Former Obama economist disputes notion of chaotic White House

In this photograph from CBS's "Face the Nation", then President-elect Barack Obama's economic advisor Austan Goolsbee appears in Washington Nov. 23, 2008.

President Obama's former chief economist says allegations in a new book that dissension was the order of the day among economic policymakers in the early days of the Obama administration bears no resemblance to reality.

Journalist Ron Suskind writes in a book released Tuesday that Mr. Obama was ill-served by his economic advisers in the early days of the White House, even alleging that Treasury Secretary Timothy Geithner ignored a request to come up with a plan to dissolve a struggling Citigroup.

"I haven't read this book, but to borrow a phrase, I lived the reality. And the reports I've read about this book bear no resemblance to the reality we lived together. No resemblance," Austan Goolsbee, who served on the White House Council of Economic Advisers from January 2009 until last month, said on CBS' The Early Show. He was chair from September 2010 through August 2011.

The book, Confidence Men: Wall Street, Washington and The Education of a President, covers the first two years of the Obama administration but does not include events later than January 2011.

"I think that is just factually wrong," Goolsbee said of the Citigroup charge, "the president didn't give the order, 'Go dissolve Citigroup' and then the Treasury said no."

Goolsbee recounted the well-publicized "stress tests" on the 19 largest banks the administration conducted in its early days, noting that "nobody was talking about dissolving anyone before the stress test is done. You had to have the numbers so that there wouldn't be a run on every other bank."

Goolsbee, who has since returned to academic life at the University of Chicago, said the White House forecast of 9 percent unemployment in 2012 may be too pessimistic.

"I'm not sure that the general forecasts are an unemployment rate as high as you say. But it's clearly going to be too high," Goolsbee said when asked about 9 percent unemployment next year by Rebecca Jarvis.

The White House Office of Management and Budget and the CEA earlier this month released their mid-year forecasts for economic growth and and unemployment, predicting 2011 will close with an unemployment rate around 9.1 percent. The official White House forecast also predicted next year's rate would average around 9 percent and 2013 would average around 8.5 percent.

Administrations often present worst case scenarios in their forecasts so the actual figures appear better than expected, though the Obama White House had earlier predicted unemployment would already be lower below 8 percent. The Labor Department said this month that the unemployment rate in August was 9.1 percent.

  • Corbett Daly On Twitter» Deputy Politics Editor Corbett B. Daly is based in Washington. He has worked at Reuters, Thomson Financial News and CBS MarketWatch.