

Part of the Executive Office of the President, the NEC was created for the purpose of advising the President on matters related to U.S. and global economic policy. The NEC has four functions, by executive order: ensuring that programs and policy decisions are consistent with the President's economic goals, monitoring the implementation of the President's economic policy agenda, coordinating policy-making for domestic and international economic issues, and coordinating economic policy advice for the President.

Earlier AP reported that Tim Geithner, the current president of the Federal Reserve Bank of New York, has been chosen as Secretary of the Treasury.

Read complete coverage of Obama's transition here.

Comments

[undecidedaboutPOTUS]

My take on the Summers appointment, is summarized in the following possible conversation between Barack and Larry: (with my commentary on Barack"s added thoughts that are not stated out loud by Barack.)

Barack: Hello Larry, guess what -- you"re in charge of the proposed Stimulus Plan and you have all of three weeks to put the comprehensive and obviously needed stimulus package together that will create 2.5 million jobs by 2010; and remember it has to be BIG enough to shock and awe the economy that is in a very severe recessionary contraction.

Barack "s unstated thoughts: OK Larry you may believe all your press clippings about how brilliant an economist you are: and it maybe that most professional women economists, scientists and engineers don"t agree with your press clippings.

So Larry, here"s your big chance to prove your detractors wrong. Here"s your chance to show everyone what you can do. Some argue that you were an arsonist that played a major role in creating this horrific financial meltdown and fire -- NOW help create a controlled burn under the real economy to "grow the economic pie".

In order words Obama has Summers as the point man for developing this plan consistent with what Obama wants.

IMO Summers can't deliver what Obama wants, so there's not likely a FED Chairmanship in Summers future either.

[cbruno linux]

Summers is being totally trashed unfairly. Economists are notorious for making arguments that appear "insensitive" , but this says nothing about the values of the economist. When Summers said that LCDs are underpolluted, he meant that Africa may be willing to accept money for accepting some of the industrial nations pollution - given the many desolate areas of Africa, this may be a good deal for them. Maybe not. Atleast Summers is looking for ways to get Africa some sort of economic stimulus - which is better than nothing. Critics of Summers demonize him for this suggestion, but what suggestions do they have for raising the standard of living in Africa? Most of these critics only offer bogus theories of dependency and imperialism - theories which only help employ academics, and not Africans.

Summers is not a free market fundamentalist. He just realizes there is no such thing as a free lunch, and wants to look for real solutions, instead of just warm fuzzy, good feeling solutions.

[EveningLand]

memo promised in my 2:15 pm of 11/24 post:

DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP

'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

[EveningLand]

Re. my posts of 2:15 pm and 2:21pm of 11/24, above
At the end of 2:15, I promised to give a memo by Larry Summers. I had to post the memo in question in two separate entries: at this point, only one, the second part of the memo, has been displayed, in the 2:21 post . The first part of the memo has not been displayed.

[EveningLand]

remainder of Larry Summers memo, the beginning of which is posted above
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.
The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.

[EveningLand]

Here are some reminders about Larry or Lawrence Summers.
These are facts, not pessimism or some other psychological trait one may want to impute, and they may all be checked on the Web. The most telling are the Harvard episode and the infamous memo produced by Summers at the World Bank (the memo is reproduced in my second post below).
1991-93: Chief economist of the World Bank
July 2, 1999: Appointed U.S. Treasury Secretary; served through the remainder of the Clinton Admistration.
2001: Named president of Harvard University. Resigned from that post in Februray 2006, after a relatively brief and turbulent tenure of five years, nudged by Harvard's governing corporation and facing a vote of no confidence from the influential Faculty of Arts and Sciences. Eventually alienated professors with a personal style that many saw as bullying and arrogant. His well-known desire to change Harvard's culture, which he saw as complacent, was accompanied by slights to some faculty members and missteps like his statement in 2005 that women might lack an intrinsic aptitude for mathematics and science.
November 2008: named to Barack Obama's Transition Economic Advisory Board.
The following memo was issued by Summers while he was working at the World Bank.

[Jimco]

The idea that " we're complaining about everything " is a bit rash . That quite a few of Obama's supporters are dismayed that he is surrounding himself with DLCers ( essentually republican lite democrats ) and filing his administration with the likes of Summers who was one of the architects of this current mess is troubling to some of us . I thought we voted for change , not more discredited conservative garbage . I have constantly heard that Obama likes to receive many different opinions . From what I've seen so far those many differing opinions will range from conservative to very connservative , where are the liberals in this administration ? All of the socalled liberals I've seen are moderate to middle right , show me one true liberal in his inner circle , there aren't any , they only seem liberal when compared to the neanderthals in the bush administration . While he seems determined to bring in right wingers the left is not represented . It seems that the DLC has taken over the party . I keep hearing how the republican party was kicked out , not so , they've simply taken up residence in the democratic party .

[Dupree]

There are some diehards who have been so indoctrinated to be divisive and find or search for dissent that NOTHING Obama does will ever satisfied them. I will confess I did not want Hillary Clinton as the Secretary of State but the good news is that Obama does reserve the right to fire her if she forgets that she is HIRED to implement HIS foreign policies and NOT her own. If she gets confuse...he will handle it and demonstrates who is in CHARGE as it should be. I recognize that I am not going to agree with every decision Obama made as I have at times saw myself at odds with the FISA bill. I am not drunk on Kool Aid but I am very much alert and will give him a chance to execute his plans while holding him accountable and questions his decision on some issues....it is appropriate. However, for anyone to think that Obama should not pick talented and intelligent people who KNOWS how to operate in Washington...they are drunk on stupid. We are in a crisis and if one seeks to do economic surgery ...you look for someone who knows how to perform it with a scapel and not an axe.

[RJII]

Look how quick and informative Obama has been already.

Look how organized and fast he is putting together his teams to address this impossible mess. Give him a break and don't give up hope so easy.

He wasn't given any time to get set up before everyone is pulling on him for help out of this crisis.

I didn't like HRC as SoS. However, I've decided, as an Obama supporters, not to be a fair weather supporter.

For God's sake, we just had 8 yrs of Bush and Cheney. How can we already start complaining,-- even before Jan 20?

[RichDavid]

This guy is a huge mistake......Isn't he one of the morons that caused this ?

[Alex02139]

Huge, huge mistake. Summers is a champion of crisis-driven globalization. Wage stagnation is not a problem for him. Health care is not a priority. Corporate profit and global capital flows are his main concerns. National health care Medicare for all would act as a huge stimulus by releasing all that money people pay in premiums and co-pays. Instead we see Obama will be pumping more money into Wall Street.

[KrystynM]

So perhaps he's in a position to uniquely understand HOW we got here and now can work on HOW to get out of it? Change doesn't mean NEW necessarily....it means different.

[johnnycmlately]

I wonder if after all is said and done, Bro-O will be just another "Good old boy" doing the same things just in a different way. I just wonder why all these clinton folks in his cabinet? I'll still wait and see and hope he prove me wrong.

[RJII]

i just want Obama to stop the hemorrhaging of our economy. O's being asked to put his teams together rather quickly. Don't give up hope so easy.

[holeybuybull]

Any bets on how long it will be before Barack and Michelle are hanging with G.H.W. Bush, Babs, and Clinton in Kennebunkport?

[JulieSA]

It's Bar, not Babs.

[holeybuybull]

Nice slap in the face for the African continent. Summers will create a new "industry" for you as a toxic waste dump for the industrialized nations. I know, when he proposed this at the World Bank, he was "just kidding". I'd love to get Naomi Klein and John Perkins' take on these appontments.

[ddanimal]

Bad move Obama. This guy is Clintons architect of the free trade, bank-deregulation, bubble-blowing scam that created the current mess. Dont forget that the US still has an enormous trade deficit, is bleeding manufacturing infrastructue and is still horribly dependent on debt to fund economic activity. The US economy is screwed because of policy decisions by both Clinton and Bush. Dont forget that Clinton worked hard to implement the free trade scam and banking deregulation and encourage US businesses to move to china. Summers was one of the clowns that thought this was a good idea. Do they STILL think this was a good idea? If so, we have a LOT more pain to endure before sanity returns.

How does Summers represent change? He doesnt.

My expectation is that the standard deficit spending methods used to restart the economy wont work this time. There are no more bubbles that can be blown. The result of the deficit spending necessary to fuel the economy will be a destruction of the US currency. Summers et al. will cling to deficit spending as a way out, but it wont work this time. Structurally, the economy is a mess, and its a mess because of people like Clinton, Bush and Summers.

I was hoping Obama would tap someone like Volcker that was warning about the dangerous excesses as far back as 2003.

The choice of Summers is extremely disappointing.

[EveningLand]

DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP

'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

memo cont' in next post of mine

[JB32]

u said it

I don't care if you are conservative or liberal, if u make less than 300k a year you don't want this guy.

Is there anyone we can vote for against NAFTA, WTO, Megamergers etc...?

[Kassandra]

Hope for the best; prepare for the worst...my motto in these times.........

Summers; I just don't understand. Maybe he can throw off his Freidmanite philosophies, maybe not. Maybe we need a mix right now.

But I think repeal of the Bush tax cuts is the only way to go right now. We've got to stop the trickle up effect. Like Obama said, there will be mistakes made. I think this is one of them, but who knows? One thing, summers will be easier to fire at this level than is he'd gotten a cabinet appointment........something to thinks about. Rahm will be easier to fire also than if he'd bumped off Pelosi for the speaker of the house. HEH