WASHINGTON -- Former Treasury Secretary Lawrence H. Summers, who was the perceived front-runner to be the next Federal Reserve chief until he pulled out in the face of liberal opposition, predicted Wednesday that nominee Janet L. Yellen would be a success.
"I think Janet Yellen's going to a great job at the Fed," Summers told CNBC-TV ahead of Yellen's Senate confirmation hearing Thursday.
Summers expressed no ill will after losing out to Yellen in the race to replace Ben S. Bernanke, whose second term as Fed chair ends Jan. 31.
The challenge for the Fed as it transitions to Yellen, who is expected to be confirmed, would be to continue to try to boost the economy, he said.
"The primary policy emphasis does need to be on spurring growth going forward," Summers said.
The Fed's unprecedented stimulus efforts have been controversial, swelling the central bank's balance sheet to nearly $4 trillion since 2008. Fed policymakers are considering reducing their latest effort, the monthly purchase of $85 billion in bonds to push down long-term interest rates.
Yellen has been a strong supporter of the Fed's stimulus efforts since becoming Fed vice chair in 2010, despite warnings from conservatives that the easy money policies risked runaway inflation. So far, inflation has remained in check.
Summers noted the low inflation rate in saying the Fed needed to focus on getting the economy back up to full speed. Although the financial system "has been fundamentally repaired" since the 2008 crisis, growth has been slow to rebound.
"Since that time, we really haven’t caught up with the economy’s potential," Summers said. "We haven’t raised the fraction of adults who are working and the inflation rate, if anything, has come down and that’s why we have to focus on growth."
Summers, who was President Obama's top economic advisor in 2009-2010, also said the healthcare reform law already had helped the economy by reducing the growth rate of medical costs.
He described the controversy over the flawed healthcare.gov website as "very exciting theater" for the news media and said the site's rollout "wasn’t managed the way the president wanted it to be."
Still, Summers said Americans should focus on the broader benefits of the law.
"If you look at the medium run and the long run, the important thing that’s happened for growth is that in the last three years since Obamacare was passed, we have bent the curve on healthcare costs," he said.
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