Obama Aide Summers Counters GOP Criticism of Economic Policy

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By David Cho
Washington Post Staff Writer
Tuesday, October 13, 2009

The White House's top economic adviser took aim at Republican criticism of President Obama's economic recovery policies on Monday, delivering a sharply worded letter to lawmakers that credited the administration with pulling the nation back from an "abyss" and faulted the record of recent GOP presidents on the economy.

In his five-page letter to House Minority Leader John A. Boehner (Ohio), National Economic Council Director Lawrence H. Summers attempted to rebuff what has become a centerpiece of the Republican attacks -- that despite the administration's $787 billion stimulus package, job losses are continuing. Summers argued that the Recovery Act has substantially reduced the pace of unemployment and that financial markets have stabilized. And while the economy is still contracting, it is doing so much more slowly, he said. He also noted that some of the worst job losses occurred before the administration took office.

Summers saved some of his toughest rhetoric for Obama's predecessor.

"The bipartisan commitment to fiscal discipline that existed during the 1990s evaporated during the 2000s. Every major policy enacted during this period violated the principle of paying for new proposals," Summers wrote. "As a result of these decisions and a weak economy, when President Obama took office in January 2009, he inherited a deficit well in excess of $1 trillion."

Boehner reiterated the GOP stance in his response to Summers's letter.

"Every American is asking this Administration: Where are the jobs?" said Boehner in a statement. "In February, Mr. Summers himself said Americans would see the effects of the stimulus 'almost immediately' but since it took effect our economy has lost roughly three million jobs and more families and small businesses are struggling than ever before."

Earlier this month, the Labor Department reported that the unemployment rate had reached 9.8 percent, the highest in 26 years, and the 21st consecutive month of job losses. Obama called the data a "sobering reminder" of the fragility of the economic recovery.

The pace of job losses has slowed since Obama took office in January. But the issue still poses a political problem for the administration, given that most economists expect the unemployment rate to remain high throughout next year. Republicans appear to have no plans to abandon their attacks, which could gain traction with voters in mid-term elections next fall.

Summers said the administration's stimulus package, along with its efforts to rescue the financial system and help distressed homeowners, is restoring consumer confidence, which has been on the rise since the beginning of this year. He said the administration is seeing signs of stabilization in the housing market as well.

"We have walked a substantial distance back from the economic abyss and are on the path toward economic recovery," he wrote.

The second half of Summers's letter was devoted to arguing that Republican presidents are to blame for deepening the nation's deficits with "fiscal irresponsibility." In the 1980s, the nation's debt as a share of the overall economy nearly doubled, he wrote. Under President Bill Clinton, who appointed Summers to high-ranking Treasury posts, that trend reversed itself, he said.

Summers added that three major initiatives under Bush -- tax cuts, the wars in Iraq and Afghanistan, and a Medicare prescription drug bill -- are projected to add $6 trillion to the nation's deficits.

"President Obama is committed to not repeating the fiscal mistakes of the last eight years," Summers wrote.

Boehner and Summers agreed on one point: Small businesses remain the engine of job growth. Summers wrote that the administration would continue to review GOP proposals to help these companies that include offering them tax cuts and allowing them to join together to purchase collective health insurance for workers.


© 2009 The Washington Post Company

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