The United Front of Geithner and Summers
Monday, March 2, 2009
The Obama administration's budget bears the hallmarks of a decade-old alliance that has quickly come to dominate the most pressing issues on the young administration's agenda.
Treasury Secretary Timothy F. Geithner and National Economic Council Chair Lawrence H. Summers pushed for weeks for a strict cap on the nation's debt. And while other advisers argued that the administration needed a more flexible spending plan, they could not deter the president from ultimately agreeing with the views promoted by the partnership of Geithner and Summers.
The approach advanced by the two men proved formative, providing White House budget officials the critical guidepost for the overall spending plan, an administration official said. When the pair team up in policy debates, as they often do, they are a potent force within the administration, officials said.
Geithner and Summers are also taking the lead in shaping the Obama administration policies for creating millions of jobs through the economic stimulus plan, rescuing the banking system, revitalizing the housing market, restructuring the auto industry and overhauling financial regulation.
Obama's decision to make Summers and Geithner the key players in such a wide-ranging agenda has left some within the government concerned that they will be unable to handle so many complex issues at once. Geithner already was widely criticized on Wall Street for being too vague when he announced the financial rescue package last month.
Geithner said the crisis has left the administration little choice but to tackle every problem head-on. Last week alone, Geithner ran from meeting to meeting to craft a new rescue deal for Citigroup, talk with governors on the economic stimulus package, co-host a summit on the nation's fiscal issues, work with lawmakers on regulatory reform, refine a plan to help homeowners, discuss a major upcoming summit with his foreign counterparts and roll out the details of a "stress test" for banks.
"Time is not on our side," Geithner said in an interview. "I really deeply believe that this will be a much more damaging crisis unless we move as quickly as possible on each of these fronts, and that's forcing us to do more at once than you would normally do. . . . But we got dealt this hand, and we are just making a conscious judgment that you have to move all these fronts together and take the initiative."
Geithner and Summers first joined forces in the late 1990s at the Treasury Department to confront financial meltdowns in Mexico and Asia. They forged a friendship, often losing themselves in esoteric policy debates that would carry over as their careers progressed and even during their vacations together at a tennis camp in Florida. (Summers conceded that Geithner beats him "more than half the time" on the courts, but said, "I am better age- and physique-adjusted").
"I'm struck in meetings by the fact that when Tim says something, it was exactly what I thought needed to be said," Summers said. He added that they can often finish each other's sentences and communicate through a single glance. "We often look at each other and the look says, 'What somebody is saying isn't really viable in both of our views' or . . . 'that basically feels right.' "
For a brief time late last year, relations turned awkward between Geithner and Summers, a source familiar with their interaction said. In November, Summers wanted to become Treasury secretary, a job he'd held under President Bill Clinton. Geithner offered to stay in his post as president of the Federal Reserve Bank of New York, one of the sources said. Obama's transition advisers were divided over whom to choose.
Ultimately, Obama made the call to bring them both to Washington. He approached Summers to be the chairman of the National Economic Council. Initially, "it was a big disappointment to Larry," the source said. But he quickly came around as he understood the advantages of being in the White House and having access to the president.
Some Democrats predicted Summers's position in the White House would create problems for Geithner, but Geithner said it has been the opposite.