If you had known Austan Goolsbee way back when, you might not have expected him to ever chair President Obama’s Council of Economic Advisers. Even now, at 41, he still looks more like one of his M.B.A. students than like a professor.
That effect was even more pronounced at 35, when he first met Barack Obama, who was then a state legislator running against Alan Keyes for a U.S. Senate seat from Illinois. A mutual friend had suggested that Goolsbee write some issue memos for Obama, but the two had never met. When Goolsbee had a lengthy lunch with me recently at Founding Farmers, an eco-conscious restaurant in the headquarters of the International Monetary Fund, he recalled their first meeting, at a 2004 debate with Keyes. “You look nothing like a professor,” said Obama, startled. “Where’s the beard and the tweed jacket? And what’s with Goolsbee?”
Goolsbee chuckled. “‘Hey, you’re not the only skinny guy with a funny name—as far as I’m concerned, you stole my bit.’”
By all accounts, this sort of thing has endeared him to the president. Nonetheless, when he joined the Obama campaign, I had a shocked and faintly amused conversation with another economics journalist who knew the professor fairly well. “Can you imagine Austan in the White House? Austan?”
It’s not that we thought he’d give bad advice: rather the opposite, in fact. I’d known Goolsbee since 2001, first as my professor at the University of Chicago, and then as an economist whom I interviewed. He was a sound economist, refreshingly independent, and intellectually honest. But those qualities seemed more like liabilities than assets in Washington.
Our suspicions seemed to be confirmed in February 2008, when a Canadian television network reported that an Obama adviser, whom ABC later identified as Goolsbee, had told Canadian diplomats that Obama was stepping up the rhetoric on NAFTA, and said, “It’s just campaign rhetoric … It’s not serious.” Everyone had already suspected as much, of course, but Goolsbee seemed to have made the un-Washingtonian mistake of saying out loud what everyone else was uncomfortably thinking.
Goolsbee’s decision to step down in August after 11 months as head of the council (after joining it in March 2009) and return to his professorship in Chicago was greeted by sniping and sniffs. One Fox online headline crowed, “Obama’s Top Economic Adviser Jumps the Sinking Ship.” The Huffington Post argued that Goolsbee “has often taken positions that have failed to carry the day, or he has ratcheted down his prescriptions from the outset.” Even The Economist, generally a fan, admitted: “Goolsbee’s tenure as chairman has been a thankless one.”
Thankless, perhaps—but Goolsbee’s stature as Obama’s longest-serving economics adviser is in fact a fairly remarkable testament to him, and to his president. Christina Romer, the first person to chair Obama’s Council of Economic Advisers, had done major work on economic stimulus and other questions that became very important at the height of the crisis. Goolsbee’s contributions are less obvious—but that doesn’t mean they have been less important. Pundits on the outside may ask what specific initiatives he pushed, but that is not how Goolsbee describes his position. “I always felt my role was like the pit crew in a Nascar race and President Obama was Dale Jr.—he’s driving, and my job is to change the tires and get him back on the road.”
People who have worked with Goolsbee do not talk about the fierce policy battles that he waged; they praise his flair for asking questions that get at the heart of the matter, his self-deprecating humor, his talent for “disagreeing without being disagreeable,” and his commitment to making sure that the president understood all possible angles before he made a decision. “He’s got no agenda,” says Valerie Jarrett, a senior adviser to Obama. “He’s respectful, but he tells the president exactly what he thinks, and he’s not shy about telling the other members of the economic team what he thinks.” Of course, advisers are always nice about other advisers—on the record. Then again, no one has ever tried to convince me, on the record or off, that Larry Summers didn’t have an agenda.
Washington worships the policy warriors, the brilliant macroeconomic manipulators who push through their agenda, using canny negotiation or the sheer force of fiery will. But Washington also very much needs its policy mechanics, the people who make sure that no matter what decision the president makes, the wheels won’t come off.
“What you like about Austan,” says Jeff Immelt, the CEO of General Electric, “is that he’s curious; he asks good questions; he listens. He also recognizes the limitations of what policy can do.” Immelt worked with Goolsbee on the President’s Economic Recovery Advisory Board. “He’s … a brilliant guy who’s also disarming. He’s supersmart but he doesn’t make you think he’s supersmart—he’s stealthy.” David Axelrod, another of Obama’s close advisers, also calls Goolsbee “brilliant,” but puts it more vividly: “He always sounds to me like the voice-over guy on a beer commercial.”
Bluntness, self-deprecation, and a knack for asking difficult questions: these are not necessarily the weapons you need to win policy battles. But in an adviser, they can be strategic assets that help a president win the policy war. The last administration had lots of policy warriors; it also had lots and lots of terrible mistakes made by people who didn’t ask enough questions. President Obama certainly knew Goolsbee well enough to understand what he was doing in elevating him to the council chair at the tender age of 41, making him the second-youngest person ever to hold the job. (The youngest was Arthur Okun, who served during the last year of the Johnson administration, and was just 39 when he took the job.)
But perhaps I am prejudiced, because I have experienced Goolsbee’s stealthy brilliance firsthand. In the winter of 2001, Goolsbee opened my technology-strategy class by asking, “Okay, now who likes the AOL–Time Warner merger?” We all raised our hands. The $165 billion megamerger had just closed, and the top-tier banks and consultancies we’d been interviewing with had gotten a piece of the deal. We’d become expert at generating novel reasons to love that messy agglomeration of old media and new.
Goolsbee was nodding, which made us feel smart. “Okay, why?”
Even the normally shy students bubbled over with justifications, and for some minutes Goolsbee listened intently and wrote our answers on the whiteboard. By the time he was done, the list spanned several columns, and AOL–Time Warner was beginning to sound like the best idea since the joint-stock company. And then he systematically demolished every one of those reasons.
The carnage went on for an hour, until his barrage of calm and deadly questions had deflated dozens of M.B.A. egos sufficiently to make room for learning. And then, gently, he started showing us when mergers do work—deals that require specialized investments, various sources of synergy, industries with large economies of scale. But the list of successful-merger conditions was short, and nothing on it sounded remotely like AOL.
On May 28, 2009, Time Warner announced that it was spinning off AOL after nearly a decade of dismal performance, during which the combined company’s stock had dropped from $161.40 a share a week after the deal closed to $23.55.
Goolsbee’s gift for questioning the things that sound smart seems like an especially helpful quality when you’re trying to negotiate the worst financial crisis since the Great Depression and half of macroeconomic theory is melting down. According to Axelrod, even when Romer was still at the helm, Goolsbee was “more than a member of the CEA, because of his relationship with the president. The president would frequently ask for Austan to be present at meetings, because he wanted his judgment.”
A senior economic adviser for George W. Bush once told me a rather haunting story about the administration’s decision to sign the 2002 farm bill, one that illustrates why Obama might have liked having Goolsbee around. Like virtually all sound economists, Bush’s advisers disliked the bill, a subsidy-laden monstrosity that was considerably worse than the farm bill that had preceded it in 1996—but they reluctantly allowed it to go forward, because they thought passing the farm bill would buy legislative support for something they considered even more important: the authority the president needed to advance the next round of treaty negotiations at the World Trade Organization.
As compromises go, this one didn’t seem too bad, so Bush’s advisers put on their game faces as the president signed it into law on May 13, 2002, with a touching speech about providing a safety net for farmers. All went well until later, when someone cracked a joke about how “we don’t need another farm bill.” The president, shocked, demanded an explanation. “What’s wrong with the farm bill? No one told me to veto the farm bill.” The adviser wasn’t trying to hide the football, but had just assumed that Bush knew. So had everyone else. It was so obvious to economists, no one thought to tell the president.
Herb Stein, who was head of the CEA when Nixon imposed far-reaching wage and price controls in 1971, once reflected on the blindness that can afflict advisers—and hence, their presidents.
Even now, I am amazed to think of how little we looked ahead during that exciting weekend at Camp David when we (the president, really) made those big decisions … Some people at Camp David had a theory of what we were doing with the ninety-day freeze … It was a rather flaky theory, and we were not prepared for the strong possibility that it was wrong.
Nor was Nixon. When the “temporary” 90-day controls had to be renewed, Nixon told Stein and George Shultz, “If this baby gets too strong we can strangle it in its cradle.” They couldn’t. Wage and price controls lasted nearly three years, and much longer for oil and natural gas. The oil and gas shortages lasted much longer too, into the early 1980s.
Goolsbee apparently always remembered to tell the president—even when doing so brought him into conflict with other members of the administration. Steve Rattner, the former “car czar,” describes in his book a briefing where Summers told the president that they’d decided to provide $5 billion to support auto suppliers while they made up their minds about a plan for the automakers. Surprised, Goolsbee immediately broke in, even though he’d agreed he was just there to listen and not to speak:
“Mr. President,” he interrupted, “just be aware that the second we announce we’re going to save the suppliers, everybody is going to assume we’re saving the auto companies too. Have we really decided that?”
As soon as the meeting broke up, a furious Summers cornered Goolsbee in the hallway and “exploded”:
“You do not relitigate in front of the President!”
“I was not litigating in front of the president,” Austan shot back. “He hasn’t seen that program and it has nothing to do with the financial rescue.”
Inside the White House, Goolsbee may voice his disagreements, but outside he is loyally reticent, acknowledging the disputes only obliquely even though they’ve been widely reported. “I always think it is important that the president hear the unvarnished truth, as seen by the various positions,” he told me. “History is not kind to administrations where all anyone says is ‘Good idea, boss.’ So there were always debates, but that was a sign of health.”
And though in private councils he may have been devil’s advocate in chief, in public he was simply advocate in chief. Early on, he started deploying his formidable pedagogic talents as the administration’s chief economic evangelist, in venues ranging from the Sunday-morning talk shows to YouTube videos. He is extraordinarily persuasive, on issues from small-business investment to tax policy.
He was also very convincing when he was telling me during the campaign that the administration didn’t need an individual mandate in its health-care plan—the opposite of what it is now arguing in court as it defends the 2010 health-care act from legal challenges. “My goal in life is to be 80 percent Paul Volcker and 20 percent Muhammad Ali,” he told me. I’ve heard Republicans privately complain that his presentations are unfair and one-sided, and the complaint is not entirely off base. I have never heard him say anything untrue, but like all advisers, he paints his administration’s policies in the best possible light.
But really, people place absurd demands on academics who become political advisers: They want former professors to publicly criticize their boss’s policies as if in an academic seminar. And they grouse if the politicians don’t make policy as if they, too, were living inside a theoretical model. This is not reasonable—and criticizing people who can’t meet this impossible goal seems likely to diminish the quality of the advice, not improve the quality of the policy.
“There’s a certain kind of academic that comes to Washington and can’t survive,” Goolsbee said. “They’re the ones starting each sentence with ‘The economic model says …’ They are prone to silver-bullet-style answers, which demonstrate very sophisticated thinking about the model but very unsophisticated thinking about the real world.” The model may be missing a few things that are found in the real world—not least, the institutional and political obstacles that make some problems silver-bullet-proof. “If you’re going to be an academic who’s involved in the world of policy, you have to be involved in the world that exists,” Goolsbee told me. “I was always a data guy, not a theorist. Theorists can maintain total purity. The data are always messy.”
Goolsbee expects to take some heat for his administration’s actions, and for his loyalty, especially because he’s going back to the University of Chicago—where a graduate-school applicant once said during an interview that he wanted to do public finance and was told, “At Chicago, we don’t consider that a field.” Goolsbee seems unfazed by the prospect. “I have no doubt that there will be some heated arguments in the seminar rooms and in the hallways. But in some sense, that’s why I want to get back to Chicago. If you want to be repeatedly told by your own allies, ‘Oh, yes, we are 100 percent right; those other guys are crazy,’ then Washington is more for you.”