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Last week 1.5 million people filed for unemployment, according to the Department of Labor. Here & Now's Jeremy Hobson talks with Larry Summers, former Treasury Secretary, about the state of the economy and what the recovery might look like.
On his assessment of the economy right now considering the recent jump in retail sales
“Better than I probably would have guessed three or four weeks ago. But I think it's more that the bounce back we knew would come has come a little faster than we expected than it is that there's a profound change in where we're headed. The basic conclusion driving an economic view [is] that we're still going to be substantially short of normal until we get a vaccine. I haven't seen anything that causes me to change my mind about that. The retail sales number was a particularly striking number because in most every respect, we've all been saying that this crisis is much worse than the 2008 financial crisis. But as of now, retail sales are only down between half and two thirds as much as they were in 2008. So it does represent some kind of return toward at least the normal range of crisis.”
On how much more federal assistance he thinks is going to be needed and what Congress should do
“Congress should urgently support state and local governments. Congress should urgently appropriate at least 2% of all the money it appropriates for testing and contact tracing. Congress should refashion the expanded unemployment insurance to invest more in administering a program that works rather than simply extending high benefit levels for a lucky few. And Congress should oversee the business support programs to make sure that the taxpayers are getting the right value for money in terms of claims on the upside when taxpayers are providing support on the downside.”
On what he means by reforming unemployment
“I mean making sure that if somebody works half time, they can get a half unemployment benefit. I mean appropriating enough money so that here in the 21st century we have the I.T. systems that enable everybody who's eligible to get their application through and start receiving the benefits they urgently need. I mean adjusting eligibility rules so that people who were previously self-employed or who were previously in the gig economy are able to get the unemployment insurance they need.”
On the Fed’s steps to prop up the economy and its decision to start buying individual corporate bonds
“The most important lesson of a financial crisis is that there is more risk of underreacting than there is of overreacting. And Jay Powell and the Fed have heeded that lesson. I do think we need to think a little bit more about people's capitalism rather than capitalist's capitalism. But overall, I would give the Fed a high mark.”
On his advice to U.S. universities and colleges considering whether or not to reopen this fall
“I think there's a famous phrase that the Supreme Court used in a very different educational context, all deliberate speed. You have to start with the basic trump, which is health and safety. And you need to recognize that a college dormitory is a lot like a cruise ship. And we know the cruise ships are dangerous and there's risks of the same kind with respect to college dorms. It seems incredibly important right now to be back in September rather than back a few months later. I'm not sure in three years those few months are going to look quite as important as they do right now. And if this contributes to setting off a second wave, that's going to be a very substantial danger. So I worry about people overdoing it in terms of speed.”
This segment aired on June 18, 2020.
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