Obama's Centrist Economic Team

Weekly Standard: Pro-Free Trade And Pro-Wal-Mart Are Not Enough

(Weekly Standard)  This column was written by Cesar Conda.

---

Senator Barack Obama declared in a recent interview on the business cable channel CNBC: "Look, I am a pro-growth, free-market guy. I love the market." And Obama's economic team appears to support this claim. His main advisers, Jason Furman and Austan Goolsbee, are both centrist, pro-free traders; one is a defender of Wal-Mart, and the other is a self-described "free-market type" who has drawn praise from the likes of George Will.

If Obama wins the White House, Furman and Goolsbee are slated to be at the center of the economic policymaking universe, with Furman a likely appointee as director of the National Economic Council and Goolsbee the top candidate to be the chairman of the Council of Economic Advisers. So do these possible appointments indicate that a President Obama would move towards the center and become a "free market guy" as feared by the left or follow through with his statist campaign platform of protectionism and expansion of the regulatory state?

Although Austan Goolsbee is a professor at the University of Chicago Graduate School of Business, he is not a part of the famous "Chicago School" of such prominent free-market macro-economists as George Stigler and Milton Friedman. Rather, he's one of the young economists whose work is referred to as the "new social economics," focusing on how people behave and make decisions in their everyday lives. He has written columns for the New York Times on such topics as why Americans came to embrace reality TV and why billionaires line up to bid for professional sports franchises.

On the left-to-right spectrum, Goolsbee appears to be smack-dab in the middle. He is pro-free trade, not an alarmist on globalization, and a defender of subprime lending on the grounds that it has expanded home-ownership for minorities. But he is opposed to supply-side tax cuts--especially any further reductions in the top marginal rate--and personal retirement accounts for Social Security, and thinks the Internal Revenue Service should become the nation's largest tax preparer.

According to George Will:

Goolsbee no doubt has lots of dubious ideas--he is, after all, a Democrat--about how government can creatively fiddle with the market's allocation of wealth and opportunity. But he seems to be the sort of person--amiable, empirical and reasonable--you would want at the elbow of a Democratic president, if such there must be.

Jason Furman, the director of economic policy for the Obama campaign, was head of the Hamilton Project, a centrist, pro-trade policy research group founded by former Treasury secretary Robert Rubin. Furman can best be described as a free trader who supports a robust social insurance safety net for displaced American workers. He favors broadening the U.S. corporate tax base by lowering the corporate tax rate and limiting exemptions, à la Reagan's 1986 tax reform. Most interesting, Furman wrote a 2005 paper arguing that Wal-Mart's low prices and other policies benefit low-income consumers. On the left side of the spectrum, Furman strongly supports universal health care, opposes Social Security privatization, and supports progressive taxation.

Both Furman and Goolsbee have admirers on the right. Kevin Hassett of the American Enterprise Institute (one of John McCain's economic advisers) calls Goolsbee "an honest and honorable scholar who can be quite clever academically. He is left-leaning, but would be a voice of reason in an Obama administration." Of Furman, Hassett says: "Jason is a lot like Goolsbee, but has been more politically active. His deep well of experience will serve Obama well." Glenn Hubbard, a former chairman of the Council of Economic Advisers under President Bush, said: "Austan Goolsbee is a very talented young economist; indeed, I wish he was on my faculty at Columbia Business School (even though I disagree with his research showing a small distortionary effect of high marginal tax rates)." Hubbard went on to say: "A team of Austan and Jason gives the Obama campaign punch in economic ideas--though the statist platform of the candidate suggests they have a tough road ahead!"

With such fans, it's not surprising that Furman and Goolsbee's roles on the Obama campaign are generating quite a bit of angst on the left. Lori Wallach of Public Citizen told the Los Angeles Times: "Furman seems like a liability, given his anti-worker writings and statements about Wal-Mart, fair trade and other middle-class issues." In that same article, Marco Trbovich of the United Steelworkers said: "[Furman] is a very bright fellow, but he is an unalloyed cheerleader for the trade policies that have been very destructive to manufacturing jobs in this country." In an article in the Nation about both Furman and Goolsbee, entitled "Obama's Chicago Boys," Naomi Klein wrote: "But before Obama can purge Washington of the scourge of Friedmanism, he has some ideological housecleaning of his own to do."

But how much comfort can conservatives take from Obama having such "reasonable" economic advisers? There is certainly no question that an Obama administration is a frightening prospect for free-market advocates. This self-described "free market guy" has said he opposes the Central American Free Trade Agreement (CAFTA) and will reopen the North American Free Trade Agreement (NAFTA). He would sign legislation raising the minimum wage and ending secret balloting for workers deciding on unionization. He would require employers to pay for health insurance for their workers, mandate coverage for all children, and expand Medicaid and other government programs. He wants higher fuel-economy standards for new cars and trucks, power companies to produce some of their electricity from solar and renewable sources, and federal ethanol mandates.

Furman and Goolsbee are obviously in agreement with much of this agenda, and both have been strong advocates of progressive taxation. Goolsbee, in particular, has taken direct aim at the conservative movement's biggest economic policy achievement of the past three decades: the sharp reduction in marginal tax rates, especially the top personal income tax rate. He is a leader in the liberal onslaught against the Laffer Curve, producing research to show that income tax cuts "for high-income taxpayers likely gave windfalls to those whose incomes were already sharply rising because of broader market forces."

And, while both Furman and Goolsbee purport to believe in free trade, they seem to have no trouble working for a candidate with a pronounced and public protectionist bent. Obama's promise to reopen NAFTA alone should cause any degree of free-market economist pause. The facts about NAFTA's benefits are unassailable: Since its enactment in 1993 through 2001, U.S. employment increased from 120 million to 135 million. Jason Furman should certainly know the benefits of NAFTA inside and out; he served as a special economic assistant to President Bill Clinton, for whom the passage of NAFTA was a major political victory in 1993. That Furman and Goolsbee have suspended their belief in free trade does not bode well for how hard they would fight protectionism in an Obama White House.

The next president and his economic team will face enormous challenges--from managing the decline in the housing market to stabilizing the U.S. dollar and reducing energy prices. Furman and Goolsbee will be at the elbow of a President Obama, if there is one. To date, they have shown little appetite for fighting for free-market views and appear perfectly comfortable working for a candidate who is running on a statist platform of protectionism and bigger government.

[sanfelz]

Weekly Standard should restructure its comments to examine really large economic figures; like the number of recessions, the numbers of jobs lost and the expansion of the deficit under the Presidents Bush 41 and 43.

[eskieville1]

The Weekly Standard needs to come to grips with the fact that Milton Friedman is dead. Not only is he dead but I suspect most Americans also regard his economic theories as dead. George Bush Sr. had it right the first time when he said supply side economics is "vodoo economics".

[kaelinda]

It''s interesting to me that Obama is working both sides of the aisle - appealing in some ways to conservatives and in other ways to populists and liberals. As far as I''m concerned, reasonable policies take the good things from each side and throw the bad things out the window.

[ofbyfor1]

Better thanMcCain''s Phil Gramm, who believes that we are a nation of ''whiners'' and believes we are in a ''mental recession''.

And who works for a Swiss bank that is currently under major investigation by the Feds.

[dashortround]

As distasteful as it might seem to both the far right and the far left, a centrist approach is probably the only way to actually get get our horribly gridlocked government going again.

[ofbyfor1]

As distasteful as it might seem to both the far right and the far left, a centrist approach is probably the only way to actually get get our horribly gridlocked government going again.

Posted by DaShortRound at 02:02 AM : Aug 04, 2008

One of the most intelligent, sensible and reasonable posts I''ve seen on these boards in a long, long time!

[mt_guy]

One phrase jumped out at me... ''the benefits of NAFTA''? You''ve got to be kidding! Factories and good paying jobs here in the US have left the building. As far as China is concerned, Free Trade turned the USA into a 3rd World Country. We send our raw materials to China, they ship ''em back in finished goods form. The whole idea behind NAFTA and Free Trade was so that American goods could be sold all over the world, right?

WRONG! People in other countries do not enjoy the income levels we Americans do. They cannot afford the goods we produce here.

So the major corporations have exploited the cheap labor to be found overseas. "Sweatshops are OK" in the corporate world. Just don''t get caught - bad for PR.

I think what''s needed is some kind of incentive to corporations who employ American workers here at home. Part of what has kept us strong down through the years is a vibrant, skilled workforce. When that workforce is supported and happy, they turn out better end results. They also support the communities they live in through their savings which support the banking system, the medical community through their health care plans, their local governments through the real estate and sales taxes they pay.

Convert those $20-$25/hr. jobs to $12-$15/hr. retraining jobs and your house of financial cards comes down.

NAFTA and Free Trade - good for corporations and stockholders, bad for people in general.

The ''benefits of NAFTA''... what a joke.

[sharncedar]

when you are hated by all the people, both right and left, you are called "centrists". A better description is sell-out corporate butt-kissers.

Are you people getting it yet? Obama is a complete liar and con-man, he stands 1005 for the status quo, for the game how it is played today, and 100% against the American people. He can''t even look ordinary citizens in the eye, have you ever seem how awkward and forced are his phony photo-ops with Americans. But he gives a full, heartfelyt warm embrace to elite types and Israeli killers and French ministers and so forth.

His economic team is worse than Bush''s, and that''s saying a lot. The guy was FOR SUB-PRIME MORTAGAGES for god''s sake. Obama sold us hope but is delivering betrayal, absolute and cynical betrayal.

[lfitts1]

when you are hated by all the people, both right and left, you are called "centrists". A better description is sell-out corporate butt-kissers. Posted by SharnCedar

As distasteful as it might seem to both the far right and the far left, a centrist approach is probably the only way to actually get get our horribly gridlocked government going again.

Posted by DaShortRound

The point is that being in the center is where we and our government SHOULD be. Not on the radical right with Bush and not on the extreme left--balance in all things--when the extremes both despise you--you are probably in the right place doing a good job

[lfitts1]

Centrist"??? Is that what CBS is calling socialism?
Wanting to steal the money from shareholders of oil companies for a big government giveaway is not "centrist". What a crock.

Posted by ritewingman

Just to re-orient you to reality--O''Reilly , Hannity, Rush Limbaugh, Bush and Cheney are NOT centrists

[lfitts1]

Centrist"??? Is that what CBS is calling socialism?
Wanting to steal the money from shareholders of oil companies for a big government giveaway is not "centrist". What a crock.

Posted by ritewingman

Just to re-orient you to reality--O''Reilly , Hannity, Rush Limbaugh, Bush and Cheney are NOT centrists

[dashortround]

"If a free society cannot help the many who are poor, it cannot save the few who are rich." ~John F. Kennedy

[dashortround]

I hear SO many Republicans simply dismiss the "working poor" as being "lazy" or "un-ambitious". To Republicans they merely represent a financial drag on our government and our society.

My own experience in life tells me that this is really not true at all.

The poor have the very same hopes and dreams and ambitions that ALL Americans are known for - what they lack are the basic resources; that initial "helping hand" that will enable them to excel and become prosperous, and lift themselves out of poverty.

One of the most essential tasks of our government is to empower the poor among us to rise up into the "middle-class", and beyond.

The poor are actually our future "middle class", if only we''re willing, as a nation, to help them rise to the next level.

If not, then they truly are just a financial drag on our government and our society.

It doesn''t have to be that way. If we''re all willing to put our own money where our mouths are, to help the poor lift themselves out of poverty, we''ll all be much better off for it, in the end.

[sarahbt]

It''s a sad day when politicians throw dollars out for votes. That''s what the windfall tax rebate is all about. A thousand dollars is a world of money to many people. But it does nothing for the long term. I''m in Germany and the folks here do their dishes in the dark to save electricity. They use public transportation as often as possible. American''s need to change their way of life. If you bought an SUV to commute to work or a McMansion with a subprime loan-you deserve 100% your financial woes. Live beneath your means. We are a nation where our poor are overweight. A satalite dish at every home. You used to see cars on the road that were 20 years old-not anymore. We are a throw away society waiting for the next best Icrap to come out. The Government will take care of us when we are old so we don''t save a bit for our future. I know what it is like to be poor. Went years without a TV. Mom didn''t get a new car until she was 50yrs old. Food was donated to us and our community helped in times of need. That''s what society needs. Get out of our materialistic funk and moral degredation. What do you need to survive? A roof over your head, food on your plate, a way to get to work, a job to pay the bills, and an education for your kids so that they can live successful lives. That''s what its about.

[sarahbt]

Then again, maybe the hokey pokey is what its all about?

[ubrew12]

The Economist Magazine says:
"Between 2002 and 2006 the incomes of 99% [of Americans] rose by... 1% a year in real terms, while those of the top 1% rose by 11% a year; three-quarters of the economic gains during Mr Bush''s presidency went to that top 1%."

I''m so glad we''re not ''technically'' in a recession and that economic growth remains positive. Take out the richest 1% of Americans, however, and we''ve been in a recession for two years.

But, as Phil Gramm, McCains economic adviser, would say, ''quit whining''.

[sparks224]

"If a free society cannot help the many who are poor, it cannot save the few who are rich." ~John F. Kennedy
Posted by DaShortRound

Both you and this John F Kennedy fellow, obviously hate America.

[dashortround]

"If a free society cannot help the many who are poor, it cannot save the few who are rich." ~John F. Kennedy

Posted by DaShortRound at 02:35 PM : Aug 04, 2008


"Both you and this John F Kennedy fellow, obviously hate America."

Posted by sparks224 at 01:08 AM : Aug 05, 2008

- - - - - - - - - -

"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tossed to me,
I lift my lamp beside the golden door!"

- - - - - - - - - -

That prose is from the inscription on the plaque inside the Statue of Liberty, one of our most revered national monuments. The sentiment it expresses was, and still is, considered central to our entire nation''s concept of what "true patriotism" embodies.

Only a Republican could equate having compassion for the less fortunate here in this country with "hating America".

The arrogance and pure selfish greed of today''s average Republican is truly mind-boggling.

[whitemale08]

The problem with Republicans is that they hate the "middle class".

They prefer a 3rd World America like Sean Hannity promotes where everybody defends for themselves even if Wall Street and "rogue capitalism" devastates your manufacturing industries, even if "hedge fund" managers look around for companies like vultures to eat ''em up and spit ''em back out for profit.

It''s sickening, Republicans just simply do not care about "working America" and yet many "working class Americans" are Republicans and remain so because of race, so-called Christian values, warmongering against folks who wear turbans.

And they look simply ridiculous riding around in their SUV''s with the windows rolled down sweating like a hog and yet have a yellow ribbon pasted on the back and a flag sticking out the window pulling up to their WalMart jobs.

You guys look stupid.

[whitemale08]

The problem with Republicans is that they hate the "middle class".

They prefer a 3rd World America like Sean Hannity promotes where everybody defends for themselves even if Wall Street and "rogue capitalism" devastates your manufacturing industries, even if "hedge fund" managers look around for companies like vultures to eat ''em up and spit ''em back out for profit.

It''s sickening, Republicans just simply do not care about "working America" and yet many "working class Americans" are Republicans and remain so because of race, so-called Christian values, warmongering against folks who wear turbans.

And they look simply ridiculous riding around in their SUV''s with the windows rolled down sweating like a hog and yet have a yellow ribbon pasted on the back and a flag sticking out the window pulling up to their WalMart jobs.

You guys look stupid.