UPDATE 1-Summers' successor to set tone on US economic policy
* Republicans, others urge Obama to signal centrist tilt
* White House official says decision is months away
* Volcker: Pick needs to be an honest broker (Adds Gibbs, Goolsbee quotes)
By Caren Bohan
WASHINGTON, Sept 22 (Reuters) - Republicans on Wednesday urged President Barack Obama to pick a more business-friendly successor to economic adviser Larry Summers, a move that would signal a shift to the center.
But a decision on Summer's replacement is months away, a White House official said.
A day after Summers announced plans to step down as director of the National Economic Council, speculation about his replacement focused on female candidates, many of whom would bring business expertise that some say is lacking in the Obama White House.
The administration needs someone who has a "good understanding of what it takes to create private-sector jobs," Senator Lamar Alexander, chairman of the Senate Republican Conference, told Reuters in an interview.
"One of the real problems with this administration -- it seems like they don't know how. And they don't have very many people who've ever tried."
Names such as that of former Xerox Corp. chief executive Anne Mulcahy, former Clinton administration economist Laura Tyson and NEC deputy director Diana Farrell surfaced as possible replacements.
"A decision is months away," said one White House official, adding "there are a number of names under consideration" and the list will probably continue to grow.
White House spokesman Robert Gibbs said Obama would consider "a broad group of people representing a whole host of backgrounds."
DRAMATIC CHANGE UNLIKELY
"Whether it's a businessperson or an economist or a policy person or that, I don't know...The president should pick whoever he's comfortable with," said Austan Goolsbee, chairman of the White House Council of Economic Advisers.
In a Reuters interview, Goolsbee defended Obama's economic policies over the past 18 months and said he didn't expect "any dramatic change of direction" with the turnover in the economic team.
Summers, a former Treasury secretary, had planned to stay at the White House for a short period of time and is leaving to return to his teaching job at Harvard University.
The NEC director, a role created in the Clinton administration, takes the lead in coordinating economic policy advice to the president.
Summers' departure at the end of the year will follow the Nov. 2 congressional elections. Obama's Democrats fear crushing losses amid voter frustration with the sluggish economy and 9.6 percent unemployment.
Obama would be forced to work more closely with opposition Republicans and may emphasize a more centrist message on the economy, including calls for deficit reduction, as he lays the groundwork for his re-election bid in 2012.
Although aides said Obama would miss Summers' depth of experience, the decision on a new NEC director is a chance to signal a fresh start on economic policy if Obama wants to.
Summers' resignation follows the departures of White House budget director Peter Orszag and Christina Romer, who was chair of the Council of Economic Advisers.
Also key to the direction of economic policy is the chief of staff, and Obama may have to find a replacement for that role too. Rahm Emanuel is strongly considering stepping down to run for mayor of Chicago. Whoever replaces him could have a great deal of sway in the decision on Summers' successor.
SHIFT TO THE CENTER?
With the personnel decisions he is weighing, Obama faces a choice of either going toe to toe with Republicans and facing policy gridlock or signaling a move to the center, said William Galston, a former policy adviser to President Bill Clinton.
"In recent days there have been indications that the White House is contemplating the beginnings of the second option, with a new economic approach focused on reducing the long-term budget deficit and getting private capital off the sidelines," Galston wrote in an opinion piece in the Financial Times.
"If so, the president needs a senior economic advisor who can help him execute this strategy."
Concern over the budget deficit, estimated to hit $1.47 trillion this year, has weighed on Democrats in the congressional campaigns.
The deficit will become a big post-election issue with the presidentially appointed U.S. deficit commission expected to unveil policy recommendations on Dec. 1.
"I like Larry Summers, I like him as a person, I respect his abilities, he was always a straight shooter," Republican Senator Judd Gregg said. But Gregg, a member of the deficit commission, disagreed with Obama's policy direction, saying it mirrored the "European welfare state" model.
"I don't sense that the policies have changed, so I don't think the personnel they bring is going to have much effect on policy," Gregg told Reuters.
Former Fed Chairman Paul Volcker, an outside adviser who has Obama's ear, told a conference in New York that what Obama needs most in a Summers replacement is "an honest broker," who can take in views from inside and outside the administration. (Additional reporting by Jeff Mason, Patricia Zengerle, Deborah Charles and Margaret Chadbourn in Washington and Kristina Cooke and Steve Holland in New York; Writing by Caren Bohan; Editing by Anthony Boadle) (For more on Summers' possible replacement click on [ID:nN22235682])
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