President Obama’s selection of Alan Krueger as the new chairman of his Council of Economic Advisors (CEA) comes as the president prepares to launch a jobs program to tame a 9.1% unemployment rate that could thwart his re-election campaign. So it’s noteworthy that Kruger, a 50-year-old Princeton professor, is regarded as one of the country’s leading labor economists, an expert who has studied unemployment, the minimum wage, and education. In 2006, he earned top honors from the Institute for the Study of Labor for research on the relationship between school quality and test scores. “With 25 million people unemployed, it’s fitting and appropriate that one of the country’s preeminent labor economists heads the CEA,” says Robert Reich, who served as one of the Clinton Administration’s labor secretaries.
Krueger is also familiar with Washington. In the mid-1990s, he spent two years as the Labor Department’s chief economist, and held the same post at the Treasury Department in 2009 and 2010. Experts say his ability to bounce between the ivory towers of academia and the federal bureaucracies of Washington makes him an ideal pick for the post. “He doesn’t try to make the theory fit the facts,” says Reich, Krueger’s former boss at the Department of Labor. Martin Baily, a senior fellow at the Brookings Institution who served as President Bill Clinton’s CEA chair between 1999 and 2001, says that Krueger is “open to ideas, and anything that can be done to get the labor market moving.” In announcing Krueger’s nomination at a Rose Garden ceremony Monday, President Obama said the CEA provides crucial analysis, “not based on politics, not based on narrow interests, but based on evidence.”
Krueger assumes the post with the job market still reeling from the Great Recession. The U.S. poverty rate is 14.3%, the highest since the mid-1990s, and a record 45.8 million people receive food stamps. But as Krueger tries to devise strategies to jump-start the labor market, he will face political opposition from Congressional Republicans, who are staunchly opposed to the kind of fiscal stimulus many economists say is necessary to revive the flagging economy.
Liberal economists are betting Krueger won’t wilt in the face of these challenges. “This is the worst labor market since the Great Depression. It’s time for bold action, and the president needs to know what must be done regardless of political feasibility,” Reich says.
Krueger, says Joseph Stiglitz, who served as President Clinton’s CEA chair between 1995 and 1997, should be a champion for programs that can create jobs and combat growing economic inequality — and, ultimately, push President Obama to make both a part of his re-election platform. “The image of America as a land of opportunity, of the Horatio Alger story, is less and less true, and Americans don’t want to hear that,” Stiglitz says, adding: “The challenge for Alan will be, how to get people on all sides talking about it in a way that’s not seen as hostile.”
But it’s highly likely that Republicans–who have made slashing federal spending the centerpiece of their political philosophy during Obama’s tenure–will refuse to consider new stimulus. In which case Krueger will have to navigate the gap between what theory dictates and what reality allows.