Peter Diamond for Chief Economic Adviser

June 8, 2011
45 Views

Austan Goolsbee, who’s been President Obama’s chief economic adviser since he entered the Senate in 2004, is returning to the University of Chicago. As chairman of the Council of Economic Advisers, he’s been an able spokesperson for the administration’s desperation moves to save the economy from entering a second great depression. And while his cheerleading for long-term investments in education and infrastructure makes sense, it’s not exactly a message that provides immediate hope for the long-term jobless, who increasingly make up the 9.1 percent of Americans who are unemployed.

Austan Goolsbee, who’s been President Obama’s chief economic adviser since he entered the Senate in 2004, is returning to the University of Chicago. As chairman of the Council of Economic Advisers, he’s been an able spokesperson for the administration’s desperation moves to save the economy from entering a second great depression. And while his cheerleading for long-term investments in education and infrastructure makes sense, it’s not exactly a message that provides immediate hope for the long-term jobless, who increasingly make up the 9.1 percent of Americans who are unemployed.

Given his close relationship with Obama, there’s little reason to doubt the given reason for Goolsbee’s departure. Unless he returns to the U of C this fall, he loses his tenured position. That’s a message the jobless can understand.

So who should Obama pick now? The job may not have the influence it once did (think of Martin Feldstein under President Reagan, who brought young luminaries like Larry Summers and Paul Krugman into the White House). But in the the current political and economic environment, the pick could send an important message.

Why not choose Peter Diamond? Earlier this week, he withdrew his name from consideration for a spot on the Federal Reserve Board after Republicans refused to consider his nomination, claiming an economist whose Nobel Prize for insights into the relationship between monetary policy and employment was not qualified to serve on the Fed.

Let’s see. What message would choosing choosing Diamond send? It would be a stick in the eye to Republicans, and especially Alabaman Sen. Richard Shelby, whose love affair with the big banks from his seat on the Senate Banking Committee knows no limits. It would be a boost to Fed chairman Ben Bernanke, who today in a speech in Atlanta made his strongest statement yet that the short-term budget cutting fever now raging in Washington threatens to short-circuit the recovery. And it would be a signal to the business community that says, “Hey, look, I’m dealing with a pack of assholes here. If you want to see your sales and profits rise over the next four quarters and not have the country sink into a double-dip recession, you’d better start spending and hiring, because the cavalry is led by a bunch of Custers and they’re riding off in the wrong direction.”

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