EPI News

Larry Summers’ farewell address: the need for public investment and increased revenue

Departing NEC Director Larry Summers visits EPI, speaks of need for public investment, increased revenue

Larry Summers, the departing director of the National Economic Council, delivered his farewell address December 13 at EPI, where he spoke about the controversial deal earlier this month to extend the Bush-era tax cuts, and the ongoing economic challenges the country faces.

Public investment is “right and necessary”

In a talk that addressed many of the most heated economic debates of the moment, Summers said that the compromise deal to extend tax cuts for the country’s top earners despite growing deficit concerns had been “necessitated” by the poor economy. He also stressed that additional public investment was needed to support a still-fragile economy, and said that “without rapid recovery, all of our other goals (including deficit reduction and job creation) will be compromised.”

Summers, who as NEC director served as President Obama’s top economic advisor, explained that the need for additional public investment grew out of a historic drop in private borrowing and consumption over the past two years. Noting that the increase in the federal debt over that period has not entirely offset the drop in spending by individuals and private businesses, Summers said “it is right and necessary for government to counteract private sector deleveraging.”

For a look at EPI’s position on some of the economic policies Summers discussed, see EPI President Lawrence Mishel’s response to the tax cut compromise, and Bush tax cuts: Past and future, a compilation of EPI’s research and commentary on the ways that tax policy impacts the economy. Policy analyst Andrew Fieldhouse recently examined the payroll tax cut that is included in the bill before Congress and explains in aWeb commentary how it would actually hurt lower income workers relative to President Obama’s Making Work Pay tax credit. In addition, the budget blueprint Investing in America’s Economy, co-authored by EPI, outlines why investing in job creation must be the country’s number one economic priority. 

Lessons from abroad on immigration

On December 9, EPI hosted a day-long discussion on immigration reform that explored the ways an independent commission might help align immigration policy with labor market needs. The event, which was moderated by EPI Vice President Ross Eisenbrey, featured many prominent immigration scholars and policy makers, including Martin Ruhs of the University of Oxford; Doris Meissner, Senior Fellow at the Migration Policy Institute; Philip L. Martin of the University of California, Davis; and Ray Marshall, former U.S. Secretary of Labor.

The event explored immigration from the perspective of a number of industries, from health care to information technology, and included scholars from the U.K. who shared some of the achievements of that country’s Migration Advisory Committee, which determines labor shortages and answers immigration policy questions for the British government . Panelists discussed both the challenges that such a commission might face in the United States as well as the value it could add to an immigration system that is currently not aligned to labor market needs.

Meissner stressed that a problem with the existing system of immigration in the United States was its “absolute inflexibility” and “inability to update immigration laws in any relevant time period.” The discussions on immigrant labor in individual industries illustrated that employer demand for immigrant labor can exist even during times of high overall unemployment. Likewise, much of EPI’srecent research on immigration has highlighted how guest worker visas can displace U.S. workers, even in tight labor markets.

EPI’s 2009 book, Immigration for Shared Prosperity, by Ray Marshall, proposed a framework for immigration reform that would establish a Foreign Worker Adjustment Commission to track trends in the U.S. labor market and recommend that Congress adjust the number of visas accordingly.

EPI in the News

–Larry Summers’ visit to EPI received widespread media attention, in TimeMagazine, The Washington PostUSA TodayReuters and other outlets.
–EPI’s Economic Snapshot showing that whites were more upwardly mobile and blacks more downwardly mobile was cited in The New York Times and The Atlantic blog.
Politico cited EPI’s research about Chinese currency manipulation and how it has contributed to the loss of more than 2.4 million U.S. jobs over the past decade.

Coming in January

EPI’s latest edition of The State of Working America will be published online in January in a new and improved interactive format featuring about 200 charts. tables and figures. Also in January, EPI will publish, Failure by Design: The Story Behind America’s Broken Economy, by Economist Josh Bivens, that offers a narrative to explain the economic policies that led to the worst recession since the Great Depression and the ongoing jobs crisis.