Obama nominates Alan Krueger to lead economic council

Reporting from Washington —  President Obama is moving to install labor specialist Alan Krueger as chairman of his Council of Economic Advisors in an effort to bolster the depleted White House economic team as it girds for a political campaign that’s expected to focus on jobs and growth.

In nominating Krueger, Obama picked a highly respected specialist in employment and the workforce who served as chief economist at the Treasury Department in the first two years of the Obama administration. During that time, Krueger, 50, worked on tax incentives to encourage employment and on programs that sparked auto purchases and municipal building projects — the kinds of plans Obama is expected to unveil in coming weeks to spur job creation.

Although Krueger would clearly add weight to an economic team that has been hit by a raft of departures, he is relatively unknown and his appointment signals a continuation of the current middle-of-the-road course on economic policymaking, despite some Democrats’ call for more aggressive action, including additional government stimulus to boost the flagging economy.

Krueger’s selection came on a day investors’ confidence rose after new data showed that consumer spending grew solidly in July, in part because of stronger car sales. Stocks surged, and some economists slightly upgraded their outlook for third-quarter economic growth. For a sustained stronger level of consumer spending, however, analysts say the economy needs to generate more jobs and incomes. The August unemployment and jobs report will be released Friday.

The appointment drew support from both liberal and conservative economists, but it was immediately denounced by Republican political leaders who pointed to Krueger’s past advocacy of ending tax breaks for big oil companies and capping greenhouse emissions to encourage corporate moves toward a clean-energy economy.

In introducing Krueger in the Rose Garden on Monday morning, Obama promised to rely on the Princeton University economist for recommendations “not based on politics, not based on narrow interests, but based on the best evidence” about what’s best for the economy.

Administration officials say they expect Krueger will be confirmed quickly, given that he already cleared congressional scrutiny to serve at the Treasury. And the White House released several recommendations praising Krueger and his work, including one from Greg Mankiw, Council of Economic Advisors chairman under President George W. Bush, and from Martin Feldstein, who held the position under President Reagan.

Krueger would succeed Austan Goolsbee, who left this month to return to the University of Chicago. Goolsbee’s departure was part of the breakup of what many considered an all-star economic team that included former Treasury Secretary Lawrence H. Summers, Great Depression scholar Christina D. Romer and former Federal Reserve Chairman Paul A. Volcker.

“Krueger gets you part of the way back,” said Dean Baker, co-director of the Center for Economic and Policy Research, a think tank in Washington.

“How much difference does it make? … I don’t expect him to win an argument if [William] Daley and [David] Plouffe are on the other side,” Baker said, referring to Obama’s chief of staff and senior advisor, respectively.

White House press secretary Jay Carney suggested as much. While praising Krueger’s credentials as an academic and working economist, he indicated Krueger’s addition wouldn’t radically change the course the president pursues.

Krueger will be “an important member of the economic team,” said Carney, but “the president sets economic policy.”

Among others considered for the position was Rebecca Blank, a macro-economist at Northwestern University who served as a member of the Council of Economic Advisors during the Clinton administration.

As an academic, Krueger is best known for his work on minimum wages. Krueger’s research with other economists, including David Card at Berkeley, showed that raising the minimum wage doesn’t lead to job losses, as is often claimed.

Responding to the nomination Monday, several Republicans inferred that Krueger would advocate raising minimum wages as a way to boost employment.

Administration officials said Krueger’s appointment doesn’t mean the president is weighing that as a possible proposal.

If confirmed, Krueger could play an important role in bringing his polished, down-to-earth perspective to communicate and sell the president’s economic policies to the public, say economists who know him.

“He’s a very well-spoken, articulate economist,” said Lawrence Mishel, president of the Economic Policy Institute in Washington. That institute and other groups have been pushing for strong stimulus from the White House to fight unemployment, which remains above 9%.

Mishel said he wasn’t expecting a great deal out of Obama’s upcoming jobs plan. “They’ve already handcuffed themselves” with the budget agreement, he said. “They don’t have much room to increase spending.”

Obama’s economic team is putting the final touches on a jobs plan expected to provide job training, tax credits and investment in infrastructure as ways to get people back to work.

Advisors think the president has a compelling case to make, and that the public will object to knee-jerk opposition to a jobs plan that makes sense to them.

The elements of Obama’s proposal would have “significant impact” if only Congress can set aside politics and look together for solutions, Carney said Monday.

“If the entirety of his proposals are passed by Congress,” Carney said, the “impact will be very beneficial to the economy and on employment.”

The campaign for public support officially begins after Labor Day next week, with the president’s unveiling of the specifics of his jobs plan. But the Krueger announcement Monday was a late-summer reminder to members of Congress that he’s staffing up and preparing to talk about little else for the foreseeable future.

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