President Obama's top economic adviser on Sunday endorsed an economic model in which jobs become less reliant on consumer spending, which has driven the nation's economic growth for decades.
"The focus has got to be on investment, on exports, and on innovation … rather than on excessive consumption and housing investment, as it was in the last boom," Austan Goolsbee, chairman of the White House Council of Economic Advisers, told ABC's "This Week." "The president's firmly in that — planted in that camp — and we're going to grow our way out of this."
Although many elements of the economy have bounced back from the Great Recession — including both the Dow Jones and Nasdaq stock markets — jobs have not. In November, the nationwide unemployment rate was 9.8 percent — down just two-tenths of a percent from a year ago.
Economists across the political spectrum have noted that the 2008 collapse of the housing market immediately eliminated trillions of dollars in home equity previously available for homeowners to spend. With the housing market still struggling, consumption — and the jobs fueled by it — have struggled as well.
Consumer spending is estimated to make up roughly 70 percent of the U.S. economy.
Goolsbee said the White House is already moving away from the consumer-fueled model. The recently passed tax cut deal, for instance, included provisions designed to grow businesses, not just consumption.
"You got direct incentives for companies to invest in the country," he said. "You've got a payroll tax cut for workers that follows up on the small-business bill to get credit to small businesses."
Republicans are skeptical. Earlier in the day, Rep. Darrell Issa (R-Calif.), the incoming chairman of the House oversight committee, slammed the Obama administration's stimulus efforts as failing to do anything to stir job growth. Instead, Issa said the $787 billion stimulus package — including billions of dollars for teachers and state Medicaid programs — merely represented "dollars spent for one year of kicking the can down the road."
"There's not a lot of ripple effect in that kind of spending," Issa said on CNN's "State of the Union."
"Real creation of jobs — permanent jobs — is what we didn't get out of this. Of course … if I hire you and give you a quarter of a million dollars, you have a job for that year. That's not creating a job, that's hiring or continuing to pay for a government worker. … Stimulus should have been about private-sector creation."
Democrats have taken issue with such statements, arguing that Republicans simply don't want to give credit to Obama initiatives they opposed unanimously. Tim KaineTimothy (Tim) Michael KaineLiberty University professor charged with alleged sexual battery and abduction of student Senate parliamentarian looms over White House spending bill Menendez jabs State official over Colombian group's terror designation MORE, who chairs the Democratic National Committee, told "State of the Union" that such a polarized approach threatens major accomplishments in the next Congress.
"How does the president work with Republicans who seem determined to insist he hasn't accomplished anything?" Kaine asked.