'This Week' Transcript: NEC Director Larry Summers

April 4, 2010 — -- TAPPER: Good morning, everyone, and happy Easter and Passover.You have to go back three years -- to March 2007 -- to find the lasttime the U.S. economy created as many jobs as were created last month,three years. And yet the 162,000 new jobs did not put a dent in theunemployment rate, which remains at 9.7 percent.

Fifteen million Americans were still looking for work in March,and of those, 6.5 million have been unemployed for more than 27 weeks.And the broadest measure of unemployment, those who have given uplooking for a job or cannot find a full-time job, bumped up to 16.9percent.

Joining me now, the president's top economic adviser, Dr. LarrySummers.

Dr. Summers, thanks so much for joining us.

SUMMERS: Good to be with you, Jake.

TAPPER: Now, if you remove the temporary census worker jobs,48,000, you're left with 114,000 new jobs. Big businesses haveretained earnings. They are not spending that -- that money oncreating new jobs. They're investing abroad. They're buying theirown stock. They're buying other companies. Why are they not creatingnew jobs?

SUMMERS: They're starting to. We're in a very different placethan we were a year ago. A year ago, we were losing 600,000 jobs amonth. Now the process of job creation has started. We expect thatit will accelerate.

But we've got to do more to make sure that there's demand in thiseconomy that will create more jobs. We are in no position to rest orto be complacent just because of this jobs report.

That's why the president thought it was so important to sign intolaw the incentive program two weeks ago that allows the waiver ofpayroll taxes for companies that hire an unemployed person. That'swhy the president is pushing for spending on new constructionprojects, new infrastructure projects. That's why we've got to focusparticularly on small business at this point.

You know, if you look at the data, the situation with largebusinesses is serious, but the situation in small business isdevastating. That's why the president put forth proposals in Decemberand wants to see Congress act on his measures to increase the flow ofcredit to small business. That's why it's so important that we'reseeing a big increase -- more than 10 percent -- in the tax refundsthat Americans are getting this April, which will put them in aposition to spend -- to spend more and start that process of jobcreation.

That's why it's so important to have passed health insurance,which is going to give a tax credit that's actually retroactive toJanuary to small -- to small businesses. We've got to do everythingwe can to provide the incentives, to create the framework for more jobcreation in this economy. We cannot rest where we are.

TAPPER: Now, you said that you think it's going to accelerate.You guys have been touting a bar graph showing job losses during theprevious administration, job gains since the stimulus passed. Do yousee that progress continuing? Or can we expect that there might besome dips even into negative job growth in the coming months?

SUMMERS: Jake, the numbers fluctuate from month to month, and nogood business runs itself based on every weekly or monthlyfluctuation. And the president's focus is on building a strongereconomy so we don't have debacles like the last couple of years again.

TAPPER: So there might be some dips?

SUMMERS: But I think -- but my expectation would be that thetrend is going to be upwards. We talk a great deal to businesses. Wemonitor all the statistics. And the steps that the president istaking should bring about an increased level of employment.

But, look, we don't have enough in place. That's why thepresident has put forward measures to the Congress for the credit forsmall businesses, for incentives that will let people spend money andput people to work retrofitting their homes to make them more energyefficient, to preserve jobs on the front lines for teachers and forpolicemen.

What happens will depend on choices we make, and there is muchmore that we can do, and the president is pushing for the adoption ofthose measures, even as we focus on implementing and continuing toimplement the strong set of measures in the president's Recovery Act.

TAPPER: Where do you think we're going to be in September? Arewe going -- are we going to still be at 9.7 percent unemployment or isit going to go down a little?

SUMMERS: You know, the -- the good news is that, if you look atwhat's happened in the first quarter of this year, it's hardlysatisfactory, but it is running somewhat ahead of what theadministration was forecasting, because our forecasts wereconservative. And I'd expect continued progress in job creation.

As you see progress in job creation, you tend to see unemploymentgo down. It's not quite as simple as some people think, Jake, becauseas conditions get better, more people decide to look for work and arecounted as in the labor force. So sometimes it's frustrating and theprogress doesn't show up immediately in the unemployment rate, butit's progress nonetheless in giving jobs to people who need them.

That is what is the president's top economic priority for thisyear. You know, all of us -- I mean, the president talks about thiswith us each week. The letters that he receives from the familieswhere kids are worried about whether their parents are going to beable to hold onto their job...

TAPPER: Well, if I could...

SUMMERS: And that's why we're so focused on this jobs issue.

TAPPER: There are a lot of members of Congress who are concernedabout jobs because of China, because of what they see -- themanipulation of currency by China. The Obama administration hadscheduled a semi-annual report to Congress on currency, in which itwas going to state whether or not the Obama administration believesthe currency is being manipulated. That report, we learned thisweekend, is going to be delayed.

Is it going to be delayed because the Obama administration needsChina's cooperation on other things, such as sanctions against Iran?

SUMMERS: No.

TAPPER: That's not the reason?

SUMMERS: No, it's being delayed because that's part of ourinternational economic dialogue, which is directed at supporting acrucial issue for jobs creation, doubling our level of exports, andthat depends on what other countries do.

We've got three major meetings, a meeting of the G-20 financeministers, our strategic dialogue that takes place every year withChina, and then the president's meeting, building on the forum hecreated in London and Pittsburgh last year of the G-20 countries.

Those are opportunities to engage with China, to engage withother countries that have large trade surpluses, other countries whothink they can continue to rely on the United States as an importer oflast resort. And Secretary Geithner's judgment -- and I think it wasthe right one -- was that we could report and recommend to Congress,you know, a much more effective way after we had had those meetingsand taken stock of what kind of measurable progress we were able togenerate out of those dialogues.

But, look, at this point, given the seriousness of the recessionthat we have been through, given the number of Americans who are outof work, the economic issues have to be at the center and will be atthe center of our diplomacy.

TAPPER: OK. The president has said he wants -- in the next fewweeks, he wants the Senate to pass financial regulatory reform. Firstof all, just quickly, do you guys have the 60 votes to pass SenatorChris Dodd's bill on financial regulatory reform?

SUMMERS: I expect that reform is going to pass. It's not easy.You've got $1 million being spent per congressman in lobbying expenseson this issue. Industry has four lobbyists per member of the Houseand Senate working on this.

But the case for basic consumer protection, the case forregulating institutions that are able to bring the economy down andnot leaving them completely unregulated, the case that we've got to beable to handle the failure of an institution without a major bailoutthrough so-called resolution authority, the case that we can't letinstitutions choose their own regulator -- play one regulator off --against another to reduce standards -- that case is so compelling thatwe are confident that a sufficient majority will see that case andwill vote to support financial reform.

We've come a -- we've come a -- come a long way on this issue.We're now in the final stages. Our expectation is that we will getthere, and there's no question, I mean, how can anyone take a positionafter what has happened, after -- I mean, it's not the first thingthat's happened...

TAPPER: Well, some -- some -- some Democrats... SUMMERS: ... that we don't need -- that we don't needcomprehensive financial reform.

TAPPER: Well, some...

SUMMERS: Probably (ph) work on the details, but not compromiseon the principles.

TAPPER: Some Democrats say it doesn't go far enough. Here'sDelaware Democrat Ted Kaufman talking about the Dodd bill.

(BEGIN VIDEO CLIP)

KAUFMAN: Unless Congress breaks up the mega-banks that are toobig to fail, the American taxpayer will remain the ultimate guarantorof an almost certain to repeat itself cycle of boom, bust and bailout.

(END VIDEO CLIP)

TAPPER: Senator Kaufman is saying that there isn't being --enough being done about too big to fail. In 2000, you said, quote,"It is certain that a healthy financial system cannot be built on theexpectation of bailouts." Can you honestly say that the Dodd billchanges that?

SUMMERS: Yes, I can. It changes -- it reduces the expectationof bailouts by insisting that institutions have much more capital sothey won't need to be bailed out. It eliminates the prospect ofbailout by creating a framework in which a failure can be managed withcreditors taking responsibility.

It restricts -- and this was the important point that former FedChairman Paul Volcker has stressed -- it restricts the so-calledproprietary trading activities, some of the most risky activities ofthese institutions. So, yes, this bill is a direct attack on toolarge to fail by making failure a possibility, as it has to be in amarket system, and by making these institutions much safer and muchsounder. Senator Kaufman is exactly right.

TAPPER: Lastly -- we only have a minute left -- but there havebeen reports lately that you're -- you're thinking of leaving. Are --I know you've -- you've said that the reports are not true, but areyou committed to staying in your current position throughout at leastNovember 2012?

SUMMERS: Jake, you know that in this town, when it comes topersonality stories, usually it's the case that those who talk don'tknow and those who know don't talk.

TAPPER: Well, you know...

SUMMERS: I am very -- I am having an enormously satisfyingexperience working with this president, and that's what I'm committedto doing and serve at his pleasure.

TAPPER: Until November 2012? SUMMERS: Serve at his -- serve at his -- I serve at his...

TAPPER: Assuming that he would like you to serve until...

SUMMERS: I serve at his pleasure. I don't get into hypotheticalquestions. I'm having an enormously satisfying experience.

TAPPER: All right, Dr. Larry Summers, thank you so much.

SUMMERS: Thank you.

TAPPER: And joining me now, the former chairman of the FederalReserve, Dr. Alan Greenspan. Dr. Greenspan, thank you so much forjoining us.

GREENSPAN: It's a pleasure being with you, Jake.

TAPPER: I know that you agree with Dr. Summers that jobs willcontinue to -- job growth will continue to accelerate. Do you thinkit will accelerate enough that it will make a dent in unemployment,that is, that we see the numbers of 300,000 jobs created a month, asopposed to just 100,000, which basically is treading water?