WASHINGTON Former Treasury Secretary Lawrence Summers, once a fiscal hawk among Clinton Democrats, said the government should consider a $50 billion to $75 billion tax-cut and spending package to stave off a deep recession.
Summers, now a Harvard University professor and investment-fund manager, also urged the Federal Reserve to take more aggressive action to ensure that its rate cuts actually reduce consumers' interest charges and stimulate spending.
"Insufficient action to contain recessionary forces has much more serious consequences than excessive action to contain recessionary forces," Summers said in an interview ahead of a speech Wednesday at the Brookings Institution.
Summers' comments put him among the most pessimistic economic prognosticators and were a slap at the Bush administration's handling of the subprime-mortgage crisis and the credit-market constriction. "The kind of comprehensive approach that is necessary to minimize the risks is neither in place nor in immediate prospect," he said.
Summers also argued that economic conventional wisdom slow growth likely and a less-than-50 percent chance of recession is too optimistic. "I believe that slow growth is a near certainty, that a recession is more than a 50 percent chance, and that there's a distinct possibility of a more serious recession that will lead to the worst economic performance since the late 1970s and early 1980s," he said.