Wonkbook: 'Larry, Larry, Larry!' edition
National Economic Council chairman Larry Summers will resign at the end of the year and return to teaching at Harvard. That changes the whole outlook for the economic team. Two days ago, it seemed that the team was consolidating. With Orszag and Romer out, Geithner and Summers would be even more central to the president's decision making than they are now. But with Summers leaving too, that not only removes Obama's most senior economic adviser, but it also removes the adviser who runs the White House's economic policy process.
Summers' position as NEC chairman doesn't get much attention, in part because most people don't know what the NEC does. But it's a coordinating body. Bill Clinton formed it when he came into office in order to govern his economic policy process. So whoever replaces Summer doesn't just have to replace him as a voice in Obama's ear. They have to replace him as the manager of the policy process. And given how many new voices will be suddenly be central to that process and vying for Obama's attention, it's going to be a difficult job. The early word is that Obama would like a CEO and a woman, and there are rumors about former Xerox CEO Anne Mulcahy. Diana Farrell, Summers' current deputy and a former director at McKinsey, has also been mentioned.
Meanwhile, in news that's not as exciting as personnel changes but probably matters a lot more, the Fed has acknowledged the economy's weakness but decided to hold off on actions that could speed up the recovery. There's an interesting what-if here, as many expected Summers would be named Federal Reserve chief when Bernanke's first-term was up. Instead, the financial crisis convinced Obama to prize continuity and Bernanke was renominated. But the Economist's Ryan Avent, for one, thinks Summers would have been more aggressive in the face of continued economic weakness. "Had Obama replaced Bernanke with Summers the unemployment rate would currently be lower," he tweeted when news of Summers' departure broke. "Discuss."
Welcome to Wonkbook.
Larry Summers has resigned:
Read the official White House statement:
Read the official White House statement:http://bit.ly/cKJVX1
Edward Luce suggests the decision was personal: "White House officials said Mr Summers had originally intended to stay in his job for only one year but was persuaded last December by Mr Obama to stay on. Harvard University has a two-year rule of absence after which tenure lapses. Mr Summers’ wife, Elisa New, is an English professor at Harvard and never moved to Washington."
Ezra Klein looks at the criticism of how Summers ran the NEC: "The critique of Summers is very consistent, and it's really not about him or his vaunted arrogance. It's his position. Summers runs the National Economic Council, which is the body charged with coordinating the president's economic process. But Summers, for all his brilliance and charm, is not the guy you want running meetings and smoothing disagreements and making people feel included. Summers doesn't facilitate debates. He wins them. He wants to be the guy Obama listens to, not the guy who listens to everyone else, and to a large degree, he is."
Jonathan Cohn says liberals will miss Summers -- whether they know it or not: http://bit.ly/cZkmqa
Peter Beinart suspects Obama's Chicago advisors are taking over: http://bit.ly/b7SByq
House Minority Leader John Boehner declared the move insufficient: http://bit.ly/bsbHgP
Jonathan Weisman and Elizabeth Williamson report that former Xerox CEO Anne Mulcahy is the top pick to replace Summers, with NEC deputy Diane Farrell and Laura Tyson also in the mix: http://bit.ly/c0vWPS
Glenn Thrush and Kendra Marr add Commerce official Rebecca Blank and Biden chief economist Jared Bernstein to the mix: http://politi.co/cKLDMT
Felix Salmon backs Tyson and questions the wisdom of a business pick: http://bit.ly/cLnlGi
The Fed won't take action to bolster the economy, at least for now, reports Neil Irwin: "With economic growth sluggish, the jobless rate seemingly stuck near 10 percent and inflation well below the level the Fed aims for, officials of the central bank are 'prepared to provide additional accommodation if needed' to support the recovery and get inflation higher, said a statement from the Fed's policymaking committee. But they stopped short of taking action Tuesday. In practice, that 'additional accommodation' would probably consist of buying vast quantities of bonds, an unconventional step to try to pump hundreds of billions of dollars into the economy."
Economists react to the Feds' inaction: http://nyti.ms/b5FzDC
Early '00s rock interlude: Interpol plays "Untitled" live.
Still to come: Many mortgage companies may have to halt foreclosures; the GOP will likely overhaul the environmental committee structure in Congress should they win; Republicans are holding up the DREAM Act; and what the world looks like to a Peregrine falcon.
Jonathan Cohn interviews Steve Rattner about the auto bailout, Obama's CEO skills, unions, and more: http://bit.ly/9Chg80
A number of mortgage companies could be forced by consumers to stop foreclosures, reports Ariana Eunjung Cha: "Some of the nation's largest mortgage companies used a single document processor who said he signed off on foreclosures without having read the paperwork - an admission that may open the door for homeowners across the country to challenge foreclosure proceedings...Ally, Fannie and Freddie - all troubled mortgage companies that received extraordinary bailouts by the federal government during the financial crisis - declined to say how many loans might be affected. The Treasury Department, which owns a majority stake in Ally and seized Fannie and Freddie in 2008, also declined to comment."
Elizabeth Warren is already working on simplifying mortgage forms for consumers: http://bit.ly/cT44kv
The Make Work Pay tax credit will likely expire at year's end, reports John McKinnon: "The tax break, an Obama campaign pledge first adopted as part of the 2009 stimulus legislation, has provided as much as $400 a year for working Americans who earn below $75,000, and $800 for couples earning below $150,000. But it has made little impression on the public, lawmakers of both parties say. In part, that's because the break came in the form of small adjustments to paycheck withholdings, rather than as a lump sum. Economists believed that would encourage taxpayers to spend the money, rather than save it."
The jobless rate rose in 27 states over the summer: http://nyti.ms/aPqIFv
The Senate may still vote on tax cuts before adjourning, reports David Rogers: "Senate Majority Leader Harry Reid said he is 'working hard for a vote' next week on middle-class tax cuts and laughed off suggestions that he wants to retreat now to safer ground by waiting until after November’s election...But the White House, after elevating the issue, is sounding a more pessimistic note about the prospects of Senate action. And even as Finance Committee Chairman Max Baucus (D-Mont.) prepares to roll out a draft of his tax proposal Thursday, insiders predict Democrats will be content to go home after passing a stopgap spending bill to keep the government funded beyond Oct. 1."
Neera Tanden argues Obama should be introducing new jobs proposals daily: http://bit.ly/9tlV63
Elizabeth Warren shows the presidential appointment process needs reform, writes Bruce Ackerman: "Americans can break through this impasse if both sides negotiate a "grand bargain." Here is the deal: The Senate should change its rules to require an up-or-down vote on all executive branch appointments within 60 days. In exchange, the president should sign legislation to require Senate approval of all senior White House appointments. By reaching this agreement, the president regains the powers to govern effectively and the Senate regains its authority to approve all major appointments-regardless of their location in the executive branch."
'80s comedy interlude: Phil Hartman's SNL audition.
Republicans will seek to rejigger Congress' environmental committees should they win in November, reports Robin Bravender: "Another GOP target could be the Select Committee on Energy Independence and Global Warming -- if it survives. 'Certainly if they kept the select committee, I don't think they would keep the title on energy independence and global warming,' Ornstein said. Republicans may decide to change the name to the Select Committee on Energy Independence, he added. But most people who follow energy and environmental issues think GOP leadership would decide to scrap the panel established in 2007 by House Speaker Nancy Pelosi (D-Calif.) altogether."
Sens. Bingaman and Brownback formally introduced their renewable energy bill: http://bit.ly/c5YYLK
Migration may be the best climate strategy, writes Matthew Kahn: "Our ability to migrate means that urban places can suffer while urban people continue to prosper. Within the New York City metropolitan area, New Jersey employment centers may gain if Southern Manhattan and Wall Street are under siege from sea level rise. Land owners in Southern Manhattan will suffer but workers at downtown Goldman Sachs would not...Developed countries could ease adaptation in the developing world if they loosen immigration restrictions."
Geoengineering's effects would vary widely by region: http://bit.ly/c54IIc
Yep, it's really getting warmer, and no, this hasn't happened before, writes Brad Plumer: "The first study appeared in Geophysical Research Letters: 'We conclude that the 20th century warming of the incoming intermediate North Atlantic water has had no equivalent during the last thousand years.' And the second study was published in the Journal of Geophysical Research: 'The last decades of the past millennium are characterized again by warm temperatures that seem to be unprecedented in the context of the last 1600 years.'"
Ducking and diving interlude: A video from a Peregrine falcon's point of view.
Insurance companies are dropping child-only policies in response to health care reform, reports Avery Johnson: "Aetna Inc., Cigna Corp., WellPoint Inc., Humana Inc. and UnitedHealth Group Inc.'s Golden Rule subsidiary say they will no longer sell new child-only policies. The new law requires them to accept applications from sick children on insurance policies that they sell, but doesn't require them to sell a policy individually to children in the first place. Insurers said children with pre-existing conditions will be able to apply for coverage on their parents' plans."
Republicans are stalling the DREAM Act, reports Shankar Vedantam: "The so-called Dream Act to grant permanent residency to immigrants who were brought to the United States as children and who have completed some time in college or in the armed forces has been a sought-after goal for Democrats, who attached the measure to an important defense spending bill. Republicans used a procedural vote to block the bill. Immigration advocates accused Republicans of sacrificing the well-being of thousands of young people to cater to nativist sentiment."
Consumer groups are urging labelling for genetically modified salmon: http://bit.ly/9mlDSt
The administration is blocking rate increases for private Medicare plans, report Janet Adamy and Avery Johnson: In June, federal officials received 2,100 bids from private insurers hoping to offer Medicare Advantage plans next year. Officials said Tuesday they denied rate increases and benefit cuts in 298 cases. As a result, they said, Medicare Advantage premiums will be 1% lower on average in 2011. The plans, on average, carry higher co-payments and deductibles. Taking those into account, the core benefit package will cost seniors an extra $13 per month, the government said, at a time when many Americans are facing double-digit rises in their health-insurance costs. Officials said the government blocked insurers from taking excessive price increases or boosting their profits."
GM is already spending politically: http://bit.ly/cgkre6
Democrats will do a last-ditch vote on the DISCLOSE Act, reports Susan Crabtree: "The vote is designed to crank up the pressure on Maine GOP Sens. Susan Collins and Olympia Snowe, two longtime champions of greater limits on campaign finance...Collins came out against the Disclose Act just before the previous vote on the bill, citing what she viewed as imbalances in the way corporations and unions are treated in the disclosure requirements and complaining that the measure was designed to provide Democrats an advantage in the November election."
Kathleen Sebelius is taking lead on the administration's health care defense: http://politi.co/bj7opE
Schools need to reward teacher performance to retain good teachers, writes Deborah Kenny: "For the last seven years at Harlem Village Academies, we've been obsessed with teacher quality. Our strategy from the start was to attract talented people, create an environment where they could develop into great teachers, and hold them accountable...Our teachers have indeed produced outstanding results, with test scores that rank our schools among the best in the country in math, science and social studies...Culture-how people feel at work, how they are treated, and the values exhibited by their colleagues-determines the caliber of people who are attracted to an organization."
Closing credits: Wonkbook compiled with help from Dylan Matthews and Mike Shepard.
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