President Obama likes to tease Larry Summers as a "propeller head" and a "numbers guy," shorthand for a policy wonk who relishes the kind of esoteric arguments that everyday people might find boring and incomprehensible. But Summers doesn't seem to mind. In fact, the former Harvard president takes the joking with good cheer, his White House associates say, because he is so pleased to be back in power at a historic time.
With a rumpled appearance and a tendency to ramble to the far corners of any debate, the 54-year-old Summers has emerged as Obama's designated thinker. Despite the occasional ribbing, the president is actually quite deferential to the man he mostly calls "Professor Summers." He relies on Summers for advice on a huge portfolio of issues, including the budget, energy policy, healthcare reform, education, and international trade. "Larry coordinates all of the economic activity," says White House Press Secretary Robert Gibbs. "He's the in-house White House economic adviser. And one of his most important roles is he is the keeper of the president's daily economic briefing, where a number of decisions get made and the president gets updates on what's going on."
But Summers's public performances have gotten mixed reviews. He drew criticism this week, for example, for his statements on the bailout of insurance behemoth American International Group. In television network appearances, Summers blasted AIG for spending $165 million on employee bonuses after receiving more than $180 billion from the federal government to prevent its financial collapse. Summers said the administration had "done everything it can do" to limit the bonuses and added that "we're not a country where contracts just get abrogated willy-nilly." That's essentially the same point that AIG executives had made in defense of the bonuses.
The anger at AIG intensified, and within 24 hours Obama rendered that interpretation inoperable. The president asked his advisers to "pursue every single legal avenue to block these bonuses and make the American taxpayers whole."
More broadly, Summers has tried to walk a tightrope between candor about the severity of the nation's economic problems and optimism that those problems will be solved. "We've got an economy that's losing 600,000 jobs a month," he said on ABC News March 15. "It's probably not going to stop imminently." At the same time, Summers argued that the administration's rescue plans would eventually lead to better times.
But there are plenty of doubters. Republican pollster Ed Goeas, for example, says the public has strong concerns about whether the administration is on the right track, and many suspect that Team Obama is just making up "solutions" as it goes along. And there is rising opposition on Capitol Hill to the Obama-Summers approach. For example, Rep. Eric Cantor of Virginia, a House Republican leader, says the administration isn't doing enough to bolster troubled banks and deal with their bad assets. "There's a lack of confidence because this administration has not come forward with a plan on how to take these impaired assets out of the market," Cantor argues.
Still, Summers can make a compelling case for Obama's policies, which he has shaped along with Treasury Secretary Timothy Geithner, a close friend. "In the past few years," he said at the Brookings Institution March 13, "we've seen too much greed and too little fear; too much spending and not enough saving; too much borrowing and not enough worrying. Today, however, our problem is exactly the opposite. It is this transition from an excess of greed to an excess of fear that President Roosevelt had in mind when he famously observed that the only thing we had to fear was fear itself."
Summers presents Obama's rescue plan as based on three pillars: providing government support for job creation and higher incomes, increasing the flow of credit, and normalizing the housing market. "The Obama administration is embarking on what I believe is the boldest economic program to promote recovery and expansion in two generations," Summers said at Brookings. Echoing his earlier optimism, he said: "We can and we will emerge more prosperous, stronger, wiser, and better prepared for the future."