Obama Aide to Join Growth Debate

SARA MURRAY

Alan Krueger, President Barack Obama's pick to head the White House Council of Economic Advisers, will likely serve as an administration advocate for more aggressive government intervention to revive job growth.

President Obama may soon have a new economic advisor. Alan Krueger, a Princeton University labor economist who specializes in unemployment, may soon be joining the White House's Council of economic advisors, WSJ economics editor David Wessel reports on the Markets Hub. (Photo: Getty Images.)

"Our great ongoing challenge as a nation remains how to get this economy growing faster," Mr. Obama said Monday at the White House announcement of Mr. Krueger's nomination.

If confirmed by the Senate, Mr. Krueger would take on the job amid a bitter Washington battle over how best to strengthen the nation's fragile recovery. The economy barely grew in the first half of the year, and unemployment was 9.1% in July.

Many Democrats are calling for more government spending or tax cuts to stimulate stronger growth, but many Republicans are demanding deeper spending cuts to reduce the growing federal debt. Mr. Obama is planning to deliver a speech next week on proposals to rein in the deficit and spur job creation.

Mr. Krueger, a Princeton University economics professor and former Obama administration official, has supported both tax cuts and spending programs to help stimulate growth in recent years, including incentives to encourage employers to hire jobless workers. He also backed Build America Bonds, a program that allowed states and localities to sell taxable municipal bonds and receive a federal subsidy.

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President Obama introduced Alan Krueger Monday at the White House.

He served as assistant Treasury secretary for economic policy in the first two years of the Obama administration, where he helped design the "cash for clunkers" program to boost auto purchases.

"What you're likely to see is, he does believe the federal government can do more to help in this economy," Cecilia Rouse, a Princeton University economist and former CEA member, said of Mr. Krueger. "He will be a voice for more investments."

The nomination was mostly lauded by economists across the political spectrum. Among conservatives who voiced support were Republican Douglas Holtz-Eakin, who advised Sen. John McCain's campaign in 2008, and Gregory Mankiw, a Harvard University economist who chaired the CEA during the administration of former President George W. Bush.

Mr. Mankiw said Mr. Krueger's previous stint in the Obama administration means he is already familiar with most of the players and policies. "I think this is a continuity appointment not a change-direction appointment," Mr. Mankiw said.

But the Republican National Committee took on Mr. Krueger in a news release Monday, calling him a proponent of higher taxes and saying he is "wrong on stimulus and jobs."

A White House spokeswoman said Mr. Krueger wouldn't be available for interviews with the confirmation process under way.

Mr. Krueger's academic work touches a broad range of topics, from the economics of popular music to the origins of terrorism. He is best known for his research on unemployment and the minimum wage. Among his most recent research was a study of how 6,000 jobless workers in New Jersey spent their time. He found the longer they were out of work, the less time they spent job-searching—contrary to expectations that they would search harder as they neared the end of their unemployment benefits. One of his particular concerns is long-term joblessness and the prospect that unemployed Americans could grow discouraged and drop out of the labor force. He is a proponent of initiatives to draw jobless workers into productive activity, either through job-placement programs, volunteer work or training.

Mr. Krueger, 50 years old, earned his Ph.D. in economics from Harvard in 1987 and has been on Princeton's faculty ever since. He worked as chief economist at the Labor Department during the Clinton administration.

Mr. Obama has seen a stream of departures from his original economic team in the past year, including Lawrence Summers, who served as his top economic-policy coordinator, Christina Romer, his first head of the CEA, and Austan Goolsbee, whom Mr. Krueger is slated to succeed.

As an academic, Mr. Krueger sometimes jumped into bitter and partisan disagreements. He strongly disagreed with conservative economists who argued that minimum-wage laws stifled employment growth.

Related

• More on Alan Krueger
• Krueger 2010 testimony on infrastructure
• Krueger on the Economix blog
• Krueger columns in New York Times

He also has been a prominent figure in academic battles over school vouchers. Data on the effectiveness of school-voucher experiments in places like New York and Wisconsin have been especially hard to read. Academics have argued for more than a decade over how to interpret various studies, with right-leaning economists supporting vouchers and left-leaning economists expressing skepticism.

In one noteworthy disagreement, Mr. Krueger challenged the work of a Harvard professor, Paul Peterson, who said voucher experiments in New York showed school-choice programs helped African-Americans. Mr. Krueger said they didn't. The two and their co-authors embarked on years of sometimes testy statistical challenges against each other in different academic publications over the results of the New York voucher studies.

Mr. Peterson didn't respond to a request for comment.

Mr. Krueger is an attractive choice in part because he has recently made it through the difficult Senate confirmation process. However, his prior confirmation for the Treasury slot doesn't guarantee he will be confirmed again. The CEA chairman is seen as a higher-profile position and the confirmation process may prove more politicized now, with an election year looming.