Top White House economist Lawrence Summers said on Monday the United States must assure investors it will curb the budget deficit over time, while delivering short-term fiscal stimulus to boost growth.
It is not possible to imagine sound budgets in the absence of economic growth and solid economic performance, Summers, Director of the White House National Economic Council, was to tell the John Hopkins School of Advanced International Studies in a speech on the economy.
Massive public spending to defeat the worst recession in 50 years is forecast to push the U.S. deficit to $1.56 trillion in the current fiscal year. Officials must convince investors this is temporary, amid a vicious backlash against big-spending governments in Europe that analysts fear could spread.
Summers stressed President Barack Obama's administration was focused on the deficit but must first ensure growth.
Appropriate short-run expansionary budget policy can make an important contribution to establishing the confidence necessary for sound growth, he said, according to excerpts of his remarks released in advance of delivery.
I am convinced that is impossible to sensibly address either unemployment or long-run fiscal challenges in isolation.
(Reporting by Alister Bull and Caren Bohan; Editing by Jackie Frank)