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Obama policies averted economic 'abyss': Summers

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

WASHINGTON: The Obama administration has helped pull the US economy back from the "abyss" with aggressive efforts to spur growth and stabilize financial markets, a top White House adviser said on Monday.

The White House Director of National Economic Council Larry Summers approaches the lectern while looking into the audience after being introduced to deliver the keynote address at the Future of Global Finance conference at Georgetown University's McDonough School of Business in Washington, September 18, 2009. [Agencies]

Defending policies that Republicans have attacked as ineffective, National Economic Council Director Lawrence Summers argued measures put in place by the administration, including a $787 billion stimulus package, had helped turn back the deepest US recession since the Great Depression.

"Thanks largely to the Recovery Act, alongside an aggressive financial stabilization plan and a program to keep responsible homeowners in their homes, we have walked a substantial distance back from the economic abyss and are on the path toward economic recovery," Summers wrote to House Republican leader John Boehner.

Obama is facing rising clamor to take new steps to lift the economy and jump-start job growth as the US unemployment rate edges toward 10 percent.

The bleak jobs picture, and soaring fiscal deficits that reflect the cost of battling the recession, could put some of Obama's Democratic allies at risk in next year's congressional elections, unless voters are convinced they are doing all they can to help the economy.

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"Every American is asking this administration: Where are the jobs?" Boehner said in a statement. The Ohio Republican noted the economy had lost roughly 3 million jobs since Congress had approved the stimulus package in mid-February.

Responding to a letter Boehner had sent Obama, Summers pointed to a slowing pace of job losses as evidence that the administration's policies were working. "We have seen a substantial change in the trend of job loss," he said.

The US economy lost jobs at a monthly average rate of 256,000 in the third quarter of this year, which Summers termed "unacceptably high." But he noted it was nearly a third of the 691,000 jobs per month lost in the first quarter.

Rising joblessness poses a dilemma for Obama and his fellow Democrats. Republicans are pushing for additional tax cuts as the solution for the country's economic woes.

Speaking to a group of business economists in St. Louis, Summers said there was no higher economic priority than maximizing economic growth and job creation.

But he warned that heavy job losses "cast a substantial shadow forward" and the economy still faced a tough slog.

"We need to recognize that lack of demand will be a major constraint on output and employment in the American economy for the foreseeable future," he told the National Association for Business Economics.

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