Summers Neglected to Pass On Romer's Analysis of a Bigger Stimulus

[laughingliberal]

Summers said Monday night that Romer has been "an extraordinary friend and colleague at the White House", and he looked forward to drawing on her advice in the future.

Still, the two didn't always see eye-to-eye. As the New Yorker reported last year:

Romer had run simulations of the effects of stimulus packages of varying sizes: six hundred billion dollars, eight hundred billion dollars, and $1.2 trillion. The best estimate for the output gap was some two trillion dollars over 2009 and 2010. Because of the multiplier effect, filling that gap didn't require two trillion dollars of government spending, but Romer's analysis, deeply informed by her work on the Depression, suggested that the package should probably be more than $1.2 trillion. The memo to Obama, however, detailed only two packages: a five-hundred-and-fifty-billion-dollar stimulus and an eight-hundred-and-ninety-billion-dollar stimulus. Summers did not include Romer's $1.2-trillion projection. The memo argued that the stimulus should not be used to fill the entire output gap; rather, it was "an insurance package against catastrophic failure." At the meeting, according to one participant, "there was no serious discussion to going above a trillion dollars."
The official said no decision has been made on who will replace Romer as head of the Council of Economic Advisers.

The White House has vigorously defended its interventions - chiefly the $862 billion stimulus bill approved by Congress - as moves that first prevented further freefall and then began turning around the economy.

http://www.huffingtonpost.com/2010/08/06/christina-romer-resigning_n_672984.html


It's a shame Summers isn't the one leaving