November 8, 2011
When he addressed a group of business leaders last week on the administration’s $447 billion jobs bill, Gene Sperling sounded more like a political bulldog than one of President Obama’s chief economic advisers.
Sperling growled that Republican tactics in blocking Obama’s plan in Congress are “irresponsible and inexcusable,” and their main counterproposals all have one thing in common: “They have nothing – absolutely nothing – to do with sparking demand or job growth in the next 12 to 18 months.” Instead, he said, they intend to “sit by while our national crisis on long-term unemployment gets worse.”
White House Budget Director Jack Lew struck a similarly combative tone in a blog post on the White House web site last week when he characterized last summer’sdebt ceiling battle and GOP opposition to the jobs bill as, “partisan and ideological conflict… creating gridlock and uncertainty that can only hurt a fragile economy.”
These are not exactly the measured tones of the architects of the administration’s economic and budget blueprints. But it is certainly in keeping with the White House’s new “We Can’t Wait” strategy of largely abandoning efforts to negotiate legislative compromise with Republicans and instead promoting executive orders on the campaign trail that may help the economy around the edges. The reconstituted lineup of advisers is more likely to serve as a campaign war council than economic theorists, and their main goal is to help Obama find creative and popular ways to work around Congress.
“A lot of what the President’s doing is saying, ‘Look, we know we need to do something to make things better for the millions of Americans without work. What can we do without having to work with Congress?’” said Cecilia Rouse, a former member of Obama’s Council of Economic Advisers who left the administration in February to return to Princeton University.
When Obama took office amid the worst economic crisis of modern times, his economic brain trust was dominated by prominent economists including former Treasury Secretary Lawrence H. Summers, University of California-Berkeley economist Christina D. Romer, former Federal Reserve Chairman Paul A. Volcker and economic scholar Peter R. Orszag. That team, headed by Treasury Secretary Timothy F. Geithner, helped shape some of the most important – and highly controversial -- legislation to address the crisis and recession, including an $825 billion stimulus package, the auto industry bailout and major health care and financial reforms.
Now, saddled with a sluggish economy and high unemployment as he gears up his reelection campaign, Obama has assembled a new lineup of economic and budget advisers who are equally comfortable fighting in the political trenches as they are trying to convert economic theory to comprehensive legislative action.
Lew replaced Orszag as budget director last summer, and Sperling succeeded Summers in January. Last week, the Senate finally confirmed the nomination of Princeton economist Alan B. Krueger as the new chairman of the Council of Economic Advisers.
Krueger is a leading expert on labor and unemployment, and is certain to be a fountain of ideas for bolstering the economy absent passage of another major stimulus package. Krueger is no stranger to the Obama administration and will hit the ground running. He served as Assistant Treasury Secretary for Economic Policy and Chief Economist during the first two years of the Obama administration, and has conferred informally with officials in recent months while awaiting Senate confirmation. He replaced economist Austan Goolsbee, who left the administration to return to the University of Chicago.
Last month, Obama barnstormed across the country to roll out executive orders and proposals that had been vetted and drafted by the economic team. Those measures included cutting the maximum required payment on federal student loans from 15 percent of yearly discretionary income to 10 percent; helping struggling homeowners refinance their mortgages, and encouraging community health centers to hire at least 8,000 military veterans over the next three years. Issuing executive orders to advance a presidential agenda is one time-tested way to bypass an obstinate Congress, but the measures typically have less impact and reach than regular legislation.
“If your hands are tied and you’re trying to find a way to make things a little easier for individuals financially, especially those investing in their college education or trying to stay in their homes, executive orders seem like a sensible way to do it given the political realities,” Rouse said. Jared Bernstein, former chief economist to Vice President Biden, added that “If you can’t do major [legislation], do minor, and I’m sure the team is working very hard on anything they can do through executive order or administrative fiat.”
However, Doug Holtz-Eakin, a former Congressional Budget Office director and economic adviser to 2008 presidential campaign of Republican Sen. John McCain, said that muting internal policy debates and ideas is dangerous in a highly fragile economy. “The messaging demands are so high and jobs and economy so important, but there’s very little they [Obama’s economic team] can do about it, so they focus on defending his philosophy,” Holtz-Eakin said. “But I think he’s ignoring the substance-area experts at his own risk.”
Sperling and Lew in particular have years of experience as budget and economic deal makers and strategists in the Clinton administration as well as senior officials in Obama’s Treasury and State Department, respectively, before Sperling moved up as director of the National Economic Council and Lew became director of the Office of Management and Budget. Geithner, the quarterback of the Obama economics team and a repository for much of the administration’s institutional knowledge of the financial crisis, came close to stepping down this summer but was persuaded by the president to stay on through the 2012 election. Jason Furman, a long time economic adviser to Obama, was made Sperling’s deputy at the National Economic Council.
“Sperling and Furman are veterans of pretty much everything you can throw at them,” said Bernstein. “So you very much want guys like that around.”
Journalist Ron Suskind who wrote a controversial expose on the White House called Confidence Men: Wall Street, Washington, and the Education of a President, said Obama’s reconstructed economic team provides a good balance heading into tough economic times.
“What you’ve got… is Gene Sperling, who is the hustler, you know, who has the history of a guy who can do ‘Let’s Make a Deal,’“ Suskind told The Fiscal Times. “You’ve got Alan Krueger, who is obviously the ideas man for his expertise of jobs—of the jobs crisis and how to stimulate job growth. That’s his specialty. You’ve got Jack Lew who [has] . . . very, very strong inter-personal skills and ability to balance competing positions on economic theory and practice. . . And finally you have Tim Geithner . . . the last man standing of the first team . . . who has the institutional memory of what exactly was done, and the whys and hows of policy.”
While the faces of the economic team have changed significantly from the early days of the financial crisis, so too has the routine and meeting schedule In the lead up to the bank bailout and stimulus in 2009 it was protocol for Geithner, Summers and other top economic advisers to meet every morning for a briefing, data analysis and strategy session. During the gut-wrenching debt ceiling negotiations between the White House and congressional GOP leaders this summer, the economic team met multiple times a day with the President. But now, Obama is traveling more frequently, and the team briefs him most days by paper, Sperling said.
An administration official familiar with the operations of the economic team said, “We all work closely together and there’s no silos where you never see each other. And at the very senior level, the principal level, not only do they work well together but in some cases relationships go back a long time.”