Here is what I know, or what I think I know, about President Obama’s pick of Austan Goolsbee to be the new head of his Council of Economic Advisers:
1. Don’t expect him to recommend any big tax cuts. Goolsbee is extremely skeptical of supply-side tax arguments, calling the Laffer Curve a “fleeting figment of economic imagination.” Indeed, he may have influenced Obama himself, who in his 2008 book, “The Audacity of Hope,” says he doesn’t buy the theory that the Reagan tax cuts changed investment or labor incentives. He does, however, think it would not be a bad idea to lower corporate tax rates if there were also fewer credits and deductions.
2. Unions won’t like the pick. Recall that during the 2008 campaign, Goolsbee was rumored to have whispered to Canadian officials that Candidate Obama had no intention of reopening the North American Free Trade Agreement. In fact, Goolsbee will likely be another pro-trade voice in the administration. He was also against the Chrysler bailout, to the displeasure of the UAW.
3. He thinks “creative destruction” is generally good for America. As he wrote in 2007:
Perhaps the greater amount of uncertainty and churn in the world economy in the 1990s is the new norm. Perhaps the 21st century will continually favor those who adjust best to changes. … ‘But that is, of course, the paradox of the American position. We hate experiencing major adjustments and industry transformations that force people to look for new jobs. That experience has made many skeptical about the future of the United States in the world economy. Yet the evidence seems to show that for all our dissatisfaction, we are the most flexible economy around and may be best poised to take advantage of the coming changes on a global scale precisely because we are so good at adjusting.
4. Wall Street probably isn’t a fan, either. When Goolsbee won the 2009 “DC’s Funniest Celebrity” contest, he got a big laugh when he called the big banks “ingrateful bastards” who “bankrupted your gradma.”
5. His promotion is one more reason for Larry Summers to leave at year end. The famed Goolsbee wit may be lost on Summers, the director of National Economic Council. The two notoriously clashed over whether to bail out Chrysler (Summers pro, Goolsbee con), with Summers eventually trying to block Goolsbee’s access to the president — as he also did with Goolsbee’s now-predecessor, Christina Romer.
6. His selection could be a sign of Obama moving to the center in 2011. Resignations are allowing Obama to gradually reshape his economic team. In addition to Goolsbee, he will have a new budget chief in deficit hawk Jack Lew, assuming U.S. Senate confirmation. If Obama plans on spending the rest of his term seeking deals with a likely more heavily Republican Congress, these two picks make a good start.
7. He will say at least one thing that will make Robert Gibbs wince. During Goolsbee’s famous comedy bit, he joked that the White House took its ideas from the “old textbooks, Karl Marx and Trotsky.” Or maybe Goolsbee’s old research will accomplish the trick, such as this paper which says R&D tax credits, like the one Obama wants to permanently extend, mostly just raises the wages of scientists.
Me: All that being said, the personable Goolsbee is about the best pick Obama could have made from the job given the center-left pool of potential candidates.