<![CDATA[Christina Romer - Articles - RealClearPolitics]]>http://www.realclearpolitics.com/authors/rss/archive/17548.xmlAuthor <![CDATA[The Business of the Minimum Wage]]> Sun, 03 Mar 2013 00:00:00 -0600 I don’t believe that’s because economists care less about the plight of the poor — many economists are perfectly nice people who care deeply about poverty and income inequality. Rather, economic analysis raises questions about whether a higher minimum wage will achieve better outcomes for the economy and reduce poverty. ¶ First, what’s the argument for having a minimum wage at all? Many of my students assume that government protection is the only thing ensuring decent wages for most American workers. But basic economics shows that competition between employers for workers can be very effective at preventing businesses from misbehaving. If every other store in town is paying...]]> <![CDATA[Fed Policy Drives Best at Higher Speeds]]> Sun, 20 Jan 2013 00:00:00 -0600 First, what has the Fed done recently? Until September, its bond-buying program was explicitly limited in size and duration. Fed policy makers then replaced it with an open-ended program, whose pace was to be determined by progress in healing the labor market. And they adopted simpler, more positive explanations for their actions — jettisoning the gloomy, expectations-killing language that cited wretched economic prospects to justify every expansionary move. Then, in December, the Fed surprised markets by replacing its somewhat confusing predictions for interest rates with numerical guidelines. It said it would keep the rate it controls — the federal funds rate — near...]]> <![CDATA[The Fiscal Stimulus, Flawed But Valuable]]> Sun, 21 Oct 2012 00:00:00 -0500 AS a former member of President Obama’s economic team, I have a soft spot for the fiscal stimulus legislation he signed just a month after his inauguration.

But I’m also an empirical economist who’s spent a career trying to estimate the effects of monetary and fiscal policy. So let me put on my empiricist’s hat and evaluate what we know about the legislation’s effects.

]]> <![CDATA[Obama Would Cut Deficit, With Compassion]]> Sun, 09 Sep 2012 00:00:00 -0500 ASIDE from the empty chair that Clint Eastwood debated, the main prop at the Republican convention was a debt clock, highlighting the federal deficit and the growing national debt. The importance of dealing with the deficit will clearly be a major Republican theme this fall. So far, Democrats have mostly been playing defense on this issue by criticizing the Romney-Ryan approach. It’s time for them to go on offense by putting their own plan front and center.

Thanks to former President George W. Bush — remember the compassionate conservative? — I have a good name for the fundamental principle that should guide the Democratic alternative: compassionate deficit...]]> <![CDATA[Only the First Step in Containing Health Costs]]> Mon, 23 Jul 2012 00:00:00 -0500 Here's a frightening thought: Despite the recent Supreme Court decision upholding the Affordable Care Act, serious work on more health care legislation is still needed.

Don’t get me wrong: the new law is a great step forward. It is expected to expand health insurance coverage to more than 30 million uninsured Americans without increasing the deficit, and it makes an important start on reining in the rapid growth of health care costs.

]]> <![CDATA[It's Time for the Fed to Lead the Fight]]> Sun, 10 Jun 2012 00:00:00 -0500 The argument for additional monetary action is straightforward. By law, the Fed is supposed to aim for maximum employment and stable prices. But the unemployment rate is 8.2 percent — a good two percentage points above what even the most pessimistic members say is its sustainable level. Moreover, the spate of disappointing data and the deepening crisis in Europe make continued weakness all too likely.

What about the arguments against further action? I don’t think they are convincing enough to win the debate.

 

]]> <![CDATA[Hey, Not So Fast on European Austerity]]> Sun, 29 Apr 2012 00:00:00 -0500 EUROPEAN policy makers just don’t get it. To hear them talk, you’d think that Europe was on the right path. Troubled countries just need more of the same, they say — more fiscal austerity, more labor market flexibility, more price stability — and the European crisis will be licked.

Have they looked at their own numbers? It has been two years since moves to austerity started, but the crisis is still with us. Growth in European gross domestic product was negative in the last quarter of 2011. Unemployment in the entire euro zone in February was 10.8 percent; in Spain it was an astounding 23.6 percent.

]]> <![CDATA[Wishful Thinking About Tax Rates]]> Sun, 18 Mar 2012 00:00:00 -0500 AT least since Calvin Coolidge, politicians have trumpeted the supply-side benefits of cutting marginal income tax rates. Lower rates will unleash economic growth and the cuts will largely pay for themselves — or so it’s often said. Yet careful studies find little evidence of such effects. Perhaps it’s time to reform tax policy based on facts, not worn-out assumptions.

A family’s marginal tax rate is what its members pay to the government if they earn another dollar. If the government takes a smaller chunk of that dollar, a family has more incentive to earn it. Workers may choose to work additional hours, or a stay-at-home spouse may decide to work outside...]]> <![CDATA[Do Manufacturers Need Special Treatment?]]> Sun, 05 Feb 2012 00:00:00 -0600 EVERYONE seems to be talking about a crisis in manufacturing. Workers, business leaders and politicians lament the decline of this traditionally central part of the American economy. President Obama, in his State of the Union address, singled out manufacturing for special tax breaks and support. Many go further, by urging trade restrictions or direct government investment in promising industries.

]]> <![CDATA[Ben: It's Time For Your Volcker Moment]]> Mon, 31 Oct 2011 00:00:00 -0500 IN October 1979, inflation was running at more than 10 percent a year, and the Federal Reserve’s gradual interest rate increases weren’t solving the problem. So Paul Volcker, the Fed chairman, dramatically changed how monetary policy was conducted. Today, an equally intractable unemployment crisis demands that Ben S. Bernanke, the current Fed chairman, stage a quiet revolution of his own.

What did Mr. Volcker do? He reasoned that because inflation depends on growth in the money supply, inflation would fall if he brought that growth down. And he believed that by backing up his commitment to lower inflation with a new policy framework, he would break people’s...]]> <![CDATA[Tax Hikes Should Be Part of Budget Plan]]> Sun, 03 Jul 2011 00:00:00 -0500 DEALING with our nation’s gaping budget deficit is going to hurt. So here is a question for policy makers: What would hurt more, raising taxes or reducing spending?

The Republicans who walked out of budget negotiations the other week think they know the answer. They insist that higher taxes would threaten our fragile economic recovery and do serious long-term damage. Better to cut federal spending, they say.

]]> <![CDATA[A Strong Dollar Isn't Always a Good Thing]]> Sun, 22 May 2011 00:00:00 -0500 AT a recent news conference, Ben S. Bernanke, the Federal Reserve chairman, was asked about the falling dollar. He parried the question, saying that the Treasury secretary was the government’s spokesman on the exchange rate — and, of course, that the United States favors a strong dollar.

Listening to that statement, I flashed back to one of my first experiences as an adviser to Barack Obama.

]]> <![CDATA[Jobless Rate Is Not the New Normal]]> Sun, 10 Apr 2011 00:00:00 -0500 IT takes a while to match people with jobs, so even in normal times the unemployment rate is never zero. Before the recent recession, in the view of many economists, the lowest sustainable rate of unemployment in the United States — a level known as the normal or natural rate of unemployment — was around 5 percent.

The turmoil of the last few years, however, has shaken up the economy. Is it possible that it has affected the natural rate of unemployment — increasing it to 8 or even 9 percent?

]]> <![CDATA[What Obama Should Say About the Deficit]]> Sun, 16 Jan 2011 00:00:00 -0600 BY the time President Obama gave his State of the Union address last year, the speech felt like an old friend. It had been part of my life — from the brainstorming sessions in late November 2009 to the last minute fact-checking. I knew when all of my favorite lines were coming. That led to an awkward moment during the address when I sprang to my feet, applauding the president’s tacit endorsement of the free-trade agreement with South Korea, before noticing that the only other person cheering seemed to be Ron Kirk, the special trade representative.

]]> <![CDATA[Long Run Debt is Creating Uncertainty]]> Sun, 05 Dec 2010 00:00:00 -0600 UNCERTAINTY is frequently blamed for the sorry state of the economy — for why businesses are not investing strongly in new equipment or hiring more workers, and for why consumers are not spending freely. On Wall Street, it’s even said that government meddling is the main culprit and that political gridlock is the cure.

This is a serious misreading of the situation. Uncertainty is likely holding back the recovery. But its sources are far more fundamental than the tax and environmental issues that typically top the list of complaints. And the solution is certainly not for the government to do less. Rather, it needs to do much more.

]]> <![CDATA[Our Long-Run Deficits Are Simply Unsustainable]]> Sun, 24 Oct 2010 00:00:00 -0500 THE clamor to cut the budget deficit is deafening. Blue Dog Democrats, Tea Party Republicans and doomsday economists are calling for immediate action. And the demands for austerity coming from abroad are even louder.

Make no mistake: persistent large budget deficits are a significant problem. Government borrowing in good times crowds out private investment and lowers long-run growth. It can also make policy makers unable or unwilling to use adequate fiscal stimulus in times of need: concerns about the deficit limited the size of the stimulus act in 2009 and are a main reason that Congress has refused to take additional measures to cut our painfully high rate of unemployment.

]]> <![CDATA[How to Prevent Huge Teacher Layoffs]]> Fri, 28 May 2010 00:00:00 -0500 The emergency spending bill before the House would address the education crisis facing communities across America -- and the jobs of hundreds of thousands of teachers are at stake. Because of continued high unemployment, state and local budgets are stressed to the breaking point. Many states and localities are drastically cutting education spending. This year school districts in Hawaii went to only four days of instruction a week. In many other districts, officials are ending the school year early to save money.

 

]]> <![CDATA[Making Job Creation a Priority]]> Tue, 29 Dec 2009 00:00:00 -0600 These proposals are an important steppingstone in our efforts to fix the economy - but they are only a part of our strategy. There is no single piece of legislation that will solve our problems. Our nation faces double-digit unemployment. Far too many Americans still are struggling to make ends meet.

But to understand where we need to go, it's important to look back at where we started. On the first days after the president was elected, our economy was rolling toward the edge of a cliff with ever-increasing momentum.

President Obama instructed his economic team to take swift action to stem the tide of crisis. And we did. From shoring up banks so they would lend to...]]> <![CDATA[Putting Americans Back to Work]]> Wed, 02 Dec 2009 00:00:00 -0600 President Obama took office at the height of the worst downturn since the Great Depression. Following the collapse of Lehman Brothers in the fall of 2008, both weak and strong financial institutions faced panic-induced runs, and by last November, job losses rose to over half a million per month. Over the winter, any hope that the crisis might be limited to the United States was dashed as countries throughout the world began reporting breathtaking declines in GDP and trade.

The president's first task was to stop the economic free fall and stabilize financial markets. Next was to help restore confidence and begin the process of financial-market repair. And now we are moving ahead...]]>