Obama Economic Team Turning Over as Larry Summers Departs

BY Murrey Jacobson  September 21, 2010 at 8:00 PM EDT

It’s official now: With the midterms fast approaching, President Obama’s economic team is turning over.

The latest departure: Larry Summers, the president’s chief adviser on economic matters and director of the National Economic Council, who announced Tuesday afternoon that he will return to Harvard University at the end of the year.

Summers’ decision follows on the heels of departures by Peter Orszag, the former head of the Office of Management and Budget, and Christina Romer, the head of the President’s Council of Economic Advisers, who left earlier this month.

Based on President Obama’s response at a town hall yesterday, there’s considerable speculation that Treasury Secretary Tim Geithner may leave later this year (although it should be noted that prior reports of Geithner’s supposed departure have always been greatly exaggerated.)

Throughout his tenure in the Obama administration — and before that in the Clinton administration, where he eventually served as secretary of the treasury — Summers has been known for throwing his intellectual weight around.

Publicly, Romer and other members of the administration have always described those debates as more of a friendly Socratic-like intellectual exercise. But over the past 18 months, there has been considerable talk and reporting that Summers is often committed to making sure his ideas and preferences are the ones that the president signs off on when all is said and done.

In the turbulent first half of the president’s term, Summers has been alternatively described as an overly liberal architect of economic policies that cost too much and at other times as too cozy with the Wall Street establishment. (He worked briefly at the hedge fund D.E. Shaw before joining the Obama administration.)

Summers helped shape the size and scope of what eventually became a $787 billion stimulus package (and according to this New Yorker account argued that it could not exceed $1 trillion, something we also discussed here online). He made the case internally within the administration against nationalizing troubled banks in the aftermath of the financial crisis; served as co-chair of the auto task force that worked on the restructuring of GM and Chrysler; and played a significant role in the White House deliberations over health reform. More recently, he played a major role in the debate over financial reform legislation, discussed here with Jeffrey Brown and in the debate over extending tax cuts.

“I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team,” President Obama said in a statement. “While we have much work ahead to repair the damage done by the recession, we are on a better path thanks in no small measure to Larry’s wise counsel.”

Amid continuing criticism from the financial world that Obama is hostile to business, both Bloomberg and the Wall Street Journal are reporting that the administration is trying to find a CEO or another major leader from the business world to possibly step into Summers’ seat.

For his part, Summers, the former president of Harvard, said he would miss working at the White House.

“I will miss working with the president and his team on the daily challenges of economic policy making,” Summers said in a statement. “I’m looking forward to returning to Harvard to teach and write about the economic fundamentals of job creation and stable finance as well as the integration of rising and developing countries into the global system.”