More on the Economy
Perhaps the most notable thing about President Obama's reported choice of Jason Furman to be chairman of the Council of Economic Advisers is what it doesn't portend: change.
The widely respected Furman, currently deputy director of the National Economic Council under Gene Sperling, is less known as an academic economist than as a policy wonk closely identified with many of Obama's policies from the first term. Trained at Harvard, Furman is also a committed centrist whose selection is drawing approval from both right and left in the economic debate. "If true, that is great news. Jason is smart, knowledgeable, and sensible," Greg Mankiw, George W. Bush's former CEA chairman, blogged after Bloomberg reported the choice, which the White House has not confirmed. On the other side of the debate, Jared Bernstein, Vice President Joe Biden's former chief economist, said Furman is both a "cyclical dove" and a "structural hawk"—in other words, he strongly backed the nearly $800 billion first-term stimulus, but also believes that "ultimately over the long term you have to pay for most of what you spend."
Along with recent Cabinet choices, in particular Jacob Lew to head Treasury, Penny Pritzker at Commerce, and White House aide Michael Froman as U.S. trade representative, the selection of Furman indicates that the president is seeking to reward loyal associates from his first term and has no plans to seriously alter the economic course he has chosen, even in the face of continuing grim data on jobs. That may be, in part, because Obama appears to realize that he's unable to take a more progressive course against unwavering GOP opposition.
"We're not talking game-changer here," Bernstein said in an interview. "We're talking about an economist who's been influencing White House policy for a while, but now his influence will be more direct and more broad as well." Furman would replace Alan Krueger, a labor economist who is heading back to Princeton University.
Furman's views appear to coincide neatly with what has emerged as a slightly left-of-center brand of Obamanomics: a nurturing if sometimes critical approach to Wall Street that has paid off with a roaring stock market recovery, an occasionally bold but still measured approach to health care and seeding new industries, yet scant help for the middle class through job training or mortgage assistance. Furman, like Obama, is also a stout free-trade advocate. He was harshly criticized by progressives for a 2005 paper he wrote praising Walmart, a company that the writer George Packer, in his new book, The Unwinding, blames for "the hollowing out of the heartland." Manufacturers in the United States have come to attribute the constant downward pressure on prices and wages that has shrunk the hopes of the middle class on the so-called "Walmart" effect. Furman, by contrast, wrote that the benefit of Walmart to consumers is much greater than the harm it has brought to workers.
But Bernstein and other defenders say Furman has been unfairly stereotyped by that paper, and to little notice he proved to be a champion of putting antipoverty programs in the stimulus. "The idea is how to use empirical evidence and rigor to advance progressive causes," says Jonathan Orszag, who held Furman's current job in the Clinton administration. "Jason is one of the best in the world at that."
Some liberals simply shrugged their shoulders at the choice, saying neither Furman nor anyone else Obama chooses could make much of a difference anyway in the current environment, which is still largely dominated by Republican thinking on austerity even though the Democrats control the White House and Senate. "It's important to step back and remember that economic policy in recent years has been principally driven not by well-qualified economists with the CEA, NEC, or elsewhere in the executive branch, but instead by conservative congressional obstructionism," wrote Andrew Fieldhouse of the progressive Economic Policy Institute. "Jason Furman's appointment to the CEA will not alter the troubling reality that the United States is on an autopilot course of premature, excessive austerity and intentionally poorly designed sequestration spending cuts."
That stalled debate is summed up by the sequester, the inequalities of the economy, and a 7.7 percent unemployment rate that represents something of a grim new "normal," along with still-high long-term unemployment. The choice of Furman is highly unlikely to change any of that.