In a meeting with House Dems today, President Obama reportedly gave a full-throated defense of Larry Summers, who is rumored to be the front-runner for Fed chair, provoking anger from progressives who prefer Janet Yellen. She would be the first female Fed chair, and Summers is being widely criticized for his pro-deregulatory past.
It’s unclear to me from all the reporting exactly what Obama was saying about Summers. Judging by what House Dems said today, he could have simply been characterizing the attacks on Summers as unfair, as opposed to signaling that he’s leaning towards Summers for the gig. Indeed, Dem Rep. Gerry Connolly came away convinced Obama is “not even close” to making any decision.
Either way, Harry Reid made a pronouncement today about Summers that’s already raising some eyebrows among Dem aides:
“Larry Summers is a longtime friend of mine. I like him a lot. I think he’s a very competent man. But that decision is up to the president. Whoever the president selects, this caucus will be for that person — no matter who it is.”
Aides to several Democratic Senators who favor Yellen told me today that they find it unlikely that Senate Dems would unite behind Summers if he is indeed the pick. Reid may be right that most of the caucus would be behind him — perhaps some grudgingly — but it seems obvious that some Democrats will oppose him. One senior Democratic aide even told Brian Beutler yesterday: “Given the level of opposition to Larry Summers within our caucus, confirming him would be a huge challenge and probably a pretty ugly process.”
Meanwhile, Democrats opened up another front in favor of Yellen today, with 62 female House Dems signing a letter urging Obama to pick her. One third of Senate Dems have also signed a similar letter. Neither missive actually comes out against Summers. But both letters speak directly to Yellen’s economic views and priorities in ways that signal a clear preference for Yellen over Summers. Both note that she has demonstrated an understanding of the need for a robust commitment to regulation — given the financial crisis’ impact on the middle class — which stands in contrast to liberal criticism of Summers’ role in the repeal of Glass Steagall financial regulations and other deregulatory stances.
Indeed, progressive Senator Jeff Merkley told Bloomberg News that he is “extraordinarily skeptical that his background is appropriate” for the role of Fed chair, describing him as a “life-committed deregulator.” Dick Durbin added that he would have a “lot of questions” for Summers about the “role of the Fed in terms of helping the middle class and creating jobs.”
It’s well known that the White House really doesn’t like to see its hand forced by public pressure — indeed, one person familiar with the sitaution told me the other day that letters such as these from Dems risk being counter-productive. But at this point it’s hard to see how Summers gets picked without a lot of noise and public opposition coming from at least some prominent Democrats, suggesting — as one Democratic aide put it above — that the process could indeed get ugly and contentious.