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ItsAHabit's avatar

Why is Council of Economic Advisers Chair Romer resigning?

Asked by ItsAHabit (2297points) August 5th, 2010

The top economic adviser to President Obama, Dr. Christina Romer, is resigning. She has co-authored research indicating that tax increases decrease GDP.

More taxes are scheduled to go up in January. Do you think this is a factor in her decision to resign?

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25 Answers

Cruiser's avatar

She is just another sacrificial lamb who the White House can direct blame to for it’s failed economic policies. The old out with the old in with the new 11th hour shakeup to make it look like it was all her fault for giving lousy advice. New blood will surely fix this problem…..sure! Truth is Larry Sommers is the one whispering in Obama’s ear, I’d rather see him pack his bags and get somebody with real economic credential finally get behind the wheel!

ETpro's avatar

Her stated reason is that she’s taking a teaching position at UC Berkeley and wants to be closer to her son back in California who starts high school this fall. Could be there is nothing more to it than that.

Could also be she is a bit frustrated with all the political football. She believes the economy needs more stimulus, but that’s politically unlikely to fly. She faces an opposition party who insists that government can’t ever create a single job, it is fundamentally impossible for government to create jobs, and this government is a complete failure because it hasn’t created more jobs.

ragingloli's avatar

failed economic policies
As for summers…
Well I guess studying economics at MIT and getting a Ph.D. at Harvard does not count as credentials to some.
Maybe you want Basil Marceaux, because he has ‘credentials’ from being an “average” citizen~

ETpro's avatar

@ragingloli Absolutely. I would remind @Cruiser whose failed economic polisies got us into the mess we are in, which administration was losing 740,000 jobs per month at its end and which one has gioven us 6 straight months of job growth. Personally, I am not ready to go right back to the failed Voodoo Economics that got the National Debt into the stratosphere and showily brought job growth and the economy to the brink of Great Depression II.

Cruiser's avatar

@ETpro compare the unemployment rates and your comment falls flat on its face. For 8 years the worst Bush did was 6.9 when he handed the reigns to Obama….The Oct-Dec ‘09 run was particularly impressive double digit 10% so lets jump up and celebrate the fine job Obama has been doing to destroy more jobs than ever before in history!! If you like graph curves Obama gets a gold star for his soaring unemployment numbers!!

ragingloli's avatar

@Cruiser
You are severely deluded if you think that anyone could have stopped the massive job loss, that was caused by the Bush regime, the moment they come into power.
In the real world it takes time for economic policies to take effect. In the real world, economic stabilisation and recovery does not happen over night but over an extended period of time. Due to Obama’s economic policies, the country was saved from a second great depression and its economy stabilised.
You complain about the high unemployment rate, but you fail to realise that without Obama’s actions, it would have been much worse, and you would be standing in line in cold weather to grab a loaf of bread from charity.

Cruiser's avatar

Gee @ragingloli Obama’s velvet tongued campaign promises of lots of new jobs and reduced deficit still ring loud and clear in my ears. Promises…promises….promises….

What ever happened to the buck stops here!! Typical teflon Democratic lip service.

ETpro's avatar

@Cruiser My argument falls flat on its face? What part of the Great Recession of 2007 has partisanship erased from your memory?

Bush managed an anemic 3 million jobs created in his 8 years. Meanwhile, the population grew by 22 million. That’s a net loss of 19 million jobs. Had the real-estate bubble not been inflating that whole time, there would have been no economic growth. It was all driven by the debt party where people used real-estate inflation as a bottomless ATM and the expansion of the heavily leveraged, real-estate backed derivatives market to $62 trillion per year. It was all Casino capitalism at work. And the Con men that claim they have, “Come to take their country back.” have in mind taking us back to that. No thanks. I don’t recall having ever signed my country over to them.

Cruiser's avatar

@ETpro Throwing meaningless numbers around is not a good way to make a point. The population may have grown by 22 million in the 8 years Bush was in office but it would be at best another 8 years before even a fraction of that 22 million of these new citizens were old enough to legally get a job. That is the whole comedy of errors of the current administrations approach to only reporting the numbers only the gullible will swallow…and you should be pretty full by now ET!

ItsAHabit's avatar

“That’s a net loss of 19 million jobs.” That conclusion is not logical, correct or relevant. It’s based on the false assumption that every man, woman and child is supposed to be gainfully employed and if they are no employed, they constitute a LOSS of jobs.

Economists obviously don’t calculate employment that way. Nor do they calculate “jobs saved.” Neither can legitimately be done.

ETpro's avatar

@Cruiser Numbers aren’t meaningful, but bumper sticker lies like things will be better under the Republican plan are? Let’s agree to disagree, as there is no point discussing this if statistics on economic success must be disregarded in order to make your case.

@ItsAHabit I am sure you are right that not all the population will work. Of course, if the percentage that don’t or can’t is above the unemployment rate, then that amounts to net job losses. But to further address your concern, let’s look at job growth under the Clinton tax plan as opposed to job growth under the Bush welfare for the rich plan. Under Clinton we added 23.1 million jobs. Again, Bush’s record was 3%.

Cruiser's avatar

@ETpro I would be happy to discuss economic success if there were some to discuss! HS talk about your so called recession of 2007….that is water under the bridge sir!! How about the 2009/2010 “depression” we are currently in!! You want numbers and statistics look at Obamas and the democratic regime in how unemployment is near record levels!! Almost 2 years into this train wreck and no end in sight! The ONLY new jobs have been government jobs and WE have to pay taxes to support those jobs not to mention the taxes WE will all be paying for years to cover these failed stimulus plans. Compile your stats all you want but until people, my friends and relatives can find meaningful employment your stats mean squat. You stats are straws and keep grabbing for them before Obama taxes you on them too!

ETpro's avatar

@Cruiser It isn’t water under the bridge if we put a group in charge of congress who are determined to go right back to what created that recession. It’s all one recession, and in technical terms, it has ended ed. Two successive quarters of growth end a recession. But unemployment is still high. However, at the end of the Bush administration we were hemorrhaging jobs at the rate of 740,000 a month. We’ve now had 7 months of job growth. This month we had a net loss, but that was because while the private sector added 71,000 jobs, 234,000 temporary jobs ended at the Census department.

ItsAHabit's avatar

I think we’ll have a problem creating new jobs so long as the uncertainty continues. Employers don’t know how much the new health care entitlements are going to cost them, how seriously the negative consequences of cap and trade will effect them (and the President has admitted that the cost will be enormous), etc. So employers are sitting on a great deal of cash, and will probably be reluctant to hire, until the extent of the costs to them is known.

ItsAHabit's avatar

It’s interesting that the chart to which you refer would make it appear that Jimmy Carter was the most successful president in modern times. However, under his presidency we were subjected to punishing inflation and what he, himself, described as social malaise. His is generally recognized as a failed presidency.

Cruiser's avatar

@ETpro Again the number we are seeing are no where the real of actual numer of people without jobs! There are millions of people who have fallen off the radar and just given up looking and no longer qualify for benefits, there are millions of underemployed people and these are near record numbers but nobody really knows. You are a smart enough guy you know better here. Things suck out there, people are hurting and raising taxes on anybody just takes more money off the street to pay for essentials whether it be for a struggling family or a struggling company. The only one NOT struggling is our bloated government. And that beastly government is made up of Dems and Repubs and they all need to take some fiscal responsibility in this mess and CUT SPENDING!! NOW!!! STOP SPENDING on all fronts!! It’s that simple…but I have not seen one iota of a sensible effort to do so and that sir rest solely in the lap of Obama and the Democratic regime. I don give a shit what Bush, Clinton Reagan or Carter did….all I know in all my years I have NEVER seen anything this irresponible from our Government and it has to stop and it will stop come 2012. Enough is enough and please save your BS rhetoric for someone who doesn’t have a clue.

I guarantee Dr. Christina Romer is counting her blessings to soon being off this administrations sinking ship.

ragingloli's avatar

all I know in all my years I have NEVER seen anything this irresponible from our Government and it has to stop and it will stop come 2012.

Conservative “logic”:

- Preventing carmakers and banks from going bankrupt and by that preventing a bankruptcy chain reaction throughout the economy : irresponsible.

- Passing stimulus package that saved millions of jobs, who then use their earned money to buy goods and support the ailing economy: irresponsible.

- tax cuts for middle class and below (yes, Obama did those), so that they have more money to spend on goods, thus supporting the ailing economy: irresponsible.

- Passing a health insurance reform bill, that (while not going nearly far enough), will save millions of lives and will lower the financial burden on tax payers by making sure that people are insured and thus putting money into the pool, lowering the costs for everybody when they use health services: irresponsible.

BUT!

- massive tax cuts for the rich while starting 2 illegal and increadibly costly wars: responsible.

- massively reducing government expenses, which will only have the effect of consumers having less money to spend on supporting the economy by buying goods, in a time where the economy is in trouble because people do not/can not spend money on goods: responsible.

Actual logic:

- letting systemic companies fail, thus destroying millions of jobs in a chain reaction, thus causing people to have less money to spend on goods, thus deepening the recession further, even causing a 2nd great depression: Irresponsible.

- Not passing a stimulus package, thus destroying countless jobs, thus causing people to have less money to spend on goods, thus deepening the recession further: Irresponsible

- Not passing health insurance reform, therefore condemning countless people to death, letting the cost spiral continue to grow unimpeded, and causing people to go bankrupt because of illness, thus wasting a lot of money that could otherwise be spent on supporting the ailing economy: Irresponsible.

- tax cuts for middle class and below, so that they have more money to spend on goods, thus supporting the ailing economy: Responsible.

The fact is that you can never get out of a recession, unless the majority of the people can and do spend money on goods. To do that, the government must enact policies that puts money into people’s hands to spend on goods, that includes taxcuts for middle class and below, that includes stimulus packages to keep/create private and public jobs and thus money in peoples’ hands to spend on goods, that includes preventing systemic companies from going bankrupt, saving millions of jobs, thus keeping money in peoples’ hands to spend on goods, that includes passing health care reform, freeing up money for people to spend on goods.

And yet conservatives advocate doing the very opposite of what needs to be done, the opposite of what will help overcoming the recession, and what will only worsen the recession.
And the most frightening thing of all, is that with all their demagogery, they might get back into power again, enacting their counterproductive ideas, plunging you, and, because of global economic interconnectedness, the whole world, back into a depression.

Cruiser's avatar

@ragingloli All good points is retrospect BUT all of your points could have and IMO should have been left alone to allow the natural cause and effect of wanton abuses of the system correct themselves. Freddiemac and Fannymae are the main impetus of this economic meltdown and the subsequent chain reaction of business meltdown. And despite of all the money and we are talking BILLIONS of dollars poured into trying to rescue companies with irresponsible fiscal management, they are no better off than they were in Nov 2008. Pure waste of time and money. The rest of the bailouts were plain and simple unnecessary. The big 3 automakers were gluttonous beasts that with their insane bonuses paid to execs and the lavish excesses of spending and out of sight legacy expenses, all they needed to do is what they all ultimately did is to cut expenses and this could have been done quite easily without a penny of bailout money. Ford did it.

The big banks are all turning profits now….why?? Not because of much needed bailout money but because they stopped carrying loser loans and again cut expenses. This is all sound bite BS….any company that is now turning a profit is doing so because they cut costs and trimmed the fat something the Government needs to do in a massive no holds barred way. Anything else you want to try and defend or argue is baseless since not once and nowhere have I seen the Government trim one ounce of fat and until they do we will continue this downward spiral into the economic abyss.

The only reason Obama and his administration chose the bailout route which has extended this depression years longer than it should have carried on is to avoid having blood on his hands from the short term job losses that should have taken place. So now we have more jobs still being lost because of these misguided failed policies of the Obama administration.

There is no easy answer to this problem other than aggresive no holds barred approach to cutting spending across the board. Sure it will hurt but only for a little while until money loosens up and people have cash in their pockets instead of in the Government till.

ragingloli's avatar

all of your points could have and IMO should have been left alone to allow the natural cause and effect of wanton abuses of the system correct themselves.
In a second Great Depression? Because that is what would have happened. And incidentally, the Great Depression was one of the key factors in leading to WW2.

And despite of all the money and we are talking BILLIONS of dollars poured into trying to rescue companies with irresponsible fiscal management, they are no better off than they were in Nov 2008
They are certainly better off than they would be if nothing had been done, namely bankrupt amidst a Great Depression. Money well spend.

all they needed to do is what they all ultimately did is to cut expenses and this could have been done quite easily without a penny of bailout money. Ford did it.
GM/Chrysler are not Ford. The two companies would not have survived long enough to catch themselves from freefall into bankruptcy. Neither would have the banks. And since most companies run on loans, nor would they.
And it would not have just been the car makers that would have self destructed. Together with them, the car part makers, dealerships and other contractors would also have gone bankrupt, millions would have lost their jobs, and whithout those people’s purchasing ability, it would have made the economic situation even worse.
You say that all those companies and banks are doing better now because of internal restructuring, but you completely ignore the fact that they would not have survived long enough to implement these measures without the bailout and stimulus.

“nowhere have I seen the Government trim one ounce of fat and until they do we will continue this downward spiral into the economic abyss._”

Newsflash, the downward spiral in the abyss has been averted, it has been averted, because the government did not choose the route of doing nothing.

to avoid having blood on his hands from the short term job losses that should have taken place.
There would have been no “short term job losses” but a complete economic collapse, and that is what he avoided by going the bailout route.
It seems the reason you advocate the route that would lead to a global Depression is because you severely underestimate the repercussions and effects of such a decision.
It is like saying that dropping a nuclear bomb on a city is OK because it will “just get a little bit hot for a few seconds”.

Cruiser's avatar

@ragingloli Time to pull your head out of the sand we are in the second great depression!! Time to pull up the boots straps, cut our losses, cut the fat to the bone and work to putting sound basic fiscal economic plans into effect. As much as Obama and some may want it, the status quo cannot be preserved and radical change in spending has to take place…that is the kind of change Obama should have been campaigning on but he knew he would lose the election if he told the truth!

ragingloli's avatar

@Cruiser
We are NOT in the second Great Depression. Your own statements about companies making a profit right now contradict that. As does the fact that german municipalities are seeing an increase in business tax revenue, meaning that businesses make more money. As does the fact that for example both Siemens and VW have seen a large increase in profit during the last quarter. If we were in a Great Depression, what you would instead see long lines at charity food outlets, soaring unemployment (which has seen a slight decrease, instead) and bankrupt companies all over the planet.
Your so called “sound fiscal plans” do not work in reality and would wreak havoc on the economy.

Cruiser's avatar

@ragingloli The reason companies are showing profits now is because for almost two years the cut costs, held back fringe benefits, laid off employees….just look at the reduction alone in ranks of the banking industry!!

I know all this because of what we had to do in our company to remain profitable. No bonuses, not time and a half, no company picnics, no more ½ days off gratis, no pay raises and guess what my employees are grateful I did this because they know they still have a job unlike many people they and I know who would kill to have a job.

Since Obama took office we have increased the defit over 30%, unemployment rose over 30%, stock market crashed over 30%, number of welfare recipients swelled over 30% and the size of our Government grew 30% and that is where new jobs if any came from but again increased taxes are coming our way to pay for it all. There is nothing not depressing about these numbers and the situation we are in. You can put lipstick on a pig but it is still a depression @ragingloli!

ragingloli's avatar

@Cruiser
increased the defit over 30%” Yes, because it was necessary.
unemployment rose over 30%” economic policies take time to implement and have effects and economic recovery is always slow.
stock market crashed over 30%” economic policies take time to implement and have effects and economic recovery is always slow.
number of welfare recipients swelled over 30%” economic policies take time to implement and have effects and economic recovery is always slow.

Current unemployment rate in the US is 9.5 percent, 7,6 % in Germany, if it were a Great Depression, it would be somewhere around 25%, not just in the US, but world wide. Instead unemployment is steady, and it even decreased in some parts, and businesses are posting increased profits. It is not anywhere near a Great Depression, and it has nothing to do with lipstick BS, but with facts.

Why do I keep arguing with someone, who (willingly?) ignores almost everything I write?
You know what, I am going to stop, because you are a case of “One ear in, out of the other”.

ETpro's avatar

@Cruiser You are ignoring facts like the track of the Gross Domestic Product during the Great Depression compared to our GDP today. It is you who is blinded by ideology, not @ragingloli who has a head in the sand. See the Great Depression where the GDP dropped 40% and was in the doldrums for nearly 10 years compared to the Financial Crisis of 2007–2010 with it’s relatively benign drop which has already recovered.

Also, while blaming Fannie and Freddie is so comforting to right wingers (it was all blacks and Latinos not paying their bills), it misses almost the entire cause of the fiasco. It is like overlooking the fact someone packed a building full of nitroglycerin, and claiming the person who dropped a marble in the place caused the building to explode.

Fannie and Freddie combined held about $2 trillion in mortgages, total. Not all of that was sub-prime, and not all of sub-prime defaulted. In fact, 85% of the mortgages in default are not sub-prime. But even if all $2 trillion of Fannie and Freddie’s mortgages had defaulted, that’s nowhere near a big enough loss to jeopardize the entire US financial system. The problem was Wall Street had heavily leveraged mortgage debt in creating the $62 trillion a year Derivatives market. When the real-estate bubble finally burst, that put much of that enormous, and heavily leveraged debt at risk. It was the very casino capitalism Republicans have been filibustering to preserve that caused the collapse. Here’s a fair discussion of all the causes of the Financial Crisis of 2007–2010..

ETpro's avatar

@Cruiser I misses the hyperbole about the debt. I agree with you it’s huge and we need, as soon as the economy is stabilized, to put taxes back like they were under Bill Clinton and start paying the debt down. But for the record, Bush left office with the National Debt at $10.6 trillion and the economy in shambles. With all the money we have had to throw at avoiding a second Great Depression, we are now at $13.3 trillion. That’s a 20% increase, not a 30% increase.

At the end of the Great Depression and after the costs of WWII, our debt hit 120% of GDP. It’s closing in on 100% now, but not there. We paid it down from 120%. All the sniveling gimmie-pigs who have voted for free this and that from the government and more tax cuts to pay for it are just going to have to man up and do what the Greatest Generation did; pay the damn debt down.

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