Is Larry Summers on the way out?

Joshua Green thinks so:

I think Summers is going to leave sooner rather than later, possibly before the mid-term elections, and if not then, soon afterward.

Why? Because Summers is frustrated by his role, and his colleagues are clearly frustrated with him. Alexis Simendinger had a devastating item in last week's National Journal suggesting that Summers's "legendary self-regard" and "ego the size of the national debt" had gotten out of control. Some of Summers's frustration no doubt stems from his wanting to be Treasury secretary. When that plum went to Geithner, Summers cast his eye on the Fed chairmanship and agreed to bide his time until Ben Bernanke's term ended at the NEC--a staff position well below his old job as Clinton's Treasury secretary. Most administration officials tactfully avoid pointing this out, because Summers has a fragile ego. But that's why Joe Biden is so great. "How many former Secretaries of the Treasury would come in not as Secretary of the Treasury?" Biden blurted out to the New Yorker's Ryan Lizza last fall.

But Summers didn't get the Fed job either. Apparently that didn't sit well. Administration insiders told Simendinger that Summers demanded a series of perks as compensation, including cabinet status, golf dates with the president, and a personal car and driver. In the "No Drama" Obama administration, such behavior stands out. [...]

Summers always seemed a bad fit for NEC director because the job entails dispassionately presenting the president with the counsel of his competing economic advisers. Summers doesn't do "dispassionate" and he didn't want to limit himself to fielding others' advice--he had plenty of his own to offer. In other words, he was supposed to be the referee, but he also wanted to play power forward.

Summers was one of President Obama's worst appointments, in my opinion, but I wouldn't expect the president to reshuffle his economic team unless a mostly-jobless recovery continues, or the worst-case scenario of a douple-dip recession develops. Anyway, Summers' departure wouldn't make much difference if Green is right about Timothy Geithner being "ever more secure at Treasury."

What do you think?

Is Larry Summers on the way out?

Joshua Green thinks so:

I think Summers is going to leave sooner rather than later, possibly before the mid-term elections, and if not then, soon afterward.

Why? Because Summers is frustrated by his role, and his colleagues are clearly frustrated with him. Alexis Simendinger had a devastating item in last week's National Journal suggesting that Summers's "legendary self-regard" and "ego the size of the national debt" had gotten out of control. Some of Summers's frustration no doubt stems from his wanting to be Treasury secretary. When that plum went to Geithner, Summers cast his eye on the Fed chairmanship and agreed to bide his time until Ben Bernanke's term ended at the NEC--a staff position well below his old job as Clinton's Treasury secretary. Most administration officials tactfully avoid pointing this out, because Summers has a fragile ego. But that's why Joe Biden is so great. "How many former Secretaries of the Treasury would come in not as Secretary of the Treasury?" Biden blurted out to the New Yorker's Ryan Lizza last fall.

But Summers didn't get the Fed job either. Apparently that didn't sit well. Administration insiders told Simendinger that Summers demanded a series of perks as compensation, including cabinet status, golf dates with the president, and a personal car and driver. In the "No Drama" Obama administration, such behavior stands out. [...]

Summers always seemed a bad fit for NEC director because the job entails dispassionately presenting the president with the counsel of his competing economic advisers. Summers doesn't do "dispassionate" and he didn't want to limit himself to fielding others' advice--he had plenty of his own to offer. In other words, he was supposed to be the referee, but he also wanted to play power forward.

Summers was one of President Obama's worst appointments, in my opinion, but I wouldn't expect the president to reshuffle his economic team unless a mostly-jobless recovery continues, or the worst-case scenario of a douple-dip recession develops. Anyway, Summers' departure wouldn't make much difference if Green is right about Timothy Geithner being "ever more secure at Treasury."

What do you think?

Some great news slipped under the radar last week

I'm tired of thinking about the Massachusetts Senate race. Here's some good news from last week that didn't draw much media coverage. It confirmed my view that Transportation Secetary Ray LaHood will turn out to be one of President Obama's outstanding appointments. Last Wednesday LaHood

proposed that new funding guidelines for major transit projects be based on livability issues such as economic development opportunities and environmental benefits, in addition to cost and time saved, which are currently the primary criteria.

In remarks at the Transportation Research Board annual meeting, the Secretary announced the Obama Administration’s plans to change how projects are selected to receive federal financial assistance in the Federal Transit Administration’s (FTA) New Starts and Small Starts programs. As part of this initiative, the FTA will immediately rescind budget restrictions issued by the Bush Administration in March of 2005 that focused primarily on how much a project shortened commute times in comparison to its cost.

“Our new policy for selecting major transit projects will work to promote livability rather than hinder it,” said Secretary LaHood. “We want to base our decisions on how much transit helps the environment, how much it improves development opportunities and how it makes our communities better places to live.”

This represents a big change from a Bush administration rule, imposed in 2005, which "elevated 'cost-effectiveness' above all other criteria used to determine whether a local transit project can receive federal funds." Representative Earl "The Bike" Blumenauer, one of the most progressive voices in Congress on transportation issues, hailed LaHood's action:

Rescinding this Bush administration restriction will unleash funding for important transportation projects across the nation, jumpstarting local economies and creating good jobs. This means quicker and better funding for streetcars, light rail, and bus projects that improve transportation, revive local economies, and reduce global warming pollution. After much hard work with the administration and my Congressional colleagues, this is an exciting outcome that will create better and more transportation opportunities.

At Transportation for America's blog, Stephen Lee Davis noted,

one problem that this will not fix is the very high demand for a limited supply of New Starts funding. Even under the old narrow rules for winning approval, only a small percentage of the many applicants were receiving limited funding, and even then, the federal government was only matching about half of local funds, compared with at least 80 percent for road projects.

Still, LaHood has taken an important and welcome step toward reorienting the way the DOT evaluates projects. LaHood's new direction on transit funding is part of a broad sustainable communities initiative that he and Housing and Urban Development Secretary Shaun Donovan announced last March. The Environmental Protection Agency joined the interagency partnership in June, which will promote the following "Livability Principles":

* Provide more transportation choices. Develop safe, reliable, and economical transportation choices to decrease household transportation costs, reduce our nation’s dependence on foreign oil, improve air quality, reduce greenhouse gas emissions, and promote public health.

* Promote equitable, affordable housing. Expand location- and energy-efficient housing choices for people of all ages, incomes, races, and ethnicities to increase mobility and lower the combined cost of housing and transportation.

* Enhance economic competitiveness. Improve economic competitiveness through reliable and timely access to employment centers, educational opportunities, services and other basic needs by workers, as well as expanded business access to markets.

* Support existing communities. Target federal funding toward existing communities—through strategies like transit oriented, mixed-use development, and land recycling—to increase community revitalization and the efficiency of public works investments and safeguard rural landscapes.

* Coordinate and leverage federal policies and investment. Align federal policies and funding to remove barriers to collaboration, leverage funding, and increase the accountability and effectiveness of all levels of government to plan for future growth, including making smart energy choices such as locally generated renewable energy

* Value communities and neighborhoods. Enhance the unique characteristics of all communities by investing in healthy, safe, and walkable neighborhoods—rural, urban, or suburban.

Past time for Geithner to go

Here's hoping this latest revelation about Timothy Geithner brings a rapid end to his tenure as Treasury secretary:

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.”[...]

Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, said the e-mail exchanges were “troubling” and that he supports holding congressional hearings to review them.

I've been hoping for the last year that President Obama would ditch Geithner sooner rather than later. The president didn't react to the November report from the Office of the Special Inspector General for the Troubled Asset Relief Program, which slammed Geithner's conduct during the AIG bailout. But it's clear that Geithner wasn't looking out for the public interest in his last job and never should have been promoted to his current position.

Senate Confirms Kathleen Sebelius as HHS Secy

From the Associated Press:

Kansas Gov. Kathleen Sebelius has won Senate confirmation to serve as the nation's health and human services secretary.

She already has a public health emergency on her hands with the swine flu sickening dozens of Americans.

The 65-31 vote came after Democrats urged quick action so that Sebelius could get to work leading the federal response to the flu outbreak. Sixty votes in the 100-seat Senate were necessary for approval.

Taking a look through the roll call vote, every member of the Senate Democratic caucus, save for Senators Ted Kennedy and Jay Rockefeller who did not vote, voted in favor of invoking cloture on Kathleen Sebelius' nomination -- including Arlen Specter, who is still listed as a Republican on the Senate.gov website. Among Republicans, Sebelius earned eight votes (plus Specter) from Senators Kit Bond, Sam Brownback, Susan Collins, Judd Gregg, Dick Lugar, Pat Roberts, Olympia Snowe and George Voinovich. Senator Jeff Sessions did not vote. For a nomination vote on which the GOP didn't have the juice to successfully filibuster, this battle dragged out for an awfully long time, but at least the President's cabinet is finally complete now.

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