Summers defends stimulus programs
Says they saved US from collapse
Former White House economic adviser Lawrence H. Summers defended President Obama’s health care reforms yesterday and said the stimulus plan he helped create pulled the nation back from the brink of financial collapse.
Summers, who served as the president’s chief economic adviser for the last two years, spoke at the Greater Boston Chamber of Commerce and touched on a range of subjects. Of the stimulus plan, Summers said the nation’s economy would have otherwise gone into a catastrophic free fall were it not for the $787 billion in government spending on schools, roads, clean energy, and other projects.
“Not everything was perfect, battlefield medicine never is,’’ Summers said of the recovery plan. “But make no mistake, the American economy has a feeling of normalcy that was completely absent two years ago in 2009 and that is a very substantial achievement.’’
Summers’s speech at the Boston Harbor Hotel was one of his first appearances in Massachusetts since leaving the administration in January. A former president of Harvard University, Summers has returned to take a tenured position as director of the Mossavar-Rahmani Center for Business and Government at Harvard’s Kennedy School.
Summers said he is studying the government response to the financial and economic crisis, to determine what worked and what “we could have done better,’’ and to create an accurate historical record of it.
Summers stressed a theme of optimism, saying the economy has been in recovery for 18 months. He noted that the auto industry has rebounded and is showing profits, arguing that those who think the nation’s “best days are behind us are far too pessimistic.’’
He also urged businesses to embrace the president’s health care plan, noting that it was based on Massachusetts’ law providing universal coverage. He credited Mitt Romney, the former Massachusetts governor, who pushed the law, with correctly identifying that states must play a “vital role’’ in health care reform.
Describing Massachusetts’ health care policy as a pioneering and imperfect model for national reforms, he said business leaders should focus their energies on creating effective health care cost controls instead of bickering about whether reforms are necessary or about less urgent political issues, such as sick-leave policies.
“This is a state, and this is a region where there is a dialogue,’’ Summers said about health care in Massachusetts. “That is more than can be said about other parts of the country.’’
Summers also stressed the need for Massachusetts to retain a strong life sciences sector as a source of innovation and employment. He noted that many researchers under the age of 40 have difficulty getting federal funding grants for their work.
When asked how he would jump-start the region and nation’s ailing housing market, Summers said that in past decades the housing industry has consistently helped fuel recovery. While there may be an “enormous temptation’’ to try that again by building more houses as a way to create jobs, he said it would be foolhardy, likening it to “drinking to cure your hangover.’’
He said government reforms need to be created “strategically and carefully’’ but there is no “silver bullet’’ that can solve foreclosure and housing problems.
“I think it is terribly important we be mindful of the fact that the majority of people are paying their mortgages,’’ Summers said. “And we don’t want them to feel like chumps.’’
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