Image: Larry Summers
Feng Li  /  EPA file
Larry Summers is still director of the National Economic Council but his impending return to Harvard means President Obama will be picking a new economic czar.
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updated 12/28/2010 4:15:29 PM ET 2010-12-28T21:15:29

Change is soon coming to the White House economic team, with President Barack Obama set to announce a new top adviser who will have broad influence over the administration's efforts to jumpstart the struggling economy.

Obama is expected to announce a replacement for departing National Economic Council director Lawrence Summers early in the new year, soon after he returns to Washington from his Hawaiian vacation.

The president's choice is being closely watched for signs of where he wants to take his economic agenda in the second half of his term, and how he looks to bring down the almost double-digit unemployment rate.

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Will he tap the business world with a figure such as Roger Altman, an investment banker and Clinton administration alumnus who might carry too much baggage from his association with Wall Street? Will he turn to academia instead, calling on a scholar such Yale President Richard Levin? Or will he go with deeply experienced insiders such as deficit hawk Gene Sperling at the Treasury Department or Jason Furman, the council's deputy director?

With the unemployment rate at 9.8 percent, the private sector struggling to maintain steady growth and the public ranking the economy as the top concern, Obama's handling of the issue over the coming months is certain to play a central role in his expected reelection bid.

White House blames delay on lame-duck frenzy
The selection process for the council post has dragged on for months. Summers announced his resignation in September, and many in the administration knew well before then that he planned to return to Harvard University after serving two years at the White House.

Obama spokesman Robert Gibbs said he expects Obama to make an announcement in early January, and blamed any delay on the frenzied legislative session that consumed the White House through the end of the year.

"The president wants to take some time to make a good decision because ... we have had a lot on our plates the last couple weeks," Gibb said Sunday.

The administration's thinking on how to fill the job has evolved since Summers announced his resignation. The initial view — both inside and outside the White House — was that Obama should name a business leader to the post, in an attempt to give the private sector a greater voice in the administration and ease the perception that the president is anti-business.

But the administration now believes the relationship between Obama and the business community has started to thaw. For example, both sides praised each other following Obama's meeting with CEOs earlier this month. The White House has grown more willing to find another prominent job for a private sector appointee while leaving the council post to an economic heavyweight who can coordinate the advice Obama is receiving from throughout the administration.

"To get a business person in there, it seems like an odd place," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. "And if he does need someone from business, I don't think he would want someone from Wall Street."

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The knock against Wall Street
It's that Wall Street connection that's been a knock against one of the leading candidates for the job, Altman, founder of Evercore Partners. Altman does have government experience, though, having served as deputy treasury secretary under President Bill Clinton.

Sperling, another top contender, has also dabbled in Wall Street, advising Goldman Sachs and other financial firms, although he's most well-known for his work in the Clinton and Obama administrations, including his current post as counselor to Treasury Secretary Timothy Geithner. Sperling helped craft the 1993 Deficit Reduction Act, and his appointment could show Obama is serious about his pledge to address the mounting debt and deficit next year.

Levin, who as president of Yale shares Summers' academic pedigree, is likely to favor stepped up Wall Street regulation. Furman is also said to be in the running for a promotion from the deputy's job.

Both Sperling and Furman would bring an insider's knowledge of the Obama White House and the president's economic policies to the job, attributes that may not necessarily be to their benefit. Critics have accused Obama's economic advisers of not fully grasping the depths of the crisis, and the team's prediction that the president's massive stimulus bill would keep unemployment below 8 percent has caused headaches within the administration.

Benefits of an outsider
Selecting an outsider to fill the top economic job would help Obama counter the notion that he's too insular and unwilling to accept advice from outside the administration. He filled two other high-profile vacancies on his economic team this year from within the administration, replacing Budget Director Peter Orszag with State Department official Jacob Lew, and Council of Economic Advisers chair Christina Romer with Austan Goolsbee, who was serving as a member of the council.

"They should be looking to take things in a new direction," Baker said. "I don't think more of the same is the answer."

Beyond the economic qualifications of the candidates he's considering, the president is also believed to be looking for a council director who can serve as both a good manager and a team player. For all of Summers' intellectual heft, he brought along a healthy ego and an often prickly temperament. Rumors swirled of conflict among Summers, Orszag and Romer, a rarity in a White House run by a president with little patience for drama.

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