Summers also said lack of demand was a main constraint facing the economy and the government must help counteract that, as he laid out a case for a compromise tax-cut deal that President Barack Obama worked out with opposition Republicans.
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Summers disagreed with critics who say the package would worsen the U.S. budget deficit. In a speech to the Economic Policy Institute think tank, he said accelerating the recovery would help alleviate the deficits.
The economy needs "forward momentum" to fully recover from its worst crisis since the 1930s, he said.
Obama's $856 billion tax deal, struck with the Republicans who will soon wield greater clout in Congress, is viewed with alarm by many Democrats who worry the president gave away too much at the bargaining table by agreeing to temporarily extend Bush-era tax cuts for the wealthiest Americans.