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Exiting Romer to call for more spending

romer3.jpg

Christina Romer with Treasury Secretary Timothy Geithner, President Obama and economic advisor Lawrence Summers in March 2009.

(Photo credit: Bill O'Leary/The Washington Post)

In her final speech as White House chief economist, Christina Romer on Wednesday will call on Congress to summon the political will to approve additional spending on the economy.

"Given our long-run fiscal challenges, any additional support should be done in a responsible way...But concern about the deficit cannot be an excuse for leaving unemployed workers to suffer," Romer will say, according to excerpts of the speech distributed in advance by the White House. "We have tools that would bring unemployment down without worsening our long-run fiscal outlook, if we can only find the will and the wisdom to use them."

The speech, to be delivered at 1 p.m. at the National Press Club, underscores Romer's longstanding view that the chronically high jobless rate requires additonal government action. With unemployment stuck at 9.5 percent - and forecast to stay above 9 percent through much of next year - Romer has been a champion for additional spending, such as the $26 billion in state aid recently approved by Congress.

That $26 billion sum was barely half what the administration requested, whittled down by election-year anxiety about the deficit. Another measure, aimed at boosting small-business hiring, is pending in the Senate. But Romer - an expert on the Great Depression - has made no secret of her opinion that additional federal spending to spur job creation is needed to avert years of high unemployment.

Obama said earlier this week that his advisers are discussing another possible jobs measure. People with knowledge of the talks said such a package is likely to include more tax breaks for business beyond those in the small-business bill, possibly including another temporary reduction in payroll taxes for new hires.

Romer announced last month that she would step down as chair of the White House Council of Economic Advisers to return to her old post teaching at the University of California at Berkeley. Though she said the move was primarily for family reasons, Romer is also in the running to head the San Francisco Federal Reserve Bank.

The White House has yet to name a replacement to the three-member council; the posts are subject to Senate confirmation.

By Lori Montgomery  |  September 1, 2010; 8:59 AM ET
Categories:  *Economic agenda , Budget and fiscal policy , Federal Reserve , U.S. Economy , Unemployment  
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Comments

I respect Dr. Romer and very much regret her departure. (There are good high schools in the D.C. area!)
But the ref. to unemployed suffering worries me. Here in Orlando, a ground zero for both employment and house price meltdowns, many (many) un- or under-employed people do not qualify for a cent of unemployment. They were self-employed, contract, contingent or the like and not 'straight' salary workers.
The so-called 99ers look like princes to us, having been locked out of the system. Those in unions perhaps like this method, but it looks unfair to those whose entrepreneurship cost them participation in easing 'suffering.'
Please keep these folks in mind and stop funding the same people over and over for unemployment. Share the (relative) wealth fairly.

Posted by: FloridaChick | September 1, 2010 10:20 AM | Report abuse

There is little question that our current economic condition requires more government action. The big problem is just what kind of action. Unfortunately, too many people throughout the political spectrum do not understand the nature of intelligence or the concept of investment. They believe that some wand that floats money in front of people through lower taxes, lower interest rates, make work jobs, or some form of handout is going to magically fix our economic problems. Unfortunately, the only realistic way to improve our economic prospects is through the application of intelligece and the intelligent choice of investments in the real economy. We have to make much more effort to understand why people are unemployed and what prospects there are for them to fit into our economic future. We have to understand who can benefit from training in new skills and how to make that training available to them. We have to understand what available skills are being under used and what investments the government can seed that would generate a product from those skills instead of letting them go to waste in unemployment. We need to focus on our economic future and not our past patterns of overemphasis on housing construction and financial speculation. We need a trackable plan on how we are going to reduce our trade deficit with China. We need investments that will increase energy availability and decrease our dependence on foreign oil. The government needs to apply its intelligence to understanding what part of the effort the private sector is carrying and what part it is not. It needs to step up to directly addressing the gaps either by working with the private sector on making specific investments or seeding the effort with direct government investments. Deficits that result from investments are likely not to be a problem if some of those investements pay off. The important characteristic of an investment is its potential to create an asset or business that earns money that can pay back the cost of the investment and more.

Posted by: dnjake | September 1, 2010 10:50 AM | Report abuse

I sense the economy getting better already,
due to the possible takeover of the House
by Republicans and possibly Senate, too.

Posted by: ohioan | September 1, 2010 1:58 PM | Report abuse

Good lord, it couldn't be more obvious that this lady has no idea what she is doing. Did you see the end of the article where she can go back to teaching at Berkley and is being considered to head a reserve bank. Only in the government and academia does failure get rewarded with a six figure salary.

Posted by: peterg73 | September 1, 2010 2:50 PM | Report abuse

I didn't go to Harvard, Yale,or Berkley. I am not an expert on the great depression as Ms Romer, and and others in the administration claim to be. I did take economics 101, management and follow on courses. And I know in my heart there is no way this economy is going to turn around as long as there are incredible ''unknowns'' lurking out there. How can a CEO produce a BUDGET if he really doesn't know what the cost of capital and the ramifications / cost of health care are. Please tell me what exactly will be in the Chris Dodd bill which is not even fully written as yet.And while we are at it, lay out for me whether taxes will be mandated / increased or repealed. With this type of uncertainty looming, CEO's and small business are simply going to sit on their hands and wait for a better picture. NO AMOUNT of stimulus will change that fact! !!And by the way, no amount of unemployment extensions will change the picture either. In the meantime, politics will prevent trillions of dollars sitting on the sidelines from entering the market! I am not a big Republican fan, but at this point, I hate stimulus and stupidity even more! ! !

Posted by: fmsovich | September 1, 2010 4:57 PM | Report abuse

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Posted by: josecailin1 | September 2, 2010 4:50 AM | Report abuse

When someone who understands profit is not a function of overhead.Business needs stability of government policy.And tax credits are a scam.But we have a political group of professional protesters running the government, The fed has got to be pulling what hair they have left out.I can however attest to the fact my bank is making money. I am catching strange new charges, and must bring a role of toilet paper to visit my money.

Posted by: Anonymous | September 2, 2010 5:16 AM | Report abuse

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