- The Washington Times - Friday, July 17, 2009

The White House’s top economic adviser in a much-anticipated speech Friday outlined how the Obama administration hopes to reshape the U.S. economy to be one less dependent on consumer spending and debt for growth while increasing the role of manufacturing and exports.

In a speech before the Peterson Institute in Washington, Lawrence Summers, the head of the White House National Economic Council said the administration is using the sharply increased role that the government gained as it sought to address multiple crises unfolding when President Obama took office to try to change the direction of the economy in the future.

The government already was playing a major role propping up banks and the financial system when Mr. Obama took office, and since then the president has staged a virtual government takeover of the U.S. auto sector and proposed dramatically expanding government mandates in health care and energy to address chronic problems in those sectors and to curb global warming.

Mr. Summers said the overall goal of the president’s agenda is to redirect economic growth into areas that benefit middle-class workers more while rewarding less the wealthy risk-takers whose activities fed the housing and credit bubbles that led to the economic crisis.

“Yes, the President has an ambitious agenda,” Mr. Summers said. “But it is an agenda comprised of measures that lay a foundation for future prosperity and for the confidence on which the current recovery depends.”

The economy as it recovers should be “more middle-class-oriented and less oriented to income growth that disproportionately favors a very small share of the population,” he said. Among his many economic plans, Mr. Obama has proposed or endorsed sharply higher taxes on top earners to pay for health care and other expansions of government.

Mr. Summers, a widely admired economist who was Treasury Secretary under President Clinton and a former president of Harvard University, said the economy is making progress in approaching a recovery.

“We were at the brink of catastrophe at the beginning of the year, but we have walked some substantial distance back from the abyss,” he said. “Substantial progress has been made in rescuing the economy from the risk of economic collapse that looked all too real six months ago.”

Mr. Summers has been widely rumored as a possible replacement for Federal Reserve chairman Ben S. Bernanke, whose terms comes to an end in January.

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