Byline: Patrice Hill, THE WASHINGTON TIMES
The Obama administration hopes to reshape the U.S. economy to be less dependent on consumer spending and debt for growth while increasing the role of manufacturing and exports, the White House's top economic adviser said in a much-anticipated speech Friday.
Appearing before the Peterson Institute for International Economics in Washington, Lawrence H. Summers, head of the White House National Economic Council, suggested the administration is using the sharply increased role that the government gained as it sought to address multiple crises unfolding when President Obama took office as an occasion to try to change the direction of the economy in the future.
The government already was playing a major role in propping up banks and the financial system when Mr. Obama took office. Since then, the president has staged a government takeover of much of the U.S. auto sector, pushed through a record stimulus program and proposed dramatically expanding government mandates in health care and energy to address chronic problems in those sectors and to curb global warming.
Mr. Summers, a widely admired economist and former Treasury secretary under Bill Clinton, said the overall goal of the president's agenda is to redirect economic growth into areas that benefit middle-class workers more while rewarding less the wealthy risk-takers whose activities fed the housing and credit bubbles that led to the economic crisis.
Yes, the president has an ambitious agenda, said Mr. Summers, who is rumored to be a top candidate to possibly replace Federal Reserve Chairman Ben S. Bernanke when his term expires in January. But it is an agenda comprised of measures that lay a foundation for future prosperity and for the confidence on which the current recovery depends.
The president was confronted with a series of crises when he entered office, but the economy is now slowly responding to the administration's efforts to revive it, he said, noting that the stimulus provisions are starting to gradually work their way through the economy.
We were at the brink of catastrophe at the beginning of the year, but we have walked some substantial distance back from the abyss, he said. Substantial progress has been made in rescuing the economy from the risk of economic collapse that looked all too real six months ago.
In shaping the stimulus bill and other legislative programs, the president insisted that the recovery from this crisis would be built not on the flimsy foundation of asset bubbles but on the firm foundation of productive investment and long-term growth, he said.
The past practice of relying on consumers to generate as much as 70 percent of economic growth, often by going deeply into debt, must change, said Mr. Summers, even if that means a painful transition both for the U.S. economy and global economy, which also depends on American consumers as a major engine of growth. …