New White House Top Economist Says Unemployment Benefits Are Not Stimulus


Gotta love the cognitive dissonance:

Princeton University economist Alan Krueger, who will replace Austan Goolsbee as the White House’s chief economic advisor, “is likely to provide a voice inside the administration for more-aggressive government action to bring down unemployment and, particularly, to address long-term joblessness,” according to a report in the Wall Street Journal.

But will Krueger’s recommendations jive with the president’s apparent economic and political agenda? Krueger co-authored a paper for the Handbook of Public Economics in 2002 that seems to undercut the economic argument for extending unemployment benefits. The paper found that those benefits tend to increase the length of unemployment by discouraging the search for a new job, and may actually encourage layoffs. Conversely, the paper also found that unemployed persons who are ineligible for benefits search harder for a job and are therefore unemployed for less time.

So, will Kreuger stick by his 2002 conclusion, or will he bow to the boss’ preference for massive spending and endorse something that he, himself, used to think made the problem worse?

And, another question, did the Obama White House vet Kreuger before offering him the job, or is this going to be another of those surprise, surprise, surprise moments?

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About Conservative Wanderer

Conservative Wanderer is currently Editor-in-Chief of That's Freedom You Hear! That means anything that goes wrong can be blamed on him. Previously he was a contributor to the PJ Tatler.
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