The White House is Stuffed With People Who are Clueless About Economics [View all]

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http://www.alternet.org/economy/obama-and-austerity



I am a strong supporter of Janet Yellen and believe her support for the fiscal and monetary policies best designed to produce a stronger, prompter recovery from the Great Recession makes her the superior replacement for Ben Bernanke. The criticism of Larry Summers’ position on fiscal stimulus, however, was generally inaccurate. Within the Obama/Biden administration, the best known economists (Summers, Christina Romer, and Jared Bernstein) proved dramatically better economists than did the non-economists who eventually came to dominate Obama’s economic policies (Timothy Geithner, Jacob Lew, and William Daley). Summers, Romer, and Bernstein were strong voices in favor of fiscal stimulus. Summers deserves some additional praise because he had to break from his mentor’s (Bob Rubin’s) pro-austerity straightjacket to reach his anti-austerian position.

Obama’s lead non-economists were austerians who denigrated fiscal stimulus, were terrified by the deficits, and eager to cut the safety net. Over time, they became Obama’s dominant economic advisors even as their predictions consistently proved false. Obama supported them because he shared their dogmas. As I explained in a recent column, Obama’s six senior economic advisors are unreconstructed Rubinites who share the President’s economic leanings.

The willingness of Summers, Romer, and Bernstein to oppose the President's leanings reflects well on their integrity. The Obama/Biden administration, of course, has failed to appoint prominent economists as successors to Summers, Romer, and Bernstein who are willing to oppose vigorously Obama’s pro-austerian dogmas.

Geithner, Lew, and Daley championed what Obama hopes to be his “legacy” in the history books – the Grand Bargain (sic, Betrayal) that would inflict even greater austerity on the Nation and begin the process of making massive cuts in the safety net. Had the four horsemen of austerity succeeded in July 2011 in reaching the Grand Betrayal with the Republicans they would have pushed our Nation back into recession and made Obama a one-term president. Fortunately for the Nation, the Tea Party Republicans’ demands proved so extreme that Obama could not get the Grand Betrayal finalized in July 2011.