Larry Summers Channels Paul Krugman
Lawrence Summers, the director of the National Economic Council, must have been channeling economist Paul Krugman. For weeks - months? - the Nobel-winning economist and New York Times columnist has been warning the White House not to do the bidding of deficit hawks, whose prescriptions he believes would be precipitate, if not disastrous.
In fact, some leaks suggest that the president's State of the Union speech will make reducing the federal deficit in 2010 the major focus and "will downplay other new domestic spending beyond jobs programs." The administration, which apparently feels it's turned a corner, sent a message to undercut concerns that it's either-or. In fact, on CNN this morning, Summers did a middle age PhD's version of a victory dance for the cameras:
"A year ago, the question was would we have a depression? Today everyone agrees that the recession is over. And the questions are around how fast we'll recover. Experience is that it that these things -- that it takes significant time. First, GDP increases. We have seen that start to happen. Then firms ask the workers who are already with them to work more hours. That's starting to happen. Then, net job creation starts to happen.
We were losing 700,000 jobs a month when President Obama took office. Last month, we lost 11,000. So we are getting there. And most professional forecasters expect job growth by spring, and I think that's a reasonable judgment in an uncertain world.
"And then after employment growth, given that when you start to create jobs, more and more people start looking for work because they are encouraged, it takes further time until you reduce unemployment. But on the key measure, is the economy creating jobs or are jobs still on net being destroyed, most people now think that we are looking to see that by spring. And some forecasters think it will happen a little sooner, some forecasters think it will happen later. But we are a lot closer than where we were a year ago, and the signs that are the first signs that things are turning, the output starting to grow, hours worked starting to increase, we are now seeing progress."
(Council of Economic Advisers Chairman Christina Romer said much the same during her appearance today on NBC's "Meet the Press.")
Summers is betting that long-term economic trends will take care of the short-term anguish of the people still out of work, sooner, rather than later. He may be right but it's a particularly tough sell because when it comes to this one message, his boss has trouble connecting with the country on an emotional level. To be sure, Barack Obama comes across as competent and cool and technocratic - all the attributes that you want to see in a crisis manager. Up to a point. Until the economy kicks into high gear, the country could use with some uplift. (Peggy Noonan has been especially good on that topic.)
According to a recent Rasmussen survey, 67% of adults believe unemployment will be the same or higher a year from now. Nonetheless, the White House believes the numbers will make the case. All of which should make for some interesting spectacle in the runup to 2010's midterm elections. The president has to make good on Summers' marker. Otherwise, rest assured that Michael Steele's minions will fan out across the airwaves to recite that jobs sound byte by heart.
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