Is WaPo Damning Yellen With Faint Praise?

While President Obama is still conveniently off vacationing on Martha's Vineyard, the Washington Post has a front page story today on Janet Yellen and her candidacy to replace Bernanke as Fed Chair.  I feel a bit odd being in agreement with so much of the economics profession for once, although I have been out in front since at least 2009 when McBride of Calculated Risk and I were the only ones urging her for Chair back then.  Anyway, looking closely at this article, which appears on the surface to be favorable, I see a lot of input from pals of Summers trying to undercut her at points.

The article is by Neil Irwin and Ylan Q. Mui, entitled "Solid analytics a boon in contender to lead Fed: Vice Chair Yellen is well-versed in labor markets."  Well, so far so good and accurate to boot.  Indeed the article does point out her excellent track record in analyzing economic trends as well as her deep and excellent scholarly record in publishing about labor markets, certainly something most relevant in this slow recovery with job growth continuing to be pathetically weak.  Various prominent economists are quoted praising her, from former Fed Vice Chair Alice Rivlin (eeeeek! a woman!  does not count!) through John Williams (eeeek! her successor as SF Fed President!  does not count!) to even people one might assume might not be favorably inclined towards her due to her "dovish" rep (signaled in the article by noting "She has been a strong intellectual force within the Fed, a tough taskmaster for staff and single-minded in her desire to push down joblessness. She has been less inclined to wring her hands over the risks that the Fed's easy-money policies could create new bubbles or stoke inflation").  So, even uber-hawk Allan Meltzer offers some faint praise: "She was perceptive about the problems in the housing industry, but she did not have a major role in the crisis."  And so we begin to get this subtle dinging along with the praise.

This last gets to something important for the decisionmaking process by Obama, and here is where this article is playing its little game.  Obama has signaled that he admires Summers because of his supposed role in handling crises, and pro-Summers people have leaked all these concerns about whether or not Yellen has the "gravitas" to handle one.  Here we have Meltzer in effect saying that she may have been right (and she was a lot more right than Summers about pretty much anything they disagreed on), but the nice studious girl just never was really in charge when the shit hit the fan the way good old boy Larry was, even though he messed things up quite a bit when he was so in several places, such as Harvard.

There are some other dog whistle bleeps that are in here playing to those in the White House and nearby who will be whispering in Obama's ear on his return from Martha's Vineyard about how Larry really is better than Janet.  We get reports of her losing turf fights with Gene Sperling when she was CEA Chair under Clinton, given that "The CEA is meant to provide the president with the best advice the economics profession can offer, even when that advice is politically infeasible.  It is instead the National Economic Council, headed then and now by Gene B. Sperling, that typically weighs economic arguments against political concerns and practical realities,"  There you go, for all her Fed experience, she is just an impractical academic out of touch with political realities, and Summers pal Sperling will be pounding this message to Obama hard and clear.  Sure, in the next paragraph Yellen is defended by Laura Tyson in that is the nature of the deal with being CEA Chair, but, heck, Tyson is just another girl like Rivlin and thus obviously lacking in sufficient gravitas, donchaknow?

We are then told about how she is not quite the team player that many of us have presented her as, presumably an offset to the same charge being made about Summers.  Unlike her predecessors as Vice Chair (and current dark horse candidates for Chair) Don Kohn and Roger Ferguson, she has not played "the trusted deputy" of the Chair.  She has "acted more as an independent force within the institution" (eeeeeeek! an independent female force!). She has favored certain staff members over others, and she "has had an often tense relationship with Daniel Tarullo," the Fed governor overseeing bank regulation.  According to one official, "They both have big egos and big personalities," and Tarullo "was an Obama campaign adviser and the president's first appointment to the Fed, and he has remained close with former colleagues in the White House."  So, no doubt, while it is just fine for Larry Summers to have a big ego, a supposedly get-along type like Yellen cannot have one (although maybe this also suggests that she might just have a bit of, ahem, "gravitas"), and presumably Tarullo will be filling Sperling's ears with tales of her hubris to tell to Obama.

Finally, we have a reminder that in the end she is just another good girl who does her homework whom we should not really take seriously.  While Bernanke speaks "extemporaneously from a couple of bullet points, Yellen drafts scripts of exactly what she will say, people who have been in the room said, and reads them word for word."  Eeeeeek!  She might be as bad as that president who supposedly only can speak if he has a teleprompter to read from!

Barkley Rosser