Lawrence Summers Withdraws His Name From Consideration for Fed Chair

US National Economic Council (NEC) Direc
By Mark Felsenthal

Lawrence Summers, a former top economic aide to President Barack Obama and a Treasury secretary under President Bill Clinton, has withdrawn from consideration to succeed Ben Bernanke as Federal Reserve chairman, the president said on Sunday.

"Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve," Obama said in a statement.

Summers, widely regarded as a brilliant economist and a shrewd and decisive policy-maker, was considered to be the front-runner for the position to replace Bernanke, whose second term expires in January. However, Summers was dogged by controversies including his support for deregulation in the 1990s and comments he made about women's aptitude while president of Harvard.

Word that the president was leaning toward nominating Summers over Fed Vice Chair Janet Yellenelicited an unprecedented amount of controversy for a potential nominee to run the U.S. central bank. Four Democratic senators on the Senate Banking Committee were expected to vote against him if nominated by the president.

Summers said that the storm around his possible nomination pointed to a difficult confirmation process that could hurt the president's economic agenda and the institution, and decided to pull back.

"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the administration or, ultimately, the interests of the nation's ongoing economic recovery," Summers said in a letter to Obama.

Twenty Senate Democrats have signed a letter urging Obama to nominate Yellen, who would be the first-ever woman to lead the U.S. central bank, if nominated and confirmed.

Summers is the second high profile potential nominee to withdraw under pressure in Obama's second term. Susan Rice, now Obama's national security advisor, stepped back from consideration to be secretary of state over controversy surrounding her role in explaining the 2012 attack in Benghazi, Libya, that claimed the lives of four U.S. government employees, including the ambassador.

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It’s easy to understand why President Barack Obama’s friends don’t want to acknowledge that July represents 17 months since Congress passed the $787 billion economic stimulus bill — the president’s signature measure to jump-start the economy and fight unemployment.

Obama says the economy is headed in the right direction; jobs are being created, not lost, and he is doing everything possible to revive the “worst economy since the Great Depression.” Most of the national press has been remarkably accepting of this narrative — even if the president has been vague, at best, about when we might finally see an uptick in economic growth and job creation.

But in another economic time, President Ronald Reagan’s economic recovery program took 17 months to take hold. It took from the time Congress passed his tax cuts, in August 1981, until the recession he inherited finally ended in January 1983.

Unemployment hit a high of 10.8 percent in December 1982. But then economic growth spiked, and the unemployment rate began a long, steady decline throughout the 1980s. It was obvious the program was working when people stopped calling it “Reaganomics.”

Tax cuts were a part of Reagan’s effort to cut the size and scope of government to fight economic stagnation. “Government is not the solution,” Reagan said in his remarkably clear inaugural address. “It is the problem.”

In addition to tax cuts, Reagan reduced domestic discretionary spending and streamlined regulations to make them less of a burden on businesses seeking to create jobs. He believed that government should give individuals and businesses the proper incentives to grow and expand and not inhibit the private sector with high taxes and cumbersome regulations.

Reagan faced obstacles that Obama did not. The House he had to work with was always controlled by Democrats. More ominously, inflation was running at double-digit rates, and it took nearly a year for the Federal Reserve to squeeze those pressures out of the system.

Regardless, in the end, Reagan’s program worked. The turnaround began 17 months later.

Fast-forward to today. The Obama administration says that government-directed investment, via huge spending increases, can revive the economy. It’s now stimulus plus 17. Is there a turnaround in sight?

September 16 2013 at 10:10 AM Report abuse rate up rate down Reply

John Fitzgerald "Jack" Kennedy (May 29, 1917 – November 22, 1963), often referred to by his initials JFK, was the 35th President of the United States, serving from 1961 until his assassination in 1963.
His Inaugural Address offered the memorable injunction: "Ask not what your country can do for you--ask what you can do for your country." As President, he set out to redeem his campaign pledge to get America moving again. His economic programs launched the country on its longest sustained expansion since World War II; before his death, he laid plans for a massive assault on persisting pockets of privation and poverty

September 16 2013 at 10:07 AM Report abuse rate up rate down Reply

to hello
reagan copied JFKs model for his economy and just like JFKs the economy boomed

September 16 2013 at 10:04 AM Report abuse rate up rate down Reply
rebecca jean

he was involved with the WORST ECONOMY.......duh

September 16 2013 at 9:59 AM Report abuse rate up rate down Reply

Supporting deregulation? That's always worked well, the airlines in the late 70's by Carter, massive tax cuts by Reagan leading to the debt machine we have today and Gramm, Leach, Bliley of the late 90's followed by GWB's tax cuts are all deregulation where we le the rich control the economy and the entire market really and how's it worked out? Exactly. Deregulationists are poison.

September 16 2013 at 9:58 AM Report abuse +2 rate up rate down Reply
rebecca jean

chow............................dont let the door hit ya

September 16 2013 at 9:53 AM Report abuse rate up rate down Reply

Smart guy ....He does not want his name involved with the worst ecconomy since 1929. Also known as Obama's depression.

September 16 2013 at 9:44 AM Report abuse -2 rate up rate down Reply
1 reply to peppersmile1's comment

Good one. The fact that the Great Recession started in Dec 2007 means that it's Obama's? Brilliance. Unemp rose 3% the year before Obama took office, he stopped the increase by October, 9 months after he took office and it's fallen since. I guess if you were alive in the 1920's you'd say the same the 3 stooges (Harding, Coolidge and Hoover) masterminded the Great Depression and it took FDR 8 years and a war to get us out of it; hence it's Obama's fault. Can't you see a continuum of Republicans hammering the economy, followed by Democrats fixing it? It's not a secret.

September 16 2013 at 9:53 AM Report abuse rate up rate down Reply

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.”
-Abraham Lincoln

September 16 2013 at 9:38 AM Report abuse +3 rate up rate down Reply

woodrow wilson appoligized to the nation for fed res act saying he was tricked by the international banking community! we need to run these people out of bussiness in america and the world! the are the biggest terrorist group on the planet crushing economies globally such as greece and eventually america

September 16 2013 at 9:35 AM Report abuse +2 rate up rate down Reply

if you want to learn more about how the banks are screwing america watch "the obama deception" ! For all you liberals do not let the title fool you it is not what it sounds like it talks about obama bush clinton lincoln jfk and more about these presidents and their part in the money powers that are in controll of this nation! very informational

September 16 2013 at 9:31 AM Report abuse rate up rate down Reply