Larry Summers has been relatively silent since removing himself from the running for Fed Chair.
But now, the former Treasury secretary is out with an op-ed decrying the budget battle in Washington.
Some lawmakers are too focused on the debt when they should be focused on spurring growth, Summers writes.
“Projections that there is a major deficit problem are highly uncertain,” Summers wrote on his blog and in the FT. “And policies that indirectly address deficit issues by focusing on growth are sounder economically and more plausible politically than the long-term budget deals with which much of the policy community is obsessed.”
Beyond the fact that spurring growth has a multiplicity of benefits, of which reduced federal debt is only one, there is the further aspect that growth-enhancing policies have more widely felt benefits than measures that raise taxes or cut spending. Spurring growth is also an area where neither side of the political spectrum has a monopoly on good ideas. We need more public infrastructure investment but we also need to reduce regulatory barriers that hold back private infrastructure. We need more investment in education but also increases in accountability for those who provide it. We need more investment in the basic science behind renewable energy technologies, but in the medium term we need to take advantage of the remarkable natural gas resources that have recently become available to the US. We need to assure that government has the tools to work effectively in the information age but also to assure that public policy promotes entrepreneurship.
“If even half the energy that has been devoted over the past five years to “budget deals” were devoted instead to ‘growth strategies’ we could enjoy sounder government finances and a restoration of the power of the American example,” Summers concludes.
Read the whole piece at FT.com.
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