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
, would be a mistake even if that is likely to happen.
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
, 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.
The best person for the job may be Blinder. I prefer Tyson for her industry roots, but Blinder is likely most acceptable to Wall Street and the Harvard/Princeton axis of ideological and credentials purity. He could be Treasury secretary or Federal Reserve chairman; Tyson would be poor choices for those jobs. Summers' position would permit the president to test-drive Blinder.
However, look for the president to go with a woman because the other two top economics posts are held by men.
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Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.