ABC News’ Bret Hovell reports:
Chair of Council of Economic Advisors Christina Romer gave the administration’s standard defense of its $787 billion economic stimulus program, just short of its six-month anniversary.
In a speech titled “So, Is It Working?” Romer included the normal caveats -- that there is only one quarter of economic data to work with; they can’t know exactly what would have happened without the stimulus and there’s still a long way to go. But on the question of whether the $787 billion stimulus was working: Absolutely.
“The Recovery Act, together with the actions taken by the Treasury and the Federal Reserve to stabilize financial markets and the housing sector, is helping to slow the decline and change the trajectory of the economy,” she said.
Romer detailed what the administration did and why she says it is working, but she did not clarify why she initially predicted such a different outcome in the unemployment rate than what has come to pass. She acknowledged that tomorrow’s employment numbers would show “that the U.S. economy continued to lose hundreds of thousands of jobs in July,” and said that “unfortunately, even once GDP begins to grow, it will likely take still longer for employment to stop falling and begin to rise.”
Romer also stressed that the stimulus was just one of many actions the Obama administration had taken to stabilize the fiscal difficulties.
Asked about what goes on in President Obama’s daily economic briefing, and how well the president understands economics given that he has no formal training in the field, she answered, “I tell you, the scariest thing is to be in one of these briefings and for one of us [economists] to ask someone else a question, and the president answers it. So I will tell you that he absolutely knows a lot of economics.”
She explained that in the briefings the scheduled topic sometimes gets thrown out the window if the president has something else he wants to talk about.
“They’re freewheeling, I think the economics team in the white house is known for being open and free with our opinions, and so there are often good lively discussions,” Romer said. “But that’s a great way to spend 40 minutes every day."
Romer punted on the question of what would happen to mortgage giants Fannie Mae and Freddie Mac. This morning’s Washington Post raised the possibility of a major restructuring of the quasi-governmental institutions, but Romer did not wade in.
“We’ve been through just a real crisis in our financial markets and that’s why again in the midst of all the other things we’re doing, thinking about how you reform the system so that we do don’t ever face that again,” Romer said.
She continued: “So of course something we’re going to be thinking about is where do we go from here? As we move out of the immediate crisis, how do we think about reforming those just as we’re thinking about reforming the financial regulatory system. I don’t want to get ahead of the process just because obviously we are at the very start of anything that we’re doing on a whole range of issues on the financial markets. But it is going to be something that we’ll be looking at.”
When asked about the lessons learned from the Cash for Clunkers program – which ran out of money within a week of its start -- Romer said, “It has been a big success, there’s no question, right? The idea that you put these incentives in place, we knew people would respond, but boy did they really respond.”
Romer said the administration “anticipate[s] good news” from the Senate, which will vote today on whether to authorize an additional $2 billion for the cash-strapped program.