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Posted at 8:41 AM ET, 12/30/2010

Will Gene Sperling replace Larry Summers?

By Ezra Klein

sperlingtestifies.png

Alongside -- and perhaps in front of -- Roger Altman, Gene Sperling is rumored to be the leading contender to succeed Larry Summers as director of the National Economics Council. At the moment, Sperling serves as an adviser (or, in the lingo of the Treasury, "counselor") to Timothy Geithner. For Sperling, the odd reality is that this means he's vying for a job he's already had once: He led the NEC from 1995-2000, and given both the economy's performance over that period and the perception that the Clinton White House ran fairly smoothly in its later years, you'd think he'd be a shoo-in.

But politically, Sperling has two problems. The first is that he took a lot of money from -- a term that should be distinguished from "went to work for" -- Goldman Sachs and two hedge funds. In 2008 and 2009, Sperling served as an adviser to the financial titan, making more than $800,000 for consulting. His duties at Goldman Sachs were primarily on a $100 million charitable project to help raise the skill levels of poorer women in developing nations, but in some ways, that makes the transaction more peculiar: You tend not to get paid that much for offering guidance to charitable endeavors. It is very hard to believe that Goldman Sachs wasn't attempting to buy influence with a politically savvy economist who had good relations -- and would later go to work for -- the incoming Democratic administration.

As Noam Scheiber reports, there's little evidence that Sperling has been particularly sympathetic to his former benefactors. He was the principal force behind the tax the administration levied on firms to pay back TARP. Sperling is also pretty far-flung from Wall Street itself. He's worked in politics pretty much his entire professional life, developing a reputation for insane hours and comical unkemptness in the Clinton administration, attaching himself to think tanks and writing a policy book ("The Pro-Growth Progressive") during the Bush years, and then joining the Obama White House in a position that was far beneath the role he'd served for Bill Clinton. If Sperling is intellectually and emotionally captured by anything, it's Washington, not Wall Street.

Nevertheless, perceptions matter in politics, and the Wall Street payout is the sort of arrangement that people loathe: Whatever it really was, and whatever Sperling saw it as, it sure looks like Goldman Sachs was buying itself some political insurance.

The second issue for Sterling could be seen as either a positive or a negative: He's already in the administration. So far, every major vacancy in the White House has been filled by someone else from the White House. Rahm Emanuel was replaced by Pete Rouse, Peter Orszag was replaced by Jack Lew. Christina Romer was replaced by Austen Goolsbee. The implication here is that President Obama believes his team is doing a good job, and that it doesn't need new members. But there are certainly people inside the White House making the case that for both political and policy reasons, some new blood would be a good thing.

What'll help Sperling there is that the administration never found a real outsider it liked -- and it may have concluded that an outsider isn't the right fit for an internal process job. The early interest in a CEO appears to have fizzled. The other leading candidate for the job is Roger Altman, a banker and former Clinton-administration official. That is to say, he shares most of Sperling's drawbacks, but doesn't have Sperling's advantages: experience running the NEC, experience with the personalities in this White House, and extended experience in politics, including during a previous period when a Democratic president had to negotiate with a Republican Congress. All of those qualities would be rather helpful in directing the activities of the administration's economic team going forward.

Photo credit: AP Photo/Susan Walsh.

By Ezra Klein  | December 30, 2010; 8:41 AM ET
Categories:  Obama administration  
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Comments

Read your piece Ezra and sad to say I agree with you on both points. I keep hoping things will be different and there never seems to be any change. Why is it the accepted standard that one has to have Goldman Sachs connections? Certainly there are others in the world who could do as well or even better. The political perceptions will be ruinous. It only reinforces the image of Obama as aloof, arrogant and insular.

When will Obama wake up to the fact that his economic team is politically incompetent? One of the biggest mistakes they made was predicting that unemployment would remain below 8.5% if the stimulus plan was enacted. Chances are we will still be above that level in the 2012 election cycle? The day after the tax cut deal was finalized Valerie Jarrett, in response to the jobs question, went into 10 minutes of spin about how education will create jobs. Education will do nothing for the middle aged unemployed who need jobs now!

So now we're supposed to believe that another insider will somehow be different from recent experience. Do I really need to point out that the Democratic economic team just had their butts kicked by an oxymoronic Republican economic ideology. Arrording to the Republicans,taxcuts and deficits have no correlations whatsoever. The Democrats couldn't win that argument. How can anyone expect they will win it the next time?

Posted by: GDGriffin | December 30, 2010 9:14 AM | Report abuse

Read your piece Ezra and sad to say I agree with you on both points. I keep hoping things will be different and there never seems to be any change. Why is it the accepted standard that one has to have Goldman Sachs connections? Certainly there are others in the world who could do as well or even better. The political perceptions will be ruinous. It only reinforces the image of Obama as aloof, arrogant and insular.

When will Obama wake up to the fact that his economic team is politically incompetent? One of the biggest mistakes they made was predicting that unemployment would remain below 8.5% if the stimulus plan was enacted. Chances are we will still be above that level in the 2012 election cycle? The day after the tax cut deal was finalized Valerie Jarrett, in response to the jobs question, went into 10 minutes of spin about how education will create jobs. Education will do nothing for the middle aged unemployed who need jobs now!

So now we're supposed to believe that another insider will somehow be different from recent experience. Do I really need to point out that the Democratic economic team just had their butts kicked by an oxymoronic Republican economic ideology. Arrording to the Republicans,taxcuts and deficits have no correlations whatsoever. The Democrats couldn't win that argument. How can anyone expect they will win it the next time?

Posted by: GDGriffin | December 30, 2010 9:15 AM | Report abuse

Shouldn't being head of the NEC during the most ideologically antireglatory period of post WWII American fiscal policy also be seen as a negative? Perhaps Obama should break away from the Committee to Save the World era figures.

Posted by: DavidCEisen | December 30, 2010 9:47 AM | Report abuse

"One of the biggest mistakes they made was predicting that unemployment would remain below 8.5% if the stimulus plan was enacted. Chances are we will still be above that level in the 2012 election cycle?"

The chart I saw had unemployment topping out at 7.9% in the middle of 2009, and declining to 6.9% by present time.

The actuals were 10.1% in late 2009, and 9.8% currently.

http://www.unitedliberty.org/articles/7116-chart-of-the-day-wasnt-the-stimulus-supposed-to-keep-unemployment-down

It will be interesting to see how the unemployment rate evolves as federal stimulus spending continues winding down and QE II takes over.

Posted by: justin84 | December 30, 2010 10:29 AM | Report abuse

There is something truly sad about this Administration. The President promised change, but he seems incapable of appointing anyone but an old aide or someone who had a high post--often the same post--in the 1990s. Sperling, like Summers, had the post during the deregulation, promote-the-NASDAQ-bubble period of Bob Rubin, Altman was high in 1993 until he got involved in the Clinton real estate scandal. The only exception seems to be in foreign policy where, like Gates and Petraeus, and Brennan, you had to be a key figure in the Bush Administration. Obama just seems to have no confidence in his own judgment, but to look for someone to whom to defer.

As for this post, remember, however, it can be dominant or nothing. It was dominant when Rubin had it and nothing when he went to Treasury. It was nothing under Bush, but dominant under Summers. Sperling, alas, learned how to defer to Rubin.

Posted by: jhough1 | December 30, 2010 11:06 AM | Report abuse

"Political insurance"? Can that be traded in a market? If not, I'm sure Goldman Sachs could make the market. Oh, and sell sythetic CDOs related to the actual political insurance. Cha-ching!

-Shane, Omaha

Posted by: spekny | December 30, 2010 1:21 PM | Report abuse

Has the Rev. Wright weighed in on this? It seems some of those gone or about to leave were of the group he said wouldn't let him "get near the boy" after Inauguration.

Posted by: phvr38 | December 30, 2010 1:23 PM | Report abuse

No one can replace Summers.
Thankfully.

Posted by: myoung22 | December 30, 2010 1:42 PM | Report abuse

No one can replace Summers.
Thankfully.

Posted by: myoung22 | December 30, 2010 1:43 PM | Report abuse

Memo to Washington ....

STOP recycling Clinton era rejects ... there are thousands of qualified Americans who can provide knowledge and experience to fill high level government jobs.

Posted by: Hazmat77 | December 30, 2010 1:45 PM | Report abuse

"the administration never found a real outsider it liked"

Something about this statement rings very true.

Posted by: windshouter | December 30, 2010 1:48 PM | Report abuse

It is a truth universally acknowledged that anyone called "Austan" is doomed see their name misspelled in print.

Posted by: vagueofgodalming | December 30, 2010 1:51 PM | Report abuse

jhough1 .Why should Obama have any confidence in himself? HE knows that he is in way over his head. HE knows that by now many of his leftist supporters have finally figured out what US on the other side of the political spectrum learned several years ago when weighing his qualifications for the job of president.

Just think about his inane performance with regard to the Professor Henry Gates Matter; where he jumped in - not knowing all the facts- and charged the Cambridge Police with acting stupidly. In spite of the fact that the cops were doing their jobs properly, and under normal circumstances his good friend, Professor Gates is an arrogant snot!

Posted by: Hazmat77 | December 30, 2010 1:54 PM | Report abuse

Most critics are aloof, arrogant and impractical! A robust economy (creating jobs, selling housing, increased consumer spending, etc) will only increase our demand on oil.
Supply and Demand will increase gas prices dramatically to $5 a gallon. A some point we will cross a threshold that will cripple the economic recovery.
Cars must become fuel efficient at 60 miles per gallon plus in city for the USA to thrive once again. Trucks must also become more efficient otherwise inflation will rise due to transportation cost of goods.
Get real folks! If the USA engine pushes full steam ahead the worlds consumption of oil will increased as well further putting strain on the limited resource.
We have not addressed the need for efficient infrastructure change.
We are not innovating fast enough to keep up with the shifts in energy cost.
We need real change in this area. We need to stop bickering and start innovating.

Posted by: KBrustmeyer2003 | December 31, 2010 11:15 AM | Report abuse

why would anyone want klein's Journolist opinion on anything?

""Liberal Star Blogger Ezra Klein: Constitution ‘Has No Binding Power on Anything’; Confusing Because it’s Over 100 Years Old""

this is the WaPo's boy genius's quote!!!

Posted by: morphy | January 1, 2011 8:39 AM | Report abuse

I hope he appoints whomever he wants. The "progressives" groups, who will scream the loudest, have already created their own reality about the candidates.....everyone's a sellout but Krugman or Stiglitz! Both of them are repulsed by Obama if you believe their writings so it would be even more nonsensical for the president to hire one of them.
Unfortunately HuffPo, Daily Kos, and FDL believe their own spin on everything. I keep reading in Business & Foreign Press that Richard Levin, pres. of Yale, is a candidate. Do you know if he was interviewed, Ezra. He has an interesting Economic background.

Posted by: carolerae48 | January 1, 2011 10:10 AM | Report abuse

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