Romer Regrets
Tim Mak synopsizes a farewell to the troops delivered by outgoing chairwoman of President Obama's Council of Economic Advisers Christina D. Romer. Unbowed, Romer says debt is still the answer:
"While we'd all like to find the inexpensive, magic bullet to our economic troubles, the truth is, it almost surely doesn't exist. The only surefire way for policy makers to increase aggregate demand in the short-run is for the government to spend more and tax less. And in my view we should be moving forward on both fronts… the key is that we need to take action, and we need to do it quickly."
The one-time fiscal stimulus skeptic remains perplexed by the failure of the American Recovery and Reinvestment Act. It's popular these days to use nobody-else-expected-it-either defenses and to puff out the scope of the Great Repression as an explanation for your own failure. Romer plays along on both counts:
"To this day, economists don't understand why firms cut production as much as they did, or why they cut labor so much more than they normally would," said Romer. "The current recession has been fundamentally different from other post-war recessions… Rather than being caused by deliberate monetary actions, it began with interest rates at low levels… Precisely what has made it so terrifying, and so difficult to cure, is that we have been in largely uncharted territory."
Regrets? Too many to mention:
As Romer leaves the administration, she says that her only regret is that there is so much left to be done in order to ensure a stable economic recovery. "Policy-makers need to find the will to take the steps needed to finish the job and return the American economy to full health," said Romer.
Now that sounds like a plan!
Read the full speech [pdf], then come back and we'll talk about whether any slackjawed bumpkin could still be falling for this pile of…Oh hey! It's Ezra Klein!
