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Christina Romer, Who Predicted Stimulus Would Keep Unemployment At 8%, Calls For Even More Stimulus

September 2nd, 2010 by sclemons · No Comments

As Christina Romer, the White House’s chief economist, prepares to leave the Obama administration, she gave a speech to the National Press Club yesterday, where, according to The Washington Post, she urged Congress to spend even more money on more economic stimulus. The Post writes, “Romer did not say how much more she thinks Congress should spend. But in a farewell speech before returning to academia, she said election-year anxiety about the deficit that has blocked much of the president’s jobs agenda this year ‘cannot be an excuse for leaving unemployed workers to suffer.’ . . . Romer . . . has made no secret of her opinion that more federal spending is needed to prevent high unemployment from becoming a permanent condition. Although acknowledging concerns about rising deficits, she has persistently pressed for more spending than most lawmakers – and some administration officials – have been willing to stomach.”

So Romer is apparently urging Congress to spend even more than the failed $862 billion stimulus she championed. Recall that it was Romer who, along with Jared Bernstein, Vice President Joe Biden’s chief economic adviser, wrote in January 2009 that the “unemployment rate with … the recovery plan,” would not exceed 8%. After the bill was signed, Romer said, “I’ve run the numbers. We firmly believe it is going to create about 3.5 million jobs.”

But since then, 3.3 million jobs have been lost, unemployment is at 9.5%, the national debt has surpassed a stunning $13 trillion, and the deficit for 2009 was a record $1.4 trillion.

Dana Milbank attended the lunchtime National Press Club speech, and Romer’s speech and record were enough to do in his appetite: “It wasn’t the food; it was the entertainment. Christina Romer . . . was giving what was billed as her ‘valedictory’ before she returns to teach at Berkeley, and she used the swan song to establish four points, each more unnerving than the last: She had no idea how bad the economic collapse would be. She still doesn’t understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn’t have much of an idea about how to fix things.”

Milbank also points to Romer’s less-than-stellar predictive capabilities, writing, “Romer had predicted that Obama’s stimulus package would keep the unemployment rate at 8 percent or less; it is now 9.5 percent. One of her bosses, Vice President Biden, told Democrats in January that ‘you’re going to see, come the spring, net increase in jobs every month.’ The economy lost 350,000 jobs in June and July.” On her unemployment prediction, Milbank adds, “Without the policy, she had predicted, unemployment would soar to 9.5 percent. The plan passed, and unemployment went to 10 percent.” And The Washington Post notes that few expect things to improve much. “An array of economic data indicate that the recovery is rapidly deteriorating despite last year’s massive economic stimulus package, now estimated to cost $814 billion. The latest jobs report, due out Friday, is expected to extend that streak by showing the jobless rate inching up to 9.6 percent in August as the private sector created only about 42,000 new jobs.”

“No wonder most Americans think the effort failed,” Milbank writes. “But Romer argued, a bit too defensively, against the majority perception. ‘As the Council of Economic Advisers has documented in a series of reports to Congress, there is widespread agreement that the act is broadly on track,’ she declared. Further, she argued, ‘I will never regret trying to put analysis and quantitative estimates behind our policy recommendations.’ But the problem is not that Romer did a quantitative analysis; the problem is that the quantitative analysis was wrong.”

As Milbank explains, “This is why nearly two-thirds of Americans think the country is on the wrong track – and why Obama’s efforts to highlight the end of U.S. combat in Iraq and the resumption of Middle East peace talks have little chance of piercing the gloom as voters consider handing control of Congress back to the Republicans.”

Given the failure of the massive stimulus bill to live up to the Obama administration’s predictions about how it “literally drop-kicks us out of this recession,” it’s remarkable that Romer is calling for even more government spending in the same vein as the stimulus bill.  It’s long past time for a different approach to the economy.

Related:

Rasmussen Reports:

62% of Likely Voters believe Congressional Democrats want to increase government spending

29% Say U.S. Heading in Right Direction

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  • 1 We have a Spending Problem, NOT a tax revenue problem // Jun 30, 2011 at 8:44 pm

    […] Re: We have a Spending Problem, NOT a tax revenue problem Originally Posted by Sheik Yerbuti Fine, then quote his administration "promising" that. Oh, wait, you can’t produce that either. Damn it. Sheik, have you ever managed anything in your life, ever been in control of any business activity, ever had anyone report to you? Obama is the President of the United States and his responsibility is to be a leader and as a leader you can never delegate responsibility. You can delegate authority to get things done but if they aren’t done it is still your responsibility. Obama has zero leadership skills and like you blames someone else for failures. The Obama numbers are his, they are his responsibility, and he can blame no one else for those numbers. Missouri Political News Service’ […]

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