We are barely two weeks into Barack Obama’s tenure and reports are surfacing everywhere that his “team of rivals” is at each other’s throat. President Obama had said just after the election that he was looking to pull together the best and the brightest. However, this strategy comes with a cost as the outsized egos assembled in his team are starting to jockey for political position.
A well-informed reader alerted me to the latest and most depressing story, which involves former Harvard President and Treasury Secretary Larry Summers shunting aside legendary ex-Fed Chairman Paul Volcker. Summers is trying to exclude Volcker, who is legendary for righting the U.S. economy after the stagflation of the 1970s. If he succeeds in sidelining Volcker, we will be the worse for it.
Paul Volcker has grown increasingly frustrated over delays in setting up the economic advisory group President Barack Obama picked the former Federal Reserve chairman to lead, people familiar with the matter said.
Volcker, 81, blames Obama’s National Economic Council Director Lawrence Summers for slowing down the effort to organize the panel of outside advisers, the people said. Summers isn’t regularly inviting Volcker to White House meetings and hasn’t shown interest in collaborating on policy or sharing potential solutions to the economic crisis, they said.
While Summers, a former Treasury secretary, oversees the official White House economic policy apparatus, Obama tapped Volcker for a new Economic Recovery Advisory Board charged with injecting fresh, outside ideas into policy debates.
“When you have two strong, highly accomplished, driven people, it’s not unusual that there is going to be a battle over turf,” said James Cox, a professor at Duke University Law School in Durham, North Carolina. “I would hope that Obama doesn’t lose Volcker’s counsel. They need someone to help them think outside the box.”
The contretemps shows the difficulties Volcker, perhaps the world’s most respected economist, may encounter as an outside adviser charged with providing policy alternatives to the president, said William Silber, a finance professor at New York University’s business school.
Outsider’s Disadvantage
Volcker “is not in the White House and he doesn’t have a bureaucracy to command,” Silber said. “It puts him at a disadvantage.”
After testifying at a congressional hearing yesterday, Volcker declined to respond to questions. His office said he doesn’t grant interviews.
Summers, in an interview, played down any conflict.
“Paul’s got a kind of experience that no one else has, and the president enormously values his advice,” said Summers, 54. “I think this board is going to be very useful, because it’s very easy sitting here to kind of lose sight of what’s happening on the front lines of the economy.”
Obama named Volcker on Nov. 26 to head the new panel, saying he wanted an outside voice to keep administration policy planning from becoming “too insular.”
Tensions between the two could hamper Obama’s efforts to get consensus on how to combat the financial crisis at home and reshape the international banking system. While Summers has a West Wing office, Volcker’s group is supposed to scrutinize economic and regulatory policies and their impact on average Americans.
Felix Salmon has a similar view:
I didn’t like the idea of appointing Larry Summers to be Treasury secretary, largely because he’s bad at politics. And given his jealous and petty spat with Paul Volcker now that he’s running the National Economic Council, the decision to deny Summers the Treasury job looks even better:
Volcker, 81, blames Obama’s National Economic Council Director Lawrence Summers for slowing down the effort to organize the panel of outside advisers, the people said. Summers isn’t regularly inviting Volcker to White House meetings and hasn’t shown interest in collaborating on policy or sharing potential solutions to the economic crisis, they said.
Are we already running into a too-many-cooks problem in the Obama economic team? Having lots of smart people on board is only going to work if they can play nice with each other, and be, well, collegial. The former president of Harvard should be able to work that one out.
Quite frankly, I am fed up with all of this nonsense: the tax problems, the jockeying for position in foreign affairs, the politics in economic affairs. It does not give one confidence that this team is going to get the job done. I remain hopeful, but I am increasingly disappointed in the direction Obama’s team is taking.
Sources
Summers vs Volcker – Felix Salmon
Volcker Chafes at Obama Panel Delay, Strains With Summers Rise – Bloomberg.com
Obama Embraces ‘Team of Rivals’ – Time