ABC News Interviews Top WH Economic Adviser Larry Summers — 12/8/09

I interviewed White House National Economic Council Director Larry Summers earlier today, on what the administration is doing to improve the economy. Here's what he said:

Q: $50 billion in new funds for infrastructure – there already have been 10-100s of billions of dollars dedicated for infrastructure – much of which has not been spent. Why does the country need to spend $50 billion more?

SUMMERS: Because it is going to create jobs and make us a better country, better able to move goods about our country, and it keeps people out of traffic jams. It lets our economy be productive and it puts people back to work. We’re seeing big increases at the rate at which the projects are being undertaken under the recovery act, but we’re going to need to maintain that momentum for quite some time given our joblessness problem. And that’s what these funds will enable us to do. It will make us a stronger, better country for livable cities.

Q: Last week during the jobs summit President Obama expressed some frustration about programs that were labeled “shovel ready” but maybe were not. What’s the frustration there? What’s the problem there?

SUMMERS: Well often people claim projects are shovel ready but turns out when the money becomes available they need to get more planning, they need to get more approvals and so it takes some time, and that was a frustration on some projects but it was a frustration worth accepting because President Obama has been absolutely insistent that we do high-quality projects, that we do things right, that we not rush things to the point of doing them less well. That means it does take time and that’s part of the reason why we need to be planning now for the investments that our country is going to need in our roads and bridges and our airport and our ports for some time to come.

Q: Some environmentalists today expressed some disappointment that it’s only going to be – the  investment into weatherization – is only going to be in the billions and not the tens of billions, as one senior administration official put it. Should more money be spent on weatherization or is that redundant since the stimulus already had some money for that?

SUMMERS: We have moved as much money as we can into weather – into weatherization. There’s components for residential houses, there’s components for commercial buildings, there’s components for government buildings. All told we are going to be spending in the tens of billions of dollars. And the constraints are going to be how fast we can do these projects, how fast they can be planned and implemented. These are projects that have very high rates of return. They would pay off purely as economic problems, even if there was no energy independence issue, even if there was no environmental issue. So the constraint is not going to be lack of federal budget, the constraint is simply going to be how rapidly these projects can be implemented.

Q: Some Republicans in Congress question whether or not you guys have the authority to use the TARP dollars in this new way that the President and you are proposing and Secretary Geithner are proposing to try to free up credit for small businesses. Are they completely wrong?

SUMMERS: That’s a – that’s a real misunderstanding of TARP legislation – TARP legislation statement and intentions that the administration set up provided explicitly for support for small business lending under TARP. The TARP program is being wound down, that’s going to free up money. Once that money is freed up it will be easier for congress to appropriate money to serve other objectives, like investing in infrastructure, like promoting energy efficiency, like protecting the jobs of teachers and policemen and firemen across the country. But there’s no question that TARP is going to be used for the purposes by which it was intended. The really exciting news is that the program is going to be wound down and that’s going to provide funds for other purposes.

Q: The tax credit, the tax incentive for job creation for small businesses – what’s the challenge there? I remember during the stimulus debate there was some talk of the tax creation, tax credit for people who create jobs – it’s a lot more complicated that what it seems at first, right?

SUMMERS: Jake, job creation is like anything else – how much of it people do depends on the cost. If we’re able to reduce the cost, by reducing the payroll taxes and giving tax credits we’re going to encourage employers to create more jobs, and that’s going to help the people who get the jobs, so then it’s going to help the economy. Because they’ll have money to spend. That will create more jobs, that will create higher incomes and the process will – the process will go on. So it’s really simply a matter of providing the incentive for job creation and at the same time it’s a matter of helping small businesses, you know at a time when it’s harder to get credit than it used to be. That extra help can be the difference between hiring more people and not hiring  more people.

Q: And President Obama said that this is not the end of the efforts to create jobs, in addition to the stimulus, in addition to all the other measures that you have taken, what else can we expect to see from you guys in the coming weeks?

SUMMERS: We are going to be continuing to look at a whole set of ideas – and a central idea is that it is not the public sector that creates jobs in our economy, it’s the whole economy – and that means we’re going to be working to promote exports substantially, increase exports in our economy. We’re going to be working a whole variety of ways to promote private investments, for example, in information technology and spreading broadband across the country. We’re going to be working to implement energy legislation that will make the country more free from Middle Eastern and secure oil supplies. And at the same time provide more opportunities, whether it is in mining, or drilling, or processing energy. Our health care reform legislation is going to provide substantial opportunities for people in providing the care to people who have never been insured before and getting us past a point where the country shouldn’t be – where the average supermarket has more information technology than the average hospital.

Q: Are you convinced that this administration is doing everything it can to create jobs? There are a lot of Americans out there – we spoke to some of them today in Long Beach, California – who say ‘look around there are all these people in lines, the jobs aren’t there.’ Temp agencies one woman told us, temp agencies aren’t even interviewing people. Because all those jobs are filled. Are you guys doing enough?

SUMMERS: We are doing everything we can. Every morning we brief the president, every morning the president wants to know what’s happening on jobs. This announcement today isn’t about one jobs bill that’s the end of our approach. Every bill is going to be seen through the prism of job creation going forward. This president is not going to rest, is not going to allow any of us to rest as long as there is such unemployment in the country. This is the defining issue for the next several years, these questions of job creation. Above all for the families that are affected but also for our strength as a nation. We have no chance at achieving our national objectives, whether it is bringing down the national debt, whether it is reducing poverty, whether it is leading the world in science technology, whether it is creating wealth for all Americans. We have no chance at achieving those objectives unless we’re able to make progress in bringing down unemployment.

Q: Last question – and that is: were any of the announcements today, did any of them come out of the jobs summit or no?

SUMMERS: Certainly the jobs summit helped refine our thinking in each of the areas at how best to reduce – reduce disincentives for setting up a small business, in helping us design the particular approaches we’re taking with respect to supporting energy efficiency. We’re going to be looking to people who were actually at the summit to help us carry through on these ideas, whether it is the energy efficiency investment area, or the small business area.

-jpt