Romer: Historians will praise stimulus

Senior White House economist Christina Romer said that historians will judge President Barack Obama’s stimulus more favorably than is a public still struggling through an economic downturn.

“I think when we’re through this, when scholars actually sit and look at this, they will say, ‘My goodness, look at all of the trajectory, look at where we were going, my goodness, it would have been dramatically worse [without the stimulus],’ ” Romer said Friday.

{mosads}Romer, at a breakfast with reporters organized by The Christian Science Monitor, acknowledged public frustration over the $787 billion stimulus, the centerpiece of the Obama administration’s effort to turn the economy around. A New York Times/CBS poll released Thursday found that 52 percent of Americans disapprove of Obama’s handling of the economy and that just 6 percent believe the stimulus had already created jobs.

The White House estimates that the stimulus has created or saved up to 2 million jobs. Independent estimates by the Congressional Budget Office and private economists suggest that the massive package of spending programs and tax cuts has led to more than a million jobs that wouldn’t have existed otherwise.

Romer, chairwoman of the president’s Council of Economic Advisers, noted that the economy was losing about 700,000 jobs when Obama entered office and pushed for the stimulus. The economy lost 20,000 jobs last month and is expected to show gains this spring.

Romer said frustration partly stems from the fact that Americans haven’t been able to compare the current economic situation to one that would have been more dire if the stimulus hadn’t been enacted.

“We’re inherently in the world of the counterfactual, right? We know we’re still losing jobs; [the] unemployment rate has gone up steadily. In that world, if you ask people, ‘Are things working?’ they say, ‘God, no, things aren’t working,’ ” she said.

Asked why the public hasn’t supported Obama like they did with President Franklin Roosevelt after his New Deal efforts to combat the Great Depression, Romer noted that people had been “suffering like crazy” for the three years before Roosevelt took office.

“At some level, they had seen the counterfactual, they had to see what happens when you don’t do something,” Romer said. “I think this unbelievable sense of relief that someone was doing something did keep them with [Roosevelt] for a while.”

Roosevelt entered office three years into the 1930s, when the economy was fully into the Depression, she noted.

“We came in with this incredible downward momentum [and] took responsible, good actions,” she said. “I think they’ve had exactly the effect we hoped they would have had in the sense of stopping the downward momentum and turning this giant oil tanker around.

“We do see GDP growing again … and we did it quickly, we didn’t live through the horrible counterfactual, but it’s still the case conditions are lousy, so it’s completely reasonable the American people are frustrated and they want things to get better quickly,” she added.