Speaker

Lawrence Summers Assistant to the President for Economic Policy and Director of the National Economic Council

At Thursday's dinner, Daniel Yergin, CERA Chairman, greeted attendees and thanked the evening's sponsors: Alstom, ANH Standard Chartered, Vinson & Elkins, Cisco, Microsoft, Eni, GridPoint, SAIC, Total, Baker Hughes, the Massachusetts Institute of Technology, and Oncor. He welcomed keynote dinner speaker Lawrence Summers, Assistant to the President for Economic Policy and Director of the National Economic Council. In his Keynote Address "The Future of the US Economy," Dr. Summers offered a forceful defense of the Obama Administration's initiatives on health care, education, energy, and financial regulation. He analyzed the evolution of the world economy over the past five decades, including the causes, effects, and interventions related to the Great Recession. He hailed the present as a "critical time for the United States and the world."

President Barack Obama entered office facing a series of economic crises unprecedented since the Great Depression, he explained. In 2008-09 a "dangerous downhill vortex" threatened to push the economy into severe and protracted decline. Dr. Summers argued that the Obama Administration's interventions were not "antimarket" but designed to provide a context in which the market could function in a robust and effective manner.

Dr. Summers said that the financial crisis settled, once and for all, the question of whether markets are capable of self-regulation. Had government not intervened in the financial system, and in the economy broadly, the results would have been disastrous. Only the decisive action of the Obama Administration, and of other governments around the world, enabled the economy to return to growth, he said. "We are very close to a point where job losses will give way to job growth," he said.

On the need to reduce US debt, he quoted the economist Herbert Stein: "Things that cannot go on forever, won't." Dr. Summers noted that imbalances in US borrowing and energy importation cannot continue indefinitely and warned that "it cannot be forever that the world's greatest borrower remains the world's greatest power."

Dr. Summers stressed the importance of improving the US educational system through innovation and of pursuing a broad energy policy that utilizes all of America's resources--including renewables, fossil fuels, and nuclear energy. Energy policy is a "three'fer" that improves national security, promotes job creation, and mitigates the risk of climate change.

In the question and answer session, Dr. Summers discussed the financial system, health care, and the economic recovery, among other topics. He stressed the importance of devising regulatory systems that can protect consumers and curb the destructive power of Wall Street. "To big to fail" must go, and companies must not be allowed to select their own regulators or we will face a "race to the bottom." Derivatives are important, but must be "forced out of the shadows." If economic policy is managed properly, it can create a "virtuous circle"; Dr. Summers pointed to the Clinton years as an example of such success. This is all important to protecting what he called "the greatest experiment in market democracy that the world has ever seen."