Will Jeff Immelt Replace Larry Summers -- and Does It Matter?
Assuming that President Obama decides to run for a second term, the person who takes over as director of the White House National Economic Council could play a pivotal role. That's because the director's role is to be the person who listens to all the arguments for and against an economic policy proposal, then present those opinions in a balanced manner.
Larry Summers didn't do that -- he promoted his own views ahead of those of Obama's other economic advisers. If Obama picks Jason Furman, one of the NEC deputy directors (and a man with whom I worked during John Kerry's 2004 presidential campaign), he will get a person who fulfills that unbiased presenter function. However, by that time it likely won't matter much, because at this point, Washington has done everything it can to fix the economy. Now, it's up to capital providers to make the investments that will create jobs.
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According to Reuters, there are nine candidates -- Furman among them -- being considered for National Economic Council director, four of whom are former or current corporate executives. This suggests that Obama is going to use the position to court the business community. That makes sense, because Obama has already elevated Austan Goolsbee, a University of Chicago professor, to replace Christina Romer as head of the Council of Economic Advisers. It's Goolsbee who will become the chief economic ideas person -- replacing Summers in that role.
Given that corporate executives account for a plurality of the candidates, let's review each of their track records:
Jeff Immelt, (pictured, above) General Electric (GE) CEO 2001 to present. Immelt has been disastrous for GE shareholders -- the company's stock has lost 58% of its value since he took over, while the S&P 500 fell 22%. Immelt's CNBC is a persistent Obama basher, and its on-air personality Rick Santelli spewed the rant that inspired the Tea Party movement. But Immelt's departure would be great for the stock -- depending on the quality of his replacement -- and good for his relations with the business community given GE's prominence;
Anne Mulcahy, Xerox (XRX) CEO 2001 to 2009. Under Mulcahy, Xerox stock was down 1% during a period when the S&P 500 fell 26%. She would be a fine, but not stellar, choice as far as relations with the business community go;
Ann M. Fudge, Young & Rubican, CEO 2003 to 2007. There is no data on the advertising agency's financial performance under her leadership, but she is well connected in the business community;
Richard Parsons, chairman of Citigroup (C), 2009 to present and CEO of Time Warner (TWX) 2001 to 2008. Parsons is well-connected and admired in political circles, but under his leadership, the stock prices of the companies he's led have been poor relative to the market. Citigroup stock is up 13.5% since he took over as chairman (the S&P 500 has risen 37% since then) and Time Warner stock fell 49% during his tenure -- during which time the S&P 500 rose 29.8%.
What Does President Obama Want?
If Obama's goal is to have an NEC director who will objectively present the range of economic opinions, Furman would be a great choice. In 2004, Senator John Kerry trusted him to frame economic policies, and he has been a valuable deputy to Larry Summers. From my time working with Furman, I know he's a hard-working, low-ego expert in macroeconomics who would do a great job of framing fairly the economic options presented to the president.
But I don't think that's what Obama wants. And given what I expect he does want -- better press coverage and relations with the business community -- I wouldn't be surprised if he picks Immelt, whose nomination might diffuse the anger of the wealthy rage monkeys represented by Rick Santelli's CNBC. If Immelt gets inside the tent, it could shift CNBC's foul mood, which might help put executives into a mindset where they start opening their wallets to compete, instead of opening their mouths to whine about their taxes.
