The renewed focus on jobs reflects a shift for Obama and his economic team, who have devoted much of their attention over the past year to the debate over how to cut the budget deficit. That objective was pushed to the forefront by tea party Republicans who prevailed in the midterm congressional elections in November. Some White House aides calculated that Obama, by embracing deficit reduction, could curry favor with the independent voters he needs to win reelection.
But as Obama negotiated a deficit-reduction part of the debt-ceiling debate this summer, surveys showed a dramatic fall in voters’ approval of his job performance. The dip began in July as debt talks heated up, and recent polls show his job approval rating in the low 40s.
Meanwhile, an array of mixed economic signals — including breathtaking losses and gains on the stock market in recent weeks — have left many Americans unsettled. The roller-coaster ride continued Monday as a sudden burst of optimism regarding the global economy sent U.S. stocks sharply higher.
Surveys show Americans to be most concerned about jobs. Several economists and officials said Monday that Krueger, if confirmed, could help in that area.
“It’s clear to everybody on the planet that there isn’t going to be another $787 billion stimulus package,” said Alan Blinder, a fellow Princeton economist. “You’re going to have to design something micro targeted and much less costly in the budgetary dollars. These are the kinds of things that labor economists, and Alan Krueger in particular, have a lot of insight on.”
Krueger has done leading research on why a minimum wage does not increase joblessness and why job growth can lag during otherwise prosperous economic time. He served as chief economist in the Treasury Department from March 2009 until November 2010 but returned to Princeton, where he’s been a professor since 1987, in order to preserve his tenure.
During his time at Treasury, Krueger advocates a number of key administration measures designed to stimulate the economy, including a tax cut for businesses that hire new workers, the “cash for clunkers” auto trade-in program, and “Build America Bonds” that allowed states and localities to raise funds for building roads and other construction projects.
Outside of labor economics, he has researched an eclectic range of subjects, including music and terrorism. In one study, he found that many terrorists hailed from middle class backgrounds, not the impoverished conditions many assumed.
Krueger replaces Austan Goolsbee, who had been a confidant of Obama since his 2004 Senate run and had served as chairman of the Council of Economic Advisers since last fall. Goolsbee was successor to Christina Romer, a macroeconomist who was an advocate for aggressive new federal spending to fuel the economic recovery.
Unlike Romer, who grew frustrated with the administration’s unwillingness to pursue major new jobs initiatives, Krueger is unlikely to be a voice of dissent.
Krueger is a center-left economist in the mold of many top economic policymakers in the Obama administration, including Goolsbee and Harvard economist Lawrence Summers, the Harvard economist who resigned as director of the National Economic Council at the start of the year.
N. Gregory Mankiw, the Harvard economist who led President George W. Bush’s Council of Economic Advisers, said Krueger was unlikely to push the White House in any new directions.
“He’s a very smart guy, and it’s always good when smart guys get important jobs,” Mankiw said. “But he has been a part of the administration, so it’s not a signal that they’re going to change things. It’s a signal of continuity, if anything.”
Obama’s nomination of Krueger would largely reconstitute the economic policy team inside the Treasury Department during the first two years of the administration. At the time, Krueger served as Treasury Secretary Timothy F. Geithner’s top economic adviser. His work overlapped with that of Gene Sperling, who was a top adviser on budget and tax issues. Should Krueger be confirmed by the Senate, he will rejoin Sperling at the White House, where he is director of the National Economic Council.
Krueger was previously confirmed by the Senate and, as a result, may have an easier time being confirmed for his new job.
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