White House adviser argues against more stimulus

Despite calls in Congress among Senate Democrats for new stimulus spending, outgoing White House economic adviser Austan Goolsbee argued against the idea at a Washington event Friday.

“The government involvement when we’re teetering on the edge of a Great Depression … the government is the primary and in many cases the only engine of recovery. But as you shift to better conditions that is not longer true,” the chairman of the Council of Economic Advisers said. “It starts to become things that government can do to facilitate the standing up of the private sector.”

“The correct policy when you are in the depth of rescue mode is all about government directed stimulus. It is not sustainable. … It was never meant to be sustained,” he said.

The administration has so far not heeded the calls for a new stimulus package despite fears of a double-dip recession. Senate Democrats calling for spending themselves acknowledge that more spending has no chance of making it through the Republican House.

Goolsbee played down a negative jobs report from last week that showed unemployment rising to 9.1 percent, saying the report followed three excellent jobs reports from prior months.

He argued the negative news was caused in part by the Japanese tsunami and by high gas prices, which he said many private-sector analysts view as temporary in effect.
“I will simply note that the private sector forecasters and the Fed are saying they expect many of those forces were temporary … and they expect a rebound the second half of this year and going into 2012,” he said. “The labor market remains heavily damaged but is on a trajectory of improvement.”

The adviser reiterated the administration pitch to spare investments in education, infrastructure and innovation when cutting spending. He referred to the idea as “the agenda formerly known as the winning the future agenda,” in a joking acknowledgment of the mockery the WTF slogan has met in some quarters.