Austan Goolsbee Escapes Economic Failure
Great Recession: Austan Goolsbee is only the latest prominent White House economist to pull the ejection lever and parachute to safety. But like the others, his reputation has already crashed and burned.
Last September, Goolsbee, the Council of Economic Advisers chairman who resigned this week, got a question from ABC News:
If the Obama administration spent yet another $50 billion on infrastructure - on top of the $800 billion that had been spent already - plus targeted business tax credits for R&D, would it bring down unemployment?
Goolsbee's answer: "I don't anticipate it coming down right away."
That, of course, is not what Barack Obama promised when all that spending was being thought up by Goolsbee and his confreres. Some 4 million new jobs were supposed to appear by the end of 2010.
And according to Obama a week and a half before his January 2009 inauguration: "90% of these jobs will be created in the private sector. The remaining 10% are mainly public-sector jobs we save, like the teachers, police officers, firefighters and others who provide vital services in our communities."
At the time, Goolsbee's predecessor at CEA, Christina Romer (who flew the coop last year), issued a now-infamous chart comparing unemployment rates with and without enactment of the stimulus. Without it, unemployment would peak at about 9% in 2010. But with the stimulus, unemployment would not even reach 8% in 2009, it was promised.
Last September, at the National Press Club, it must have been humiliating for Romer to make claims such as: "That the economy remains as troubled as it is despite aggressive action reflects the fact that this has not been a normal recession."
Subscribe to the IBD Editorials Podcast According to Romer, "Just as the downturn was uncharted territory, so is its recovery." The U.S. economy was facing "numerous head winds not normally present in recoveries," she contended. "Firms aren't producing and hiring at normal levels simply because there isn't demand for a normal level of output."
What to do in such "uncharted territory"? "The only surefire ways for policymakers to substantially increase aggregate demand in the short run," according to Romer, "are for the government to spend more and tax less. In my view, we should be moving forward on both fronts," she told the Press Club crowd.
Isn't that exactly what supply-side economists favoring the 1980s defense buildup to combat the Soviets were accused of? Forget about debt and deficits and just cut taxes and let the Pentagon spend.
Of course, in the case of the Obama administration there have been none of the tax cuts for which Reagan's economic policymakers were vilified. And there has also been no recovery worth speaking of.
Instead of creating 3 million to 4 million jobs, 90% of which were to come from the private sector, the president scolds the private sector, outrageously accusing investors of sitting idly on a trillion dollars in wealth. And unemployment remains above 9%.
Goolsbee, Romer and Lawrence Summers, the departed chief of the White House National Economic Council, all have egg on their faces. They are political hacks posing as serious policymakers.
They claim that the trillions they've spent (when ObamaCare is included) made the difference "between a second Great Depression and a slow but genuine recovery," as Romer put it. In fact, they made the U.S. economy a laboratory for their great experiment in Keynesian activism, convinced that nothing could go wrong.
Now that the guinea pigs - the American people - know what has been done to them, Goolsbee follows Romer and Summers back to the safe haven of academe. Will they ever admit - even to themselves - that government spending is not the path to economic recovery?
