Obama to the Economic Rescue: Is He Picking the Best Team?
Continued from previous page
Christina Romer, Director of the Council of Economic Advisors
Presently: Economics professor at the University of California, Berkeley
Resume: Before joining the faculty at Berkeley, taught public affairs at Princeton, and has been a visiting scholar at the Board of Governors of the Federal Reserve System.
Permanent Stain: None. Has enjoyed what appears to be a highly successful and incredibly dull academic career studying the history of fiscal policy and business cycles with her equally bland colleague-husband, David Romer.
The progressive critique: John B. Judis of The New Republic has parsed Romer's academic output and finds that her views on the economy "appear to place her well to the right of mainstream Democratic economic opinion." Judis is particularly troubled by her interpretations of what caused recovery and growth from the Great Depression to the Reagan recession.
"Fiscal policy...contributed almost nothing to the recovery before 1942," Romer wrote in a 1991 paper for the National Bureau of Economic Research. That's a view that would lead one to emphasize monetary over fiscal fixes -- that is, changes in the federal funds rate and money supply over increases in public investment and cuts in taxes. This policy perspective would seem to de-emphasize or even oppose the kind of massive public investments that Obama now seems to be considering ... According to Romer, fiscal and monetary policy partially returned to the successful strategy of the 1950s after Ronald Reagan's election in 1980. She cites Federal Reserve chief Paul Volcker's attempt to kill off inflation through inducing the steepest recession since the 1930s ... If Romer's views [are] applied to November 2008, what do we get? Deficits, but with an eye toward surpluses, and an emphasis -- going back to her article on the Depression -- on monetary rather than fiscal expansion as the solution. If that is, indeed, what Romer advocates, that's probably not the change we need -- or that Obama has promised.
Alexander Zaitchik is a freelance journalist.