By taking his name out of consideration for the Federal Reserve chairmanship this weekend, Lawrence Summers became a metaphor for the difficulties President Obama has had in pursuing his economic agenda.
And the end of Summers, at least as Federal Reserve chair Ben Bernanke’s potential successor, signaled that the president’s inability to get traction on his economic agenda is likely to get worse, not better. Now even lawmakers in his own party are willing to break with him on high-profile economic decisions.
The president’s most significant successes in enacting his economic plan came early in his presidency when fears of a second Great Depression hounded the nation. His American Economic Recovery and Reinvestment Act and his effective takeover of major U.S. auto industry companies occurred within months of his entering the White House. He signed the Dodd-Frank Act into law.
Those successes showed how national emergencies can give presidents greater leverage to advance their policies.
As the economy has improved and fears receded, however, Obama’s ability to achieve the other pieces of his economic to-do list has been, at best, spotty. The change in House control from Democratic to Republican party in January 2011 was certainly a huge factor.
A jobs plan Obama unveiled with considerable fanfare and sent to Congress in 2011, for instance, went nowhere. The only pieces of his economic agenda he has been able to accomplish since Republicans won the House — like extending payroll tax holidays or allowing the Bush tax cuts to expire for those with the highest income — have come only grudgingly during bouts of fiscal brinksmanship with GOP lawmakers.
Summers’ surprise announcement to drop out of the Federal Reserve chase adds a new twist to Obama’s problems. Summers was widely viewed as Obama’s preferred choice. Summers, after all, had been one of Obama’s top White House advisers during the crisis.
Summers’ decision came after several Democrats on the Senate Banking Committee told White House officials they wouldn’t support the former Clinton-era Treasury secretary and top Obama economic advisor for the Fed post. To some, Summers had partial culpability for the 2008 financial and economic crisis as a big proponent of deregulation during the Clinton years.
Before Obama could always count on Democrats for support on the big economic questions. Now even that’s in doubt.