Larry Summers So Reviled, Republicans Back More-Liberal Janet Yellen For Fed Chair
Republican Senator Pat Roberts of Kansas became the first Senate Republican to formally endorse Janet Yellen for the soon-to-be-vacant chairmanship of the Federal Reserve. The front-runners to replace Ben Bernanke, who has served in the position from 2006-present, are widely believed to be former U.S. Treasury Secretary Larry Summer and current Fed Vice Chairperson Yellen.
"I wouldn't want Larry Summers to mow my yard," said Roberts. "He's terribly controversial and brusque and I don't think he works well with either side of the aisle, quite frankly." If Roberts' support for Yellen and disdain for Summers spreads throughout the GOP, Barack Obama may well find himself in a politically untenable position.
It's fairly unsurprising that Democrats are lining up behind Yellen. After all, she has monetary policy experience to spare, supporting Ben Bernanke in implementing his sometimes-controversial quantitative easing programs (QE2, the QE Strikes Back, was clearly the best installment) and "Operation Twist." Selecting Yellen would thus likely ensure a relatively smooth transition between Federal Reserve chairs. Additionally, Democrats would no doubt like to add to their resume the breaking of yet another pane in the glass ceiling: if Yellen is selected, she will be the first female Fed Chair.
Democrats also harbor no deep love for Summers. Despite his significant contributions to the Clinton administration and work for the World Bank, Democrats are wary of Summers's connections to the hedge-fund-manager types Barack Obama has made a living from vilifying during his tenure. He also played an important part in repealing the Glass-Steagall Act, which loosened the leash on commercial banks to invest in those oh-so-popular credit-default swaps everyone knows and loves.
What will be much more fun to watch is if Republicans circle the wagons behind Roberts and flock to the monetarily dove-ish Yellen. The Fed vice-chairperson has demonstrated a desire to aggressively tackle unemployment, perhaps, some speculate, at the cost of the second half of the Fed's dual mandate — keeping inflation stabilized. Normally, one would think that a dove (as opposed to a hawk) would rankle a Republican, since inflation reduces the value of wealth already accrued by individuals, and direct aid for the poor and unemployed is — generally speaking — usually a Democratic talking point.
If all politics is personal, however, then it's possible that it's not complex Machiavellian machinations that will drive Republican opposition. Put simply, they might just think Summers is a huge tool. He has a propensity to dodge personal responsibility for the sake of his own ego and reputation (seriously, just Google "Larry Summers' ego" and be amazed), as well as reportedly abrasive personality. After all, Roberts' statement about Summers didn't mention any policies per se — it just criticized his working style and demeanor.
As fascinating as it is on a purely intellectual level that it might take Larry Summers (of all things) to break the iron congressional Curtain between Democrats and Republicans — nothing like shared contempt to bring folks together, after all — the important political outcome could be that the Senate will block a Summers nomination during confirmation proceedings. Barack Obama, who is reportedly quite fond of Summers and uneasy about a Yellen chairship, can ill-afford to be rebuked by his own party in the Senate, and he can afford even less to be on the receiving end of an ironic bipartisan consensus. His second term agenda is already lying wounded and writhing on the floor. There's no reason to pick it up and light it on fire too.