Friday, September 3, 2010
Departing White House Economists Wants More Stimulus
Departing White House economist Christina Romer wants the government to increase stimulus spending and decrease taxes in order to lower the unemployment rate and improve the U.S. economy. The consequence of increasing spending while lowering taxes would be an increase in the deficit, which could destabilize the economy in the future. According to the article, there is a debate going on in the White House over whether to increase stimulus spending or to focus on decreasing the deficit. Politically, many Americans don't like the idea of more stimulus spending, especially because the original stimulus was not large enough to have a sustained positive impact on jobs recovery. Obama's point that the stimulus saved many more jobs that could have been lost without it may be true, but the Republicans are taking advantage of the fact that most Americans are preoccupied with the current high unemployment rate and not concerned about the hypothetical alternative that the unemployment rate would have been higher without the stimulus.
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Christina Romer makes the argument that many other economists make: the stimulus wasn't big enough and we need another one. Kyle, you make a good point by saying that Republicans have capitalized on keeping the focus on high unemployment and rising US debt. Another stimulus measure falls into their talking points, and it appears that the Obama Administration, and congressional Democrats, cannot politically afford another stimulus measure. But, playing devil's advocate to this argument, it's not as if the Obama Administration or congressional Democrats can reverse their images in the next two months and convince American independents that they are completely focused on reducing the American deficit. So, while the current strategy of congressional Democrats may be to appear as fiscally responsible as possible (at least until November), it may be worth considering changing their approach to embrace their "proactive" economic image and to push for a second stimulus.
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