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. Mike

    Boy you "Independents" and "Republicans" surew are eating this up like candy huh? Oh – the Obama administration messed up. They are gonna make it worse. They are letting rich people win. Bla bla bla!!!

    Haven't any of you looked at the calendar? Its March 22nd. Obama has been in office a little over two months. If you think for a second that anyone in the Obama administration orchestrated this or facilitated any of this mess (including the AIG crap) then you woke up in fantasyland fellas.

    Let me quote Obama here: BE PATIENT. It is gonna take a while to clean up the Bush/GOP mess thats taken 8 years to build up. FDR needed 10 years AND A WAR to clean up the depression. You think Obama was gonna make everything better right away? Grow up.

    March 22, 2009 02:59 pm at 2:59 pm |
  2. Dakota Kyle Evans

    I want the FTC to start preventing some of these corporate mergers.

    I never again want to hear a company is "too big to fail"!

    March 22, 2009 03:01 pm at 3:01 pm |
  3. Roos Foyee

    Obama and Geithner...amateurs on a snipe hunt for answers!!!

    March 22, 2009 03:02 pm at 3:02 pm |
  4. dave

    Jan 1 2010 if there's not a "change" then send this one out on her kiester.

    March 22, 2009 03:05 pm at 3:05 pm |
  5. Dennis Stillings

    No, it will not bottom out this year; it will not bottom out until 2010, then it may start recovering, but likely not.

    March 22, 2009 03:12 pm at 3:12 pm |
  6. tedious898

    Ok ENOUGH!

    I ask the Republicans/Conservatives two (2) simple questions.

    1. Where as all this all this righteous indignation when the previous administration was shipping pallets of money to Iraq and shortly thereafter losing it all in the dessert? Do any of you remember the troops playing football with bundles of money in the dessert?

    2. What is your suggestion? Please don't reply with the usual tax cuts idea. Isn't that what got us to this point?

    Two simple questions...requesting two simple answers from a group of utter simpletons

    March 22, 2009 03:13 pm at 3:13 pm |
  7. Carl Justus

    I believe the fourth quater will show an increase in jobs and spending.
    The stilmulus should be working and begin to show much improvement and the confidence level will be greatly improved.

    March 22, 2009 03:15 pm at 3:15 pm |
  8. Paul

    So, how's that "change" and "hope" working out for you?
    Sorry yet?

    March 22, 2009 03:16 pm at 3:16 pm |
  9. twinkletoes

    Can we PLEASE PLEASE leave the AIG bonuses alone (outrageous as they are) and begin to focus on the really important issues: health care, education, energy policy, and long-term bank regulation that will make such unscrupulous bank activities things of the past.

    March 22, 2009 03:18 pm at 3:18 pm |
  10. Vic Florida

    More propaganda from the White House... and in response to Independent Jim, the White House is trying to pull the wool over OUR eyes!

    March 22, 2009 03:21 pm at 3:21 pm |
  11. Victor Mandy jr

    Well first thing that I would like to say is I am hoping these bonuses are taxed heavily, And now the banks are bragging about lending. Hugh that is quite funny aren't banks suppose to lend money to citizens of this country? What right do they have to brag about doing what they have suppose to been doing all along? Anyways here is a great example of the stimulus being bad ( I support the stimulus )

    There is a bridge that connects the state of Vermont and the state of New York. The bridge is in bad shape. I am pretty sure if this bridge closes and is not replaced there will be drastic economic problems for the surrounding towns of both states. Banks got all sorts of money to stay a float, maybe the banks should give both states some super low interest loans to fix or to build a new bridge.

    I am reasonably sure that if the bridge closes it will also produce a higher unemployment rate for the area also.

    Just my opinion

    March 22, 2009 03:28 pm at 3:28 pm |
  12. Pat

    Bottom out and recover in one year? That is a very rosy outlook. People continue to lose their life savings, health, homes, and pets. Shattered dreams of college. Loss of ability to act on serious medical issues will not be "recovered" soon enough. Stop the lies; nothing goes that far south and swiftly recovers – not for the "small" people.

    March 22, 2009 03:31 pm at 3:31 pm |
  13. MichaelDS

    Gee, what else would I expect to hear from an Obama team member? Hey you hens, you've got a wolf outside guarding your henhouse. Don't worry, be happy . . .

    March 22, 2009 03:32 pm at 3:32 pm |
  14. ralph

    reading and listening to most of the comments ine wiould concuded that they are all of thre republican persuasion trying hard to continue scaring teh peop0le in the hope that in 4 years they wil turn against our president

    March 22, 2009 03:33 pm at 3:33 pm |
  15. Jason White

    UM.... Who the hell is she? From what i've read, she doesn't know what she's talking about.. AT ALL!! Is this the same person that said "Go out and BUY a new car?"
    It's not looking good for Obama AT ALL!! I think he's going to get impeached..

    March 22, 2009 03:34 pm at 3:34 pm |
  16. Paul Stewart

    Why is it that Not One Single Republican has offered at least an IDEA of where to go from here? It's clear they're playing politics to the detriment of our Entire Country.
    Whatever ever happened to "We're ALL Americans and let's work TOGETHER to help us ALL out of this mess" ?
    Yeah...politics as usual fron the "wrong..I mean right"....!!!!

    March 22, 2009 03:34 pm at 3:34 pm |
  17. Luis

    I like how many of these commenters pretend to have a better grasp of economics than Romer. Not everything need be a partisan issue, friends. Most private economists think the recession will end in late 2009 as well.

    Further, there should be no serious debate about her credentials. She's brilliant and her studies are as or more intellectually honest than any I've seen which attempt to discredit Keynes.

    March 22, 2009 03:36 pm at 3:36 pm |
  18. Dan

    Makes me sick that Commerce Secretary nominee Gregg was involved with the AIG bonus issue.

    Gregg voted for every one of the Bush budgets.
    Gregg voted for deregulation.
    Gregg never many of the bailed out companies failed to pay their taxes in 2004. 23 bailed out companies owe hundreds of millions in taxes from 2004.
    Gregg voted to allow these corporations to buy a post office box on an island to avoid paying their fair share of taxes.

    March 22, 2009 03:37 pm at 3:37 pm |
  19. Karen

    I guess screaming "The sky is falling!" bug eyed every day wasn't really working for them.

    March 22, 2009 03:42 pm at 3:42 pm |
  20. Dave Foster

    Of course Ms Romer (or is it Roemer, CNN can't seem to decide which one) doesn't want to discuss the bonuses. Geithner, Dodd, Frank, Rangel, Pelosi, Imanuel and Obama are all responsible for those being included in the language of the bailout bill. These people are incredible, they cannot remember what they put into a bill and/or when. No wonder they didn't want the bill read before being voted on. These intelligent elitists, my pet nickname for them is incompetent boobs, they have the Audacity to call Bush stupid...

    March 22, 2009 03:43 pm at 3:43 pm |
  21. Austin

    I think that no matter what we say about AIG, they will still receive their bonuses due to the highly controversial clause. If the government took away their bonuses or had some sort of substantial effect on their "commissions", they would get sued because it is in AIG's employees' contracts. We will also continue to pour money into the insurance "giant", because they are too big to falter. Therefore, whatever action we take, it is inevitably going to have to be in AIG's favor.

    March 22, 2009 03:43 pm at 3:43 pm |
  22. Ohio for Obama- Suburbs

    Good news to hear. But hear comes the knuckle heads that think they know everything about the economy and down play the good news.

    p.s Affirmative, Jeff Spangler, and Matt Van Susteren, please post your credentials in order to qualify your rebuttal argument.

    March 22, 2009 03:50 pm at 3:50 pm |
  23. Jeanne

    Can't wait to see how competent the government is with all these new programs! They have such a great track record as it is.

    March 22, 2009 03:53 pm at 3:53 pm |
  24. Brian

    As a Canadian, I will be watching keenly to see how things unroll in the US during 2009. There has been so much damage caused by the US system within the US and around the world. I can't believe how the institutions of the US were so unstable and have literally crumbled. Let's see if the auto industry is really salvagable – I have my doubts that just throwing money at everything and going into immense govt debt is really the answer. Perhaps the govt should let some institutions/industries go under if they cannot self sustain – isn't that capitalism?

    March 22, 2009 03:53 pm at 3:53 pm |
  25. Keith Graham

    I would like to see the economy turn around because families are suffering across America because of the worests economic crisis since the Great Depression. I wish that everyone come together as Americans to get things done. I also believe that Washingtion needs to be fix because the Democratic and Republican parties are bankrupting America's future. No political party is better than the other. America will never be the same again.
    Politics is the reason why this country is in the shape that it is in. With all due and respect, I support everything that President Barack Obama is trying to do to get the economy to recover. The Republican party and some Democrats need to stop trying to make President Obama look bad. The man is trying to do the best he can because none of this economic problems is his fault. The Republican party needs to quit playing politics and help get things done. I agree with President Obama that we need to add to the deficit in the short term to get the economy back on track so people can get back to work. When the economy get back strong, then we can focus on getting the federal deficit and the national debt pay off in the long-term.

    May God Bless America

    March 22, 2009 03:54 pm at 3:54 pm |
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