Christina Romer, chair of President Obama's Council of Economic Advisers, joined us in our first hour today to talk about the economy and the debate over whether a second round of stimulus is needed.
Asked about Vice President Biden's recent remarks, that the administration had "misread how bad the economy was," she replied: "It’s important to realize that none of us has a crystal ball....the important thing, again, is to concentrate on where we are now." Here's the audio of her interview, followed by the transcript.
This is one of things I’ve been pushing so hard is, this is why healthcare reform is so important. If you look at the studies coming out of the Congressional Budget Office, the number one thing that’s going to blow a hole in the deficit as we go forward 20, 30 years is government spending on healthcare. So doing those reforms now that genuinely slow the growth rate of cost, that’s the thing that we can do right now to make us healthier, you know, after we get through this crisis and bring those budget deficits down in the long run.
TOM ASHBROOK: The vice president said over the weekend, you know, that the administration undershot its expectations of unemployment. It’s already higher than was expected. So might that mean that you undershot on the size of the stimulus needed as well?
CHRISTINA ROMER: As I was saying earlier, we certainly got a lot of information, all forecasters did, that things were changing quickly, and we certainly have seen the unemployment rate go up more than anyone, I think, anticipated. You know, I think the important thing is to concentrate — we have done a tremendous amount to try to turn this economy around. It’s not just the fiscal stimulus. Think of all the work we’ve been doing on the housing program to try to mitigate foreclosures, to try to allow people to refinance at lower rates. Those are things that are designed to actually help consumers do better, start spending again — the financial rescue. So, all of them are part of a comprehensive package.
TOM ASHBROOK: What would it take for you to say, "You know what, we tried, but it wasn’t enough, it’s time to pull the trigger"? 10.5 percent unemployment? 11 percent unemployment? What would it take for you to advise that?
CHRISTINA ROMER: I think the crucial thing is: What’s the direction that we’re moving in, right? So one of the things that, you know, I think people have forgotten is just what the economy — I’m sure they haven’t forgotten — what the economy was like in December and January. We were truly an economy in freefall. And I think one of the things we’ve been seeing is moderating conditions. We’ve started to see some of those leading indicators, like building permits, orders for durable goods — those kind of things that tend to turn around before the actual economy turns around. You know, what I’m going to be looking at is, Are we on the right path? And certainly we do have to give the stimulus the time to have an effect. Simply because we do know we’re getting a lot more money out the door in the next several months, and we’ll be getting a read on, Is that doing what we think it should be doing?
TOM ASHBROOK: Are we on the right path right now? You saw the unemployment numbers for June that just came out last week.
CHRISTINA ROMER: Of course we all were disappointed at those unemployment numbers. Every person that is unemployed is a tragedy, and the numbers we saw clearly were bad. I think the important thing is to not read too much into any one point of data. For example, right today we just got some information that initial claims for unemployment insurance have dropped a lot. So I think we do have to realize that there’s a fair amount of noise in our indicators.
I’m going to be looking at all of the indicators, and are we seeing them — we’ve got to be moderating the downturn before we actually turn the corner. And I want to make sure we’re still on that path. But of course we are concerned. That’s why we are focusing so much on taking the stimulus we have and using it as quickly and effectively as we can.
Listen to the full hour here, in which Romer was followed by William Gale of Brookings and Dean Baker of the Center for Economic Policy and Research.
This program aired on July 9, 2009. The audio for this program is not available.