Top White House economic adviser Lawrence H. Summers will step down at the end of this year, the administration said Tuesday, marking the departure of yet another key player on President Obama's financial team, which has struggled to right the U.S. economy.
Mr. Summers, the influential head of Mr. Obama's National Economic Council, will return to his teaching post at Harvard University, where he also served as president after a stint as Treasury secretary under President Clinton.
Mr. Summers will become the third top economic adviser to leave the White House in recent months, after the departures of Mr. Obama's budget director and chief economist. His resignation was announced as Democrats face stiff political head winds this fall with a sluggish recovery and stubbornly high nationwide unemployment.
Charged with developing overall economic policy and leading Mr. Obama's daily economic briefing, Mr. Summers helped oversee #<t-7>an expansive agenda that included the $814 billion economic stimulus bill and an overhaul of the rules that regulate the nation's financial firms in the wake of the 2008 global financial meltdown.
Liberal activists, who accused the veteran economic adviser of being too close to Wall Street, applauded news that he was leaving.
"This is a big victory for anyone who voted for change in 2008, only to see Summers work from the inside to water down Wall Street reform, block President Obama's promise to protect 'Net neutrality,' and urge other pro-corporate positions," said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee.
"While we feel bad for Harvard students and faculty who have to deal with Summers again, Harvard's loss is America's gain. When President Obama fills this important economic position, Americans need him to appoint a champion for regular working folks, not Wall Street tycoons," she said.
Ms. Taylor mentioned as one possible replacement liberal favorite Elizabeth Warren, a Harvard economist just named by Mr. Obama to oversee the formation of the new federal consumer finance regulatory agency.
But Mr. Obama is also under fire from leading business groups and conservatives, who say that the administration has taken an anti-business line on a number of issues, from health care to climate change.
A report by Bloomberg News citing unnamed officials said the White House is mulling a corporate executive to replace Mr. Summers in a bid to combat that anti-business charge. Among others being mentioned as successors: Laura Tyson, a former economic adviser to Mr. Clinton; Jason Furman and Diana Farrell, deputies to Mr. Summers; and corporate executives Jeffrey Immelt of General Electric and Richard Parsons of Citigroup.
On Tuesday, the president hailed Mr. Summers for his service "at a time of great peril."
"Over the past two years, he has helped guide us from the depths of the worst recession since the 1930s to renewed growth. And while we have much work ahead to repair the damage done by the recession, we are on a better path, thanks in no small measure to Larry's wise counsel," Mr. Obama said.
A brilliant, but caustic economist, Mr. Summers was one of the youngest tenured professors in the history of Harvard and held top economic posts throughout the Clinton administration. But his controversial tenure as president of Harvard ended abruptly in 2006 after a faculty vote of no-confidence. There were also reports of clashes between Mr. Summers and other members of Mr. Obama's economic team.
Mr. Summers, 55, said in a statement he was "looking forward to returning to Harvard to teach and write."
He departs Washington as polls show voter anxiety over the economy and skepticism of Mr. Obama's economic policies remain high. The administration's woes include a stubbornly high jobless rate, an unfavorable political playing field heading into the midterm elections, and the rise of the "tea party" movement angry over government spending, deficits and corporate bailouts.
Earlier this month, a CBS-New York Times survey found 41 percent of adults approve of Mr. Obama's handling of the economy; 51 percent said they disapproved. Six in 10 Americans said the president has not made progress in dealing with the economy he inherited.
Republicans on Tuesday appeared to hold their fire on Mr. Summers personally, but expressed hope that the personnel change might produce policy shifts as well, notably an end to White House opposition to an extension of Bush-era tax cuts for all taxpayers, including the highest tax brackets.
"We hope this will be followed by an announcement that the White House is ready to work with Republicans to cut spending and stop the president's tax hike," said Michael Steel, a spokesman for House Minority Leader John A. Boehner. "Until that happens, the White House is not focused on the No. 1 issue on the minds of the American people: jobs."
Mr. Summers is only the latest economic adviser to depart the White House. Christina Romer, the former head of the Council of Economic Advisers, left earlier this month. Former Office of Management and Budget Director Peter R. Orszag was the first member of Mr. Obama's Cabinet to step down when he left in late July.
Mr. Obama recently tapped CEA economist Austan Goolsbee to replace Ms. Romer, while the Senate is making progress on the confirmation of Jacob Lew, nominated to replace Mr. Orszag. The Homeland Security and Governmental Affairs Committee unanimously signed off on his nomination Tuesday.
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