Sunday, August 2, 2009

Larry Summers on Face the Nation

Today on Face the Nation, the President’s chief economic advisor, Larry Summers, discussed the recession and a possible tax increase. Treasury Secretary Geithner had spoke with ABC’s George Stephanopoulos and stated that the smaller federal deficit is vital to sustaining economic recovery. When Geithner mentioned the country making ‘hard choices’, he didn’t specifically state whether or not those choices included new taxes. Bob Schieffer asked Larry Summers if those hard choices would include new taxes.

Larry Summers answered, “No, not at all. He was explaining what’s been the President's policy. The President recognizes that his first job was to rescue the economy, that what he inherited was an economy with a trillion-dollar-plus deficit and an economy that was in freefall and people talking about depression. And he had to change that. And I think we have and the statistics we have seen confirm that. People aren’t talking about whether the recession is going to turn into a depression; they are talking about when it’s going to end.” Larry Summers continued, “And that’s a real accomplish-- that’s a real accomplishment for these policies. But we also recognized--and this is something the President’s also talked about--that in addition to rescuing the economy we have to rebuild it on a much stronger foundation so we don't have the kind of problems that brought this acc-- expansion to an end that led to the mess we have suffered for the last two years. And crucial to that is getting the federal deficit under control. And that’s going to involve difficult..."

Bob Schieffer interrupted, “Well, how are you going to get it under control?”
Larry Summers continued, “…difficult and challenging steps. Look, the first and most important thing for getting the federal deficit under control is substantial reform of the health care system and that's why the President’s started there. He has done something that actually is new. If you look at when Medicare was put in, if you look at the George Bush's prescription drug benefit, if you look at the Iraq war, if you look at the tax cuts, if you look at the Reagan tax cuts, we’ve done major things in this country without paying for them.

No one is arguing with the President's central premise, and it’s an important leadership of the President, that anything we do in health care is going to be paid for itself as judged by the nonpartisan independent scorekeepers. But the President’s actually going to go further than that, because he is also insisting that we enact a set of measures that are not the kind that you can really do a bean count on and score precisely, but which we know will have effects over time, things like encouraging preventive medicine, things like encouraging cost-effectiveness research. So health care is the first sort of ground zero of our efforts to contain the deficit.”
Bob Schieffer then asked Larry Summers specifically about tax increase, “I’m going to ask you about that in just a second, but let me just go back into this just to make sure. You don't see another round of tax increases coming”

Larry Summers replied, “Tax increases. Look, let-- let’s understand where we have been. Let's
understand that the President put in place, as part of the stimulus bill, as part of the economic recovery act, a measure he had campaigned on, the making work pay tax act that’s reducing taxes by eight hundred dollars for working-- for working families. That’s where the-- that’s where the focus is. We are going to keep working to strengthen the foundation…”
Bob Scheiffer repeated, “ No-- no tax increases for middle-income Americans?”

Larry Summers continued, “…foundation of this economy. There’s a lot-- oh, there’s a lot that can happen over time. But the priority right now, and so it’s never a good idea to absolutely rule things-- rule things out no matter what.”

Bob Schieffer responded, “ Okay,” before Larry Summers elaborated further, “But the President’s actually going to go further than that, because he is also insisting that we enact a set of measures that are not the kind that you can really do a bean count on and score precisely, but which we know will have effects over time, things like encouraging preventive medicine…” At which point, Bob Schieffer asked Larry Summers if the recession was over, citing the recent Newsweek cover story.

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