Austan Goolsbee, currently the head of the CEA, has been one of Obama's economic advisors for the last four years. Prior to that, he taught at the University of Chicago's Booth Graduate School of Business, where he was one of my favorite professors. Last night, news broke that Goolsbee would be returning to Booth this fall.
Goolsbee was one of the things that commended Obama to me. Austan Goolsbee is smart, fearless, and slightly unorthodox, and he's not afraid to tell people that they're wrong. It showed great wisdom to choose such a person as an advisor. Obviously, that didn't mean that I always got policies I agreed with. But I have been very glad that he was in the White House.
Goolsbee gives the same reason that Summers gave for leaving the administration--he cannot stay on leave from his academic job forever without risking tenure. He's certainly earned a rest; he's been working for Obama for more than four years, and spent most of it grappling with the worst economic crisis in living memory. But without slighting the president's other advisors, I think that the administration is losing a valuable asset that will be hard to replace.
Talk is already turning to his successor; Greg Mankiw nominates Jason Furman, who is already in the administration. Jason has two things to commend him, beyond the fact that he's a solid economist: he's an old DC hand, and he's already in the administration, which is might make the confirmation process less bruising. On the other hand, Andrew Samwick
argues that nominating someone from within the administration will make things harder, not easier: "The next CEA Chairman will have to be someone not currently associated with the Obama Administration, so that the confirmation hearings can be less of a retrospective on Obama's policies to date and more of a forward-looking discussion of what could and should be done. "
Samwick adds: "I don't envy Goolsbee's successor, for two reasons. First, outsiders have a terrible time trying to be heard by those who have been around since the campaign and have developed trust and established ways of working together. Second, by the time this person takes office, the entire economic agenda will be driven by the 2012 election campaign and not the more thoughtful possibilities for crafting policy."
He or she will also, of course, be walking in just as the economic recovery seems to be sputtering. The administration doesn't have many good options to combat it--even if you are a fan of more stimulus, it is clearly politically impossible. It's a hard thing being an advisor when the only advice you can offer on the administration's largest problem is "look to the Fed, and pray."