Obama: ISO Economists

In 2008, Barack Obama brought an all-star squad of centrist and center-left economists to the White House. Now, as he confronts a critical turning point in the economy and his own political career, he can barely field a team.

Much as I hate to admit it, politicians need economists, especially in campaign season. Their most important job may be to talk their bosses out of doing things that make for terrific sound bites but turn out to be very stupid in the real world. Yet, Obama is kicking off his reelection and trying to balance demands for economic growth and deficit reduction without a single economist in a top policy position.

Obama’s initial team included such powerhouses as National Economic Council head Larry Summers and budget director Peter Orszag (a Tax Policy Center alumnus), who brought both academic chops and a wealth of Washington experience to their jobs. Christina Romer, Obama’s first Council of Economic Advisers chair, is one of the nation’s top scholars of the Great Depression (Fed Chair Ben Bernanke is another).  Romer’s successor, Austan Goolsbee, was not only a top-shelf academic economist at the University of Chicago but, more important, had earned Obama’s trust well before the president moved into the White House.  Goolsbee announced his return to Chicago this week. The others have been drifting away all year.

Today, Obama’s remaining senior economic advisers are NEC chief Gene Sperling and budget director Jack Lew, as well as Treasury Secretary Tim Geithner.  While Geithner has a master’s in economics, his real expertise was in international finance. As chairman of the New York Fed, he specialized in the care and feeding of Wall Street. 

Sperling and Lew, while wise in the ways of Washington, are both lawyers. There is nothing at all wrong with lawyers. Some of my best friends are lawyers. But lawyer brains are wired very differently from economist brains. It is something like cats and dogs. They both do what they do quite successfully, but see the world in very different ways.

In part, Obama’s dearth of economic advisers is not for lack of trying. I know a handful of top-notch academics who have turned down offers, mostly because they were unwilling to face an increasingly ugly confirmation process. Most recently, Nobel Prize winner Peter Diamond withdrew his name from nomination as a Federal Reserve Governor in the face of implacable GOP opposition.    

And, of course, plenty of good economists continue to serve the Administration in either career or mid-level political jobs. CEA’s Katharine Abraham and NEC deputy Jason Furman come to mind. But they don’t get enough face-time with the Big Guy, and it is essential for any president to hear for himself that that brilliant-sounding idea cooked up by the campaign team is doomed to fail. And, right now, Obama needs more senior economists who can deliver that unpleasant but necessary message.