Summers: Education Spending 'Crucial'

Feb. 8, 2009 -- President Obama's top economic adviser, Larry Summers, said the president believes support for education is "crucial," a day after the Senate presented a stimulus plan allotting $20 billion less for education than the House version.

The Senate version of the approximately $800 billion stimulus package provides $88 billion for education but does not include $20 billion for "K-12/College Construction."

"There's no question...we need a large, forthright approach here. There are crucial areas, support for higher education, that are things that are in the House bill that are very, very important to the president," Summers said in a "This Week" interview with George Stephanopoulos.

"What we've got to do is go after support for education," said Summers. "And there are huge problems facing state and local governments, and that could lead to a vicious cycle of layoffs, falling home values, lower property taxes, more layoffs. And we've got to prevent that. So we're going to have to try to come together in the conference. And the president is certainly going to be active in sharing his views."

Critics of the latest Senate version of the bill -- filed late Saturday night and expected to be voted on this Tuesday -- say that some of the most effective spending provisions have been cut, including education spending and aid to state and local governments.

Summers, director of the National Economic Council, declined, however, to say whether the president prefers the House of Senate version of the bill.

"I don't think this is about the House bill or the Senate bill. It's about the best bill for America," he said. "There are respects in which both bills can surely be improved, and the president's going to work as thoughtfully and aggressively as he can to move this process along...drawing on the very important strengths that are contained in both these bills."

Summers went on to stress that, moreso than any individual spending, "the most important thing is that people come together and create the 3 million to 4 million jobs."

"The president feels that, above all, we need a major program enacted very quickly that will create 3 million to 4 million jobs. He believes we need to perfect it in every way we can," Summers said, adding that "if there are programs that aren't going to serve important purposes...they should be eliminated."

The majority of Senate and House Republicans are opposed to the stimulus and many claim the Democrats and the president have failed to learn the lessons of history and are repeating past mistakes.

"Those who presided over the last eight years, the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that's collapsing more rapidly than at any time in the last 50 years, don't seem to me in a strong position to lecture about the lessons of history," Summers said in response.

"We need an approach that's very different than the approach that we had that brought us to this point. That's what the president is providing. There are millions of people in this country who need work. There is a huge amount of work that needs to be done modernizing our schools, creating a green economy. And what the president's program does is give that needed work to the millions of people who need work."

In a separate interview, Michael Steele, the newly appointed chair of the Republican National Committee, strongly disagreed with Summers' assertion that the GOP has lost credibility when it comes to the economy.

"I think that's laughable," Steele said. "I mean, he acts like we have spent the last eight years in -- in this -- in the mess that we're currently in. This is about 18 months old. The reality of it is, Bush inherited a recession. He got us through that recession. The spending was out of whack. There's no doubt about that. And a lot of Republicans had a problem with the level of spending that took place during that time."

Obama made clear his hope that a much broader bipartisan coalition would support the stimulus. When asked if the failure of bipartisanship was a failure of Republicans, Summers said, "The president's walked a long mile."

"He's been open to a number of ideas. The president was very strongly criticized by many in his own party for the fact that the measure includes more than a third tax cuts, including several major tax cuts for business. But it hasn't really been enough. And ultimately the president can't do more than walk a long way down the road towards bipartisanship."

On the broader bank bailout plan, Summers confirmed that Treasury Secretary Tim Geithner will unveil on Tuesday how the remainder of the $700 billion in TARP money will be spent. The Treasury previously announced the plan would be revealed on Monday.

"I think there's a desire to keep the focus right now on the economic recovery program, which is so very, very important," Summers said of the change in schedule.

While Summers would not detail the principles of the plan, he did say "the focus is going to be on increasing the flow of credit and doing it with transparency, with accountability for those who receive support, and with a kind of consistency that, frankly, we haven't seen so far."

"Yes, there will be support for banks so that they remain stable, are in a position to lend. There will be support for the credit markets more generally. And absolutely critically, there will be support and pressure that assures that these needless foreclosures are avoided and that government is acting aggressively to contain the damage in the housing markets."