Lawrence Henry Summers is one of the world’s most eminent economists. He won the John Bates Clark Medal given every two years to the nation’s best economist under 40 — an award so competitive that some economists say it’s as prestigious as a Nobel Prize. His fellow economists cite his work even more frequently than that of Federal Reserve Board Chairman Ben Bernanke. Summers also has more experience than any senior U.S. official in memory, including Bernanke, in dealing with the financial crises that have become the regular responsibility of Fed chairmen since the Great Depression. He started in the Reagan administration, when he was senior staff economist on the Council of Economic Advisers, then moved on to become Treasury secretary under President Clinton, and, finally, President Obama’s chief economic adviser in the middle of the worst financial crisis since the 1930s. Summers holds mostly middle-of-the-road but profoundly informed views on finance that make him fairly uncontroversial as a prospective steward of the Fed’s mandate, which is to control inflation, reduce unemployment, and guide economic growth.
So, on paper, Summers is a superb candidate to succeed Bernanke in a post that the brilliant 58-year-old Harvard professor has pined for since his earliest days in Washington, according to longtime associates. Obama is reportedly fond enough of Summers that he may name him in the next few weeks, passing on a chance to appoint Janet Yellen, the widely admired current vice chairwoman, who is said to be the other major contender, as the first female Fed chief in history.
And yet Summers is a very risky choice for chairman — far riskier than Yellen, who would undoubtedly win overwhelming confirmation and was recently rated the Fed’s most accurate forecaster since 2009 on issues from growth to jobs to inflation.
In this week’s cover story, National Journal‘s Michael Hirsh makes the case against Larry Summers.