It's too early to say for sure why Larry Summers decided to take himself off President Obama's list of possible contenders for Fed chair. He seems to have cut some sort of implicit deal with Obama years ago: He'd take a position that was beneath him, and when Ben Bernanke's term was up, Summers would easily be nominated. And not without warrant: Summers has all the right credentials.
It turns out that history has saddled with him several of the wrong credentials, too. Over time, and not too fairly, he's been blamed by a lot of powerful people for tilting Obama recovery plan toward the financial sector, and for fighting other appointments of more liberally inclined economists to other administration posts. But Obama had his back. (The recovery was always Obama's, and the books we've consumed so far suggest that Obama usually understood exactly the implications of some of the very complex technical decisions that his economists had to make.)
The proximate cause of his withdrawal is that the Senate confirmation hearing he would face would be turned into a review of the past, rather than focus on his ideas for the present. It would be "acrimonious," Summers acknowledged, which is putting it lightly. Quite simply, he'd face fire from both Democrats and Republicans, and at a time when the Obama administration is still struggling to convince businesses and consumers that the economy is recovering, all that heat would counter that message. I think such a review of past policy would be interesting and productive, but the White House obviously doesn't share my views.
As POLITICO noted, a number of Democratic senators are circling on the anti-Summers bandwagon and have elections in 2014. The presence of an absolutely qualified and more politically palatable alternative, Janet Yellen, made their decision easier. Yellen will face fire from Republicans, and partisan fire, which Democratic senators will relish and gain momentum from. Our politics has taken a distinctively populist turn, even if only in tone, and Yellen better fits the moment. It is extraordinary that liberal pressure groups have exerted influence on the Fed chair process, but indeed they have. And perhaps it's a good thing: Not since Paul Volcker has the position been at the center of the debate about the way forward.
Summers is really smart. He understands this. He thinks it's bullshit. But he's not going to stand in the way of history.