The Huffington Post claims her resignation is due to conflicts with official within the Obama White House Staff (The CEA is part of the Executive Office of the President): Romer's resignation came amid a report that she had been frustrated that she didn't have as much access to the president as Larry Summers, director of the White House National Economic Council.The story mentions a New Yorker article which also highlighted conflicts between Romer and Summers:
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."
Given the increased possibility of a double dip recession, perhaps the decision to not go over a trillion dollars, almost certainly a political decision, was unwise. Previous posts have highlighted the conflict in the Obama White House between the political team and the economic team over how best to deal with the recession.
8/7/10: Update
Here's some background on her resignation and how the story broke. The author tells us it had been known for weeks, but the story broke before the White House could annouce it and has beem trying to contain how the resignation has been framed. The author points to the comments specifically:
Check the comment section on Hotline On Call, and you'll get a sense of how challenging it is for the White House to contain a story once it breaks. Larry Summers is the bad guy; HE should have been forced out; HE hates women; he's muscling women who have good advice out of the way; why is the president so reliant on him and Tim Geithner, anyway?
A sample:
"Summers was the worst pick ever, along with that weasel Geithner and Rahm "Karl Rove" Emanuel. At least Romer was a progressive voice to counter the the Harvard/Chicago axis that represents Goldman Sachs, Wall St and the kind of unfettered, unregulated, "free"-market larceny that has been eroding this country's economic vitality for 30 years, while making the rich much richer still. Summers and company are the same ding-dongs and charlatans posing as economic gurus who have enabled the on-going plunder of America
"The person writing this could be a world-renown policy expert or someone with great insight into the motivations of the White House economic team. Or, he or she could be a crank. One would not know from reading the commentators' post that Summers is among the most forceful advocates for more spending...that Summers and Romer were among those who pushed the Senate and the House to consider a state bailout bill that, two weeks ago, had no chance at passing.
Suddently this story has shifted from one about economic policymaking to media relations in the age of the internet. Which raises a question: Has the increase in available information actually increased public ignorance of government, politics and public policy due to the increase in the noise that purports to be informative?
