US: Obama's economist

Wednesday, May 21

Since Bill Clinton embraced free trade and supported the North American Free Trade Agreement (NAFTA) in the early 1990s, Democrats have been divided on whether to continue his pro-business free trade stance or turn protectionist in the name of 'sheltering' US jobs.

Obama continues the tradition of most Democratic candidates running for national office, railing against the 'evils' of free trade, while hesitating to vote for meaningful protectionist legislation. His lead economic adviser is Austan Goolsbee, an Chicago economics professor who is in his late 30s.

In an embarrassing event for the Obama campaign on the eve of the Ohio primary in March, Goolsbee told a Canadian diplomat that his candidate needed to criticise NAFTA on the campaign trail and say the pact needed to be amended. Yet he assured the diplomat that this was mainly just for 'campaign purposes' in heavily working-class Ohio, and that Obama would not be an anti-trade president.

Although Goolsbee's observations were probably close to Obama's true position, he also has some economic advisers who are pushing more protectionist positions. Obama has staked out positions against new free trade agreements (FTAs), including a planned deal with South Korea.

Obama's hesitant support for tree trade suggest and penchant for activist spending programmes suggest that his economic policy thrust may be to the left of former President Bill Clinton's approach. At the same time, he has resisted some popular but economically unsound proposals -- like the temporary gasoline tax holiday favoured by rivals Hillary Clinton and John McCain.