Romer's Departure Raises Questions And Concerns About White House's Economic Team

[depakid]

Upon entering the White House in the winter of 2009, President Obama asked his economic team to come up with potential solutions to the economic crisis he had inherited. According to a lengthy profile of that team by the New Yorker's Ryan Lizza, Christina Romer, the chair of the Council of Economic Advisers, outlined three different-sized stimulus packages. The first was $600 billion. The second: $800 billion. The third would be $1.2 trillion.

Romer's work was supported by the weight of historical analysis. The former Berkeley professor was a leading expert on the government's response to the Great Depression. But when her memo finally made its way to Obama's desk, the $1.2 trillion package was missing. At the meeting, Lizza reported, "there was no serious discussion to going above a trillion dollars."

Who removed the $1.2 trillion suggestion is unclear, though Lizza pointed the finger at senior economic adviser Larry Summers and now-former Office of Management and Budget Director Peter Orszag. Senior Adviser David Axelrod was quoted saying that that the idea was a non-starter on Capitol Hill. It likely was.

Nevertheless, when Romer announced her resignation from the White House on Thursday evening, the stimulus story provided a useful window into the limitations and frictions that have affected the Obama administration's economic policies. It also raised the question: Who in the administration can assume the role she played -- untainted by the perception of Wall Street ties and willing to make the case for enhanced stimulus spending?

...Dig a bit below the surface... and you get different insights into how the bureaucratic debates played out. One economic adviser who worked with both Summers and Romer said that the latter was "essentially" driven out by the former. "Summers has kept Romer, Austin Goolsbee, and Paul Volcker all outside the inner policy circle. For Romer, why stay under these conditions, when she would lose her tenure if she stayed for more than two years?" the adviser said.

More: http://www.huffingtonpost.com/2010/08/06/romers-departure-raises-q_n_673586.html