Summers sees prospects for eventual US budget deal

* Compromise will take “very hard work”

* No deficit solution without economic growth

* Election result a communications, not policy problem

By Caren Bohan

WASHINGTON, Nov 5 (BestGrowthStock) – A bipartisan agreement to
tackle huge U.S. 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 U.S. deficit,
which hit $1.3 trillion in the 2010 fiscal year that ended
Sept. 30.

Obama is awaiting recommendations from his fiscal
commission, which is due to deliver a report by Dec. 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 US budget deal