Obama policies averted economic 'abyss': Summers

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(Agencies)
Updated: 2009-10-13 10:50

Economists surveyed by the group expect the jobless rate to top out at 10 percent early next year before falling.

In a nod to concerns about the large federal deficit, inflation and the value of the US dollar, he cautioned against simply throwing piles of public money at the economic problems without considering the longer-term consequences.

"No actions to combat short-term output gaps must be taken that call into question our commitment to sound money and noninflationary growth."

Summers told Boehner that private forecasters have estimated that the stimulus program added 3 percentage points to second quarter GDP, tempering what would have been an even deeper economic swoon.

He also said they believe the unemployment rate would be 2 percentage points lower by the end of 2010 than it would have been without the stimulus plan.

Most forecasters estimate the economy resumed growth in the third quarter, although some still worry about the risk of a "double dip" recession in which the recovery stalls.

Summers took note of the improvement in US stock market performance since early this year and of recent data suggesting the housing market, which was central to the financial market collapse, was stabilizing.

Hitting back at Republicans who are trying to lay blame on Obama for a record US budget deficit, Summers said Obama inherited a deficit well in excess of $1 trillion when he took office. He said the policies of Obama's Republican predecessor, former President George W. Bush, led to the shortfall.

"The bipartisan commitment to fiscal discipline that existed during the 1990s evaporated during the 2000s. Every major policy enacted during this period violated the principle of paying for new proposals," Summers wrote.

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