The Senate confirmed Lawrence H. Summers as the nation's 71st treasury secretary yesterday, giving the 44-year-old ex-Harvard University economist a job he has long wanted, in the midst of a vibrant economy some of his predecessors could only dream of.
In part, history will judge him a success if nothing blows up on his watch -- either the U.S. economy or the fragile global economic recovery he helped nurse into being.
But in public comments at recent Senate committee hearings and in private remarks to friends and associates, Summers -- who has held Treasury's No. 2 job since 1995 -- has laid out an ambitious to-do list for the remaining 18 months of the Clinton administration.
In no particular order, Summers has said he wants to see the U.S. government: aggressively pay down the national debt; persuade Americans to save more money; overhaul Social Security and Medicare; crack down on corporate tax shelters; help rewrite the rules of international finance; make the Internal Revenue Service a better-respected institution; and promote open global markets while finding ways to help Americans who lose their jobs to foreign competition.
There's more, but already some economists are rolling their eyes and wishing him luck. Despite the advent of huge new budget surplus projections and a detailed new proposal for Medicare, the lame-duck Clinton administration may have diminishing clout to enact its domestic wish list. And while Summers will have broad policymaking influence, the job of treasury secretary comes with relatively little power to manipulate the domestic economy, economists say.
"He actually has very limited abilities besides jawboning," said Bruce Steinberg, chief economist for Merrill Lynch & Co. "In the last 18 months of a lame-duck administration, the treasury secretary's brief is mainly going to be confined to international events."
In both international affairs and domestic matters, Summers has said he will continue the policies he helped set at Treasury as deputy to outgoing Secretary Robert E. Rubin. "We share a common orientation with respect to economic policy," Summers told the Senate Finance Committee during his confirmation hearing.
Some Treasury insiders say that was an understatement. Summers has privately praised Rubin for giving him uncommonly broad responsibilities as deputy. And insiders said the arrangement amounted to one-stop shopping, where subordinates could come to either man for a decision and get the same answer.
"At Treasury, on economic issues and other issues we face, the right course has been set," Summers told the committee. "Our challenge will be to carry on."
At the hearing, Summers pledged to stick with three fundamental policies long associated with Rubin: a strong dollar (even when there is pressure to weaken the dollar to help ease the nation's trade deficit); policies that will promote the continuation of budget surpluses (that is, no big GOP tax cuts); and a determinedly hands-off attitude toward the Federal Reserve (even when Fed interest-rate increases threaten to slow the booming economy).
Even so, the new secretary is likely to make his own mark in both policy and style.
As both an academic economist and a policymaker, Summers has long been interested in figuring out what motivates people to save money and how the government helps or hinders that process. The question has become increasingly pressing as the nation's personal savings rate has fallen to abysmal levels.
Summers has said repeatedly that he wants to find ways to reverse that trend. As a policymaker, he was the father of inflation-indexed Treasury bonds, which are designed to entice investors by offering them protection against inflation-induced declines in their holdings. More recently, he has become a chief cheerleader for the administration's proposed USA savings accounts, which would tap the federal budget surplus to set up savings accounts for working Americans and provide a full or partial match for contributions by low- and middle-income savers.
In terms of style, Summers probably will be more aggressive than Rubin about coming up with new ideas and pushing them, associates say. "Bob [Rubin] is more somebody who likes people to bring ideas to him and then he . . . sifts through them," said a senior administration official who has worked extensively with both men. "Larry's a little more somebody who likes to be part of the . . . new-idea generation process."
For now, though, Summers is likely to push familiar administration policies:
In domestic economic matters, the administration is locked in a struggle with the Republican-controlled Congress that boils down to a White House effort to block the Republicans' hopes for a major tax cut. Even though his pre-confirmation Senate committee appearances called for maximum deference, Summers disagreed with GOP senators over the wisdom of the sort of tax cuts congressional Republicans have made their signature issue for the 2000 elections.
Instead, Summers defended the administration's plans to use the projected budget surplus for smaller tax cuts and a variety of spending programs, including Medicare. He has preached repeatedly that the best use of the surplus would be to pay down the national debt.
Despite the partisan policy conflict, the 97 to 2 confirmation vote yesterday reflected Summers's credibility in Congress, where GOP senators enthusiastically supported his nomination.
In global economic matters, Summers long ago emerged as a champion of a strong interventionist role for the United States. His policy views can be summed up in part by what he calls the international finance version of the "Powell doctrine" -- a variant of Gen. Colin Powell's view that when the United States intervenes with force, it should do so overwhelmingly. In international financial rescues, which are dependent in part on investor and consumer psychology, that means intervening with enough money to create confidence and the conviction that the United States is serious.
A renowned academic economist who became the youngest tenured professor in Harvard history at age 28, he already has earned a place in economic history books for the role he played at Treasury in orchestrating massive financial rescues in Mexico and Asia.
The new secretary also subscribes to what the New Yorker magazine called the "Summers doctrine" -- that global capitalism can be a force for good, but free markets need controls and guidelines that they will get only if the United States leads the effort to impose them.
This view includes a major role for the United States at times of crisis, and a major U.S. push to remake the global financial system to look more like the one the United States takes for granted at home -- where at least in theory, all investors have access to enough information to produce an informed and efficient financial marketplace.
Summers's To-Do List
Among the things Lawrence H. Summers has said he would like to see the U.S. government accomplish during his tenure as treasury secretary are:
* Pay down the national debt.
* Persuade Americans to save more money.
* Overhaul Social Security and Medicare.
* Crack down on corporate tax shelters.
* Help rewrite the rules of international finance.
* Leave the IRS a better respected government institution.
* Promote open global markets while finding ways to help Americans who lose their jobs to foreign competition.
CAPTION: Lawrence Summers at his confirmation hearings last month. Among his plans are efforts to reverse the decline in the nation's personal savings rate.