Interview with White House Economic Advisor Austan Goolsbee

Interview with White House Economic Advisor Austan Goolsbee

By The Situation Room - September 8, 2010

WOLF BLITZER: President Obama put on the brass knuckles today for a new attack in Ohio on the man who personifies Democrats' worst fears for the fall election. That would be the minority leader, John Boehner, the man poised to become the new speaker of the House if Republicans win back control of the Congress.

Just a short while ago, Mr. Obama offered a stinging assault on Republican economic policies from President Bush to Congressman Boehner, and he did it in Boehner's home state.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A few weeks ago, the Republican leader of the House came here to Cleveland and offered his party's answer to our economic challenges. Now, it would be one thing if he had admitted his party's mistakes during the eight years that they were in power, if they had gone off for a while and meditated and come back and offered a credible new approach to solving our country's problems.

But that's not what happened. There were no new policies from Mr. Boehner. There were no new ideas.


BLITZER: The president gave voters something more than fiery words. He also argued his case to let the Bush tax cuts expire at the end of this year for the wealthiest Americans -- individuals who earn $200,000 a year or more, couples who earn $250,000 a year or more. That's about 2 or 3 percent of the country.

He wants Congress to extend the Bush tax breaks for everyone else.

The president also is proposing $200 billion in tax cuts for businesses to buy new equipment. Those businesses would be able to write-off 100 percent of their new investments through the end of 2011.

And joining us now from the North Lawn of the White House, Austan Goolsbee, the president's economic adviser.

We're getting in this reaction from John Boehner, the Republican leader in the House. The president was pretty critical of him in his speech in Cleveland.

Here's what Boehner says: "If the president is serious about finally focusing on jobs, a good start would be taking the advice of his recently departed budget director and freezing all tax rates, coupled with cutting federal spending to where it was before all the bailouts, government takeovers and stimulus spending sprees."

He's referring to Peter Orszag, the budget director during the Obama administration, who wrote a piece in "The New York Times" this week: "For the next two years, keep tax rates, including for the wealthy, exactly where they are right now."

AUSTAN GOOLSBEE, COUNCIL OF ECONOMIC ADVISERS: Well, look, I think Representative Boehner is a little confused about what Peter Orszag was suggesting and threw in on that second bid, let's go back to the final Bush budget of 2008, as if that were the -- the gold standard that we wanted to return to, when, in fact, that was the -- the final culmination of exactly the policy that got us into this mess.

BLITZER: Well, he -- he -- I guess, to be precise, Peter Orszag was not recommending the second part of what John Boehner was saying in that statement, only the first part. But -- but here you do have Boehner and Orszag agreeing --


BLITZER: -- keep tax rates where they are for two years --

GOOLSBEE: No. No, hold up --

BLITZER: -- don't increase tax rates during a time of economic crisis on anyone. GOOLSBEE: No, no. Wolf, the -- the Orszag piece was a political piece, it wasn't about economics -- in which said he thought that it would be a compromise that if you had two years, then you could get rid of those -- the tax cuts for the highest income Americans. John Boehner is not for that. This is just an old Republican gimmick of take what you can get then and in then in two years, ask it to be permanent.

Ask Representative Boehner, does he want to make permanent, for $700 billion, the Bush tax cuts for people making more than a quarter million dollars a year?

He does. He's been for it all along. And he's just trying to get a nose under the tent to do that.


GOOLSBEE: We cannot afford $700 billion for that purpose. And every objective analyst that has looked at it has emphasized that tax cuts for millionaires have the lowest bang for the buck of any measures that we could possibly take and we shouldn't extend those.

BLITZER: You're --

GOOLSBEE: And. The president has made that clear.

BLITZER: You're right, John Boehner doesn't want to raise taxes on anyone right now -- rich people, middle class, poor people, anyone.


BLITZER: But -- but I -- I want to be precise. Peter Orszag says at least for two years, keep the tax rates --

GOOLSBEE: No, not --

BLITZER: -- where there are right now.

GOOLSBEE: No, Wolf, he did not say at least for two years. He said --

BLITZER: He said for two years.

GOOLSBEE: -- do it for two years --

BLITZER: That is correct.

GOOLSBEE: -- in order to get them to give them up after two years. I disagree with his political calculation. And let's put it a different way. When the -- when the minority leader in the House of Representatives is taking political advice from the economists that have left the Obama administration, I guess I'm a little confused.

BLITZER: Here's what "The Wall Street Journal" wrote in an editorial this -- this week. I want you to respond: "Never before has government spent so much and intervened so directly in credit allocation to spur growth. Yet the results have been mediocre, at best. In return for adding nearly $3 trillion in federal debt in two years, we still have 14.9 million unemployed. What happened?"

That's the question "The Wall Street Journal" asks.

So what happened?

GOOLSBEE: Well, what happened is we went into a recession beginning in December of 2007 that was the worst since 1929. And it is a very deep hole that we have been struggling to get out of. After 22 months of straight job loss, for the last eight months, there has been private sector job creation. What. The president has emphasized repeatedly and outline again today in his remarks in Ohio, is that the only way that our recovery is sustainable is if we get the private sector to stand up.

Let us not forget that when the president took these policies, it wasn't for fun. It was because the economy and the private sector were in freefall, following the policies -- many of which it sounded like Representative Boehner wants us to return to. When we were following those policies, the economy collapsed. And we have been trying to rebuild it. We have come a long way. We're on the right path. But we've got a long way to go.

BLITZER: I can't -- I can't tell you how many business leaders -- big business leaders who were big supporters of President Obama on Wall Street in the banking industry, the financial sector, keep asking -- especially this week, following the president's speech in Milwaukee and then in Cleveland -- why does the president keep demonizing Wall Street?

GOOLSBEE: Well, look, the president outlined today a deliberately pro-market, pro-private sector agenda in which the government is going to be spending money on tax credits to encourage business to locate their research and development investments here in America and giving them full tax write-offs of all of their factory or equipment spending for the next year. So I think if you go ask businesspeople, they will actually find much to like about this policy.

And truth be told, until the last few weeks, most Republicans would have been for that policy. So I am hopeful that there is common ground here, that we can all agree that all patriotic Americans should be for growing jobs, investing in this country in research and development in factories and in equipment. And that's what the president is trying to enable. And just opposing it for the sake of opposing it is not productive.

BLITZER: Austan Goolsbee is the adviser -- the economic adviser to the president.

Thanks, Austan, very much.

GOOLSBEE: Great to see you again, Wolf.


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