An unapologetic Larry Summers used his final speech as the head of the White House National Economic Council to press the case for more government action to stimulate consumer demand, starting with—but not limited to—the tax compromise between President Obama and Republicans.
It was a fitting sign off from a much-respected but often prickly economic thinker who was a chief architect of Obama’s attempts to fight the worst recession in decades. Those efforts included the 2009 economic stimulus bill, which many economists say staved off millions more job losses, but which also helped spur a voter backlash against federal spending that Republicans rode to retake the House in November.
Summers expressed no regrets for the administration's choices. He refused to cede ground either to conservatives who said the stimulus had been ineffective or liberals who argued that it had been too small.
“The president has been right to take pride in what has been averted, and that is not easy for people always to understand,” Summers said.
Summers' last day at the White House is on Wedneday, after which he plans to return to teaching at Harvard University. He used much of his 40-minute speech at the liberal Economic Policy Institute to argue that the government still needs to do more, not less, to spur the weak economy.
“There cannot be any question that the constraint on our economy now and for the next several years will be a lack of demand,” he said. He also called for more investment in infrastructure and education.
He touted the imporance of increasing exports—singling out the recently completed U.S.-Korea Free Trade Agreement as a model for action. And he hailed the stimulative provisions of the Obama-GOP tax deal, an agreement that Summers said “averts what could have been a serious collapse in purchasing power, and provides far more fiscal support than most observers thought politically possible.”
In a nod to irate liberals and congressional Democrats who oppose the deal’s two-year extension of tax cuts for wealthier Americans, Summers admitted that the president had made concessions. But he staunchly defended them.
"Be clear," he said. "Compromises that were necessary with a weak economy in 2010 should be inconceivable as recovery accelerates in 2012.”
Summers devoted the meat of his prepared speech to a prescription for restructuring the American economy to grow strongly in the coming years. He said the United States is necessarily shifting to knowledge and service industries and away from manufacturing jobs, and that the emergence of developing nations such as China need not hinder American growth.
He said America’s strengths will come from its ability to develop and produce unique products, born of its collective institutions such as national laboratories, research universities, and capital markets. He called education the nation’s biggest failure of the last 50 years and public schools the battlefield of America’s economic future.
Even as he hailed the United States as “the only country in the world where you can raise your first $100 million before you buy your first tie, if you have a sufficiently good idea,” he warned against lawmakers who believe the country can compete globally by slashing wages, benefits, and collective bargaining.
“They would shred social safety nets in the name of self-reliance,” he said. “Such social Darwinism was bad morality and bad economics in the 19th century” and remains bad today.
When he finished, Summers faced a barrage of questioners asking him to reflect on—and critique—his time in office. One reporter asked him to engage in nostalgia or offer any regrets.
“I think I’ll emphasize nostalgia, and I’ll let you emphasize regrets,” Summers said.
Asked in his final question of the morning what he would miss most about the White House, he replied dryly: “Reporters like you.”
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