Reports surfaced today that Nobel Prize Winning economist Dr. Paul Krugman will be offered the job of chairman for the White House Council of Economic Advisors.
More below the noodle.
Should Pres. Obama be reelected, it's no secret that there will be major changes in his second administration.
At the top, both Sec. of State Hillary Clinton and Treasury Sec. Tim Geithner have said they plan to step down. Geithner wants to return to Wall St. – no surprise there; often, his actions at Treasury made it seem as if he never left – and Clinton will have a dizzying array of attractive options from book deals and corporate directorships to planning a presidential run in 2016. Other cabinet secretaries are likely to follow, including Attorney General Eric Holder who's become a lightning rod for Democrats and Republicans alike thanks to a triad of missteps including not prosecuting anyone on Wall St. for their role in the financial meltdown, not being more aggressive in fighting voter suppression and mishandling the "Fast and Furious" controversy.
If precedent is any indication, there will be a massive reshuffling of the West Wing itself by January, as well.
Persistent rumors in Washington say that one advisor who will leave is Alan Krueger, chair of the Council of Economic Advisors since 2011. And even more persistent rumors are floating around that the president will ask Princeton University professor, New York Times columnist and blogger, and Nobel Prize winning economist Paul Krugman to take Krueger's place.
"There's no question that Krugman is on the president's list for the next term," a well-placed source close to the highest levels of The White House told me today. He did not wish to comment for attribution for fear of risking access.
I tried reaching Dr. Krugman for a response but he is in Europe and not available for comment.
When Larry Summers resigned from the post in 2010, the liberal blogosphere was ablaze with writers urging Pres. Obama to appoint the bearded and shy yet media-savvy, superstar economist to succeed a man that many progressives felt was a poor choice to begin with.
"Not bringing Krugman in after Summers was a bad mistake," one Washington insider admitted, speaking on a condition of anonymity.
Whether or not the position was offered, Krugman himself wrote that he wasn't interested because the job is too political and involves a lot of paper-pushing – things that he said he loathes. Yet time, circumstances and things change and 2013 is a long way from when Summers resigned. Now, Dr. Krugman's track record on stating what the global and US economy needs has been remarkably prescient and accurate.
For one thing, from day one of the Obama presidency, Krugman urged a much larger stimulus than either Summers or former chief of staff Rahm Emanuel thought was needed or would get approved by Congress. It turned out that he was correct about the economy needing a much-larger goosing than The White House eventually proposed.
He also argued against including so many corporate and upper-bracket tax cuts as part of the measure, saying it didn't put enough money directly into enough people's hands fast enough and that tax cuts do not result in jobs.
Beyond the stimulus, he has been right about almost every other major economic policy issue facing the United States for the past four years.
Long before the right began shouting "death panels", Prof. Krugman calculated that, political issues aside, Obamacare would save the US trillions of dollars in health care costs over the next decade.
And he was the first to expose the flimflam chicanery of Paul Ryan's budget proposals rather than treat the Wisconsin Congressman as a "serious thinker" like nearly all of Washington's "Very Serious People" – Dr. Krugman's term for inside-the-beltway pundits who believe they know all and see all but are simply easily-fooled victims who prove P.T. Barnum's inviolate rule.
Yet it's not just on domestic economic issues that the pun-prone pundit has been on-target.
He detailed from the beginning of the recession how Germany and the European Central Bank botched a response to the Euro debt crisis, and are still mired in an unblinking denial of both the reality of Great Depression-like unemployment across the periphery nations and what's needed to fix things. And he has been unmercifully withering in his pointed and detail-laden criticism of British Prime Minister David Cameron's blind refusal to concede that his austerity program not merely was wrong but actually is damaging England which is now back for a second helping of its deep recession after a recovery effort that didn't last through lunch.
It would make sense for Pres. Obama to coax Dr. Krugman off the no doubt highly lucrative teaching-writing-media-speaking-consulting circuit to spend a few years helping the nation from one of the three most-important economic policy desks in Washington.
It would signal to the Democratic Party base that the second term will be very different from the first given that Republicans are no more likely to cooperate during the next four years than they were in the last four. Making Dr. Krugman a very senior advisor would be a tangible first step, especially if the President plans proposing a second stimulus in January.
Putting the professor in charge of economic policy would also signal to both the Hill and Wall St. that the administration is intent on using the effectively negative borrowing costs of the government to implement major projects that will put people back to work. This would include everything from giving states money if they agreed to rehire laid-off government workers to massive infrastructure projects building or repairing roads and bridges, a ton of money in green energy – which does not include the fictitious "clean coal" or nuclear – and education efforts from kindergarten through graduate schools.
It would also signal to the nation that the president is committed to returning the nation to full prosperity before he retires in January, 2017, by adopting the professor's deep understanding of how to apply Keynesian economics in a prolonged slump.
Despite Dr. Krugman's supposed disinterest in going to The White House, many people suspect he would be hard pressed to sit in the Oval Office and say no if Pres. Obama tells him, "Paul, your country and I need you and your mind."
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