'Meet the Press' transcript for Jan. 25, 2009

MR. DAVID GREGORY:  Our issues this Sunday:  the nation's 44th president takes office and lays out the challenges ahead.

(Videotape)

PRES. BARACK OBAMA:  Starting today we must pick ourselves up, dust ourselves off and begin again the work of remaking America.

(End videotape)

MR. GREGORY:  At the top of the agenda, the dire economic crisis and how to create jobs, restore confidence and get the nation's economy moving again.

Our exclusive guests, two men at the center of the debate:  the president's top economic adviser, director of the National Economic Council, Lawrence Summers; and the leader of the Republicans in the House, an outspoken critic of the stimulus plan, Congressman John Boehner.

Then, President Obama's first week on the job:  trying to make a clean break from the Bush years, ordering the closure of the detention center at Guantanamo Bay, Cuba, and signaling a new diplomatic push in the Middle East. Insights and analysis on the new Obama administration from New York Times columnist Tom Friedman; senior writer for The Weekly Standard, Stephen Hayes; and host of NPR's "All Things Considered," Michele Norris.

But first, the president's point man on the economy, Dr. Larry Summers. Welcome back to MEET THE PRESS.

DR. LAWRENCE SUMMERS:  Good to be with you.

MR. GREGORY:  President Obama's elected to get a daily economic briefing similar to the national security briefing.  Can you tell us what you're telling him, succinctly, about the state of this economy?

DR. SUMMERS:  I'm telling him he's inherited an extraordinarily difficult situation:  the worst economy since the second World War, a financial system that's got very serious problems, government budget deficits he's inheriting of a trillion dollars, an entitlement situation that's three times the burden that it was in the year 2000.  He's inheriting an extraordinarily difficult situation in the domestic economy, in the global economy; the kind of situation that requires the types of decisive action he's been working with Congress to produce.

MR. GREGORY:  So let's talk about that, and that is the stimulus or the recovery plan that the president has proposed.  In December, this is what you wrote:  "In this crisis, doing too little poses a greater threat than doing too much." That was an op-ed piece you did.  In that same piece, you said at that time that the economy was headed to a position where it was underperforming, where it was falling short of capacity to the tune of a trillion dollars.  Now, there are other economists that I've spoken to say actually that's optimistic, that it's actually falling short to the order of $2 trillion.  So why a stimulus plan that's only 825 billion?

DR. SUMMERS:  David, this is the largest stimulus plan in the country's history.  It's the largest investment in the backbone of our economy since the interstate--since the interstate highway system.  It's going to double renewable energy.  And it is only one phase of the approach that the president is taking.  The president has made clear that there will be strong action to address the terrible problems in our housing sector, that he will be using additional funds for a substantial financial recovery plan to get the flow of credit going.  This is one component of our strategy to bring about expansion. And the president has also made clear that going forward we're going to be leaning forward and that he is prepared to do what is necessary.

MR. GREGORY:  It is big, even...

DR. SUMMERS:  And so we believe this--we believe that this is a properly sized approach to move the economy forward.  You know, economists from several private firms have now corroborated our incoming CEA chairman Christina Romer's estimate that the plan will create...

MR. GREGORY:  The Economic Advisory Board.

DR. SUMMERS:  Yeah.  The plan will create three to four million jobs more than the economy otherwise would've had, and that's before you get to the financial recovery approach.  So we are very determined.

But there is one other thing that we are also very mindful of, which is money has to be spent well.  And that's why the president's put new emphasis on accountability in designing this proposal:  no earmarks, oversight of all projects, transparency on a Web site that everybody can see on the status of each project.  And we also have to do things in a way where the government can control them right.

MR. GREGORY:  I, I--and I want to go through all that.  But I just want to go back to your central point, which is that one of the biggest mistakes you can make is doing too little.  Yes, this is the largest stimulus in our history, but the problem, as you said, is something we've never seen in our history. So if you have a hole in the economy that's at least a trillion, maybe 2 trillion, don't you need a stimulus package that fills that hole?

DR. SUMMERS:  Well, no, David.  We have what economists call the multiplier. A fact--when the government--when the government spends...

MR. GREGORY:  Right, which is if you create a job, it creates another job.

DR. SUMMERS:  ...when the government spends a dollar creating a job, that person has higher income; because they have higher income, they're able to spend more, that creates other jobs down the road.  That's why we surveyed a range of economists.  We talk--and this is something the president insists on--to a lot of experts, both Democrat and Republican.  And you know, frankly, some of them think the stimulus should be larger, some of them think the stimulus should be, should be smaller.  President balanced the different views and I think came to the approach that we've taken, and came to an approach that's balanced in another way.  It's balanced between very substantial new investments that are referred to between very important protections to prevent teachers and cops from being laid off, and also--and this is a substantial part of the package--tax cuts, because we recognize that we've got to help households to be able to spend, and businesses.

MR. GREGORY:  Let's talk about what can be achieved this year, this calendar year.  It's a big concern, you want that up-front stimulus to jump-start the economy.  The CBO, the Congressional Budget Office issued a report this week, and it was also echoed by a research report done by the investment bank Goldman Sachs.  And we'll put a portion of that Goldman Sachs report on the screen:  "Preliminary estimates imply that of the $825 billion Congress is considering, only $250 billion will make it into the economy in the current calendar year.  This could still change as the package works its way through Congress, but these estimates highlight the political and practical challenges in enacting an effective fiscal package, particularly in 2009." Only $250 billion worth of impact this year.  Don't you want more of a jump-start?

DR. SUMMERS:  This is something we've been very focused on.  There's certain adjustments that are taking place in the legislation.  The president has committed, through a letter from his O and B director, Peter Orszag, that three-quarters of this $825 billion program will be spent out within the first 18 months.  And we're doing everything we can.  But frankly, we're not going to rush things to the point of being wasteful.  But the tax measures are going to change withholding checks within weeks after they're enacted.  Cities across the country are going to see help so they don't have to lay off teachers or cops within weeks after this--after the program is passed.  So yes, speed is a crucial concern.  But you know, David, there is something else we have to recognize, which is these problems weren't made in a day or a week or a month or even a year, and they're not going to get solved that fast.  So even as we move to be as rapid as we can in jolting the economy and giving it the push forward it needs, we also have to be mindful of having the right kind of plan that will carry us forward over time.  That's why the productive aspects of the investments the president's making--doubling renewable energy, for example, modernizing 10,000 schools--are so essential.

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