From the Financial Times:
By Edward Luce in Washington
The impact of Barack Obama’s roughly $800bn fiscal stimulus has been underestimated and will increasingly be felt over the coming months, says Lawrence Summers, the head of the White House National Economic Council.
‘It is an enormous achievement … that with all the projects across the country – weatherisation, medical records, high-speed rail, what have you – that there have been essentially no reports, zero, of corruption, of abuse or of egregious delay,’ Mr Summers told the Financial Times in a video interview for its View from DC series.
Mr Summers argued that the effects of the stimulus had demonstrated the virtues of government in a rebuke to those denying the stimulus has helped stave off a Great Depression. In an interview with the FT last week, Judd Gregg, a senior Republican senator, denied the stimulus had had any positive effect.
‘For those who think the government can’t do anything right, $400bn of support has been provided [so far] in a remarkably efficient way,’ said Mr Summers.
However, Mr Summers rejected criticisms from some economists that the stimulus had not been large enough. ‘You have to judge policies in the political context of the moment and I can tell you that the administration pushed the edge of what Congress was prepared to accept,’ he said.
Mr Summers also conceded that US unemployment had been higher than many economists had anticipated.
‘The question of why employment is so low given the level of GDP is something economists will be studying for years,’ he said.
However, Mr Summers said jobs growth could exceed GDP growth as the recovery gathers pace, although he added: ‘It’s certainly not something I would want to confidently predict … we’re going to have joblessness issues for … months to come.’
In reference to the crisis in the eurozone, Mr Summers called on Greece to avoid default.
‘[It is important] that Greece recognize its obligations here,’ he said.