Economist Christina Romer regrets saying jobless rate would stay below 8 percent
Saturday, August 7, 2010
As she prepares to step down as President Obama's chief economist, Christina Romer said Friday that she wishes she could redo one of her first official acts for the president: last January's forecast that a big shot of federal spending would save millions of jobs and keep the unemployment rate under 8 percent.
The forecast was wrong. Many economists agree that Obama's stimulus package probably saved millions of jobs, but the recession was far worse than Romer predicted. Unemployment has soared and is stuck at 9.5 percent.
Republicans campaigning to regain control of Congress have seized upon Romer's report as exhibit A in their case against the $862 billion stimulus package, arguing that the money was wasted and that Obama's economic policies have failed. The release of the latest jobs numbers Friday brought a hail of fresh GOP criticism of the measure "that was meant to keep unemployment below 8 percent," as Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement.
Asked about the report, Romer said in an interview: "One could have presented it differently. If we'd only talked about the effect of the stimulus on the change in unemployment [instead of predicting the unemployment rate itself] . . . it would have been better. The thing I obviously couldn't control is the baseline forecast, and that's the thing I'm getting criticized for."
Except for the unexpectedly severe collapse in economic growth, Romer said, the report has turned out to be "very accurate."
Romer's comments came as administration officials launched a search for her successor as chair of the president's Council of Economic Advisers, an in-house think tank that has played a critical role in the administration's response to the worst recession since the 1930s. She is the second senior member of Obama's economic team to depart in recent weeks; White House budget director
Peter Orszag left in July.
Although some point to the departures as a sign of disarray in White House economic policy, Romer and Orszag are following in the tradition of past CEA chairs and budget directors, who typically have not held their jobs very long. Both left primarily for personal reasons: Orszag is getting married in New York in September. Romer is returning to her old job at the University of California, Berkeley so her youngest son can start high school in the Bay Area.
Romer denied reports of friction with Lawrence H. Summers, director of the National Economic Council and Obama's most senior economic adviser.
"I have made no bones of the fact that there were a few fireworks at the beginning. I had to stand up for myself, and we had to learn to work together," Romer said, adding that she is saddened by the prospect of breaking up the group now that "I have become part of the team." She added: "I think of it as one of my accomplishments that I won Larry Summers over."
Obama has since named Jack Lew, a veteran of the Clinton White House, to replace Orszag. Two sources with knowledge of the process said Romer is likely to be replaced, at least temporarily, by Austan Goolsbee, a CEA member and University of Chicago economist who has advised Obama since his 2004 Senate race. The sources spoke on condition of anonymity because discussions on a successor are ongoing.
White House spokeswoman Jen Psaki said nothing has been decided except that Romer will play "a pivotal role" in selecting her successor before vacating her post just before Labor Day.