"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN
Fareed speaks with former U.S. Treasury Secretary Larry Summers about the state of the U.S. economy. To see this or other interviews, download the show at iTunes
What are the lessons you have learned about how you create jobs?
We've got to make the growth deficit a priority in just the way we've been making the fiscal deficit a priority, because the truth is, we are never going to resolve the fiscal deficit in any ultimate sense in an economy that's growing at 1 or 1.5 percent, or even 2 percent a year. We've got to move to a focus on the growth deficit. And if we do that, I think we'll be surprised at how rapidly we'll see improvement in the fiscal picture. And I think we'll see a variety of other...
Because extra tax revenue...
…because the extra tax revenues will come in, because there will be less need to pay unemployment insurance benefits. And I think we'll also be surprised at, as the economy starts to grow, businesses will be able to invest more in innovation. There’s a tendency, which I think is badly wrong, to argue that we need to stop focusing on the short run and we need to focus on the long run instead. I think when we put the focus on stopping stagnation and having America be a rapid escalator again, what we are doing is the policy that will best prepare us for the long run.
So what you're saying is that the whole effort of the conventional wisdom around Simpson-Bowles and around all those 10 year packages is really just wrong right now, and that the focus needs to be on this question of growth – getting the economy on an escape velocity, and then maybe looking at cuts.
Fareed, I believe that a healthy individual can walk and chew gum at the same time, and a healthy government can pay attention to long run deficit reduction, because, look, we do have to make those adjustments, and if we don't make those adjustments, we are exposing ourselves to substantial risks that we shouldn't. So I'm not here to say that long-run deficit reduction is unnecessary. I am here to say that it is wildly insufficient. That's why I put such urgency on having a growth strategy.
And it's not that we shouldn't be paying attention to the fiscal issues, it's that we should not be solely paying attention to the fiscal issues. And that's been my concern about too much of our economic debate.