Summers sees prospects for eventual budget deal

By Caren Bohan

WASHINGTON (BestGrowthStock) – A bipartisan agreement to tackle huge budget deficits is achievable, though it would take a lot of work, outgoing White House economic adviser Larry Summers said on Friday.

President Barack Obama has vowed to hold talks with opposition Republicans on ways to rein in the deficit, which hit $1.3 trillion in the 2010 fiscal year that ended September 30.

Obama is awaiting recommendations from his fiscal commission, which is due to deliver a report by December 1.

Big wins by Republicans in Tuesday’s U.S. congressional elections allowed them to capture control of the House of Representatives while increasing their numbers in the Senate.

Triumphant rhetoric from Republicans has led some analysts to speculate they may be in no mood to compromise with Obama over the budget or other issues when they take the reins in the House in January.

But Summers told a policy conference that despite the “hot rhetoric” in the immediate aftermath of the election, he still believed talks could eventually lead to a deal.

“I think the prospect is there for a necessary compromise but it’s going take very hard work,” Summers told a forum hosted by the World Affairs Councils of America.

Summers, who is stepping down at the end of this year from his job as director of the National Economic Council, said such a deal would also require “transparency and trust.”

Obama and the Republicans have sharply different approaches on the U.S. budget issue. John Boehner, who is likely to become the next Speaker of the House of Representatives, has suggested the Republicans will insist on immediate budget cuts and has sought to paint Obama as a big spender because of his $814 billion stimulus package, healthcare reform and other policies.

Obama rejects that label and has said the budget deficits are a legacy of President George W. Bush’s administration.

Obama and his advisers are wary of pulling back on stimulus for the economy given its current weakness.

Summers emphasized that the best way to reduce the deficit is to get the economy firing on all cylinders again.

“If we don’t get the economy growing again … there’s no solution to the budget deficit,” he said.

The government’s monthly jobs report on Friday offered some unexpectedly upbeat signs for the economy. It showed a 151,000 jump in U.S. payrolls in October, the first gain since May.

But the unemployment rate held steady at 9.6 percent.

Discussing his view on the message of the election, Summers said it was a signal from voters that they are dissatisfied with the slow pace of the economic recovery.

Republicans have suggested the election was a rejection of Obama’s policies but Summers, echoing Obama, said the problem was with communication, not with substance of the policies.

Summers is leaving the administration to return to his teaching position at Harvard University. Obama has not yet named a successor.

(Writing by Caren Bohan; Editing by Eric Walsh)

Summers sees prospects for eventual budget deal