Departing White House Economic Adviser Urges More Spending
September 1, 2010 - 4:09 PMThe departing chair of the White House Council of Economic Advisors says the government should 'spend more and tax less' to boost the economy.
She also said that concern about the federal deficit cannot be an "excuse for leaving unemployed Americans to suffer.”
“While we would all love to find the inexpensive magic bullet to our economic troubles, the truth is, it almost surely doesn’t exist. The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts,” Romer said Wednesday at the National Press Club in her final speech as the president’s chief economic adviser.
Romer later added, “Concern about the deficit cannot be an excuse for leaving unemployed workers to suffer. 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.”
Romer predicted that the American Recovery and Reinvestment Act (ARRA) would lower unemployment to 8 percent. Currently, the unemployment rate is 9.5 percent.
“By February 2009, before the Recovery Act was passed, unemployment was already over 8 percent; and by June, before the Recovery Act could have had much of an impact, it was 9-and-a-half percent. That is, our projection turned out to be wrong even before the Recovery Act had a chance to get off the ground, which is about as clear-cut evidence as one could imagine that the problem was in our assessment of the baseline, and not in the effects of the Act,” Romer said in prepared remarks that were omitted from her speech at the National Press Club.