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Fallout: The Financial Crisis

Obama economic adviser talks stimulus

Marketplace Staff Feb 6, 2009
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Fallout: The Financial Crisis

Obama economic adviser talks stimulus

Marketplace Staff Feb 6, 2009
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TEXT OF INTERVIEW

Kai Ryssdal: As we speak, the Senate’s stimulus package is inching ever closer to a trillion dollars. There’s a bi-partisan group that’s trying to shave that down some, probably not too much lower than the House’s $819 billion version, though.

Christina Romer is one of the people whose job it is to help figure out how much is enough and how it ought to be spent. She chairs the president’s Council of Economic Advisors. Dr. Romer, good to have you with us.

Christina Romer: Great to be here.

Ryssdal: The job numbers this morning, obviously, is the place to start. They were not entirely surprising; still very sobering. How do you think they are going to affect passage of the stimulus plan.

Romer: I found them incredibly sobering. So, losing 600,000 more jobs just in the month of January was truly frightening. And that data revision, so we know now that we’ve lost 3.6 million jobs since this recession started 13 months ago. So, I think they do reinforce the idea that this downturn, which has been bad, is accelerating. And I think they will put a lot of pressure on both Congress and the president to make sure we get this stimulus package passed.

Ryssdal: What are some of those tools that are in the stimulus package as it exists now on the floor of the Senate that are going to help the economy grow?

Romer: I think the important thing is, well, one of the things that I really like about the package is that it’s balanced, right. That it isn’t all one kind of fiscal stimulus or the other. And I think that’s incredibly important. Things like the middle class tax cut, right, that’s something we can do quickly. It gets money into peoples’ hands quickly. So we think that’s going to give us a lift. I think the state fiscal relief is important, because that, again, gets out the door very quickly and prevents layoffs of teachers and nurses and first responders. And then the spending increases. Those were long-run investments, like infrastructure and health IT and education. I mean, I think that’s going to be incredibly important for creating jobs now, but also for making us more productive in the future.

Ryssdal: But we could line up a whole bunch of economists who would say none of that stuff is really good stimulus, what we need is direct government spending and we need it right now, not 18 months or two years from now. How do you convince them?

Romer: I think I would convince them by saying look at the plan. Actually there’s a lot of direct fiscal stimulus. That’s — certainly the aid to the states is going directly into making sure that we don’t layoff state workers. A lot of the spending as well, goes out very quickly. I mean, certainly there are parts of it that take a little bit longer to get out the door, but we know that there’s, for example, money in there to extend unemployment insurance. That is ideal, kind of counter-cyclical policy that gets out quickly and gets money into peoples’ hands so that they’re spending.

Ryssdal: Back to the jobs numbers for this morning. Do you think it’s more important that this package create new jobs or save the ones that we have that are being lost so quickly?

Romer: It’s really part and parcel of the same thing, right. What we need to do is to get the economy growing again. What’s important is that on net the number of jobs is going up, right. Because that’s going to be incredibly important for average Americans that are suffering, as we see in our unemployment numbers.

Ryssdal: How confident are you, how confident is the president that whatever he winds up having to sign is going to be big enough to do it?

Romer: I think the important thing is that we get a good package out. You know, one of the things that the president has certainly made a top priority is that this package be, you know, unusual in the degree of accountability, transparency. The way I like to think of it is we’re going to be monitoring this things from the day it passes and watching: Are we creating the jobs? Is the spending going out as quickly as it needs to? Are we spending money wisely? And I think we’re going to be watching like we’ve never watched before.

Ryssdal: Christina Romer chairs the Council of Economic Advisors for President Obama. Dr. Romer, thanks a lot for your time.

Romer: Thanks. It was great to be here.

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