* Romer: U.S. needs to spend more, tax less
* Says deficit concern not excuse for unemployed to suffer
* Romer delivers last speech before stepping down Friday
* Pleads for bipartisan agreement to act quickly
(Updates with fresh Romer quotes)
By Caren Bohan
WASHINGTON, Sept 1 Departing White House
economist Christina Romer said on Wednesday the United States
needed to find the political will for more economic stimulus,
even if it pushed up the fiscal deficit in the short run.
"While we would all love to find the inexpensive magic
bullet to our economic troubles, the truth is, it almost surely
doesn't exist," Romer said in a speech at the National Press
"The only sure-fire 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."
Romer said last year's economic stimulus package had staved
off a depression and that despite the debt crisis in Europe,
there were "very small" odds of the economy falling back into
"But I desperately hope that policymakers on both sides of
the aisle will find a way to finish the job of economic
recovery," she said.
Economic data in the past couple of months have suggested
the recovery is faltering and that there is a growing
possibility of a "double dip."
Nevertheless, there is next to no political will in
Congress for another stimulus package, with Republicans and
many Democrats increasingly concerned about the growth in the
The lackluster economy has put pressure on President Barack
Obama's Democrats ahead of Nov. 2 elections that could shift
the balance of power in the U.S. Congress.
Obama said this week that he and his advisers were
discussing ideas to help boost the recovery. Romer said there
was no time to waste.
"The key is that we need to take action and we need to do
it quickly," she said.
White House officials have been debating for months whether
to focus on boosting the economy or on reducing the deficit.
Romer has been among those arguing for more stimulus.
"Given our long-run fiscal challenges, any additional
support should be done in a responsible way." she said. "But
concern about the deficit cannot be an excuse for leaving
unemployed workers to suffer."
The U.S. economy is not growing at its full potential
because of a lack of consumer, business and export demand,
Romer said, adding that GDP by most estimates was still about 6
percent below trend.
"My prediction is we come through this period of turbulence
and go back to steady growth again," Romer said.
The $814 billion economic stimulus package that Obama
pushed through Congress last year has been heavily criticized
They contend it exacerbated the budget deficit -- which is
estimated to hit $1.5 trillion this year -- without bringing
down the 9.5 percent unemployment rate. Democrats argue the
jobless rate would have been much higher without it.
Obama has appointed a fiscal commission to study the
deficit challenges facing the country and asked it to report
back by the end of the year. Its recommendations are expected
to include a mixture of tax increases and spending cuts.
Romer launched a vigorous defense of the stimulus in her
speech, saying the recession caused by the 2007-2009 financial
crisis was "fundamentally different from other postwar
recessions" and required dramatic action.
"Because the final bill was a mixture of hundreds of
measures, many of which don't come with Recovery Act signs or
easily identifiable links to the act, it (has) been hard for
people to see what the act has done," she said.
"But it is precisely because it works through existing
programs and spreads funds widely that it could get out quickly
and reap large benefits."
Romer announced earlier this month that she would leave her
job as chairwoman of the White House Council of Economic
Advisers on Sept. 3 to return to her job as a professor at the
University of California, Berkeley.
Experts say a Labor Department report due on Friday could
show an uptick in the U.S. jobless rate in August to 9.6
percent from 9.5 percent in July, which would add to Obama's
dilemma ahead of the November congressional elections.
(Reporting by Caren Bohan, Donna Smith and Lucia Mutikani;
editing by Simon Denyer and Bill Trott)