March 14, 1999
Something About Larry
Treasury's famously prickly deputy wears the mantle of heir apparent--and a smile
By Paul Blustein
Washington Post Staff Writer
Sunday, March 14, 1999; Page H01
Throughout his six years in the Clinton administration, Lawrence H. Summers, the deputy secretary of the Treasury, has been plagued by an image as a brainy but big-headed economist who can't stifle his disdain for lesser intellects. So it is with considerable amusement that his administration colleagues have noticed one of his recent efforts to display a little humility.
To preface his remarks, they say, Summers has been resorting to phrases often used by his famously self-effacing boss, Treasury Secretary Robert E. Rubin: "This is just one man's opinion . . . I could be wrong, but . . ."
What might be called the ingratiation of Larry Summers is an important work in progress as speculation mounts in Washington and on Wall Street that he will step into Rubin's job before long.
Having established himself as the intellectual powerhouse of the administration's economic team, the 44-year-old Summers is making a determined effort to improve his notoriously deficient people skills. Already, there are far fewer reports than there were a couple of years ago about Summers belittling opponents at interagency meetings by rolling his eyes, or irritating members of Congress by lecturing them like dunces. In an appearance on C-Span last week, Summers was so lavish in his praise of viewers' questions and comments that one woman caller gushed, "Mr. Summers, your modesty is refreshing!"
Actually, Summers's attempts to come across more collegially date back several years, and debate has long raged within administration circles over whether he has genuinely curbed his smarty-pants tendencies. But what makes all this bear notice now is the prospect that he may be poised to rise to the top of the policymaking heap.
In just the past few weeks, a confluence of events has sharply raised the decibel level of the long-running buzz that Rubin will step aside to fulfill his yearning for more time with his family and his large collection of fishing rods. President Clinton's impeachment ordeal is over, and the global financial crisis has abated at least for the time being, offering a window of opportunity for the Treasury chief to make a smooth and graceful exit should he be so inclined.
Further fueling the gossip mills was Summers's appearance in a three-man photo, along with Rubin and Federal Reserve Board Chairman Alan Greenspan, on the cover of Time magazine's Feb. 15 issue, which proclaimed the trio the "Committee to Save the World." The story and photo prompted Medley Global Advisors, an outfit that provides intelligence to international investment firms, to tell clients in a newsletter that from the administration's standpoint, the message is "the Deputy is every bit as serious a player as Greenspan and Rubin; thus the world will still be in safe hands when Rubin goes, as long as Summers stays."
Rubin and Summers are scrupulously refraining from shedding light on their future plans (and both declined comment for this story). The two men have said only that they remain "very focused" on their current jobs and on Treasury's "huge agenda," which includes promoting the president's Social Security proposal, managing the continuing global turmoil and shaping legislation to modernize the structure of the financial industry.
But Rubin has also been quoted saying that Summers is well qualified to serve as Treasury secretary, and other evidence abounds that Summers is being groomed for promotion. At White House meetings with Clinton, Rubin will often open the Treasury's presentation with a few remarks and then turn the floor to Summers, according to administration insiders. Summers is the only person who joins Rubin and Greenspan at their weekly get-togethers over breakfast or lunch.
And Rubin, who loves teasing Summers about his pointy-headed proclivities, has ribbed him much less in public in recent months, in part to avoid undermining his deputy's stature as a potential successor.
"Bob does not leave any question in his comments or actions that there is anyone he would trust as much as Larry to take his place if he left, or to speak for him on any major global issue," said Gene Sperling, who heads the National Economic Council, the White House policy-coordinating group (in which Summers sits as the only sub-Cabinet member).
Accordingly, Summers's strengths and weaknesses as a policymaker, leader and communicator are suddenly looming large.
"I think if you look at the great economic statesmen of the past 20 years--Paul Volcker, Alan Greenspan, Bob Rubin--they all shared one skill: the ability to listen, and to speak very cautiously," said David Rothkopf, a former top official in the Clinton Commerce Department. "This is a skill that Larry has yet to have fully demonstrated his mastery of. He's brilliant, he's hard-working, he's genuinely committed to making the world a better place. But there is a leap from being the brilliant number-two man to being the single most important spokesperson for the most powerful economy on earth."
Still, Rothkopf said, "there has seldom if ever been anybody who possesses the range of talents and skills going into the job that Larry has, and I think he needs to be given the benefit of the doubt. He's certainly matured enormously on the job."
By many accounts, he has had a lot of maturing to do.
Summers arrived in the administration with a dazzling resume, having become Harvard's youngest tenured professor ever at age 28 and served a stint as chief economist at the World Bank. But his penchant for overwhelming and even ridiculing opponents in debate went over particularly badly on Capitol Hill, where he became a target of congressional wrath during the controversy over the administration's 1995 bailout of Mexico.
An admittedly demanding taskmaster, he shocked subordinates by flinging speech drafts that he deemed pedestrian. Among those who found his manner hard to take was Alan Blinder, a former member of the Council of Economic Advisers and vice chairman of the Fed, who has told a number of people that he passed up a chance to become chairman of the CEA because he couldn't abide the prospect of tilting anymore with Summers.
Summers's brittle ego was exposed one evening in 1994 at a press briefing in Tokyo, when a U.S. Embassy official announced that the remarks by the then-undersecretary for international affairs should be attributed to an administration official. "Senior administration official," Summers instantly corrected him.
Married, with twin 8-year-old girls and a 5-year-old boy, Summers is by no means lacking in loyalists who say he is capable of great tenderness in mentoring and counseling young staffers, and he has attracted a number of talented economists to the Treasury Department.
Dismissing as overblown "the stories about 'the arrogant Larry Summers,' " Kenneth Brody, the former chairman of the Export- Import Bank, recalls Summers respectfully seeking his advice on certain aspects of the Mexican crisis because he lacked Brody's grasp of Wall Street.
"Look, he's very, very smart, and he's aware of that," said Brody, "but the key to success is knowing what you know and knowing what you don't know." Brody added: "I would say he isn't arrogant, because that would suggest he exaggerates his own worth and importance. I would say he gets it right on."
Nobody disputes Summers's enormous influence. The Mexican bailout, for example, "was a very unpopular decision that the president made based largely on the advice of Bob Rubin, who himself relied largely on the economic analysis of Larry Summers," said Sperling.
Summers has been the administration's point man in the effort to quell the more recent conflagration in Asia, Russia and Brazil, conferring constantly with the International Monetary Fund to coordinate rescue packages and traveling to crisis-stricken countries to press the case for painful economic reforms. He and Sperling were the principal drafters of the administration's Social Security plan.
While Summers can undermine his effectiveness by sounding pedantic, he often makes up for it with clearly organized arguments and clever use of language. An example is the "jet plane" analogy he uses to explain the benefits and costs of the rapidly moving global capital flows that have been blamed for sparking the crisis.
Modern jets improve lives by transporting millions where they want to go quickly, "but the crashes are more spectacular," Summers says, and the best solution is to "lengthen runways"--that is, strengthen the economic systems of the affected countries. He has used a similarly vivid metaphor in responding to Asians' complaints that they are being forced by the Treasury and the IMF to reform their economies too quickly: "A dentist does you no favor by extracting your tooth slowly."
Still, Summers suffers in some important respects by comparison with Rubin, whose self-control and ease with himself are as evident as his deputy's insecurities. Some on Wall Street are also nervous about Summers's lack of practical business or financial-world experience. While Summers has spent his entire career in academia and policymaking, Rubin spent 26 years at Goldman Sachs & Co.
The Medley firm polled its elite clientele of global investors a couple of weeks ago and found that 37 percent believed financial upheaval would be at least "somewhat more likely" if Summers replaced Rubin (a majority expressed no opinion). But 72 percent favored Summers over other candidates. (Medley would not disclose the sample size.)
Aware of his perceived shortcomings, Summers has been striving to address them. His political savvy has dramatically increased over the years, according to colleagues, who say that when Treasury was buffeted by criticism concerning its oversight of the Internal Revenue Service, it was Summers who cajoled Rubin--rather than the other way around--into bowing to the inevitable legislation that both disliked.
Summers has also devoted considerable energy to establishing a relationship with Vice President Gore, whose camp once viewed Summers with hostility because of their differences over environmental issues. When Gore gave major speeches recently at the Detroit Economic Club and the World Economic Forum in Davos, Switzerland, Summers spent hours with the vice president during the drafting stages, officials say.
His stock has risen on the Hill as well; Summers received a warm reception at a recent hearing of the Senate Finance Committee, which would be asked to confirm his nomination for Treasury secretary.
Even senators who might seem prone to give Summers a hard time in the confirmation process speak highly of him. "He has a first-class mind," said Sen. Phil Gramm (R-Tex.). "We've had a lot of good meetings about tough issues like Social Security."
Perhaps most important of all, Summers's boosters say, he shows a healthy capacity to find humor in his own foibles.
Not long ago, for example, Summers scrapped a speech he had written, telling colleagues with a grin that it was "a bunch of meaningless blather." It was an inside joke on himself, for as those present knew, he had derisively rejected speech drafts by staffers on previous occasions using precisely the same words.
Lawrence H. Summers
Position: Deputy secretary of the Treasury since Aug. 11, 1995
Born: Nov. 30, 1954, in New Haven, Conn.
Family background: Both parents are economists; he is a nephew of two Nobel laureate economists (Paul Samuelson, father's brother; Kenneth Arrow, mother's brother).
Education: Bachelor's degree from Massachusetts Institute of Technology in 1975; PhD from Harvard University in 1982
Career highlights: Economics professor, MIT and Harvard; staff economist, White House Council of Economic Advisers; chief economist, World Bank; undersecretary of Treasury for international affairs.
Honors: Received the John Bates Clark Medal in 1993, given every two years to the outstanding American economist under the age of 40.
Publications: "Understanding Unemployment," author, 1990; "Reform in Eastern Europe," co-author, 1991.
Personal: Married to Victoria Summers, a tax lawyer. They have twin daughters, 8, and a son, 5.
Sports: Tennis, skiing
SOURCES: Treasury Department, news reports, Bloomberg News