Don't pull back on stimulus
Christina Romer takes a shot at those arguing signs of recovery are a signal to cut back on stimulus spending.
"Immediate fiscal contraction would inevitably nip the nascent economic recovery in the bud -- just as fiscal and monetary contraction in 1936 and 1937 led to a second severe recession before the recovery from the Great Depression was complete," said Christina Romer, who heads the Council of Economic Advisers.
Romer, in a speech to the National Association for Business Economics, also said President Barack Obama's $787 billion stimulus package had been successful in pulling the economy out of a deep recession.
However, she said additional measures were necessary to bring the jobless rate down from the current level of 9.7 percent, which she called "a terrible number by any metric."
One analogy I've found helpful on this stuff is antibiotics. People frequently get a packet of antibiotics and stop taking them halfway through because they're feeling better. But they're feeling better because the antibiotics are working. If they pull back before the antibiotics have finished killing the bacteria, then the underlying problem is still there, and they get really sick. The fact that the economy is getting a bit better isn't evidence that the crisis is over. It's evidence that the interventions are working, or at least appear to be working.
Which is why it's a good thing that the Senate broke a filibuster yesterday to move forward with $150 billion in aid for the unemployed and tax breaks. Oh, and while we're on the subject, don't ever let Blanche Lincoln talk about the evils of backroom deals: The bill "includes more than $1 billion in emergency agricultural aid sought by Sen. Blanche Lincoln, who faces a tough reelection race."
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