The Magazine

Obama's Centrist Economic Team

Pro-free trade and pro-Wal-Mart are not enough.

Aug 4, 2008, Vol. 13, No. 44 • By CESAR CONDA
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Senator Barack Obama declared in a recent interview on the business cable channel CNBC: "Look, I am a pro-growth, free-market guy. I love the market." And Obama's economic team appears to support this claim. His main advisers, Jason Furman and Austan Goolsbee, are both centrist, pro-free traders; one is a defender of Wal-Mart, and the other is a self-described "free-market type" who has drawn praise from the likes of George Will.

If Obama wins the White House, Furman and Goolsbee are slated to be at the center of the economic policymaking universe, with Furman a likely appointee as director of the National Economic Council and Goolsbee the top candidate to be the chairman of the Council of Economic Advisers. So do these possible appointments indicate that a President Obama would move towards the center and become a "free market guy" as feared by the left or follow through with his statist campaign platform of protectionism and expansion of the regulatory state?

Although Austan Goolsbee is a professor at the University of Chicago Graduate School of Business, he is not a part of the famous "Chicago School" of such prominent free-market macro-economists as George Stigler and Milton Friedman. Rather, he's one of the young economists whose work is referred to as the "new social economics," focusing on how people behave and make decisions in their everyday lives. He has written columns for the New York Times on such topics as why Americans came to embrace reality TV and why billionaires line up to bid for professional sports franchises.

On the left-to-right spectrum, Goolsbee appears to be smack-dab in the middle. He is pro-free trade, not an alarmist on globalization, and a defender of subprime lending on the grounds that it has expanded home-ownership for minorities. But he is opposed to supply-side tax cuts--especially any further reductions in the top marginal rate--and personal retirement accounts for Social Security, and thinks the Internal Revenue Service should become the nation's largest tax preparer.

According to George Will:

Goolsbee no doubt has lots of dubious ideas--he is, after all, a Democrat--about how government can creatively fiddle with the market's allocation of wealth and opportunity. But he seems to be the sort of person--amiable, empirical and reasonable--you would want at the elbow of a Democratic president, if such there must be.

Jason Furman, the director of economic policy for the Obama campaign, was head of the Hamilton Project, a centrist, pro-trade policy research group founded by former Treasury secretary Robert Rubin. Furman can best be described as a free trader who supports a robust social insurance safety net for displaced American workers. He favors broadening the U.S. corporate tax base by lowering the corporate tax rate and limiting exemptions, à la Reagan's 1986 tax reform. Most interesting, Furman wrote a 2005 paper arguing that Wal-Mart's low prices and other policies benefit low-income consumers. On the left side of the spectrum, Furman strongly supports universal health care, opposes Social Security privatization, and supports progressive taxation.

Both Furman and Goolsbee have admirers on the right. Kevin Hassett of the American Enterprise Institute (one of John McCain's economic advisers) calls Goolsbee "an honest and honorable scholar who can be quite clever academically. He is left-leaning, but would be a voice of reason in an Obama administration." Of Furman, Hassett says: "Jason is a lot like Goolsbee, but has been more politically active. His deep well of experience will serve Obama well." Glenn Hubbard, a former chairman of the Council of Economic Advisers under President Bush, said: "Austan Goolsbee is a very talented young economist; indeed, I wish he was on my faculty at Columbia Business School (even though I disagree with his research showing a small distortionary effect of high marginal tax rates)." Hubbard went on to say: "A team of Austan and Jason gives the Obama campaign punch in economic ideas--though the statist platform of the candidate suggests they have a tough road ahead!"