Summers Carves Out a Powerful Role
By JONATHAN WEISMAN
With a slew of high-profile hires, President Barack Obama's chief economic adviser is raising the clout of the White House National Economic Council -- as well as the prospects of internal conflict in the Obama administration.
Lawrence Summers's effort may lift the NEC to a level of prominence unmatched since President Bill Clinton created the body in 1993 to give economic issues equal weight with national-security matters. White House aides say that is an appropriate response to the economic challenges facing the nation. But Mr. Summers has raised concern outside the White House that clashes with the Obama cabinet on policy and personality may be inevitable as Mr. Summers transforms a policy-coordinating council into a center for policy making.
At left, President Barack Obama and Lawrence Summers, head of the National Economic Council; at right, Bill Clinton and former NEC head Robert Rubin.
With Mr. Summers staking out such a big role, Mr. Obama has gone out of his way to promote the image of his Treasury secretary, Timothy Geithner, who was eclipsed in the opening weeks of the Obama administration as he struggled to get confirmed amid tax problems.
Other top officials also have begun making their mark. Secretary of State Hillary Clinton has firmed up her department's stake in international economics, bringing on two former Clinton White House economic hands, Lael Brainard and Jacob Lew.
But it is Mr. Summers's council that is emerging as the biggest rival to the Treasury as an economic power center. In recent days, the former Treasury secretary and renowned Harvard economist has brought on a former Clinton Treasury colleague and Obama law-school friend, Michael Froman, to straddle the NEC and the National Security Council in a dual appointment on international economics.
He has hired Harvard economist Jeremy Stein, one of the country's leading finance experts, to work on restructuring the nation's capital markets and regulatory system. One of Mr. Summers's deputy directors, Jason Furman, grew close to the president as his campaign's economic policy director. The other deputy, Diana Farrell, is one of the few business people in the administration, hailing from the consulting firm McKinsey & Co.
Mr. Summers is also expected to bring on David Lipton, a former undersecretary of the Treasury for International Affairs.
Obama aides think policy makers in the Treasury, State, Commerce, Housing and Urban Development and other departments will want to work with the best minds possible in the White House, especially given the magnitude of the economic challenges. Mr. Summers wanted the best staff he could get, and outsiders are impressed.
"It's a very different conception of the NEC as an institution than when I was there," said N. Gregory Mankiw, a Harvard economist who was chairman of the White House Council of Economic Advisers under President George W. Bush, who said the Bush NEC was dominated by Capitol Hill veterans and Wall Street executives, not academic economists and policy makers.
Mr. Summers declined to comment for this article.
Mr. Clinton created the NEC to be the economic equivalent of the National Security Council -- a White House body designed to coordinate advice and actions from the many other economic agencies. It was supposed to complement in particular the White House Council of Economic Advisers, or CEA, which houses academic economists who run numbers and advise the president on technical matters of policy, and the Treasury, which typically dominates policy making, with its offices of tax policy, domestic finance and international affairs.
Mr. Obama has further complicated economic policy making by adding a President's Economic Recovery Advisory Board, headed by former Federal Reserve Chairman Paul Volcker, a confidant of the president's. Friday, the president named Vice President Joe Biden to head a White House Task Force on Middle Class Working Families
The NEC is supposed to keep track of it all -- as a coordinator and "honest broker," or neutral mediator.
Mr. Summers is well aware that the primary knock on him is that he can be overbearing, one friend said. That could help keep his ambition in check as he tries to prove his critics wrong.
"Larry Summers is a major player wherever he is. His intellect is overwhelming and his personality can be too," said Mr. Mankiw, who worked closely with Mr. Summers at Harvard.
Phillip Swagel, assistant Treasury secretary for economic policy under President George W. Bush, said career Treasury officials have assured him that Mr. Summers is willing to accept criticism and engage in real policy debate. Other new NEC staff members, such as Messrs. Furman and Stein, have proven themselves to be as adept on policy diplomacy as they are in economics.
But to some, Mr. Summers's outspoken policy advocacy and his hiring are cause for concern. Former Treasury Secretary Paul H. O'Neill said in an interview that he personally told Mr. Obama during the campaign that he needed to set up a rigorous process to solicit ideas on policy, bring all the facts to the president and come to conclusions in a structured way, with honest brokers watching the process. Now, he is concerned.
"I am for this guy; believe me, I am for this president," Mr. O'Neill said. "But I am worried they have not put in place a deliberate, through process to make sure all ideas are aired and tested."
Write to Jonathan Weisman at jonathan.weisman@wsj.com
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