a citizen’s journal by Thomas Nephew

(UPDATED) Austan Goolsbee, International Man of Mystery

Posted by Thomas Nephew on 5th March 2008

Last weekend news broke that the Obama campaign had quietly told Canadian officials that Barack’s anti-NAFTA talk might just be swill for the rubes. The revelation can not have helped Obama’s chances in Ohio today, where NAFTA-skepticism runs deep. After initial denials by the Obama campaign, it developed that University of Chicago tax policy guru and Barack Obama advisor Austan Goolsbee had in fact visited a Canadian consulate, and had in fact spoken to them about NAFTA. Michael Luo reports in today’s New York Times that a memorandum by Canadian consular officer Joseph DeMora says that

…Professor Goolsbee assured them that Mr. Obama’s protectionist stand on the trail was “more reflective of political maneuvering than policy.”

It also said the professor had assured the Canadians that Mr. Obama’s language “should be viewed as more about political positioning than a clear articulation of policy plans.”

For his part, Goolsbee says that was DeMora’s gloss, not Goolsbee’s exact words.

I’ve purposely tried to describe the impression the news gave, rather than the absolutely verified, 100% accurate truth behind it, because Obama’s campaign has (in my opinion) basically lived by two things: making a good — no, great — impression of standing for change and a new kind of politics, and by running a tactically brilliant campaign. Goolsbee’s visit has undermined both advantages. If Obama fails to land a knockout blow tonight, it’s possible Goolsbee will have done even more than Hillary’s deeply regrettable (and somewhat ridiculous) “3AM phone call” to cause that result.

The truth appears to be that Goolsbee was acting on his own initiative and at the invitation of the Canadians, rather than as an emissary with a “don’t worry” message from the Obama campaign. However, the truth also appears to be that (1) Professor Goolsbee was unable to resist the invitation, and (2) he was then unable to stick to “nice weather we’re having” once he got there. The point is there was absolutely no upside for Obama in Austan’s visit to a Canadian consulate. Obama did not need to nail down Canadian approval of his finely nuanced views — he needed to nail down the approval of Ohio voters.

While learning what Goolsbee told a Canadian consulate is interesting, it’s more important what Goolsbee thinks — and how much that matters. My admitted bias is to think anyone who gets favorable mention by George Will, pens a glowing Milton Friedman eulogy, and gushes about having his picture taken with David Brooks can’t be all good. (But then, I’m the kind of hateful ideologue who wanted John Roberts filibustered, too, and look how well he’s turned out.)

In his widely noted profile of the Obama policy team, The Audacity of Data, Noam Scheiber describes Goolsbee as “an almost unprecedented figure in Democratic politics: an academic economist with a top campaign position and the candidate’s ear.” Scheiber depicts the Obama domestic team as gifted engineers compared to the theoretical physicists of the Clinton 1990s:

Reich and Galston are the kinds of people who’d sketch out the idea for time travel in a moment of inspiration. Goolsbee et al. could rig up the DeLorean that would actually get you back to 1955.

But Ezra Klein recasts the group portrait persuasively, saying Obama’s domestic team is fairly conventional and cautious, with ideas like opt-in 401Ks and automatic tax returns that have been proposed before:

…Obama’s team may be hardheaded empiricists, but they are also decidedly conventional. Whatever else you want to say about the health plan David Cutler wrote for Obama, it’s not the perfect world proposal you’d come up with from a long, hard look at the data. It’s not even what you’d come up with from David Cutler’s look at the data. It’s just a conventional, mainstream, Democratic health care plan that looks a bit cautious in light of Edwards and Clinton’s proposals, and would’ve looked more solidly ambitious if it had come out in 2004. But it doesn’t bespeak any unique approach on the part of Obama’s team. Rather, it’s verging on generic.

And little is more generic and mainstream among academics and well-connected economists than nodding wisely about the myriad benefits of NAFTA-style free trade — or, in what appears to be Goolsbee’s distinctive twist, low-balling its negative effects. I think that the upshot is that Obama’s domestic policy team is both the backwater and the Achilles heel of the Obama campaign, and possibly of his presidency — particularly if you harbor progressive/liberal hopes for the next administration, but even if you just want to avoid major mishaps.

Let’s say that Obama sincerely believes that in a perfect world he would use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced.” The question is, is this something he’s willing to go to the mat for, is it something he and his staff take seriously?

In a way, the clearest indication of Goolsbee’s actual importance — and hence of the portfolio of issues he advises Obama about — is that Obama officials “campaign officials did not know about the meeting when it was held.” (“Say, where’s our top economic advisor in the middle of a primary that’s about economic issues? No one knows? Whatever.”) Meanwhile, said advisor either didn’t realize or didn’t care that renegotiating anything about NAFTA would be a good deal more difficult if he made any noises whatsoever to the effect that Mr. DeMora wrote down.

That’s actually my favorable interpretation of l’affaire Goolsbee. The less auspicious one is that, as often the case with campaigns, the problem actually does go to the top. On the substantive domestic policy differences I’ve looked at, I score Clinton ahead slightly on points — and add a penalty for Obama often running aggressively to her right on those slight differences. This may not be the fault of his allegedly pragmatic economic advisors — it may be that his political staff believes there’s a need or an advantage to that. Either way, I’m resigned to being a critic of the domestic policies of an Obama administration, rather than looking forward to them.

Goolsbee may not have been a messenger — but he still may have accurately conveyed an “on the other hand” sense he got directly from Obama, whether that was Obama’s own last word on the subject or not. Obama has the gift — and/or curse — Bill Clinton had of being able to be all things to all people, perhaps including Goolsbee. (Witness, for example, the bemused “not so bad” reactions to his statements on Israel by both uberhawk Marty Peretz on the one hand, and peacenik Matthew Yglesias on the other; sooner or later, one of them will be disillusioned.)

As Mick Arran and David Sirota have pointed out, Obama’s “fair trade” credentials aren’t all that great. He voted for a Peru agreement with labor standards built on the sand of the 1998 ILO Labor Declaration rather than on the rock of its legally justiciable conventions, and for a Panama agreement that will arguably turn that country into more of a corporate tax shelter than a free and fair trade partner. Obama reportedly didn’t meet with labor groups opposed to the pacts. All but predicting this week’s headlines, Sirota wrote last November:

And so this is what we get – a kabuki dance from candidates who pray that voters are too dumb to figure it all out. Here we have two candidates going before workers telling them they will really represent them by opposing sell-out trade deals, and then telling the elite political Establishment that actually, they will continue voting for those very same trade deals when they hit the floor of the Senate.

Meanwhile, Obama’s predilection for “behavioral economics” types and academics may be data-driven and farsighted — or they may both be evading tough decisions in favor of cautious policies and small proposals that don’t do the good that’s needed.

Obama did well with Iraq, and at $3,000,000,000,000 (that’s trillion) and counting, that’s not “just” a foreign policy and moral issue, but an economic one too. But Obama’s reputation with voters as a “change agent” is a perishable commodity; a charge of hypocrisy that sticks could cripple a campaign fueled by the idealism of millions. He really can’t afford to have advisors running around giving their own “back to the future” interpretations of his thinking to anyone canny enough to invite them.

In the short run, the mystery is why he hasn’t canned the one who did. In the long run, it’s which Obama plans to show up in the Oval Office: the fiery NAFTA skeptic, or the follow-the-leader Panama and Peru “yea” vote.

UPDATE, 3/5: See also this discussion at fact-esque. Today eRobin writes, “I hope Obama went to bed last night realizing that trade deals make a real difference in real people’s lives now that one has made a difference in his. Welcome to Pennsylvania.”
UPDATE, 3/13: Via jbc, Mark Kleiman feels the story has been debunked by this report — “Anatomy of a Leak: What We Know about NAFTA-Gate” by the CBC’s Neil MacDonald. One of the key passages is here:

DeMora, it turned out, did not write his summary until five days after the discussion had taken place. And he had no direct quotes to support his characterization of Goolsbee’s remarks.

Thus, some of the most explosive statements attributed to Goolsbee — in particular, the “political positioning” one — have been disavowed by the Canadian Foreign Ministry. MacDonald is a professional reporter and I’m not, so I assume he has an explanation for the “(unintelligible)” comment inserted into the memorandum by DeMora just after he reported that remark. That seemed to me like something you’d do for a hard-to-hear part of a recording of the meeting, but it could also be how DeMora wrote up a scribbled “?” from his notes.

To me, the question remains why Goolsbee made the visit at all, and whether the official Canadian disavowal of the memo is mainly due to professional mortification at its being leaked in the first place. But I should also acknowledge that these days Canada is unlikely to be undercutting the US in labor laws, at any rate. On the other hand, NAFTA also has sovereignty-undermining effects that have been exploited in the US by Canadian companies (and in Canada by US companies), though the examples in the US are more about circumventing environmental regualtions than labor ones.

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