CEOs Don't Necessarily Make the Best Economic Advisers

History may be repeating itself, as economic adviser Larry Summers is heading out the door, and President Obama seems determined to replace him with a CEO, rather than another Wall Street figure.

Years ago, Summers was President Clinton's final Treasury secretary. When President George W. Bush took office in 2001, he decided to tap Paul O'Neill, the former CEO of Alcoa, for the job. That didn't work out so well, and now the cycle may be starting over.

President Obama, who has suffered a series of direct attacks from high profile CEOs such as Verizon's Ivan Seidenberg, is reviewing a number of corporate leaders to succeed Summers as director of the National Economic Council. He is reportedly considering Citi chairman Rick Parsons, former Xerox chief Anne Mulcahy, former Young & Rubicam CEO Ann Fudge, and GE CEO Jeff Immelt.

They're all smart and capable people, but bringing a CEO on board won't necessarily help the Obama administration. O'Neill, outspoken and independent-minded, turned out to be a political disaster for the Bush administration. O'Neill was fired for diverging with the Bush line on the Iraq war, and other issues. He was followed by former CSX chief John Snow, who left amid a financial scandal involving the purchase of Fannie and Freddie debt by his brokers on his behalf.

So, the record of CEOs as cabinet-level economic adviser is mixed, at best.

There are several reasons why this might be the case. The potential pool of CEOs is vast. There are nearly 9,000 publicly traded companies in the U.S., and thousands more private companies. They have different interests and needs. What's good for a company like CSX or Alcoa might not necessarily be good for the economy as a whole.

And CEOs are people who like—make that need—to be the boss. They often have a hard time taking orders, even from the president. Paul O'Neill isn't the only maverick among CEOs.

Choosing a CEO isn't going to make the administration more popular with the business community, either. They already have told the administration what they want, and unless it is willing to accept their agenda, having one of their own sitting in on cabinet meetings isn't going to placate them.

Seidenberg told the Economic Club of Washington in June that the country suffers from "an increasingly hostile environment for investment and job creation here. As I said before, it would be better to refocus public policy on creating private sector jobs." He cited a list of five Business Roundtable priorities on this issue, which include tax policies that promote capital formation and a focus on education, infrastructure, exports, and innovation and entrepreneurship.

Obama already has embraced most of these goals, with the possible exception of tax policy. But even when it comes to tax, the administration sees eye to eye with the business community on issues such as promoting R&D.

What he really needs is someone to help him figure out how to address economic problems, such as clearing the mess in the housing market, getting companies to create jobs, managing federal spending and debt, and assessing when, and if, to try another round of stimulus.

Could the right CEO help address those challenges? Sure—but not necessarily, if history is any guide.