Economists React to Obama’s ‘Dream Team’
President-elect Barack Obama’s selection of Christina Romer to chair the Council of Economic Advisers drew praise Monday from many of the nation’s top academic economists, who see her as part of an incoming “economics dream team” needed to quickly enact policies to help the struggling U.S. economy.
“I think she’s the perfect pick for the job,” said Jeffrey Frankel, a professor at Harvard University’s Kennedy School of Government who previously spent 20 years at the University of California at Berkeley with Ms. Romer and her husband, David, also a prominent economist. In a Chicago news conference, Mr. Obama also confirmed the appointments of Timothy Geithner as Treasury Secretary and Larry Summers as director of the National Economic Council. The president-elect named Melody Barnes, formerly Executive Vice President for Policy at the left-leaning Center for American Progress, to be Director of the Domestic Policy Council.
“He’s assembled a dream team,” Mr. Frankel said.
The CEA typically has been lead by academics with a prowess for economic theory, such as Martin Feldstein and Ben Bernanke, now chairman of the Federal Reserve. It’s one of a trio of positions central to the president’s decision-making, though not necessarily one of great influence. By appointing Mr. Summers as his right-hand man, Mr. Obama has signaled that he’ll have the final say.
Ms. Romer is widely seen as one of the top economic historians in the world, a handy expertise as the U.S. grapples with an economic downturn. Both she and her husband currently serve on the National Bureau of Economic Research’s business cycle dating committee, the official arbiter of the nation’s recessions. Ms. Romer is one of the nation’s two leading experts — the other being Mr. Bernanke – on the U.S. economy during the Great Depression.
The similarities between Ms. Romer and Mr. Bernanke (she and her husband also took over the NBER post he vacated) have some wondering whether she – and not Mr. Summers – is being groomed as a future chairman of the Federal Reserve. Mr. Bernanke’s term expires in 2010 and during Mr. Obama’s first year in the White House, he will have to decide whether to reappoint the Fed chief.
“The CEA’s definitely been used for that in the past,” said Justin Wolfers, a professor at the University of Pennsylvania’s Wharton School of Business. Another possibility, Mr. Wolfers said, is that Ms. Romer’s husband, David, could wind up serving on the Fed’s board for a couple of years and then be considered for chairman.
George Akerlof, who won the Nobel prize in economics in 2001 and is also a professor at Berkeley, said via email that his colleague’s appointment was “superb” and added that “The Obama Administration is off to a great start in putting together an all-star team to tackle the economic crisis.”
Peter Temin, who was Ms. Romer’s thesis advisor at the Massachusetts Institute of Technology, called her “terrific” and noted that her thesis topic — which questioned whether the economy really had stabilized in the postwar period – was “ahead of its time.”
He noted that the position of CEA chairman isn’t necessarily one of great power, and her role in the administration will largely depend on how forcefully she exerts her influence. “I don’t think she and Larry Summers will have any problem in getting along,” he said. “But the question is who will prevail?”