Larry Summers: No Tax Deal Could Spur Double-Dip Recession
A White House warning to Congressional Democrats today: If you block enactment of President Obama's tax cut deal with Republicans, you might trigger a double-dip recession.
"If they don't pass this bill in the next couple of weeks," said White House economic adviser Larry Summers, "it would materially increase the risk the economy would stall out and we would have a double dip."
Did Summers really mean what he just said, asked reporters?
"It would significantly increase the risk," Summers repeated.
Can any member of Congress, much less a member of the president's party, risk being held responsible for sending the economy back into negative growth?
But it reflects the determined high-pressure tactic the White House is willing to use to get the tax cut deal enacted.
At the same time, Summers conceded that the deal Mr. Obama struck with Republicans "is an imperfect agreement."
"It's got things we like and things we don't like," said Summers at a briefing for reporters intended by the White House to influence press coverage of the deal.
At the same briefing, White House senior adviser David Axelrod said Mr. Obama got what he wanted in the deal: an extension of Bush-era tax cuts for the middle class and a 13-month extension of unemployment benefits; while Republicans got what they wanted: an extension of tax cuts for upper income taxpayers and a less onerous variant of the federal estate tax.
Axelrod said he took issue with a reporter's suggestion that more Democrats are upset with the deal than Republicans. He said Republicans are better at "stifling dissent" than are Democrats. But White House spokesman Robert Gibbs was quick to cite criticism of the plan from former GOP vice presidential nominee Sarah Palin and Rep. Michele Bachmann (R-Minn.), among others.
Summers declined to put a price tag on the cost of all the elements of the entire tax cut plan but did concede there'll be "a significant increase in the deficit in 2011." He says the federal budget deficits will be higher in the short run but lower in the long run. He said that's because the tax cut extensions and other provisions have a lifespan of two years or less. He said the plan is still being scored by the Congressional Joint Tax Committee, but estimates of the cost of the agreement run as high as $900 billion.
For the third day in a row, Mr. Obama weighed in on the plan, insisting it's "inaccurate" to say Democrats feel betrayed by his deal with Republicans.
"I think the more they look at it, the more of them are going to say this make sense," said the president in response to a reporter's question during a photo op with President Bronislaw Komorowski of Poland.
Mr. Obama said the agreement has economists revising their forecasts to show the economy growing and unemployment declining.
For a second day, the White House dispatched Vice President Joe Biden to Capitol Hill to make the case to disgruntled House Democrats that the tax cut agreement is the best of option available. Biden delivered the same pitch yesterday to Senate Democrats, but even party leaders in Congress remain unenthusiastic; among them, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.
The White House wants to portray the agreement as a done deal that is the only possible hope of avoiding tax hikes on middle class Americans starting January 1.
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