Dems hand Obama big loss on Fed appointment

Last week, I noted that Republicans took great care in staying out of the skirmish among Senate Democrats over the soon-to-be-open chair of the Federal Reserve.  The White House let it be known that Barack Obama favored Larry Summers for the slot, but liberals pushed Fed Vice Chair Janet Yellen instead — which gave the GOP a rare opportunity to flex some muscle on a presidential appointment.  Yesterday, however, Summers raised the white flag:


Lawrence H. Summers, the former Treasury secretary and senior White House economic adviser, has withdrawn as a candidate for Federal Reserve chairman in a startling development that raises urgent questions about who will lead the central bank when Chairman Ben S. Bernanke steps down in four months.

Summers withdrew after an intense uproar among liberal Democrats, women’s groups and other advocacy organizations against his potential nomination — a highly unusual assault on the candidate who President Obama favored for the job.

That doesn’t mean that Yellen has the gig by default, however.  Obama may start his search all over again:

Obama has said he is considering two other candidates for the post, Fed Vice Chairman Janet L. Yellen and former Fed vice chairman Don Kohn. But he was leaning toward picking Summers, people close to the White House say, and the economist’s decision to take his name out of the ring might lead Obama to pursue a wider range of candidates.

Summers helped Obama navigate the depths of the financial crisis and recession, providing a degree of support that Obama has told aides he deeply valued. No official, with the possible exception of former Treasury secretary Timothy F. Geithner, did more to influence the president’s response to the traumatic events he faced at the beginning of his term, which Obama plans to highlight this week as he marks the fifth anniversary of the financial crisis.

Speaking of Turbo Tax Tim, guess whose name has already arisen in the wake of Summers’ retreat? So far, though, Geithner isn’t expressing any interest in fighting for another appointment:


Former Treasury Secretary Timothy F. Geithner isn’t interested in serving as Federal Reserve Chairman after Lawrence Summers today withdrew from consideration for the post, according to a person familiar with Geithner’s thinking.

Geithner, who has consulted with President Barack Obama on whom to nominate, remains firm in his stance even after Summers informed Obama he no longer wished to be considered as a possible nominee to lead the central bank, according to the person, who asked not to be identified.

A Geithner appointment would almost certainly galvanize Senate Republicans as an overtly political move, while keeping the Democratic caucus split over another bypass of Yellen.  With Summers out, it’s difficult to see how Obama could bypass Yellen after this episode — which the Atlantic’s David Graham writes is an unequivocal defeat for Obama:

Until Sunday afternoon, these seemed like just the latest skirmishes in a war. In July, almost a third of the Democrats in the Senate sent a letter to Obama imploring him to appoint Janet Yellen to the job instead. While the letter didn’t mention Summers, it was clearly a rebuke to the White House’s reported preference. Progressives worried that Summers was too much a part of the Clinton-era economic team that they charged with helping to make the Great Recession possible, and they argued that Yellen had been right more frequently on crucial recent economic issues.

But Obama was reportedly angry at the letter, and dispatched aides to Capitol Hill to vent and get the troops in line. While Majority Leader Harry Reid promised to support whomever the president picked, he apparently wasn’t able to keep his caucus completely in line, leading to today’s withdrawal. …

In August, Jeffrey Smith argued on The Atlantic that liberals actually deserved Summers because they’d been so unwilling to learn the lessons of the Tea Party and challenge centrist Democrats to stop things like this nomination. Yet on Syria and now on Summers, Senate and House leaders have shown themselves unwilling or unable to unify their caucus behind the president. Maybe Republicans don’t have a monolopy on disarray after all.


Jonathan Allen pins the blame squarely on Obama at Politico, and argues that it’s part of a pattern of incompetence in dealing with personnel matters that leaves friends twisting in the wind:

Barack Obama’s got a knack for turning trial balloons into piñatas, and then leaving his allies to pick up the mess.

The pattern: He floats a buddy for a top job early, deliberates long enough for the opposition to gather steam, defends his pal too late to do any good and then regretfully accepts defeat.

First it was Susan Rice, his choice for secretary of state. Now, Larry Summers has withdrawn from consideration to become the next chairman of the Federal Reserve. Their candidacies were so poorly handled that neither ever made it to the stage of being nominated, much less getting blocked — or voted down — by the Senate.

And the pattern of weakness has been even broader than that:

A larger question is of the president’s toughness. Liberal Democrats rallied against a Summers nomination. In another debate that never came up for a vote the White House could have easily lost, Obama was led into asking Congress for approval to bomb Syria. His summer-long fight with Russian President Vladimir Putin over NSA leaker Edward Snowden and the Syria issue has also hurt.

“It’s a consistent pattern where he says he’s going to do something, says he’s really going to fight for it, and then buckles the moment there’s any opposition,” said one veteran Democratic strategist. “It’s like the kiss of death if he wants if you for a job.”


Indeed.  The difference between Summers and Yellen are far less significant than the pattern of weakness and vacillation that have come from this White House in 2013, and the implications for domestic and foreign policy are potentially vast.

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