Obama taps right, left for econ advice

by Christi Parsons

President Barack Obama plans to name conservative economist Martin Feldstein, a recent critic of his stimulus plan, to serve on a special panel advising him on economic policy.

Feldstein will join an array of prominent CEOs and labor leaders on the advisory board, to be led by former Federal Reserve Board Chairman Paul Volcker and staffed by University of Chicago economist Austan Goolsbee.

According to a White House official, the president is asking this Economic Recovery Advisory Board to provide him with "independent advice" on recovery plans.

In particular, the official said, Obama wants analysis of how the government's response to the short-term crisis is "laying the groundwork for the reforms necessary for longer-run prosperity."

On that critical point, the panelists will surely bring contending opinions. Two of the appointees are Anna Burger, secretary-treasurer of the Service Employees International Union, and Richard Trumka, secretary-treasurer of the AFL-CIO.

As a key advisor to Obama on the campaign trail, Goolsbee articulates the candidate's view about trade issues, including the idea of revising NAFTA. (Obama is "pro-trade," Goolsbee said in a fall interview with the Tribune, and intended not to abolish the trade agreement but rather incorporate environmental and labor components into it.)

On the other end of the spectrum is Feldstein, a Harvard professor and one-time chief economic advisor President Ronald Reagan. He recently criticized the stimulus plan before Congress as needing to be "thoroughly revised" because it cost too much for the benefits it would provide.

"The problem with the current stimulus plan is not that it is too big but that it delivers too little extra employment and income for such a large fiscal deficit," Feldstein wrote in a piece published in the Washington Post.

For example, he wrote, "Has anyone gone through the (long) list of proposed appropriations and asked how many jobs each would create per dollar of increased national debt?" Instead of across-the-board tax cuts, he called for targeted ones that people get only by buying new houses or spending money on other things.

Also involved in preparing the briefings will be Obama friend Penny Pritzker, chairman and founder of the Pritzker Realty Group, and an array of CEOs including Roger W. Ferguson of TIAA-CREF, Robert Wolf of UBS Group Americas, Jim Owens of Caterpillar Inc., Jeffrey Immelt of GE and Monica C. Lozano of the Spanish-language publication La Opinion.

The model for the economic panel is the Foreign Intelligence Advisory Board, set up by President Dwight Eisenhower in 1956 to offer expert advice on the conduct of U.S. intelligence operations.

Shortly after his election last fall, Obama announced that he would create the economic equivalent of that board, and that Volcker had agreed to serve as its chairman.

After President Jimmy Carter appointed him Federal Reserve chairman in 1979, Volcker was credited with reining in inflation by way of policies that also contributed to a recession at the time.