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Jason Furman Is Not The Problem

I'm all in favor of unions and other voices of the left making themselves heard when it comes to the substantive priorities of the Obama campaign and someday (should things go well in November) the Obama administration. But making a fuss over the appointment of economist Jason Furman, because of his association with centrist Democratic economics, seems not the best excuse to do it. And while other smart people--Ezra Klein, Paul Krugman, Matt Yglesias--have weighed in on this, I wanted to chime in, as well.

The contours of the econmic policy debate within the Democratic Party have changed pretty substantially since the 1990s, when centrists (led by Robert Rubin) fought with liberals (led by Robert Reich) over everything from free trade to middle class tax cuts. The basis for this ongoing debate was philosophical rift over how best to boost living standards for lower- and middle-income Americans. The liberals thought it took a stronger labor movement and a more interventionist government, even if, say, that riled the financial markets; the centrists thought that higher economic growth would ultimately help more people, which necessarily meant putting market preferences (for, say, the fastest path to deficit reduction) above all else.

The Rubin wing of the administration won most of those fights--and, for a while, they looked like geniuses. But, as my colleague Jonathan Chait wrote in a 2006 article called "Freakoutonomics," now available here, the last few years have forced a sober reassessment. Living standards for most Americans haven't skyrocketed despite (sometimes) strong economic growth; key elements of the safety net, most notably health insurance coverage, have actually become weaker.

Now the centrists sound more like liberals. As Jon noted, Princeton economist Alan Blinder--a Clinton Administration veteran with pretty impeccable centrist credentials--have been writing articles pondering the loss of jobs to trade, something the Rubinites never did when they were busy trumpeting the virutes of globalization. The Democratic Leadership Council, a historic enemy of labor, called for letting unions organize new workers via "card check"--a change that, if enacted, has the potentially to seriously boost union organizing. Laura Tyson, another Clinton veteran and Rubin ally, started talking up the success of Scandinavia's "flexicurity" model, in which a strong--and, yes, expensive--cradle-to-grave welfare state helped workers cope with the downsides of globalization. (Also in this category is William Galston's new American Prospect essay, "How Big Government Got Its Groove Back.")

Jason's own work reflects this. While he's gotten a lot of attention for a controversial paper suggesting Wal-Mart had its virtues, he was also a staunch--not to mention highly effective--defender of Social Security during the Bush Administration's campaign to privatize it. In a riskier economy, he understood, universal social insurance is even more important. And, like most of the centrist economists I know, he's come out pretty strongly for universal health insurance, as both a necessary step towards controlling health care spending (in the long run) and an essential step for protecitng economic security.

That's not to say the centrists and the Democratic left (which has undergone its own transformation of sorts, particularly on issues like welfare and work requirements) see eye to eye on everything or even most things. You can still get a pretty good argument going between the sides on how best to manage trade, when and where to fix the tax code, not whether but how to deliver universal health are, and so on. Obama's campaign, for all of the excitement it has generated among liberals, was not exactly pushing the boundaries of policy debate to the left. That job fell largely to John Edwards and, to a lesser extent, Hillary Clinton.

So it's fine to watch the Obama campaign's policy moves warily. And it would certanly behoove Obama to keep a diverse and broad set of advisers, representing a wide swath of informed Democratic Party opinion. That means listening to folks like Austan Goolsbee, a University of Chicago economist who is firmly in the centrist tradition and has been advising Obama all along. But it also means listening to the likes of Dean Baker, Jared Bernstein, and Joseph Stiglitz--people who have not only made important critiques of Rubinomics but started doing so before it was fashionable.

But this is where the appointment of Jason Furman actually makes me feel better about Obama, not worse. Like a lot of journalists who write about poilcy, I've frequently consulted Jason while researching articles. And I put great faith in his judgment. He's the kind of expert who will tell you what he thinks, what other people think, and what the research shows--while telling you, up front, that it's not clear which one is right. He's also the kind of expert who changes his mind when new information warrants it. He is, in short, an honest broker and serious intellectual. (He's also a veteran of policy wars in campaigns and the White House, which means he can provide the kind of savvy that even politicians looking to change the culture of Washington desperately need.)

In response to this mini-controversy, the Obama campaign has said it is reaching out to the left side of the economics debate, too, specifically mentioning Baker, Bernstein, and Stiglitz, among others. I take Jason's appointment as a sign that the campagin means it.

Edit: Fixed first reference to Reich. (Thanks tnmats.)  

--Jonathan Cohn