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.
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The new banking regulations will mark the turn-around if any this year. Thus far, all the efforts have been hampered via a lack of new banking rules and regulations stifling the recovery. Wall Street, bankers, consumers and the nation as a whole are anxiously awaiting the new rules and freeing of the capital & lending markets with greater security for investments. It is the resurrection of the SEC, FTC, FDIC, and other regulatory agencies which has fallen behind the bailout & stimulus efforts.
obama and geithner are in way over thier heads
Look up this woman's credentials. She has NEVER held a job in the PRIVAT sector...NEVER!!! She is/was a Professor at Berkley and pretty much always has been. She's never ventured beyond her liberal coccoon!
Even her "studies" are selective in data, limited in scope and prejudiced in hypothesis.
AND we're suppose to LISTEN TO HER!!!! I don't think so!
I thought the AIG payout was $235 million, not $165 million.
Have you ever heard anyone who is so chirpy yet uninformative about trillions of dollars and financial crises no one seems to understand?
I completely disagree with her. She's blinded by the fact that she's part of this administration. Anyone who thinks the Keynesian multipler is 1.5 should be shot.
Where is the much needed help for the housing problem, we are waiting for help.......
...I agree...
Of course "it is not very useful" to discuss the AIG bonuses, especially when you were clearly negotiating with Congress for language in the bailout legislation that allowed the bonuses to be paid. Does she think we have any confidence in the WH budget projections when, according to the Administration's version of the AIG story, the Presidebt and Geitner were "shocked" at the AIG bonuses? According to Sen Dodd, Tresurey "pressured" Dodd into adding the language to the bailout bill. Who is the Presidebt's staff trying to kid?
You rethuglicans posting on this blog are pathetic. Where was your scathing criticism when bush ruined this country and bankrupted it? FACT: Obama has been in office two months and has done more proactively to fix this country then bush and the rethugs did in 8 years. Sadly some of you rethugs will benefit from Obama's plans and that bothers me. If things had of continued under your party you wouldn't be able to afford the internet you are using to bash Obama. This country has been run into the ground by your party and bush.
Well Yes, the economy will pick up !
IF you are a worker at the Mint or one of the paper or ink supplier for The FED.
Money counters and baggers are in demand.
Since we are printing money as fast as the presses will run, we will need some new press technicians also.
What utter nonsense !! Inflation will be so high, wheelbarrows will be in demand too.
We simply can't continue to print money on demand. Why do we never learn anything from history ?
Dont worry, at next Wednesday's cocktail party, Barry will come up with an new idea and solve all our problems. Hang in their Americans!
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independent Jim,
The President's staff's not trying to kid anyone. For once there is transparency in an administration. Bush didn't try to kid you. He made a fool out of you, by pretending to be a Commander-in-Chief, when he was really Cheney's puppet. This is, and always will be 'old Bush mess.'
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Unlike the lie Bush told Brown, I tell you the truth, Mr. President, you are doing a heck of a job!
This is propanganda or stupidity or both. The US is simply going down the drain. Numerous years of big spending cannot be compensated by many more years of even more big spending. There is one simple rule in the economy: you always have to pay your debts and when you cannot do that in due time you are bankrupt.
Looks like everyone is in a mode of "the people in the administration suck and let's find out who screwed up and penalize them". Well, here's a piece of news: we elected them very recently and gave them the power to appoint!
What would be more constructive I think is to propose solutions to fix the problems that the economy is facing. We should keep the pressure up on the administration to get us out of this mess vs focusing exclusively on who's fault it is!
sr, the whole country is in way over its head thanks to our bozo former president and Dick the VP's 8 years in office. Gripe all you want, but we all voted and it didnt take a 5-4 vote to put this administration in office. we tried it the other way; opponents of course want this administration to fail because when it doesn't then their outdated trikle-brained policies will be buried.
Of course giving the huge bonuses to the AIG people is distasteful as were bonuses to Fannie Mae, Freddie Mac, and Sallie Mae.
Everyone got their "blood money" except small investore like my wife and myself who got paid pennies on the dollar when these were taken over by the government.
No one cared that we lost 45 thousand dollars when the "Freddie's" , "Fannie's" and the "Sallie's" folded. We just had to fend for ourselves even though we are retired and on fixed income.
you people would be mad if she said all hell would break out next year
WOW! Reading some of the comments on here is like reading a transcript from O'Rielly's or Hannity's show. Bernanke has said the same twice now. Just curious as to what all the haters will say when thing do begin to pick up at the end of the year? It may be nothing, but new jobless claims were down by 12,000 last week. Unlike the haters out there who are ready to pick up their pitchforks and go headhunting, I'm willing to be rational and give the president and his people time to fix this mess. Everyone warned us that this thing was going to get worst before it got better and most polls indicated that the American people were willing to give the president at least a year to do the job. Now that we are in the thick of things, the pundits out there want to create hysteria.
I learned a long time ago that economist had very little knowledge on what is the future of the economy. You do not need an economist to determine what has happened historically with the economy. If you believe this person ( BO's so-called expert) on the economy, please put your money into the stock market today . . . you will become a millionaire, and the BO administration can raise your taxes, or take the profits as they may see fit in the future. When 'politics' continue to be the driving force of the economy, the country will continue down the path towards a long term depression.
I agree wih her
Which lead economist is this? The one that prompted all of Obama's apocalyptic talk, the one that prompted his reversal to optimism, the one that thinks adding a retroactive tax to punish people acting legally is a good idea, the one who talked him into not endorsing the tax, or another one?
And, most importantly... what does Obama's telemprompter operator think? That's who's REALLY in charge in the White House.
I am willing to take a chance on the Keynesian theory for 8 years.
We gave "trickle down" and "voodoo" economics a shot for 20+ years and look where we are today!
That has only worked for the fat cats not the little guys in America.
Recovering $150 million of bonuses will not fix our problems. It will barely pay for the legal fees the greedy lawyers will consume fighting over it. Focus on the bigger picture people! Like the fact that over the years we kept giving bailouts to AIG that still kept screwing us over. It is those billions upon billions of dollars we should be fighting over, not small potatoes!
If she is correct it will be because a socialized state as been completed with the United States being only a satellite of a world nation. There is no question that this is what Obama, Pelosi and Company are pushing for and only the naive could honestly believe otherwise.