Economists love Alan Krueger: Soon after President Obama tapped him on Monday to lead the White House Council of Economic Advisers, the Princeton labor economist was basking in praise from liberal and conservative counterparts alike, who called him “super smart”, rigorous, data-driven, policy experienced, and, in the words of the University of Pennsylvania’s Justin Wolfers, “a terrific guy.”
Krueger’s appointment will strengthen Obama’s much-depleted economic team, but don’t expect him to radically shake up the administration’s approach to job creation. In truth, his success in the job—provided he wins Senate confirmation—doesn’t figure to hinge on any particular policy proposal, or even a suite of them, that he might dream up.
It will depend instead on Krueger’s ability to focus Obama’s efforts, in Congress and in talking to the country, on a relentless campaign to address the most important economic issue facing America right now: sky-high unemployment.
The most encouraging thing about Krueger’s selection is that few economists in the country are as focused as he is on that problem.
Obama is preparing a long-awaited jobs speech next week, having promised to crank out economic proposals until every American who wants to work, can. There’s no shortage of ideas for what the president could announce (though there are some areas he must hit if he really wants to dent the unemployment rate—chiefly, treating the still-horribly-sick housing market). There’s also little indication that Krueger would push Obama to embrace anything really different from what we’ve seen from the president thus far.
Krueger is a familiar voice in Obama’s policy world, having only recently left his post as the Treasury Department’s top economist. In addition, his academic work and writings in the popular press—well-detailed here by The Washington Post’s Brad Plumer—show considerable overlap with many of Obama’s existing economic plans. That includes support for extending the current payroll tax cut, for eliminating tax breaks for oil companies, and for employing budgetary “triggers” to force Congress to reduce the federal deficit.
“Triggers,” of course, were included in the deal Obama cut with Congress early this month to resolve an impasse over raising the federal borrowing limit. The president shows no sign of backing off his calls for eliminating the oil breaks and keeping the payroll cut. Obama has trotted out a familiar set of economic plans for the better part of a year now, including spending big on infrastructure, reforming the patent process and taking modest steps to reduce the deficit.
What Obama hasn’t done is sell America on his unflagging belief that unemployment is too high, and has been for too long, and that policymakers must do whatever they can to bring it down—or risk permanent damage to the economy.
Krueger, on the other hand, has used his research and his writings to trumpet the dangers of protracted high unemployment. He released a paper in January surveying 6,000 unemployed workers and finding the longer they were out of a job, the more discouraged they became in looking for one.
In a Bloomberg op-ed this spring, he warned “the prospect of finding a job after looking for two years is small, and it probably won’t improve much even if the labor market continues to heal” and that due to discouraged workers dropping out of the labor force, “we still will have a serious joblessness problem even as the unemployment rate falls.”
Americans know how serious the joblessness problem is now. Obama’s challenge is to convince them he understands, and to prod Congress to do something about it. He needs to show the country a clear vision for how he’ll bring down unemployment—something as easily articulated as Republicans’ message that to create jobs, you must shrink government.
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