2009 Economy, Glimpses Of The 1930s

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President Obama's top economic adviser says the current economic downturn bears striking parallels to the Great Depression. Christina Romer, the economic historian who chairs the Council of Economic Advisers, says the administration's current economic policies were designed to reflect lessons learned from Franklin Roosevelt's attempts to guide the nation to economic recovery in the 1930s.


Now, the European pushback comes a day after a top economic adviser to President Obama made another appeal for government spending. Christina Romer, the chair of the Council of Economic Advisers, defended the administration's policies, saying they reflect the lessons of the Great Depression. NPR's Tom Gjelten reports.

TOM GJELTEN: Speaking at the Brookings Institution yesterday, Christina Romer had listed parallels between the current crisis and the Great Depression. In both cases falling stock and housing prices led people in businesses to stop spending. The government had to boost its own spending to compensate. Franklin Roosevelt made an effort, Romer said, but it wasn't sufficient.

Ms. CHRISTINA ROMER (Council Of Economic Advisers): In the Great Depression, fiscal policies failed to generate recovery not because it does not work but because it was not tried. The key fact is that while Roosevelt's fiscal actions were a bold break from the past, they were nevertheless small relative to the size of the problem.

GJELTEN: Romer here was challenging arguments voiced recently by some Republicans that the 1930s showed that big stimulus spending doesn't work. She also had stern words for those governments, notably in Europe, that say more government regulation, not more government spending, is the answer.

Ms. ROMER: The more we all expand, the better the world will be and the faster we'll all get out of this.

GJELTEN: The Obama administration is likely to press for a big coordinated global stimulus program next month when the Group of 20 governments meet in London to discuss the financial crisis.

Tom Gjelten, NPR News, Washington.

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