In his news conference Friday afternoon, President Obama discussed the biggest decision in economic policy he has coming up -- who to appoint as chairman of the Federal Reserve. Larry Summers? Janet Yellen? Don Kohn or another dark horse candidate? Here's how to interpret the president's answer, based on a detailed parsing.
Major Garrett of CBS posed the question, asking about the attacks by many Democrats on Summers, "do you find it in any way unseemly, and do you believe this will be one of the most important economic decisions you'll make in the remainder of your presidency?
Obama answered the second part first: "It is definitely one of the most important economic decisions I will make in the remainder of my presidency. The Federal Reserve chairman is not just one of the most important economic policy makers in America. He or she is one of the most important policy makers in the world. That person presumably will stay on after I'm president. So this, along with Supreme Court appointments is probably as important a decision as I make as a president."
"I have a range of outstanding candidates. You've mentioned two of them. Mr. Summers, and Mr. Yellen -- Ms. Yellen -- and they're both terrific people."
Translation: Yeah, I know you guys already know this, but I'll pretty much confirm that Larry and Janet are the front-runners. But I'll make what is an unfortunate slip of the tongue in doing so, given the gender implications of the appointment.
Continued Obama: "I think the perception that Mr. Summers might have an inside track had to do with a bunch of attacks that I was hearing on Mr. Summers preemptively, which is sort of a standard Washington exercise that I don't like. When somebody’s worked hard for me and worked hard on behalf of American people, and I know the quality of those people, and I see them getting slapped around in the press for no reason before they’ve even been nominated for anything, then I want to make sure somebody’s standing up for them. I felt the same way when people were attacking Susan Rice before she was nominated for anything. I tend to defend folks who I think have done a good job and don't deserve attacks."
Translation: People are being super unfair to Larry Summers in attacking his possible appointment preemptively, and that makes me mad. I worked with the guy, I know he has rough edges, but he's not the complete ogre you would think if you read some of his news clips. And if you want to attack one of my nominees, wait until I nominate them, for God's sake. But that said, don't interpret this as me promising to appoint Larry. Remember, Susan Rice didn't get the secretary of state gig.
Next, Obama turned to the specifics of what he wants to see in a new Fed chair.
"My main criteria. . .. for the Fed Reserve chairman is, somebody who understands they’ve got a dual mandate. A critical part of the job is making sure that we keep inflation in check, our monetary policy is sound, that the dollar is sound. Those are all critical components of the job, and we’ve seen what happens when the Fed's not paying attention. We saw prior to Paul Volcker coming into place, inflation shooting up."
Translation: I know I said this to The New York Times a couple weeks back, but here's a reminder: I really do worry about inflation and financial bubbles, and want a Fed chair who has the wisdom and credibility to keep that from happening.
Obama: "But, the other mandate is full employment. Right now, if you look at the biggest challenges we have, the challenge is not inflation. The challenge is we’ve still got too many people out of work, too many long-term unemployed, too much slack in the economy. And we're not growing as fast as we should. And I want a fed chairman who’s able to look at those issues and have a perspective that keeps an eye on inflation, makes sure we're not seeing artificial bubbles, but also recognizes a big part of my job right now is making sure economy is growing quickly and robustly and is sustained and durable so that people who work hard in this country are able to find a job."
Translation: Don't worry, though, I'm definitely going to appoint somebody who is going to continue the Bernanke Fed's strategy of focusing on growth right now, not panicking about bubbles or inflation.
Obama: Frankly I think both Larry Summers and Janet Yellen are highly qualified, a couple of other candidates are highly qualified as well. I’ll make a decision in the fall.
Translation: See you in September. Or maybe October.
Garrett's follow-up question was inaudible in the video feed, but Obama answered this way: "Except I just told you I haven't." [presumably hasn't decided whom he will appoint]. "Major, I'd defend you if somebody was saying something that wasn't true about you. I really would. In fact I've done that in the White House sometimes."
Translation: Ha-ha-ha! Jocularity! Let us pretend that we are not trapped in a cycle of mutual loathing!