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Summers to leave White House

Returning to Harvard after helping steer economic policy

By Donovan Slack and Matt Viser
Globe Staff / September 22, 2010

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WASHINGTON — Former Harvard University president Lawrence H. Summers, the chief architect of President Obama’s federal stimulus plan and some of his other top economic initiatives, is leaving his post and returning to the university to teach by the end of the year, the White House said yesterday.

As director of the White House National Economic Council, Summers has been at the forefront of the administration’s efforts to pull the nation out of the deepest recession since the Great Depression. In addition to developing the much-criticized $787 billion stimulus package, Summers also played crucial roles in creating plans to bail out a sputtering car industry and to overhaul the nation’s health care system.

In a statement issued by the White House, Summers, 55, did not explain the reasons for his departure. He declined requests for an interview.

“I will miss working with the president and his team on the daily challenges of economic pol icy making,’’ he said in the statement. He said he was looking forward to returning to Harvard to teach and write.

Obama, in a statement, said, “I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team.’’

When Summers joined Obama’s economic team at the start of his administration, he told the president he would commit to one year and then wanted to go back to Massachusetts, since his family did not plan to relocate, according to a White House official who was not authorized to speak on the record.

After the first year, Obama asked him to stay an additional year, with the financial regulations bill still being debated and the economy staggering, according to the official.

Summers has been on leave from Harvard, which has a rule that professors lose their tenured positions after a two-year absence. If he didn’t return by January, he could lose his position at the university, the White House official said. In an interview with The New York Times, Summers confirmed that concern.

His departure from the White House comes at a critical moment for the president, both politically and economically. The administration and Democratic leaders are struggling to calm the economic fears of anxious voters, who threaten to turn the upcoming midterm elections into a referendum on Obama’s economic policies.

Despite spending hundreds of billions of dollars to prop up some industries, reorient others, and generate jobs, the administration is still dealing with an unemployment rate of nearly 10 percent.

Summers is the third key member of Obama’s economic team to depart in recent months, a sign that a shakeup may be underway. White House budget director Peter Orszag left in July and Christina D. Romer, chairwoman of the White House Council of Economic Advisers, left earlier this month.

Of the key members of his original economic team, only Treasury Secretary Timothy Geithner remains.

Political analysts said that the string of departures could help Obama make the case that he’s listening to the electorate and heading in a new direction. But it could also provide ammunition for Republicans to argue that he’s admitting his economic policies are not working.

“The political value of creating some space — and setting some people up there that congressional candidates can scapegoat a little bit — may outweigh the implicit suggestions that the Obama policies are failing,’’ said Christopher Mann, a political science professor at the University of Miami. “It indicates that the White House has determined that the risk of these folks departing before election day is less than the potential gain for having them stay.’’

Summers, who served as Treasury secretary under President Clinton, could be brusque and confrontational with those who disagreed with him. During the debate over overhauling financial regulations, he angered some liberal legislators when he pushed back against proposals to limit the size of banks. But Representative Barney Frank, who worked closely with Summers on those negotiations, had high praise for him yesterday.

“I very much enjoyed working with Larry Summers in passing the financial reform bill because his general economic expertise provided important context for the decisions we had to make,’’ Frank said in an interview.

Obama said he is not completely severing his relationship with Summers.

Summers will return to teach at Harvard alongside colleagues with whom he had appeared to make peace following the turmoil that marked his presidency. The opinionated, at times controversial, economist was forced out of academia’s most high-profile job in 2006, five years after he had been installed as Harvard president.

Summers, who alienated faculty with his autocratic management style, suggested during a speech at an academic conference in 2005 that women lacked the same “intrinsic aptitude’’ for science as men.

Summers apologized for the remarks, saying they were intended to provoke a discussion among a small group of scientists and not as a public proclamation. He resigned a year later following a faculty meeting during which professors told him they lacked confidence in his leadership.

Summers, however, continued teaching, lecturing, and writing about the problems confronting a changing global economy. In columns for the Financial Times, he predicted a recession before others did.

After a stint with a hedge fund management firm, he worked his way into Obama’s inner circle during the campaign of 2008.

With a credit and market crisis paralyzing the economy, Obama named Summers director of the National Economic Council and assistant to the president.

Summers’ colleagues at Harvard said yesterday that they were not surprised he would be returning.

“Even the people who opposed him almost all agreed that he would be a terrific professor here,’’ said Richard Zeckhauser, a professor of political economy in the Kennedy School of Government and a friend of Summers’.

Harvard officials released a statement saying the university welcomes him back to campus.

“Larry Summers is one of a number of distinguished Harvard faculty who took leave to serve the government, continuing a long tradition of public service by Harvard faculty. We look forward to his return.’’

Tracy Jan of the Globe Staff contributed to this report. Material from the Associated Press was used in this report. Donovan Slack can be reached at dslack@globe.com.