New Obama Economic Adviser Focused on Jobs, But Will Agenda Change?

BY Murrey Jacobson  August 29, 2011 at 8:02 PM EDT

President Obama announces Alan Krueger as a nominee to lead the White House Council of Economic Advisers; Photo by Andrew Harrer/Bloomberg via Getty Images

President Obama announces Alan Krueger as a nominee to lead the White House Council of Economic Advisers; Photo by Andrew Harrer/Bloomberg via Getty Images

In light of President Obama’s selection Monday of Princeton economist Alan Krueger as the new head of the Council of Economic Advisers, there were questions throughout policy and economic circles about just what kind of message the president is sending with his new nominee.

The quick answer we heard from an initial culling of online reading and calls was this: If confirmed, the president is getting a top-notch labor economist who would almost assuredly favor new government action to help bring down the high unemployment rate. But his nomination does not necessarily signal a major shift left at a time when many of the president’s Democratic allies would like to see him propose a new round of stimulus and job creation.

“I think he’ll fit in well, I’m very pleased with the appointment,” said Larry Mishel, the president of the labor-oriented Economic Policy Institute who’s known Krueger for decades. “I don’t think one should look at it as any kind of repositioning by the administration. The president sets the policy and the political people dominate.”

“It’s a way of saying, ‘Gee, I want someone whose deep expertise involves labor markets and jobs’” at a moment when all eyes are on the weak jobs picture, said Rob Shapiro, a former undersecretary of the Commerce Department and now president of Sonecon, an economic advisory firm. “He’s a respected economist who is not an ideological partisan.”

Moreover, says Shapiro, the bottom line for the CEA is that it’s “not that partisan. You have to give unvarnished economic advice in that job. It’s a very different position than that of the director of the National Economic Council” (helmed initially in the Obama administration by Larry Summers who was well known for his advice and for taking strong positions).

Krueger is well known for his labor work at Princeton (he’s been on the faculty since the late ’80s), including papers showing that raising the minimum wage doesn’t necessarily lead to less hiring and for his research on globalization as well as the impact of social insurance programs. In government, he served as chief economist for the Labor Department during the Clinton administration. Most recently, he served as an assistant secretary at the Treasury Department to President Obama, where he worked on jobs programs and helped push the “Cash for Clunkers” program at the height of the auto crisis, Shapiro said.

If confirmed by the Senate, Krueger, who returned to Princeton last year, would replace Austan Goolsbee. Goolsbee, who knew Obama from his days in Chicago, left the CEA to go back to the University of Chicago earlier this month.

His nomination also drew praise from conservative economists, such as Harvard’s Martin Feldstein who told David Wessel of the Wall Street Journal:

His experience at the Treasury will give him a running start in his new job. Alan is an expert in labor-market problems, taxation and the economics of terrorism. I hope the president listens to him.

Greg Mankiw, also of Harvard, described Krueger to CNBC as a “very data-driven” economist who’s “distinctly left of center. He’s very much in the Obama mold of getting solid mainstream but left-of-center economists in that job…But if you look at him as a presidential adviser, he’s highly qualified, an accomplished academic. He should sail through Congress.”

The appointment comes just about a week before the president is set to deliver a major speech on jobs and the economy. For their part, conservative economists and politicians say President Obama isn’t willing to support bigger tax cuts and a true overhaul of the tax code that they say say would lead to more economic growth and job creation.

But those looking for a more aggressive approach from President Obama said they don’t expect Krueger to change the overall tone appreciably.

“I can’t imagine the president giving a jobs speech that lays out what is truly needed,” Mishel told us. “Their political strategy locks them in. Their strategy is, ‘We don’t propose things we can’t win’ and ‘We don’t draw lines in the sand and pick fights.’ Once you establish those modus operandi, you’re not inspiring and you’re not leading.”

Krueger’s own recent analyses of the jobs situation and questions surrounding unemployment benefits are worth checking out.

Both the Huffington Post and Bloomberg take note of how Krueger is more focused on a different statistic: the employment-to-population ratio. The Los Angeles Times examines his work on unemployment insurance, a question that’s sure to surface between now and the end of the year.

Our economics correspondent Paul Solman knows Krueger and has looked at his research over the years. Paul will have his own thoughts later this week. But in the meantime, you can find some of Paul’s past conversations with him including this one during the brighter days of 1999 when unemployment was much lower but young men were still facing their own troubles in the job market.