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Goolsbee Gone: Obama's Economic 'Dream Team' Evaporates

Last night's abrupt resignation of President Obama's top economic advisor was leaked as the country experienced the Weinergate maelstrom. While the country was gripped by the latest depravity committed by the elites who profess they know how to improve our country, it was easy to miss the announcement and its ramifications.

The sudden announcement that the president's remaining academic economist, Austan Goolsbee, was heading for the exits was a strong indication of our national economic crisis and the turmoil at the top: he resigned after only nine months at the helm. Goolsbee headed the President's Council of Economic Advisers, Obama's assembled "wise men." Last night Goolsbee told his staff he will hang it up for good and return to the calm of university life.  

Two and a half years ago, Goolsbee was part of President Obama's so-called economic "dream team." Now he is gone, and new poll numbers suggest Obama's bid for re-election is seriously imperiled by the "Summer of '11." The president truly looks vulnerable, bereft of ideas for economic recovery.

This is a dramatic turnaround for a president who, after all, seemed to be only about ideas. He had many: Guantanamo Bay, rendition, climate change -- even ideas about the Cambridge, MA, police's behavior. But these ideas only work in a comfortable and affluent society. The singular idea of how to create comfort and affluence? That has eluded the president and his small army of left-liberal intellectual economists. They have only had the idea of advocating FDR-style expansions of federal spending, entitlements, and government regulations. That didn't work, so Goolsbee is headed back to academia.

Two days ago, CBS News reported chronic unemployment is the worst since the Great Depression. And Goolsbee's announcement occurs less than a week after unemployment officially shot up to 9.1%, manufacturing numbers plummeted, and the housing crisis deepened in virtually all markets.

With Goolsbee's departure, the collapse of the president's economic team is nearly complete. The first to leave was the president's original chair of the Council of Economic Advisers, University of California-Berkeley economist Christina Romer. She holds the distinction of predicting an $800 billion stimulus program would bring joblessness down to 8%.  Also gone is Jared Bernstein, the actual architect of the stimulus, and the man who was behind Vice President Biden's "Summer of Recovery."

Other members who have abandoned the president are National Economic Council Director Lawrence Summers, the president's budget chief Peter Orszag, and Paul Volcker, the chairman of the Economic Recovery Advisory Board.

There are hints of Herbert Hoover in the air.

This leaves Treasury Secretary Timothy F. Geithner, who has been in place from the beginning. Geithner continues to claim economic recovery is just around the corner, but he has been proven wrong time and again, including on his claim this spring that skyrocketing energy and food prices have no effect on the economy. Interestingly, this myth was disputed this morning on CNBC by Federal Reserve President Richard Fisher:

Well, obviously, when energy and food prices go up, consumers particularly as shocked as they are, still coming out of the post traumatic shock syndrome, they're coming out of the syndrome and they see another hit at the gas tank or when they go to Applebee's to buy a meal or wherever it may be, real people, they're going to have to bye clothing for their children back to school or for summer. It has hampered economic growth.

The connection between prices and recovery may be self-evident to laypeople, but not to the intellectuals and political advisers who surround the president. When asked how to resuscitate the economy, Fisher said the administration had to "lift the fog of regulations," cut federal spending, and rein in unfunded liabilities presented by Social Security, Medicare, and Medicaid. "The unfunded liability is so deep," Fisher said, "we've buried our children in them."

The president faces a political unraveling just as he has to decide his strategy on raising the debt ceiling above $14.2T. He could have returned to his centrist moment last December, when he renewed the Bush tax cuts and called for a (tiny) tax holiday for workers. But those days have disappeared, and the president's shrill denunciation of Rep. Paul Ryan's budget proposal seems to be his current script.

The president is suffering record low poll numbers. A new Washington Post-ABC News poll shows "Americans’ disapproval of how he is handling the nation’s economy and the deficit has reached new highs." A new Zogby poll says the percentage of voters who think the president deserves to be re-elected is at 41%.

Austan Goolsbee may have gotten the message. Does the president?