Who's Afraid of Larry Summers?

Contrary to what I wrote here, President-elect Obama is apparently not shying away from former Treasury Secretary Larry Summers, despite his controversial return to academia after the end of the Clinton Administration.

Obama will reportedly name Summers to head up something which I've always considered a strange animal: the National Economic Council (NEC).

That Council was created at the beginning of Clinton's presidency. The sales pitch was that we've had a National Security Council (NSC) since 1947, so we should give equal attention to the domestic side of things. Therefore, the NSC should have a domestic counterpart, that being the NEC.

When Clinton took office in 1993, there were heady thoughts about a New World Order, following the downfall of the Marxist-Leninist regimes in Europe. Therefore, many people thought that domestic issues should have greater prominence. Later in Clinton's time in office, and, of course, during that of his successor, George W. Bush, it became clear how central foreign policy still is, among national issues.

Be all of that as it may, my question about the NEC has to do with the fact that presidents already have a Council of Economic Advisers (CEA). That group was created by the Employment Act of 1946. What does the NEC add, that the CEA wasn't already doing, or could have done?

When Greg Mankiw (now a teacher/blogger) headed CEA in the George W. Bush Administration, he addressed that question in an online forum:

Steve Friedman, the Chair of the National Economic Council, was a college wrestler so thankfully it never gets down to physical fights. The NEC is the coordinating body for economic policy. By contrast, the CEA is staffed with PhD economists and serves as policy analysts. The two organizations work quite closely together and are -- to use the jargon of economics -- complements rather than substitutes. I start each day by seeing Steve Friedman at a 7:30am senior staff meeting where we coordinate our activities. Our two staffs work closely together on all issues of economic policy. The CEA also works with the National Security Council on international economic policy issues and with the Domestic Policy Council on important domestic issues such as education.

So the NEC are doers while the CEA are thinkers? I suppose. But Mankiw's remark about wrestling hints at some overlap between the two organizations' responsibilities.