Choosing Someone for NEC

Noam Scheiber has the inside scoop on the question of who will (eventually) replace Larry Summers at the National Economic Council. 

I have no particular sense of which candidate is best (although I guess I do think that Gene Sperling's reputation is good and he has the right kind of experience for the job), but I do think that this paragraph does not inspire a lot of confidence:

My sense is that Sperling's situation is a little different from Altman's. Unlike Altman, there are people on the economic team who think he's terrific; the hesitation here is more among the political people in the White House, who wonder if he's got the right kind of public profile, that ill-defined mix of star-power/charisma/gravitas, etc. 

This is easy: no one inside the White House should care at all about the "right kind of public profile" for whoever gets the NEC job.  We're talking here about a very important position, one that will in part determine how well the economy performs in the next couple of years, which will in turn help determine whether the president wins re-election or not.  Oh, and there's the whole business about whether the American people prosper or suffer. 

The public profile, or star power, or charisma, or gravitas, or whatever will make absolutely no difference to anyone.

Now, whoever gets the job has to have enough oomph to be taken seriously within the White House, and by Treasury and other relevant departments and agencies.  If that's what Scheiber's sources are talking about, then no problem.  But the rest of it is just nonsense.  No one outside of the government (and I think I'd probably include Wall Street and other interested parties) is going to care at all who's at NEC as time goes on, certainly not outside of any policy commitments that person makes -- and since the job calls for an honest broker, that probably doesn't matter all that much either. 

No one, no one, no one is going to vote for against Barack Obama in 2012 because of the public impression left by the person at NEC.  If anyone in the White House believes otherwise, they should move to a different line of work. 

A Bit More on NEC Chair

I think Matt Yglesias makes a good point here, saying that "the larger issue is that influence in a White House staff job comes from the President deciding he wants to listen to what you have to say" (his emphasis).  Fair enough.  Larry Summers, former Treasury Secretary, wasn't going to join the administration unless he was going to be a major player, and as Yglesias points out the details of how the National Economic Council chair job worked in the Obama White House were designed with that in mind.  So it's fair to say that whoever replaces Summers might be a lot less influential.

However, one can take that line of thinking too far.  It's also true that the job actually does have responsibilities; this isn't the Kennedy or FDR White House, in which a bunch of presidential assistants have relatively undefined responsibilities.  As I said earlier, the core of the job is to try to keep the dozens of departments and agencies that have responsibility for some piece of economic policy to actually work together successfully, preferably in an attempt to formulate and carry out the president's policies, despite the obstacles of bureaucratic inertia, policy differences, and simple confusion and chaos.  In other words, while I think Yglesias is correct that the president will listen to whoever the president wants to listen to (although part of the NEC chair job entails affecting which of the many voices the president hears in the first place), the job of coordinating policy is critical even if the NEC chair acts more as an honest broker and does no policy advocacy at all.

This also gives me an excellent opportunity to link again to Keith Hennessey's wonderful description of exactly what everyone involved in White House economic policy actually does.  I suppose I should also link to Bruce Bartlett's dissenting view (he thinks the NEC is a bad idea) and, why not -- to my defense of the NEC.

I'll also add a link to Andrew Samwick's endorsement of former Xerox CEO Ann Mulcahy to succeed Summers.  While I continue to think it would be incredibly foolish to select someone for this key job based on how it would look -- the choice should instead be based on who would do the job well -- it is of course possible that Barack Obama and Rahm Emanuel believe that Mulcahy's management skills make her the best possible choice, and the public justifications (at least based on press reports) about what the business community will think are just spin.  Nothing wrong with that.  However, I continue to think that White House and government experience is more important for success in this job than is general (corporate) executive skill.  If they like Mulcahy, I'd suggest Treasury Secretary for her, if that job is opening up soon.

CEO? No Thanks

If this is true, I'm significantly downgrading my opinion of the Barack Obama presidency:

As several outlets have reported, top administration officials want to replace Summers with somebody from the business community--i.e., a current or former CEO. (Ideally, they'd like to get a woman, since Romer's departure means the economic team is nearly all-male now.) The idea is to disarm critics who say Obama is reflexively anti-business--or that, at the very least, he's getting bad advice because none of his top advisers come from the business community. 

That's Jonathan Cohn, in an excellent post about Summers and liberals, referring to reports such as this one.  But getting back to the main point here: this is a remarkably stupid plan, if true. It will not "disarm" critics who say that Obama is reflexively anti-business, any more than having Bob Gates at Defense "disarmed" critics of Obama's approach to terror -- indeed, actually expanding the war in Afghanistan and Pakistan and killing a lot of terrorists didn't slow down those who were intent on claiming that Obama was some sort of secret bin Laden sympathizer.  It doesn't work like that.  Critics will say what they will say, and it mostly doesn't matter, and at any rate there's nothing you can do about it.  What you can do, however, is have a well-run White House and do your best to have a well-run government.

We're talking here about a very serious job, one of the most important ones in the White House, both for substantive reasons and, moreover, for political reasons; after all, the condition of the economy two years from now will likely be the single most important factor in whether Obama serves a second term or not.  That's the actual condition of the economy, not the spin version of it.  Not the short-term reaction to White House personnel announcements.  Even if "the business community" goes all gooey-eyed over Obama's new National Economic Council chair on announcement day, they aren't going to stay that way if the economy tanks -- and no matter how much they might hate some other potential NEC chair candidate on the first day, they'll be (relatively) happy soon enough should the economy perform well.  Now, obviously, there's more to good economic results than White House personnel...but this is an important job, and it should be filled by someone with serious government, and preferably White House, experience.  Indeed, ideally one would prefer someone who has worked in both the White House and Treasury or some other executive branch department or agency; we're talking about the person who is responsible for coordinating the actions of several competing pieces of the government, so the more he or she understands the government the better.  Indeed, if after Summers the job is returning to more of a coordinating and honest broker role, knowing in depth how the White House and the government work might actually be more important than in-depth knowledge about the economy. 

Now, if these reports are simply a nod to an important constituency on the way to choosing whoever is the best available man or woman for the job, well, no harm done.  But if the administration is really more concerned about the short-term reaction to the selection -- how it plays in the press, rather than how it will help the president govern as well as possible -- then it's both a terrible mistake and a sign of real screwed up priorities.  It will certainly be interesting to see which it is.

NEC and the Presidential Branch

Bruce Bartlett continues to be on the warpath against the National Economic Council.  Perhaps that's too strong...at any rate, he's against it.  I wrote something long in defense of the NEC in response to Bartlett a while ago, and I'll pretty much just link back to that now.  Short version: the Presidential Branch (that is, the White House Office and the larger Executive Office of the President) exists to do three main things: to do things that the president would like to do but doesn't have time to do (such as the daily press briefings, or speechwriting, or routine lobbying of Congress); to give the president independent sources of information and expertise, because presidents don't and shouldn't trust the bureaucracies in the executive branch departments to give unbiased information; and to coordinate policy, because few important policies are only devised and implemented by one agency.  The NEC has performed the coordination job for economic policy, broadly speaking, since Bill Clinton invented it.   If it didn't exist, it seems to me that some other structure within the White House would be necessary to do the same thing. 

The main reason  I thought this was worth a separate post, however, is that I need to link to Keith Hennessey's long, but absolutely first-rate, description of the White House, the EOP, and the NEC.  I highly recommend it.  About the only caveat I'd toss in is that I think Hennessey perhaps somewhat understates the ad hoc nature of each individual presidency...a whole lot of the internal structure of the White House can change overnight when a new presidency enters office.  But that aside, it's an extremely useful piece of description.


As long as I'm writing, I might as well also say that I think Matt Yglesias is wrong to say that the Council of Economic Advisers isn't needed because "After all, if the president wants to get a briefing on some subject from an academic macroeconomist I’m pretty sure that could be arranged at any time."  Well, sure, in theory -- but in reality, presidents beginning with Truman have found that it's useful to have those people close at hand, because if they're not then odds are that, in practice, the president will be stuck with the economic analysis provided by Treasury or some other department or agency.  And presidents, it turns out, can't trust that analysis, because it's apt to be biased by whatever the bureaucratic culture and incentives might be of the relevant agency.  Of course, presidents have to be careful; Barack Obama's CEA is apt to be biased in favor of Barack Obama's way of looking at the world.  That's why honest brokers are needed for the coordination jobs such as National Security Advisor and the Director of the National Economic Council.  It's very possible that Larry Summers may have the wrong skills and sensibilities for that latter job, although it's always a bit tricky reading the tea leaves on these sorts of things (I think the logic and analysis in the Ezra Klein post I linked to there is excellent, and I don't doubt his reporting...but you never know why people are saying what they're saying).  Regardless, the jobs of the NEC Director and of the CEA are just very different.

Anyway, as I said, read Hennessey's piece if you have questions about the White House.  It's excellent.

Is the NEC a Good Idea?

Bruce Bartlett had a couple of posts up today about the speculation that Larry Summers might not be long for the administration.  I have no idea whether Joshua Green is right that Summers will soon be gone, but I'm more interested in Bartlett's comments about the structure of the White House.  He's not a fan of the National Economic Counsel:

I continue to believe that the NEC is an organization without a clear reason for existence. It was created by Bill Clinton to be the economic counterpart to the NSC. But the comparison is invalid. The NSC exists because there is inherent conflict in the nature of the State Department and Defense Department that requires continuous oversight. Also, the NSC's issues tend to be very time sensitive and often involve classified material. But there are no inherent institutional conflicts among the economic agencies, their problems are seldom time sensitive, and even less seldom based on classified information. When I worked at Treasury and had access to some of the material from its intelligence office I found that what I read in the Financial Times was much better quality and more up to date.

I don't agree.  The NSC isn't just there to deal with conflict; it's purpose is to help the president coordinate action, not just involving two departments but also the intelligence community and various other departments and agencies that have responsibilities in the broad foreign affairs/national security realm.  Similarly, there are quite a few cabinet departments and independent agencies with governing responsibility for some portion of economic activity.  Bartlett talks about Treasury, which obviously has an important role, but there's also Commerce, Labor, the US Trade Representative, and independent agencies including the SEC and FDIC, and then smaller but still important pieces of policy under a variety of other departments and agencies, everything from the Agriculture Department to the SBA.    There doesn't have to be true conflict between them to make coordination difficult.  And I'm not convinced that Bartlett is correct about whether some of these agencies may well have inherent conflicts, anyway.

While I think that every president should find the working style and staff structure best for him or her, on the whole as best as I can tell the NEC worked very well for Clinton, and is working at least reasonably well for Obama so far (my impression is that the NEC was much less successful under Bush, who retained it but perhaps did not really use it).  It is simply a very, very, difficult job to get the entire government of the United States on the same page when it comes to any complex policy carried out government-wide.  There's simply no way for a president to be assured that once he sets a policy, everyone who needs to act will in fact act.  Presidential commitment to a policy -- "energy in the Executive" -- certainly helps, but that same Executive also needs ot coordinate foreign policy, and the rest of domestic policy, while also dealing with Congress, foreign governments, electoral politics, and who knows what else.  Only the White House can coordinate, but the president himself is too busy to do so.  Of the various ways that presidents have dealt with this since Truman, the NEC model seems to me to make lots of sense, and in practice it does not seem to have revealed any unexpected flaws under the two presidents who actively made use of it.

The danger, presumably, is that the NEC (and more probably the NEC Director) will become an institutional rival to the executive branch officials charged with carrying out policy, just as National Security Advisers have, at times, been bureaucratic rivals to the Secretaries of Defense or State.  However, those rivalries are not as great a source of trouble as they once were, perhaps because presidents have learned from previous mistakes (although it could just be a run of good luck).  Mostly, however, my guess is that someone in the White House is going to help the president coordinate economic policy, and it makes plenty of sense to have the NEC structure and a policy specialist (such as Rubin, Sperling, or Summers) doing it.