Yale's Levin Might Call For Second Stimulus As Top Economic Adviser
There are hints that Yale President Richard Levin could soon assume a top economic advisory job in the White House, a move that would suggest an ideological shift for the Obama administration. If Levin were to replace Larry Summers as director of the National Economic Council, it's likely he'd push for a more aggressive fiscal policy and perhaps even another stimulus package -- with job creation as a top priority.
The next NEC director will help determine the nation's economic policy over the next two years, once Summers leaves the post by year's end. As the government attempts to repair an economy still crippled from the worst financial crisis since the Great Depression, consumer advocates, with White House adviser Elizabeth Warren as their champion, have clashed with Wall Street sympathizers, who have historically found a hero in Summers. When Obama appoints a new NEC director, his decision will clarify whether the administration is shifting toward the consumer side of the debate.
If his public statements over the past couple years are any guide, Levin, as NEC director, would lean toward the Warren camp. The Yale economist, who has said last year's stimulus package was both misdirected and too small, would likely support a policy of public works spending and proactive intervention in the banking sector. When Charlie Rose asked Levin in July of last year if he subscribed to the belief that the economy needed a second stimulus package, Levin responded, "Sign me up."
Levin has neither confirmed nor denied whether he's in the running for the top advisory job. After Bloomberg News reported on Friday that Obama had discussed "economic positions" in the administration with Levin, the Yale president told the Yale Daily News that "I love my job, and I'm not looking to leave." Pundits speculating about the replacement for Summers, who will return to a professorship at Harvard by year's end, have guessed the president's choice will be someone with real-world business experience.
Levin's office didn't immediately respond to requests for comment.
In a speech at Yale in April of last year, Levin laid out his reservations about the stimulus. After saying "the current policy response may be small, relative to the size of the shock," Levin criticized the tax cuts that came in the February stimulus package, saying they wouldn't do much to promote economic growth. When people are in debt, Levin argued, their extra cash goes to lenders.
"They're going to pay off their credit card debt, they're not going to spend it. So the temporary tax cuts that were enacted under this program are essentially worthless," he said. "The stimulus package should have been all direct job creation and not tax cuts."
Levin said the government money would have been best used to fund construction projects, in an effort to directly create jobs. In his conversation with Rose a few months after the Yale speech, Levin repeated that idea.
"Take the projects that are already being funded by states and governments -- there's a school being built right on my block in New Haven, Connecticut." Levin told Rose. "Double employment on these projects tomorrow. Tell people, go hire more subcontractors. Give them the money to accelerate the rate of these construction projects."
A devotee of economists James Tobin and John Maynard Keynes, both of whom believed the government should play a central role in regulating markets, Levin has also spoken in support of aggressive Wall Street regulation. To resolve banks' rotten balance sheets, Levin said in April, the government should have broken them up.
"The answer is: seize the banks. Split them along Glass-Steagall lines, the way that banks were before the Clinton repeal of Glass-Steagall in the 1990s," he said. "You structure the balance sheet so that the thing you now created as a commercial bank is viable, has positive value. And then sell it."
Generally, Levin's colleagues at the university seemed either unwilling or unable to express their opinion on their president's policy leanings.
"He plays his cards pretty close to his vest," Judith Chevalier, a professor at the School of Management and a former student of Levin's, who graduated from Yale in 1989, said. "He's pretty self-conscious about not staking out policy positions on matters that don't have a direct impact on the university."
Numerous professors in the economics and political science departments at Yale, as well as the School of Management, declined to comment, with most claiming ignorance of Levin's economic policy views. Others simply didn't want to talk.
"His views are well-known," said Ray Fair, a prominent Yale economist. "We live on the same block and everything, so I'd just as soon not talk about my colleague."
UPDATE: A spokesperson emphasized that the president has not made an official decision about the next NEC director. "The president has not made a decision and he is considering a number of qualified candidates," White House spokesperson Jennifer Psaki said.