WASHINGTON (Reuters) - Spending government money solely to stimulate consumer spending would be a short-sighted mistake, one of U.S. President-elect Barack Obama’s top economic advisers said on Sunday.
Lawrence Summers, a former treasury secretary and Obama’s pick to head the White House National Economic Council, said policy needed to address both immediate job creation and longer-term investment needs.
“In this crisis, doing too little poses a greater threat than doing too much,” Summers wrote in the Washington Post.
“Some argue that instead of attempting to both create jobs and invest in our long-run growth, we should focus exclusively on short-term policies that generate consumer spending,” Summers said.
“But that approach led to some of the challenges we face today — and it is that approach that we must reject if we are going to strengthen our middle class and our economy over the long run.”
Obama has said that signing a major economic stimulus package will be his first priority when he takes office on January 20. His advisers have been working with Congress to try to get a package ready for his approval right away.
Vice President-elect Joe Biden said on Tuesday the incoming administration was “getting awful close” to reaching agreement with Congress. Government sources have talked about moving a stimulus bill with a price tag in the range of $675 billion to $775 billion over two years.
The U.S. economy has been in a recession for a year and many economists expect growth to contract through the first half of 2009. That would make this the longest recession since World War Two.
“I don’t think Americans can wait,” Obama adviser David Axelrod said on the CBS program “Face the Nation” on Sunday. “People are suffering, our economy is sliding and we need to act. And so our message to Congress is to work on it with all deliberate speed.”
Some in Congress have expressed concern about the huge amounts of money that have already been spent under the Bush administration in an effort to quell the financial crisis.
Sen. Bob Corker, the Tennessee Republican who called the $152 billion stimulus package that was passed earlier this year “silly,” cautioned against rushing into more spending.
“Anything that’s done in a stimulus package ought to be those kinds of things that are productive and move us ahead and are not just throwing money out in order to say that we’ve done something,” Corker said on ABC’s “This Week” show.
Reporting by Emily Kaiser; Editing by John O'Callaghan