Larry Summers: Government Shutdown ‘Beyond Belief’

With so many mind-bending ideas to think about, the federal shutdown and political dysfunction became the unofficial theme of this year's Nantucket Project.

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Calling the stalemate that led to the government shutdown “beyond belief,” former Treasury secretary Larry Summers said this weekend that the extreme measure is symptomatic of political dysfunction that is producing a “fatalistic and weary center.” This center must galvanize and speak out against the “angry and determined” lawmakers on the extreme right and extreme left if the country is to move forward, Summers said.

His comments came at this year’s Nantucket Project, an ideas festival held on the small Massachusetts island each autumn. (Summers made the comments before the government shut down today.) The conference featured a variety of thinkers on topics from the future of food and energy to the growth of online education and African economies. But the biggest names at the conference kept coming back to the divide in Washington.

Republican Senator John McCain criticized fellow lawmakers for digging in and using the debt ceiling and threat of a government shutdown to try to defeat Obamacare. The voters have made their decision on this issue and it should be respected, McCain said. Good politics is “not just about having a philosophy,” McCain said. “You need willingness to reach a compromise.”

Political commentator Chris Matthews chimed in, saying lawmakers today don’t negotiate; they “take the ball and go home.” His new book Tip and the Gipper: When Politics Worked examines the battles and deals struck between Ronald Reagan and House Speaker Tip O’Neill in the 1980s. Despite tussles over issues such as tax reform and Social Security there was always a sense that both parties were in it together and would compromise. It was, Matthews said, “America as it should be, not as it is right now.”

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Similar comments have been heard in many corners of the nation the past few years—often from Washington veterans who find the extreme partisan differences today incomprehensible. At a small gathering I attended not long ago, Henry Kissinger said he had never seen such destructive hostility between the parties. Yet our leaders in Washington turn a deaf ear, and today they begin to turn off the lights. No one knows for how long.

Two weeks ago, Summers took himself out of consideration to be the next chairman of the Federal Reserve, a nomination he had all but locked up. He cited the political process, saying in a letter to the President that “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery.”

We’ve gone off the rails when politics gets in the way progress. The U.S. economy is running $1 trillion below its potential. Inflation is below the target rate and unemployment is above the target rate. This is when we should be investing for growth and fighting our way back from the financial crisis. Instead, we have stalemate in congress over paying for what congress has already spent.

Yet Summers believes the weary middle will eventually win the day. He called our willingness “to come together to harangue each other” a productive aspect of our system so long as we’re focused on how the world can be improved. “Ultimately,” he said, “the center will be reclaimed, opportunity will be provided, and the future as ever will be far brighter than the past.”