Relief that Summers’ prickly management style, his insensitivity to the middle class and a more balanced economy, and his persistent coddling of the big banks won’t be the hallmarks of the next Federal Reserve term.
Relief that President Obama, with an alternative selection, has the opportunity both to affirm his legacy as a genuine reformer of the systemic abuses of the financial sector and to cement his leadership in addressing the nation’s persistent extreme income inequality and the frayed fortunes of our middle class.
And, especially, relief that there is a superior alternative to Summers in current Federal Reserve Vice Chairman Janet Yellen.
No one should relish a negative campaign against any potential nominee, especially not after all of the obstruction that this president has faced on other nominations. But in strongly objecting to the nomination of Summers, which some commentators dismissed as little more than small-minded spitefulness from the “Left,” I hope it will be seen that the ‘objectors’ to Summers’ nomination were actually looking out for the best interests of President Obama and his administration.
Obama now has a consequential choice to make between candidates with records of understanding the need for strong financial regulation and anticipating the perils of financial-sector indulgence versus another candidate with a similar Rubin-like disregard for balancing our economy, for revitalizing our manufacturing sector, and for responsibly regulating the financial services industry, whose prior almost-complete deregulation Rubin and Summers substantially fostered.
Just this past week, we were reminded that the top one percent of earners earn one-fifth of the nation’s total income and that the top ten percent earn more than half. The 2009 stimulus package – largely designed by Summers when he was the president’s senior economic advisor – virtually ignored this income inequality. Then just weeks later, in a major speech on June 19, 2009, Summers showed that he also had no idea how to promote long-term economic growth. Rather than addressing our declining manufacturing sector and its lost exports of goods, he planned to rely instead on a quixotic plan to export vast amounts green technology, Hollywood movies and American consulting and legal fees services. Summers consistently held these views right through his departure speech from the Administration in November 2010, when our manufacturing sector remained ravaged and our real unemployment rate stood at a staggering 16.6 percent.
President Obama has decisively turned toward what he’s been calling a “middle-out” approach to economic prosperity. In answer, the next Federal Reserve chairman cannot be a deregulation zealot, an apologist for MNCs, or a toady to the financial services sector, which today still remains dominated by a handful of giant opaque and conflicted institutions dedicated to using various forms of government support to engage in speculative trading for their own enrichment.
The responsibility of the Federal Reserve is to help foster, through its Central Bank policies and practices, a truly fair and balanced economy, which current Chairman Bernanke has well championed. Sen. Elizabeth Warren (D-Mass.) just made clear in an interview on MSNBC that Janet Yellen has both the skills and perspectives to be a great next chairman – many of us who are committed to these same economic outcomes couldn’t agree more enthusiastically.
Hindery, Jr. is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, co-chair (with USW President Leo Gerard) of the Task Force on Jobs Creation, founder of Jobs First 2012, and a member of the Council on Foreign Relations. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. (TCI) and Liberty Media, and is currently an investor in media companies.