Good Riddance to President Obama’s First Economic “Brains Trust”

Larry Summer’s announcement that he will return to Harvard’s faculty at year end, following hard on the heels of the resignations of budget director Peter Orszag and of Christina Romer, chairwoman of the Council of Economic Advisers, has summarily taken down the ornaments of President Barack Obama’s Christmas tree appointments to positions of influence on economic policy.

None of them will be missed.

Like Nobel laureate Joseph Stiglitz before them, all three apparently caught “Potomac fever”. Professor Stiglitz, it should be remembered, opportunistically supported an increase in the federal minimum wage during the Clinton administration despite having published evidence of its negative effects on employment, especially for low-skilled, minority group members seeking entry-level jobs.

Professor Romer, despite knowing better, predicted that passage of President Obama’s American Recovery and Reinvestment Act would keep the U.S. unemployment rate below eight percent. It nevertheless remains stuck at 9.5 percent.

Mr. Orszag always has been too much of a technocrat, with little appreciation for political realty (see my review of American Economic Policy in the 1990s, co-edited by Jeffrey A. Frankel and Peter R. Orszag, Cambridge: MIT Press, 2002, posted on Economic History Services, August 16, 2002, URL: http://www.eh.net/ bookreviews/library/0527shtml.)

In any case, perhaps economists appointed to positions of public trust are intellectually honest after all. It is to be hoped that the resignations of these three economic advisers to President Obama will force him back to the center. But don’t count on it.