Romer versus Geithner

Geithner is the only economic advisor I can think of that’s been there from the start, and with the departure of others his influence has likely increased. If you are unemployed, that’s not good news:

Geithner: Stimulus is ‘sugar’ for the economy, by Ezra Klein: From Zach Goldfarb’s excellent profile of Treasury Secretary Timothy Geithner’s success inside the Obama administration:

The economic team went round and round. Geithner would hold his views close, but occasionally he would get frustrated. Once, as [then chairwoman of the Council of Economic Advisers Christina] Romer pressed for more stimulus spending, Geithner snapped. Stimulus, he told Romer, was “sugar,” and its effect was fleeting. The administration, he urged, needed to focus on long-term economic growth, and the first step was reining in the debt.

Wrong, Romer snapped back. Stimulus is an “antibiotic” for a sick economy, she told Geithner. “It’s not giving a child a lollipop.”

In the end, Obama signed into law only a relatively modest $13 billion jobs program, much less than what was favored by Romer and many other economists in the administration.

So Geithner argued against job creation and for deficit reduction? Quoting from a tweet from Andy Harless on a different topic (Bernanke’s speech), “depressing (pun intended).”

This post originally appeared at Economist’s View and is reproduced here with permission.

2 Responses to "Romer versus Geithner"

  1. JohnCardillo   June 8, 2011 at 4:39 pm

    In my opinion, neither Geithner or Romer know how to fix the problem. Since the "sick patient" analogy is so popular, here is my take on it:

    Money is the life blood of the economy and its only purpose to to facilitate the exchange of goods and services, otherwise we'd all be trading ducks and chickens for a beer and hamburger. The patient (the global economy) is suffering because certain body parts are hording money (China has trillions stashed away, companies are sitting on a trillion, etc…). As a result other body parts (the United States, Europe, etc …) are being starved. Stimulus (transfussions) aren't working because, the hording drains whatever is added. Paying down debt will never work because all money is created as debt so no debt means no money which means we all go back to ducks and chickens.

    The fix is to get those hording it to let go and use the money for its true purpose. If all the body parts would simply let the money circulate everyone would benefit and the patient would be cured!