Time for some perspective on Gary Cohn.
This Goldman Sachs alum’s departure as a White House adviser, while less than ideal, might not mark as significant a shift in policy as the hullabaloo suggests. The role he held, director of the National Economic Council, is not especially strong institutionally. Did the man himself make a difference?
Let’s first look at the position he vacates. People run the NEC for, on average, about two years. Cohn was in the seat for less time than his predecessors, but not dramatically less. The job itself has waxed and waned. It was created by President Bill Clinton to play roughly the same role for economics as the national security adviser plays for foreign affairs: That is, to coordinate advice to the president from a number of overlapping and sometimes competing agencies.
But it’s never had the same cachet. Without Robert E. Rubin as its first director, the National Economic Council might have folded pretty quickly. Rubin’s heirs and successors have been a mixed bag. The director of the National Economic Council is sometimes shorthanded as “chief economic adviser.” This obscures more than illuminates. It really depends on the person. Rubin’s influence was great; Larry Summers’ role was significant. On the other hand, did anyone in Washington during President George W. Bush’s second term doubt that Treasury Secretary Hank Paulson called the shots? (Allan Hubbard and Keith Hennessey were the NEC directors then.)
By some accounts, Cohn was relatively close to the president, for a moderate. But that can be fleeting, especially so in this administration, where notions seem to come from Fox News. Resignation chatter was in the air even last August, when Cohn critiqued President Donald Trump’s shameful response to the violence of neo-Nazis in Virginia.
Let’s look at policy. Cohn is credited with helping steer huge corporate tax cuts into law. With much policy outsourced to the Congressional GOP, this might not have been as heavy a lift as imagined. Tax reductions don’t represent a departure from the governing party’s orthodoxy. Support for corporate tax cuts was never going to be a defining position for an NEC chairman in this White House.
Investors have taken a dim view of Cohn’s resignation because it is seen as a win for trade protectionists and immigration tough guys. That may be true. If it is, the nation is poorer for it.
Here again, some perspective could be missing. It wasn’t that long ago when protectionists were seen to be in retreat. Nobody heard much from trade adviser Peter Navarro for a while, though he is back in the spotlight now. Trump didn’t label China a currency manipulator, and NAFTA is being renegotiated rather than ripped up, though it’s also true those talks aren’t moving quickly. And, as of now, there’s no trade war with China. (My Bloomberg News colleagues Andrew Mayeda and Jennifer Jacobs report the administration is mulling broad steps against China.)
Cohn, a former president of Goldman Sachs Group Inc., was always an unlikely person to be enthusiastic about a trade conflict with China. He probably understood global economic and financial linkages more than most in this crowd. And we may never know the counter-factual. What truly bad things did Cohn prevent while in the Trump administration?
The man is gone, but the policy battles will remain. More important, the underlying nature of the administration is unlikely to change. Nobody really has influence for long, the rise and fall depending on the president’s whim of the moment. We should all wish for a great person to replace Cohn.
Even if the president makes a great choice, the next NEC director may not be around for long. History suggests not much more than two years. Enough time to rise and fall and rise and . . .
Daniel Moss writes and edits articles on economics for Bloomberg View. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.