'This Week' Transcript: Larry Summers & Michael Steele

STEPHANOPOULOS: But on the biggest criticisms coming from the bulk of Republicans right now, that the package should be smaller and more targeted to tax cuts, less spending, the president has reached his bottom line? He's not going to go any further in that direction?

SUMMERS: The president wants the most effective program he can possibly -- he can possibly have at a time when, frankly, even since the process of developing this package began six or eight weeks ago, the economy looks worse than it did at that time.

And bringing the amount of help we give the economy down at a time when the economy is looking worse and worse does not seem the right -- does not seem the right way forward. Rather, the right way forward is to improve the -- is to improve the program. Look, the president has said again and again and again that if there are programs that aren't effective, if there are programs that won't work, he is open to compromise and discussion on those. His bottom line, though, is we need a major program, we need it quickly to create those 3 million to 4 million jobs.

STEPHANOPOULOS: Let me -- let me get to the state of the economy, because some economists have been even more alarming than you are right now.

STEPHANOPOULOS: This week, two economists, the president of the Federal Reserve Bank of San Francisco, Janet Yellen, said, "I think we do have the same type of dynamics taking place that do happen in a depression." The managing director of the IMF, Dominique Strauss- Kahn, was quoted in Bloomberg News as saying, "Advanced economies are already in a depression, and the financial crisis may deepen unless the banking system is fixed. The worst cannot be ruled out."

Already in a depression?

SUMMERS: We're in a very serious situation, George. This is worse than any time since the Second World War. It's worse than I think most economists like me ever thought we would see.

But let's remember. In the Depression, the unemployment rate was 25 percent. GDP had fallen in half. We were really in a very different situation than that.

But all of this concern -- the risks of deflation, for example -- points up the importance of acting as aggressively as we can. That's why the president's economic recovery program is so important. That's why it needs to be twinned, as it will be this week, with the financial recovery program directed at shoring up the flow of credit so that people can get the loan to buy a car...

STEPHANOPOULOS: Let me -- let me ask you about that.

SUMMERS: ... so that we can address the problem which has, frankly, gone unattended for much too long of declining house prices.

STEPHANOPOULOS: Let me ask about that financial overhaul. Originally, Secretary Geithner was supposed to give that speech tomorrow. Administration officials are telling me it's now more likely on Tuesday?

SUMMERS: Yes, I think there's a desire to keep the focus right now on the economic recovery program, which is so very, very important.

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