WASHINGTON (Reuters) - The departure of economic adviser Larry Summers opens the way for President Barack Obama to shake up leadership of his economic team and show he is taking seriously growing public frustration over the sluggish economic recovery.
Whoever replaces Summers will have policy options constrained by a record $1.47 trillion budget deficit and the possible Democratic loss of control of the House of Representatives in November 2 congressional elections.
* With slow economic growth and nearly double-digit unemployment the central issues in the elections, Summers’ exit continues the overhaul of Obama’s economic team, after White House budget director Peter Orszag and top White House economist Christina Romer departed recently.
Obama’s team had been widely criticized for overly optimistic forecasts about an economy that has not gathered enough steam to erode stubbornly high unemployment.
Word of Summers’ departure followed a town hall meeting on Monday where Obama came face-to-face with supporters disillusioned with his economic recovery efforts.
* The risk for Obama is that the loss of another of his top economists could look like disarray in his inner circle. The president and his aides are struggling with balancing the need to boost economic growth in the short term with a credible long-term plan to bring down the deficit.
* Possible successors include Laura Tyson, a former top economic adviser in the Clinton administration, and Vice President Joe Biden’s chief economist Jared Bernstein. If Obama looks to the business community, one possibility could be Richard Parsons, chairman of Citigroup, who is close to presidential adviser and confidant Valerie Jarrett.
* Replacing Summers, an academic, with a well-known corporate executive could help defuse the persistent notion that Obama is hostile to business. His administration has also been criticized because none of his closest advisers have a practical management background at that level.
* Summers, known for his abrasive style, has not been the best communicator of the administration’s economic policies. His departure would allow Obama to bring in a new public face for his economic agenda.
* The White House gave no immediate word on who was under consideration for the post, but whoever is eventually chosen will not be subject to Senate confirmation, a process that has stalled many of Obama’s nominees for top jobs because of Republican blocking tactics.
* Summers’ departure could solidify Treasury Secretary Timothy Geithner’s position as Obama’s chief economic policy maker. Geithner, one of the key architects of the bailout of Wall Street, has weathered criticism for his stewardship of the economy and repeated calls by some lawmakers to step down.
Reporting by Matt Spetalnick, Patricia Zengerle, Alister Bull and Ross Colvin; Editing by Eric Walsh