A case of the squeaky economic advisor getting the grease? On Wednesday, Bloomberg News reported that former Federal Reserve Chairman Paul Volcker was blaming Lawrence Summers, Obama's National Economic Council director, for "delays" in the setting up of an economic recovery advisory panel. Cue a slew of stories about nascent infighting and turf wars among the Obama economic team.
On Friday, the panel's members were announced. And at first glance, it certainly doesn't lack for diversity. In addition to Volcker as chairman and Austan Goolsbee as chief economist, the Economic Advisory Board includes the corporate elite: Jeffry Immelt, CEO of G.E.; and labor: SEIU's Anna Burger and AFL-CIO's Richard Trumka. There's new economy: venture capitalist John Doerr; and old: Jim Owens, CEO of Caterpillar. There's a veteran from the Reagan administration: Martin Feldstein; and a veteran from the Clinton years: Laura D'Andrea Tyson.
The full list can be found here.
The new panel won't lack for work. Whether or not the Senate votes on a stimulus bill on Friday, Treasury Secretary Timothy Geithner is expected to announce the Obama financial bailout plan early next week, and the economy is clearly in worse shape than ever. Indeed, it is hard to overstress how serious the situation is right now. As economist Brad Setser noted Friday morning, the fall in industrial production already registered in this recession is greater than the average fall of all the recessions since World War II.
But in an average post-World War 2 recession, the economy would be recovering by now -- not getting worse. If things don't improve, the current fall may match the biggest fall in the post war data.
Crack the whip, Mr. Volcker! You've got your panel. Now tell us what to do.