W.H. advisers draw criticism from liberals

Frustrated liberal Democrats are increasingly concerned that White House economists are too centrist and “theoretical” to fix the economy.

President Obama’s economic thinkers have baffled some House members, who see more unemployed constituents in their districts and want bolder action.

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Since Obama took office, lawmakers on the left have criticized the amount of tax cuts in the stimulus, the size of the stimulus compared to larger proposals favored by liberal economists, the administration’s opposition to protectionist “Buy American” trade policies and the president’s refusal to nationalize investment banks.

The latest warning sign for liberal Democrats is the Obama administration’s pushback against a proposal to spend more this year on roads and bridges to get the economy going.

Rep. Jim Oberstar (D-Minn.), the chairman of the House Transportation and Infrastructure Committee, said that the White House had it wrong when it opposed more money for highways, rail and mass transit in the $787 billion stimulus passed in February, and that the president’s advisers are wrong again to slow-walk Oberstar’s proposed $500 billion transportation reauthorization bill.

Oberstar doesn’t point a finger at Obama or Transportation Secretary Ray LaHood, a former House member.

He instead criticized Lawrence Summers, the top White House economist. Oberstar recalled that Summers, in January, opposed spending more than the $27 billion on highway projects that ended up in the final stimulus bill.

“These theoretical economists don’t understand how the program works,” Oberstar told The Hill.

The 18-term congressman said Obama’s economic brain trust, led by Summers, a former president of Harvard, and Treasury Secretary Timothy Geithner, a former New York Fed chairman, remind him of President John F. Kennedy’s Cabinet. The White House aides are accomplished, but they lack pragmatic experience, Oberstar said.

“Who’s managed a construction firm? Who’s met a payroll?” he added.

Rep. Peter DeFazio (D-Ore.) said Obama’s top economic advisers see only two ways to boost the economy: through tax cuts or by bailing out Wall Street firms like Goldman Sachs.

“It wasn’t productive activity, it didn’t put any Americans back to work, it didn’t rebuild our infrastructure, it didn’t even fill in a single pothole,” DeFazio told The Hill on Tuesday when asked about Obama’s approach. “But that’s their orientation.”

A spokeswoman for the White House defended its record on infrastructure spending, noting the billions spent so far this year on projects.

“The administration fought for, and won, the largest investment in our national highways since their construction,” said White House spokeswoman Jen Psaki. “We have approved more than 5,000 road projects in record time, and more than 2,000 are already under way — just 150 days after enactment.”

The House members’ comments come as the unemployment rate has hit 9.5 percent, a 26-year high, and as economists on the left and liberal Democrats talk increasingly about another stimulus package. Oberstar and DeFazio, who argue the best stimulus would be their committee bill, suggested another recovery package won’t come from Summers or other top administration advisers.

DeFazio said he plans to talk with Laura Tyson, a member of the president’s Economic Recovery Advisory Board, who said last week that a second stimulus full of infrastructure projects might be needed to create jobs.

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“And I’m going to be chatting with her about who else it is in the White House we need to bring around to a level of understanding on this,” DeFazio said.

Dean Baker, co-director of the left-leaning Center for Economic and Policy Research, said that the administration has been too close to Wall Street with its financial regulation proposals and too friendly toward international companies with its trade policies.

“They should have pushed a much harder line on the bailouts and been much stronger in their financial reform,” he said.

But Baker said Obama has to do more to help blue-collar workers. The president has done little to reverse free trade policies adopted over the past quarter-century — under both Democratic and Republican presidents — that have shifted income from less-educated workers to the more educated, Baker said. Obama disappointed unions and fair-trade advocates earlier this year by opposing Buy American provisions that would require firms receiving stimulus money to use domestic materials. Last month, he criticized trade penalties for countries that don’t abide by carbon emissions limits proposed in the energy bill that passed the House last month.

“As it stands, I see their trade agenda as being one-sided,” Baker said. “They want international competition for autoworkers and textile workers, but protection for doctors and lawyers.”

Unions themselves want more emphasis on infrastructure spending and less on banks. The AFL-CIO, Service Employees International Union and other labor groups plan to start a push for a new infrastructure-focused stimulus in September, when lawmakers return from the August break.

But other liberal Democrats said it’s too early to cast judgment, especially since the White House is less than a year into its response to a once-in-a-lifetime economic crisis.

Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee who helped draft the stimulus measure, noted that Obama, like many House Democrats, wanted a bigger stimulus but was rebuffed by senators who needed to get past a Republican filibuster. That meant cutting billions of dollars from the proposal to win three Republican votes.

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“We weren’t bold enough on the stimulus ... but we lost $40 billion” to the Republican votes needed to pass the bill, Frank said.

Frank also waved off suggestions that Democrats in the White House and in Congress weren’t doing enough to rein in Wall Street excesses, saying a financial regulation reform bill will be taken up later this year and will require investment banks to maintain more capital to buffer against losses.

Rep. Brad Sherman (D-Calif.), a critic of free trade agreements and the bank bailout, said that Obama isn’t moving backward like the past administration on trade policies. He said, however, that the administration should seek to recover more money from Goldman Sachs — which reported Tuesday that it earned $2.7 billion during the second quarter of this year — and other bailout recipients.

Goldman Sachs had reported losses of more than $3 billion last fall over four months and participated in the bailout, accepting $10 billion. But the firm anticipated a turnaround and paid back the government money last month.

“The game isn’t over yet. The game isn’t even half-over,” Sherman said. “None of my professors have given me grades before the midterms.”