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U.S. economy needs "forward momentum": Summers
Date: 2010/12/15 Click: 1850
U.S. economy needs "forward momentum" to boost recovery and curb high unemployment, said President Obama's chief economic advisor on Monday.

In his last public speech delivered at the Washington based think tank Economic Policy Institute, National Economic Council Director Larry Summers said that it was crucial to ensure that the economic recovery is as rapid as possible.

Summers, who is scheduled to return to Harvard University next year, noted that lack of demand was a main constraint facing the economy.

He said that the government must help create demand as he laid out a case for a compromise tax-cut deal that President Obama proposed last week.

Obama announced on Dec. 6 that the White House had reached a compromise with the Republicans. The package, which still needs congressional approval extends the soon-to-expire Bush-era tax cuts at all income levels for another two years, lowers payroll taxes by 2 percentage points and provides additional jobless benefits.

The framework agreement has sparked criticism from Democratic lawmakers in recent days. They are unhappy about the deal's generosity to the wealthiest and argued that it will add burden to the U.S. fiscal deficit.

U.S. federal deficit recorded 1.42 trillion U.S. dollars in fiscal year 2009, and 1.29 trillion dollars in 2010. The current federal deficit to GDP ratio is about 8.9 percent.

Many economists are worrying that the tax-cut proposal, which is expected to cost about 900 billion dollars in the next two years, will worsen the U.S. deficit.

Summers disagreed with critics who say the package would worsen the U.S. budget deficit.

He said the economy needs "forward momentum" to fully recover from its worst crisis since the 1930s.

Still, Summers acknowledged that it was also crucial to restore the country to fiscal health in the longer term.
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