Christina Romer on Boosting the Economy

The Council on Economic Advisors chair does a Q&A; with the Wall Street Journal:

What can be done to make things better?

Romer: There’s a lot that can be done. We had in our budget $267 billion of temporary recovery measures. So far, by kicking and screaming, we have only gotten a fraction of that.I think the additional state fiscal relief is absolutely essential. The FMAP extension. The $10 billion fund for preventing teacher layoffs. If you look at what’s happening at the state and local level, that’s a clear headwind to the recovery. Anything you can do to help ease that problem would be incredibly beneficial. We are working incredibly hard to get more credit and additional tax cuts for small businesses. And, the President has been talking about the Homestar program. There have been all these good ideas and what’s been frustrating for me is it’s been such a struggle to move them forward.

All true. I just wish she would mention monetary policy. Ultimately what’s needed is a whole of government effort to raise the price level back to something commensurate with pre-crisis trends. I understand the theory that it’s better for central banks to be operationally independent of elected officials (though the theory looks worse and worse with every passing day) but the convention that elected officials shouldn’t comment on central banking issues doesn’t make sense. You can’t talk about the economy without talking about monetary policy, and clearly we wouldn’t have a CEA Chair if she wasn’t supposed to talk about the economy.