Romer: Silicon Valley Can Help Nation Out of Slump

Silicon Valley's tech companies are well-positioned to help the nation innovate its way out of the current slump, Christina Romer, President Barack Obama's former top economic adviser, told an audience of valley leaders Feb 18. But Romer, teaching again at UC Berkeley after two years as chairwoman of the White House Council of Economic Advisers, warned that the country faces a bigger challenge than recovering from recession: a huge, long-term deficit from paying for the health care costs of an aging baby boomer generation.

"Government is going to have to change its free-spending, inadequate-taxing ways," she told an audience of about 1,000 people gathered at the McEnery Convention Center in San Jose for Joint Venture: Silicon Valley's 2011 State of the Valley Conference. The tax code needs reforming, she said, but "it's very clear" that tax cuts for the wealthy do not result in economic growth. They "just make the very wealthy even wealthier," she said. Romer said she's frustrated that so much of the rhetoric in Washington has been about cutting discretionary, nondefense spending, which she said represents about 15 percent of the federal budget. That debate is a "distraction" from the task of dealing with the long-term deficit, which she described as "a slow-moving train wreck that everyone can see coming years in advance."