Summers and the Second Stimulus

Yesterday afternoon I hosted Neil Cavuto’s show on Fox News called “Your World.” One of the people that I had the opportunity to interview was former Treasury Secretary Lawrence Summers. He was Treasury Secretary during the second term of the Clinton Administration from 1999-2001 and was known for supporting free trade, reducing the federal budget deficit, using the budget surplus to repurchase Treasury debt (the first time since the 1920’s), reforming the IRS and contributing to some of the biggest changes on the international stage, including an important role in negotiating the agreement to allow China to join the World Trade Organization. During his tenure, the U.S. had the longest period of sustained economic growth in history.

The reason he joined me on “Your World” was to discuss a meeting he had earlier in the day with Senator Obama, his economic team and some big-time economic bigwigs. I asked the former Treasury Secretary about the ballooning budget deficit, raising taxes, whether the Senator would have to reconsider offshore drilling now that the American people are behind it and what report card he would give this economy. He made some very interesting points, particularly about Obama’s plan to push a second stimulus package. It was the first former Treasury Secretary or economist that I have talked to in a while who said a second stimulus package is OK to do even though the budget deficit is swelling. I wouldn’t make light of that. What surprised me was that he said we could do both and he sounded confident. I don’t know if a second stimulus is necessary but the fact that a deficit hawk is cool and calm about the ballooning budget deficit gives me reason to think.

If you missed his article in the Washington Post yesterday called “Unfinished Business at Freddie and Fannie” here it is. He makes some great points about the future of FNM and FRE.