Jacob Weisberg isn’t a big fan of Ron Suskind’s new book, nor, for that matter, of Ron Suskind. I’ve also been reading ‘The Confidence Men,’ and like Weisberg, I’m not impressed, but for a very different reason. Let’s call it, as Suskind does, the Larry Summers problem.
Elsewhere: “He was brilliant at cultivating the sense of control, even as events spun far beyond what could be managed with any certainty. That was his feat, an illusionist’s trick calling for a certain true genius.”
And: “In an odd way, Summers’s extraordinary self-confidence would grow both harder and more brittle as he spent time in the public sphere. The architecture of his personality, in this way, recalls that of Nixon and Henry Kissinger, or, more recently, Dick Cheney — all men who blurred the line between ends and means.”
No one in the book gets a worse rap than Summers. And I don’t mean as a decision maker. I mean as a person. Suskind really doesn’t like the guy.
But stop for a moment and consider what Suskind actually thinks about Summers: He believes that his remarkable ability to argue and debate and convince allowed him to hijack President Obama’s process and agenda. The book, which is largely about the White House’s internal processes, argues that this issue, the White House’s Larry Summers problem, has been the core impediment for the administration over the past three years.
And yet, when Suskind begins explaining, or at least implying, what the White House actually did wrong, the Larry Summers problem provides almost no explanatory power. In fact, it points in the other direction, the direction Suskind clearly wishes the White House had gone.
Suskind, for instance, makes a very big deal of the fact that Obama was leaning toward nationalizing the banks, or at least Citibank, and Timothy Geithner arguably killed the initiative. In the conclusion, this is really the only policy issue Suskind identifies. “By handling Citibank effectively, Congress and the American people would see that ‘government could do this right,’ as the president asserted that afternoon nearly two years before, killing off fear that if another financial institution failed, it would spark a financial crisis similar to what happened after Lehman,” he writes. “Then the White House could go back to Congress to restructure the banking system properly.”
So where was Summers and his remarkable powers of persuasion during this debate? Well, he was on the side of nationalizing Citibank. Indeed, Suskind suggests that he was actually trying to end-run Geithner’s reluctance by writing the policy proposal that Geithner refused to produce. “Larry and Christina worked the phones in early March to try to gather the information they’d need to field, at the very least, a strong counterproposal,” reports Suskind, “if not the kind of fully rendered alternative plan that only Treasury could provide.”
The other major issue that could plausibly have had a material effect on the recovery was the question of a follow-up stimulus package. In another of Suskind’s more consequential passages, he relays an argument that Christina Romer made to the president, in which she characterized Peter Orszag’s view that a small stimulus would be ineffective as “oh so wrong.” In the book, Obama comes down very hard on her, and this anecdote is mentioned in many of the stories about the dissatisfaction the White House’s female staffers had with the way they were treated. In the next passage, however, Suskind notes that in a subsequent meeting, “Summers stepped up, offering, almost word for word, the position Romer had voiced previously.”
There’s little doubt that Summers ran a poor process. I wrote a piece on this back in August 2010, for instance. But the question is whether that process led to substantially worse policy outcomes. And that’s less clear. You can see the tension in Suskind’s book, as in most of the cases where Suskind identifies a major inflection point for administration policy, Summers is running a fairly open version of his process, and Summers ends up on both the side that Suskind appears to support and on the side that ultimately loses the debate.
(There are other places where Suskind and I would appear to agree that Summers was on the wrong side of the debate — for instance, on a financial transactions tax — but they are not typically questions that would have had a large positive impact on the economy in the short-term.)
That doesn’t obviate every critique of Summers’s performance, of course. It seems quite clear in retrospect — and it was arguably clear at the time — that if Summers was going to be in the administration, he should have been Treasury Secretary and Geithner or Jack Lew should have run the policy process. And that’s certainly a problem that Suskind identifies.
But as a whole, Suskind is much better at reporting internal dysfunction in the White House then assessing alternative paths forward for the economy. He never really deals with the technical problems of bank nationalization, for instance. Geithner is assumed to be wrong rather than proven to be wrong. And yet I know that many of the internal players who initially believed Citibank should be nationalized have come to conclude that Geithner had it right.
There are arguments on both sides of that debate, of course. But this is where the real questions of the last three years lie. If the recession had been smaller, or Europe hadn’t imploded, and we were on a path down to sub-8 percent unemployment, the White House might have been equally dysfunctional, but they would look a lot better. Suskind’s book is better at making them look bad then explaining where they went wrong.