Behind the scenes with Obama’s economic team

The new issue of the New Yorker features an extensive article taking readers behind the scenes with President Barack Obama's economic team during the transition.

One of the highlights is adviser Christina Romer talking about the so-called stimulus bill.

Romer explains to Obama that the government needs to get as much money as it can into the hole left by sudden evaporation of private wealth. The piece is long, but should be a good read for folks who want to better understand economics and the role of government in the economy. Here's a snippet from the New Yorker, via Politico:

"The purpose of a stimulus is to fill the hole left during a recession by the difference between the economy's potential and what it's actually producing -- what economists call the 'output gap.' She [Romer] explained the impact of different types of stimulus, giving a lesson on 'fiscal multipliers' -- the term economists use to describe the economic impact of every dollar of stimulus. For instance, she explained, a dollar of government spending raised the G.D.P. by about a dollar fifty, while every dollar of tax cuts, which are partially saved, generally returned about a dollar or less."