The Unites States needs to address its budget deficit, but measures to be taken should not bring counterproductive effects as the nation also face jobs and growth “deficits,” said a renowned U.S. economist and President Obama’s former economic adviser on Friday.
“Economic forecasts are of course uncertain. Yet the great likelihood is that over the next 15 years debts will rise relative to incomes in an unsustainable way if no actions are taken beyond those in the 2011 budget deal and the recent ‘fiscal cliff’ agreement,” Lawrence Summer, a Harvard University professor, said in an article posted on The Washington Post.
He argued that given all the uncertainties and current U.S. debt levels, the country “should be planning to reduce debt ratios if the next decade goes well economically.”
However, the former U.S. Treasury secretary held that although reducing prospective deficits should be a key priority, it should not take over economic policy.
Obsession with budget deficit “risks the enactment of measures like pseudo-temporary tax cuts that produce cosmetic improvements in deficits at the cost of extra uncertainty and long-run fiscal burdens,” he explained.
Summers noted that given the current historically low interest rates, the Unites States has a good chance of making investments on infrastructure which would contribute to job creation and economic growth.
“Nearly six years after the onset of financial crisis, we clearly are living with substantial deficits in jobs and growth,” he said.