05/11/2009 05:12 am ET Updated May 25, 2011

Summers: We Are Trying To Avoid Historical Infamy

The Obama White House is walking a tricky line in its efforts to repair the nation's and Wall Street's economic psyches. While embracing good news as it emerges from the stock market and financial sector, aides to the president are also doing their best to keep expectations relatively low.

Appearing at the Economic Club on Thursday, the president's chief economic adviser Larry Summers did predict, as widely reported, that "this sense of free-fall that we have been living with, will be arrested within the next few months." But an equally profound moment came near the end near the end of the session, when Summers essentially described his job as a defender against another Great Depression.

"My kids, when they studied U.S. history, learned a lot about the 1930s and what happened then, and they learned almost nothing about what happened in the economy over the last four or five decades; the fluctuations, the 1982 recession, that stuff. It just wasn't something that made it into a history course," said Summers. "And in many ways I think our challenge now is to make sure and do everything we can to contain what we inherited. And so, this will be a serious economic downturn, but it will not, when people look back a generation from now, have been an important historical event. That is what we are really trying to do."

It was a dose of political realism in an event that was marked by modest economic optimism. Summers did, indeed, predict that the public would "no longer have that sense of free-fall." He also underscored just how drastic the economic landscape had shifted in recent months by declaring that there had not been this "much desire for or push for reform of financial regulation in anytime since the Second World War."

But on specific questions he kept his remarks broad.

Asked, for instance, about the likelihood of cap-and-trade legislation becoming law, Summers was upfront: "It is hard enough to dodge questions and predict what is happening on the economy without having to also dodge questions on what is going to happen politically."

On the likelihood of unemployment rising even as the economy recovers, he added: "I don't think we can hold out the prospect that unemployment will stabilize at the current level and I think there are seven categories there, which mean there are seven too many."

Then he gave a nearly-Rumsfeldian response to a question about when he thought the recession was likely to end: "There are two kinds of economic forecasters. Those who know they don't know and those who don't know that they don't know," he said, before adding: "So I think the sense of a ball falling off a table, which is what the economy has felt like since the middle of last fall, I think we can be reasonably confident that that's going to end within the next few months."