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Summers Defends White House's Economic Policies Summers Defends White House's Economic Policies

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ECONOMY

Summers Defends White House's Economic Policies

Updated at 12:32 p.m.

In his first public remarks since announcing he would leave the government at the end of the year, chief White House economic adviser Lawrence Summers defended the administration's economic policies while expressing frustration with congressional gridlock and the perception that President Obama is anti-business.

 

"The program the president has been putting forward -- it's centrist. It's focused on supporting the market system," Summers said this morning at a National Journal conference on the American work force. "It's been disappointing that there hasn't been more willingness to cooperate at a time when the country has very serious problems."

Summers, director of Obama's National Economic Council, also cited disagreements with Congress in the passage of a smaller-than-advocated $787 billion stimulus package last year. "We pushed for as much stimulus as we were able to get at that time," he said, noting that Congress reduced the amount.

National Journal Editorial Director Ronald Brownstein asked whether the economy needed further stimulus. Summers answered with caveats but said he thought there was room for increased government spending measures to boost demand. "It is hard to believe that, at a time when construction unemployment is now at record levels, that there isn't something beneficial to do putting people back to work rebuilding and repairing the infrastructure," he said.

 

Summers also pushed back against theories advanced by some economists and business leaders that worker mismatch or regulatory uncertainty are chiefly to blame for the sluggishness of the current recovery. "I don't see how anybody can look at the facts of the American economy right now and not recognize that the overwhelming problem is the shortage of demand," he said. Liberal detractors of the administration's economic policies have criticized Obama for not pouring enough money into stimulus measures, while critics on the right have derided the extra spending as wasteful and ineffective.

In keeping with recent administration efforts to avoid the charged term "stimulus," Summers demurred at the use of the word: "It suggests an indifference to how the money is spent that is anything but the president's approach," he said.

Summers announced his plans to leave the administration last week. He will return to Harvard, where he was president and a top-tier professor before joining the Obama White House in 2009, after having been Treasury secretary near the end of the Clinton administration. Critics have called on Obama to replace him with a member of the business community, as an olive branch to that constituency.

Summers objected today to the characterization of Obama's policies as anti-business. "If you look at this president's interaction with members of the business community and if you look at the extent of his economic team's interaction with the business community, it has, I would suggest to you, been as extensive as that of any administration in a long time," he said.

 

Summers also delivered a full-throated defense of the benefits of free trade and argued that America faces a choice between wisely navigating an increasingly globalized world or isolationism. "Think about what's happened to the price of a long-distance phone call. Think about what the Web means. Think about what satellite TV means," he said. "It is not given to us, short of North Korean-type policies, to stop the reality of political integration. The question is whether we're going to prepare for it, manage it, and shape it to our advantage, or whether we're going to ostrich it and simply resist it. I think there's very little in the historical record that suggests that ostriching it would be an availing strategy."

As for the long-term prospects for recovery from the recession, Summers sounded optimistic. "There is an inherent cyclicality in economies, which is a cautionary note that people ignored at the peaks but it is a somewhat comforting note when things are worse," he said. "People aren't going to live with their parents forever."

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