December 9th, 2010
12:46 PM ET
Top White House economic adviser hits back at critics over dire economic Predictions
WASHINGTON (CNN) - President Obama's departing top economic adviser Larry Summers hit back at Democratic critics accusing him of exaggerating the consequences of failing to pass the president's tax bill.
Summers surprised some lawmakers Wednesday when he warned Congress that not supporting the legislation could lead to a double-dip recession in 2011.
"If they don't pass this bill in the next couple weeks it will materially increase the risk that the economy would stall out, and we would have a double dip," he told reporters at a White House briefing.
On Thursday, Summers responded to some Democratic lawmakers' grumblings that his dire economic prediction was a wild overstatement, motivated by the White House's full court press to sell their controversial tax cut deal for the rich as well as the middle class.
"It's not a political move, it's an economic analysis that tracks the judgments of many other economists," Summers said. "Look, in August of 2007, I warned that more was necessary if we were going to avoid a serious problem. A lot of people thought that was scaremongering at that time, so I think it's the right analysis of the economy and it's an analysis that's widely shared."
Summers responded to criticism that the president's tax cut deal, which could cost as much as $900 billion over the next two years, does not square with the administration's priority to lower the federal deficit.
"The president has been very clear on his view of the federal deficit," Summers said. "We first have to get this economy growing, that if we don't get this economy growing, we've got no prospect of achieving the kind of deficit reduction goals we want in the medium term."
Summers said the president's priority is "to assure that in the medium term our incomes are growing faster than our debts. In this measure we actually contribute to a lower deficit in 2013 or 2014 or 2015. It'll do that because of the re-timing of corporate depreciation allowances. Corporations will get more now when they most need them, and they'll be able to claim less in the so-called out-years."
Summers also said the tax cut deal would help the economy grow.
"The extra growth that's forecast as a consequence of this bill will leave us with a higher GDP, more revenue collections, less social welfare collections. This bill is by no means sufficient to reduce the deficit as much as we need to in 2013, 2014, and 2015, but it is a move in the right direction," he said.
Summers, who officially announced his intentions in September to step down as the director of the White House Economic Council, says his last day will be the end of next week. President Obama has yet to name his replacement, but investment banker Roger Altman is widely believed to be the top contender.
Summers would not confirm whether Altman is Obama's pick, only saying, "When the president has an announcement to make on my replacement, he will make it. And whoever he chooses will have a great responsibility, an honor of serving a remarkable president and working with an extraordinary economic team."