Obama defends Summers, but Fed decision still open

Story highlights

  • President Obama takes umbrage with criticism of his former top economic aide
  • Obama tells House Democrats that Larry Summers played a critical role in 2009
  • Summers is considered a possible choice to become the next Federal Reserve chairman
  • Legislators say Obama is considering several equally qualified candidates
President Barack Obama took umbrage on Wednesday with criticism of former top economic aide Larry Summers, but made clear he still is considering several candidates to become Federal Reserve chairman next year when incumbent Ben Bernanke's term expires.
House Democrats who attended a closed meeting with Obama on Capitol Hill described the president as defensive in response to a question about the possibility that Summers, an economist and former treasury secretary under Bill Clinton, would be chosen.
Some critics on the left have questioned the possible choice of Summers for the crucial monetary policy post, arguing he failed to seek a large-enough stimulus program when he headed Obama's National Economic Council in 2009.
Participants in Obama's meeting with House Democrats said Rep. Ed Perlmutter of Colorado questioned the president about Summers, with one source saying Perlmutter characterized the possible selection of Summers as a "bad idea."
Rep. Elijah Cummings of Maryland said Obama told the meeting he was "far from making a final decision."
"But he was very defensive, I would say, of Summers, in saying that Summers had played a very critical role early in his administration," Cummings said.
Rep. Carolyn Maloney of New York said Obama's response to the Summers question called for putting the matter in perspective.
The president noted that "there were a lot of people believing now that he didn't push for a big enough stimulus," Maloney said, adding that Obama explained how "at the time, if you saw it, people were really scratching their heads on whether or not we could get the $800 billion" approved by Congress.
She added that Obama said he had interviewed "several people" for the fed post, but provided no details.
Rep. Jim McGovern of Massachusetts said Obama was asked a negative question about Summers and responded that his former aide "has done a lot of good things."
"I wouldn't read too much into what he said," McGovern added,noting Obama made it "very clear" he was "nowhere close to a decision."
House Democratic leader Nancy Pelosi of California also noted that Obama was responding to a question about Summers.
"He did make a -- I don't want to say a defense -- but he just spoke about what he thought about Larry Summers," Pelosi said. "But it wasn't really about Larry Summers. It was about how important this decision is."
The subject didn't come up at a separate meeting Obama had with Senate Democrats, participants said, but their chamber leader acknowledged differing views on Summers within his caucus.
Last week, some Democratic senators signed letter supporting Federal Reserve Vice Chairman Janet Yellen to be Bernanke's successor.
"Some of my senators have been involved publicly in directing the president's attention to someone else," Senate Majority Leader Harry Reid told reporters when asked about Summers.
Calling Summers "a longtime friend," Reid added: "I like him a lot; I think he's a very competent man, but that decision is up to the president. Whoever the president selects, this caucus will be for that person no matter who it is."
At the conclusion of a two-day meeting on Wednesday, the central bank said the economy appears to be improving, noting that "downside risks" have diminished since last fall.
At the same time, the Fed said it would continue its monthly bond purchases to "support a stronger economic recovery."
Earlier in the day, the U.S. government released its first estimate of second-quarter GDP, which showed the economy grew at a 1.7% annual rate. That was an improvement over the first quarter's 1.1% annual rate.