March 22nd, 2009
12:21 PM ET
14 years ago

Obama aide: Economy will 'bottom out this year'


Watch Christina Romer discuss the Obama administration's economic policies on State of the Union.

WASHINGTON (CNN) – President Obama’s lead economist predicted Sunday that the nation’s struggling, recessionary economy will be growing by the end of the year.

“I have every expectation, as do private forecasters, that we will bottom out this year,” Christina Romer, chair of the White House Council of Economic Advisers, said on CNN’s State of the Union. “And, [we’ll] actually be growing again by the end of the year.”

Romer’s comments came in a wide-ranging interview with Chief National Correspondent John King where she defended the new administration’s economic policies in the face of growing criticism by Republicans – particularly over how Treasury Secretary Timothy Geithner handled payment of $165 million in bonuses to AIG employees and how Geithner has been slow to roll out the specifics of his plan to stabilize some of the nation’s largest banks.

“I think it is important to realize this is just one piece of what we're doing,” Romer said of the detailed Geithner bank rescue plan expected any day now. Romer pointed out that in the roughly nine weeks since Obama’s inauguration, the White House has rolled out a housing plan, a small-business plan, and a consumer and business lending initiative. “This is just one more of those pieces, and I don't think Wall Street is expecting the silver bullet . . . there’ll be more to come.”

Romer also left open the possibility that the White House could take more drastic action to stabilize the nation’s mortgage market through its control over mortgage giants Fannie Mae and Freddie Mac. She suggested the two massive financial entities could be broken up in order to make them more manageable and possibly avert another financial and mortgage crisis.

“I think that’s certainly going to be an issue going forward,” Romer told King when asked whether the two companies needed to be broken up. “I think it should be part of the overall financial regulatory reform.”

“If you are going to be too big to fail, we’ve got to have an eye on you and make sure that you’re taking prudent practices,” Roemer also said of large entities like Fannie, Freddie, and AIG which have posed systemic risks to the nation’s financial system in the past six months.

Romer also said she wasn’t sure “it was useful” to get to the bottom of exactly how the recent stimulus bill came to include language protecting $165 million in bonus payments recently paid to the same AIG employees who brought the financial behemoth to the verge of collapse.

“The President, again, is very aware of just how outrageous these things are,” she said when asked about the AIG bonuses.

soundoff (75 Responses)
  1. Helen, NY

    Obama has these kidns of advisers. They want to make our country bankrupt. How can you say that we will be better off one year later. THis is impossible especially when you print money and the inflation will go higher. These are not economists, they have agenda to make Obama walk on water... Obama himself has no experience in economics neither any experience as CEO. What a disaster.

    March 22, 2009 03:56 pm at 3:56 pm |
  2. joseph from Ohio, Independent

    The numerous haters will soon be quiet. Just wait and you will notice the fruit of the Obama's administration. Those that want him to fail will be terribly wrong and surprisingly quiet. Just wait if you have brains. Guys, the Keynesian model always work in times of economic collapse.

    March 22, 2009 03:58 pm at 3:58 pm |
  3. Robert New Concord, ohio

    From reading the comments it appears the people commenting do not understand the problem well enough to even comment! This is like a puzzle where you may not like some of the pieces all of the pieces are needed to make the puzzle come together. Once it does come together you will them and only them know if you had the right pieces and to make a masterpiece! It's like not seeing the complete picture of what the puzzle is until you get it together. Bad mouthing and second guessing would mean a lot more if you have a plan and we can see what it's going to look like first, otherwise shut up and weight before making a judgment! If you have that picture I'm sure the President would like to see it because he wants what we want. Peopl are also yelling about spending now and I wonder where they were during the last three Republican President terms! Look at the debt increase after everyone of them and ask yourself who are the BIG spenders! Thanks!

    March 22, 2009 03:59 pm at 3:59 pm |
  4. Pat

    Just as an offshoot on the recovery issue, what happened to the pets in past bad economies? Carter's left the famers in my area with a steady supply of stray starving and diseased animals to kill from neighboring cities. Obama has attempted to remove fireams and ammunition from most of the population – the people who cannot afford his heavenly prices. I hope PETA do not square off with any hunters attempting to feed their families. Welfare does not feed all who need it. It's going to get even uglier.

    March 22, 2009 04:01 pm at 4:01 pm |
  5. Marshall

    Interesting by the end of the year huh? Well I guess the jobs, housing, and banking mess will all be cleaned up by August then as well.
    The market will come roaring back too she might of added. I guess some people are just plain uninformed about the reality of the situation then.
    It took years to get into this mess and it will take years to get out of it. There are no magic wands to wave this time .
    The times of homes appreciating 10% a year like clockwork will never come back. Wait till the babyboomers all start selling their second and first homes in the next five years. You will see a huge downward price spiral. Wait till the boomers have no use for a second or third car that just sits in the garage. What happens when the two shoes that have not dropped yet do ? The first is the credit card debt shoe that is going to drop . People can not refi to pay off that credit card debt cause they are underwater in their mortgage or they are unemployed.
    The second shoe to drop will be sommercial real estate and especially older malls and small strip centers that are losing all of their small business owners. Here in Cleveland drive down any street and see the vacancies. One owner who had 5 vacancies out of 9 stores said "make offer' please.

    March 22, 2009 04:11 pm at 4:11 pm |
  6. Ted

    @ ind. Jim: You trust Chris Dodd?!

    March 22, 2009 04:14 pm at 4:14 pm |
  7. digger

    Keith Graham
    Nobody has to try to make obama look bad. He is doing a fine job of that himself.

    March 22, 2009 04:18 pm at 4:18 pm |
  8. mayoclinic

    Taking of the AIG bonuses is a well-calculated step towards socialism. The general public is outraged by the $$$$ amounts of the bonuses and "want" Osama...errr Obama to take the money.......and then when he takes there money, they cannot say boo about it... SOCIALISM here we come 🙁

    March 22, 2009 04:20 pm at 4:20 pm |
  9. mayoclinic

    opppss make that "their" money .. my bad..typo

    March 22, 2009 04:21 pm at 4:21 pm |
  10. thumper

    Maybe being supersized isn't better after all. There is no such thing as being to big to fail. All of congress is corrupt. The little guy is going to take in the shorts, no matter what anyone does. The rich will flourish. The old saying that the US wil collapse from within, is within our reach. God bless all sinners.

    March 22, 2009 04:23 pm at 4:23 pm |
  11. Truth Bomb Thrower

    This is called "WISHFUL THINKING."

    March 22, 2009 04:26 pm at 4:26 pm |
  12. Robert G.

    So what if the WH projections on growth are wrong? Simple: our debt service will then be so high that "95% of house holds" will see their taxes rise. Remember them? They are the people who believed the campaign promises.

    March 22, 2009 04:29 pm at 4:29 pm |
  13. independent in CO

    We wish! To the guy talking about Keynesian economics, it's never worked and never will. Wait till China and Japan stop buying our debt. Guess what happens then?

    March 22, 2009 04:34 pm at 4:34 pm |
  14. S Callahan

    Every day, I wake up Thanking my God..who provides for all my needs.
    In good times and in bad times he is ever faithful!

    March 22, 2009 04:37 pm at 4:37 pm |
  15. MARK

    Bush and his administration put us where we are today. It will take time, alot of time, to fix what the Republicans did to us.

    March 22, 2009 04:40 pm at 4:40 pm |
  16. Jack

    AIG bonuses are .001% of GDP. Get real and focus on the real issues of Health Care, Energy, Education and the Environment. Obama has it right....we cannot leave a legacy of fiscal bankruptcy and no health care, reliance on foreign pertoleum, education deficits and and environmental problems. Let's work towards solving Obama's campaign promises and en route see if the deficit can be tackled through increased production and through cutting unnecessary expenditures. It the deficit cannot be reduced over time, at least we have an infrastructure that supports the majority instead of an elite society pitting the haves against the have-nots.

    March 22, 2009 04:40 pm at 4:40 pm |
  17. MovieBuff

    We bent over for eight years and got the royal scr**ing of our lifetime.

    March 22, 2009 04:42 pm at 4:42 pm |
  18. Andrew H.

    Translation of Mayoclinic's Comment: OOOOOOOO......Obama is a communist, his middle name is Hussein so he must muslim sleeper cell terrorist .....a communist terrorist......and he's the anti-christ too because the secret service calls his limo....oooooo......"the Beast." Beeeee afraid....ooooooooooo!!!!!! I know it just isn't very scary but if you could see mayoclinic say it in a dark room with a flashlight on his double chin, you'd think it was at least mildly spooky. "And Obama would have gotten away with it if it weren't for those meddling kids and their talking dog mayoclinic."

    March 22, 2009 04:45 pm at 4:45 pm |
  19. Mike in NM

    I've read $50 TRILLION as the long-range cost of JUST health care for Americans. At, say, 3 people per household, that's $500,000 per household. Throw in defense, education, energy, roads, and lots of etc., either many of these projections are off, or we have generations of belt-tightening to do.

    March 22, 2009 04:45 pm at 4:45 pm |
  20. Leslie

    Romer, you're the ONLY one who believes in your own LIES. Keep on going, in your mind is truth, to us out here outside of the beltway, we know you're LYING to us like your President in the Oval Office, All of your under this current administration have lost EVERY ounce of credibility, you have NONE to speak of! Keep on spin until you get dizzy!

    March 22, 2009 04:45 pm at 4:45 pm |
  21. Bobby Rajan

    All thoes who are posting your coments plaese don't be in a hurry, wach your spelings. It's hard to read with so many words mis-spellt!

    March 22, 2009 04:51 pm at 4:51 pm |
  22. martin0641

    I wish people actually thought through making comments instead of just vomiting bumper sticker slogans at each other.

    It's like people think they can win an argument by just saying "Socialism!!!" over and over. Constantly making sweeping statements about "libs" and "pubs" is just barreling down the rabbit hole to political cheerleading for whichever side you happen to be on.

    I wish we could raise the level of the national discourse on these issues, and start understanding their full implications instead of just screaming "O'DOYLE RULES!"

    March 22, 2009 04:54 pm at 4:54 pm |
  23. peakarack

    I own prediction the economy will getting worse for the next 4 yrs. hahahahahaha!!!!!!!!!!!!!!!!!!

    March 22, 2009 04:55 pm at 4:55 pm |
  24. sherry

    Obama inheireted the worst economy any president has ever seen....Thank's to the Bush/Cheney era.I think Obama is doing a a good job and is trying to make thing's better.It wont happen over night but soon we will see improvement.....Unlike the catastrophy that Bush seemed to accomplish when he was in officeThe repub's like to lay blame on the democrat's , but offer no real solution's.

    March 22, 2009 04:57 pm at 4:57 pm |
  25. matt tamul

    haha, funny thing is, you guys are squabbling over this, there is a much bigger picture at play, i am astounded at how blind people are, that is what they want, that is what they count on, we are divided, easy pickings for the future authoritarians, just keep fighting, they will get what they want.

    March 22, 2009 04:59 pm at 4:59 pm |
1 2 3