Austan Goolsbee, former chairman of the Council of Economic Advisers, appeared on Bloomberg T.V. with Margaret Brennan Tuesday to discuss the Republican field of candidates, the payroll tax cut fight and the overall state of the economy.
On the economy as a factor in the President Barack Obama’s re-election chances:
The data over the last month or two has actually been coming in pretty positive. And if you saw the unemployment rate coming down substantially over the next three quarters of the year, probably would be somewhat of a positive. I think by the lingering fears of what’s going on in Europe probably mean that it’s the private forecast that will have some growth but not really rapid rampant growth mean the economy’s going to remain a big issue.
On the possibility of another round of quantitative easing by the Fed:
You’ve seen the Fed saying that they want to engage in doing the twist. They’ve had quantitative easing. I think that some of the effectiveness of what the Fed is going gets smaller and smaller each time they try it. The interest rate’s basically 0%. So it’s hard to use monetary policy to try to juice the economy. And I don’t think you’re going to see much more the kind of gridlock you’ve seen in Washington on the fiscal side. So for anybody who’s thinking, well, Washington ought to be the savior, I do think they’ve got to get over it. That’s likely not going to be the main driver of recovery. It’s got to come from the private sector.
On the possibility of another payroll tax fight in Congress:
Yes, it’s a mess. Look, the fact that every two months, we’re going to have the same ground hog day thing that we’ve had before where one side threatens that they’re going to shut down the government, or they’re going to crush the economy or they’re going to do whatever unless they get their demands, and then they go back and forth and then at the last minute, come up with some small deal that kicks the can a month or a week or whatever down the road, it doesn’t make sense. We’ve got to get out of that dynamic. But I don’t foresee that we’ll be able to, in rapid basis, until maybe after the election.
On advising the president on the economy:
He’s doing what he’s got to do in that we should pass, extend these tax cuts. We’ve got to raise the debt ceiling. And we should be doing whatever we can in Washington to help facilitate the private sector leading the recovery. Now, you don’t have any other choices but to try to do that. If one side is going to prevent that from happening or the other side is going to prevent it from happening, there’s not much you can do. But I think we saw the dynamic on this payroll tax cut extension that although there was a lot of bluster, at the end, both sides basically agreed that it was needed for the economy. And so they did it. I assume there will be another fight like that. But in the end, they’re going to do what’s the right for the short run, at least. And then hopefully, somewhere along the way, we’ll have the discussion about what are the candidate’s growth strategies and what are their plans for the grand bargain because those are the things that really matter.
On whom he thinks the Republican nominee will be:
I don’t know. I’ve had a good time watching all of the ups and downs. And it’s giving me flashbacks to 2008. But thus far, it seems like it’s going to be a pretty close contest. So I’m interested to see what happens.