This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Replacing Larry Summers -- With Whom?

The chairman of the National Economic Council is the gatekeeper to the Oval Office for economic information, and principal adviser to the president on policies for economic recovery.

He prepares the daily brief on all the economic data journalists and analysts report and write about. Hence, replacing Larry Summers with someone from industry, for example Anne Mulcahy, former chief executive of Xerox (XRX), would be a mistake even if that is likely to happen.

TheStreet's Political Pulse

Mulcahy simply doesn't have the background to effectively advise the president on the intricacies of topics ranging from the Consumer Price Index to the effects of inventory purchases on actual and sustainable growth in gross domestic product. Think of it like an NFL team -- you want a running back as your featured back, not a wide receiver.

The administration needs private industry expertise but other vacancies will emerge in the Cabinet -- for example, Commerce secretary -- and it would be better to put Mulcahy there, or at Health and Human Services to implement national health care. She is currently chairman of Save the Children.

Whoever the president picks, the person will be liberal. Economists know that temporary investment tax credits and jobs tax credits only have temporary and quite limited effects, but this president likes that sort of thing. Summers' replacement must be an economist that will go along or an industry leader who can polemic an alibi or be excused for not knowing better. This person, if it is an economist, must soft-peddle the limitations of policy tools President Obama likes.

Oft-mentioned Laura Tyson is the perfect fit. She is a champion of industry and manufacturing, is liberal and is an accomplished economist -- she is rather flexible in her interpretation of economic evidence. She is not the Harvard theoretician Northeastern liberal establishment economists would recommend, a.k.a. Alan Blinder from Princeton, but the establishment can't oppose her because of her tour of duty as Clinton Chair of the Council of Economic Advisors.

Summers deputy, Diana Farrell, has liabilities among manufacturers. She has a track record of advocating outsourcing. That would make her a friend of multinationals heavily invested in China, like Caterpillar (CAT - Get Report) and General Electric (GE - Get Report), but would hurt her with domestically focused companies that want something done about China.

If Obama goes with Farrell, it is a key indicator he is not serious about outsourcing and doing something about China's currency and protectionism.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CAT $85.98 -2.20%
GE $27.49 -0.11%
AAPL $131.73 -0.24%
FB $80.38 -0.20%
GOOG $540.02 0.04%

Markets

DOW 18,119.69 -43.30 -0.24%
S&P 500 2,119.06 -4.42 -0.21%
NASDAQ 5,094.12 -12.4730 -0.24%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs