Goolsbee bails on next Recovery Summer

After just eight months as the chair of Barack Obama’s Council of Economic Advisers, Austan Goolsbee has had enough.  Last night, Goolsbee announced his resignation, ostensibly to protect his tenure at the University of Chicago:

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Austan Goolsbee, one of President Obama’s most trusted economic advisers, said Monday night that he would resign, marking the latest departure from the president’s economic team at a time when the nation’s jobs recovery is slowing.

Goolsbee, chairman of the Council of Economic Advisers since September, is leaving to preserve his tenured professorship at the University of Chicago. Goolsbee stopped teaching at the university in 2007, when he began to advise Obama’s presidential campaign. The school rarely allows professors to take more than two years of leave.

His departure comes as Obama confronts an increasingly tepid economic recovery. Goolsbee, who is regarded as one of the administration’s most effective speakers on economic policy given his background as a star lecturer, spent Friday answering questions about the unexpected news that the economy added only 54,000 jobs in May as the unemployment rate inched back up to 9.1 percent.

According to the Post, Goolsbee has pressed for more of a private-sector approach to economic policy after the departure of Christina Romer, who spearheaded the Keynesian spending spree that Obama promised would keep unemployment under 8%.  Romer, coincidentally, left the administration last year to also return to academia at the University of California at Berkeley.  Yesterday, Romer insisted that what the US needed was another hair-of-the-dog intervention:

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President Obama’s former top economic adviser is jumping on Friday’s weak jobs numbers to make the case that the economy needs a much bigger boost from Washington than it’s getting.

“The May employment report is further evidence that the US economy needs additional help,” Christina Romer (pictured), who stepped down last fall as chair of the White House Council of Economic Advisors, told The Lookout via email. …

Romer, who now teaches at the University of California, Berkeley, also noted anemic first-quarter growth and a slowdown in manufacturing activity as evidence that “the economy is struggling.”

What should Washington be doing? Romer called for additional fiscal stimulus, as part of a package that reduces the deficit over the long term. That spending, she said, should take the form of a cut in the employer side of the payroll tax–an idea with bipartisan appeal–as well as more aid to state and local governments. She also supports infrastructure spending of the kind President Obama has proposed.

Well, considering how well Romer did the first time, why shouldn’t we take her advice again?  Romer insisted that a $775 billion stimulus would keep joblessness below 8%, which we have yet to see under her policy.  Even more to the point, Romer’s prediction was that a lack of Keynesian intervention would have produced a jobless rate today of …about 8.2%, almost a full point below what we actually have now.  The blog Michael’s Comments adjusted Romer’s original chart when she resigned to show the actual results and the new jobless rate projections, which we’re now exceeding again:

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Looking at the data produced from following Romer’s advice the first time around, she’s either incompetent at predicting real-world outcomes entirely or we should have taken her Plan B and kept the government interventions on the shelf.  Either way, Romer and the Obamanomics she helped launch have absolutely zero credibility — and that goes for Goolsbee as well.

Obama has tried putting an academic in charge who believed in public management of private markets, and then an academic who leaned a little more towards private management of private markets.  Maybe he should dump the academics and start hiring people who actually have long track records in creating and managing wealth in the private sector to craft economic policies that will create real growth, rather than gimmicky Cash for Clunkers interventions.

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Jazz Shaw 9:20 AM | April 19, 2024
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