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Policy: Budgets & Deficits

The White House is annoyed with liberals over Larry Summers

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The White House is not happy with liberals’ pre-emptive efforts to stop Larry Summers from becoming Federal Reserve chairman.

Both the Wall Street Journal and Reuters reported Wednesday that the White House is annoyed with liberal Senate Democrats’ endorsements of Janet Yellen, the Fed vice chair considered Summers’ main competition to replace current Chairman Ben Bernanke when his term expires in January.

White House aides have told fellow Democrats in the Senate that President Obama feels that members of his own party pushing for Yellen have infringed on his authority to appoint a chairman to the central bank. Rob Nabors, the deputy White House chief of staff, went to Senate Majority Leader Harry Reid’s office to voice the administration’s displeasure with congressional Democrats’ aggressiveness on the issue, according to both publications.

Democrats’ endorsement of Yellen, an unprecedented step, was originally a response to reports that the president favored Larry Summers for the position. Many liberals are wary of Summers, a Harvard professor and former Obama adviser, because of what they perceive as his coziness with Wall Street banks.

Over the past few weeks, a number of Democrats have registered their disapproval of Summers. Rep. Ed Perlmutter of Colorado directly challenged Obama to defend Summers when the president visited House Democrats in late July. The majority of women in the House Democratic caucus wrote Obama a letter asking him to pick Yellen. In a recent Huffington Post article, senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont laid out a set of criteria for the selection of a Fed chairman that seemed specifically to exclude Summers.

The most aggressive intervention by Democrats into the process, however, was a letter that a group of liberal senators sent Obama in late July recommending Yellen for the post, a clear sign that the senators were worried by news about Obama leaning toward Summers.

The nominee for Fed chairman is subject to Senate confirmation, but the debate is usually free of political jockeying before a nominee is announced, and even then it is generally low key. Previously, Bernanke’s 2010 re-confirmation vote had been considered unusually contentious because 30 senators voted against him. When Bernanke was originally nominated by President George W. Bush in 2006, he was approved by voice vote to almost no media attention.

Democratic senators’ offices declined to comment on reports that the White House wanted them to reduce their involvement in the nomination process. Some Democrats’ offices noted that the letter that began the controversy was not intended to be public in the first place.

Nevertheless, a spokesman for Sanders, an independent socialist who caucuses with the Democrats, discounted the White House’s criticisms. “The president is a constitutional lawyer but maybe he’s forgotten ‘advise and consent,’” he said, referring to the Senate’s traditional role in the confirmation process. Sanders has recommended the Nobel Prize-winning economist Joseph Stiglitz and former Clinton Labor Secretary Robert Reich as possibilities for Fed chairman.

Reid has done his part to defuse the possibility of a nomination process roiling the Democratic Party. He has said that Senate Democrats will support the candidate Obama nominates.

Separately, a Bloomberg poll released Wednesday showed that private economists still expect Yellen to be the pick even after Obama identified Summers as a possible choice in a press conference last week. Of the 63 economists Bloomberg polled, 65 percent said that Yellen would be the selection, with 25 percent expecting Summers to get the nod.

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Author:

Joseph Lawler

Economics Writer
The Washington Examiner