My colleague Joshua Green has a good item today about Christina Romer's reported fight inside the Administration to make the stimulus efforts bigger and faster and more sustained, and to worry less about "deficit spending" complaints.
As a supplement to that item, it's worth reading a speech Romer gave yesterday at the National Press Club. She defends what the Administration did but also makes clear that she thinks a lot more needs to be done, and fast. Samples of both arguments after the jump, but the whole speech, which is relatively short, deserves attention. It's available as PDF here.
From Romer's speech, what has worked so far:
These unprecedented, pragmatic policy actions [by the Administration] have made an enormous difference. On the financial side, the stress test reassured investors and set off a wave of private capital-raising that was exactly what the system needed. Credit spreads -- an indicator of perceived risk -- have returned almost to pre-crisis levels. And while credit remains tight for consumers and small businesses, lending standards have stopped tightening and are gradually starting to loosen. Large firms are able to borrow at favorable rates and get the credit they need for investment and day-to-day operations. And the financial industry has paid back U.S. taxpayers at a rate few thought possible.
In the automobile industry, Chrysler and GM have emerged from bankruptcy; and in the first half of this year, all three of the American automakers operated at a profit for the first time in six years. Employment in motor vehicles and parts has increased by almost 80,000 since its low point in June 2009.
And what more needs to be done:
The United States still faces a substantial shortfall of aggregate demand. GDP by most estimates is still about 6 percent below trend. This shortfall in demand, rather than structural changes in the composition of our output or a mismatch between worker skills and jobs, is the fundamental cause of our continued high unemployment. Firms aren't producing and hiring at normal levels simply because there isn't demand for a normal level of output.... The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts.