Jared Bernstein, the most prominent Manhattan School of Music alumnus on the White House economic team, has left his job as Vice President Biden’s chief economist. He was the most liberal member of the team, so it’s no surprise that he started a new gig on Monday at the left-leaning Center for Budget and Policy Priorities. He’ll also be blogging, and you can see from his first post that he left the White House because he was frustrated—not with President Obama or his more centrist colleagues, but with the national debate over economic policy in general and Keynesian stimulus in particular. Before he left, we exchanged e-mails about the economy, liberal complaints about the President, and what really fires him up: American Idol.
As you leave government, how do you feel about the economy, and the administration’s efforts to fix the economy?
The economy is not where we need it to be, but it’s unquestionably getting better, moving in the right direction. That’s a huge reversal from where we were when we got here, and that reversal was unquestionably hastened by the actions taken by our administration as well as the Fed.
There are still significant headwinds out there: excess capacity in the job market (high unemployment) and in the factory sector as well; housing bumping along the bottom more than contributing to growth; European debt; rising oil prices; and budget uncertainty. Together, these headwinds have made it tough to hit escape velocity. GDP is growing, and that’s been nudging the jobless rate down, but we need a few consecutive quarters with much higher growth.
But — and here’s the important part — anyone assessing this question honestly has to take full account of where we were, of the economy our administration walked into. The damage was deep and profound. Huge, key markets-housing and credit-were shut down. Leverage was completely out of hand. The Recovery Act and other actions went a long way to partially offsetting that incredible mess-and we worked quickly and efficiently to turn things around. But we’re not done.
Unemployment is still 8.8%. What should Washington be doing about it?
We should be doing everything we can to help create the conditions for more robust job growth. But the key word in your question is “Washington.” And let’s be clear: economic policy must be responsive to the political climate as well, so we need to pursue a policy agenda that exists in the intersection of things D’s and R’s can agree upon.
I think the President’s investment agenda should fit that bill. Both sides agree, or should agree, that to win the future we need to invest in clean energy, innovation technologies, education and infrastructure.
Some of those investments that help seed new, expanding industries here — think 48c [a stimulus program providing grants for factories manufacturing wind turbines and other green-energy components] and infrastructure — can work quickly to help bring down the jobless rate.
Do you think the current political focus on short-term spending cuts and long-term deficit reduction is appropriate, or would you like to see more emphasis on job creation?
They’re both important. Spending cuts are part of the fiscal solution, but we also need to be mindful of the fragility of the current recovery, and the President has tried to build that key insight into our negotiations. The best way to lower the deficit right now is to grow faster. But over the longer run, getting on a sustainable budget path means definitely includes both cutting spending and raising revenue, as in the framework the President rolled out a few weeks ago, and most importantly, lowering the growth of health care costs.
You came from the progressive movement, and you’re returning to the progressive movement; a lot of your progressive allies feel let down by the Obama administration. What do you say to them?
Obviously, things change. Fiscal conditions, the composition of the Congress, global conditions, wars, flu, pirates, etc. But the President’s essential vision of a government where you are not on your own in areas that the market is least efficient, like health care, a government that helps to foster private sector innovation, that temporarily intervenes when needed to at least partially offset market failures…that to me is a progressive vision, and it’s one that Obama has consistently stood for and consistently plotted the way toward.
What is your biggest regret about your time in government? What was the biggest surprise?
I believe I have a very clear vision of what we were trying to do and how well it’s been working–not perfect, by any means. But clearly moving things in a much better direction. My biggest regret was that I was not able to communicate that understanding to the American people.
Not really any surprises. I mean, I knew that some-not all-in the media are all about “gotcha” when it comes to the White House, but I was occasionally surprised by how far they’d go to avoid telling a positive story about something that was pretty much working as planned so as to find a supposed screw up somewhere.
Do you think the rise of Casey Abrams is making the double bass cool? Or was it always cool?
You’re lucky I saw this one last because I would otherwise have been too disgusted to continue. Casey Abrams?!!? The bass has been incredibly cool thanks to, in chronological order, people like: Pops Foster, Slam Stewart, Paul Chambers, Ray Brown, Scott LaFaro, Ron Carter, Dave Holland, Stanley Clarke, and so on. Casey Abrams isn’t even a newcomer…he’s like these guys like I am to Keynes.
That said, he is kinda cool and a pretty good bass player too.