Lawrence Summers says economic slowdown ‘is a price we do not have to pay’

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Lawrence Summers, the former Obama economic adviser, called on the U.S. to consider what its losing in GDP and consider spending more on coronavirus testing and contact tracing in order to get the economy running again.

Summers wrote an op-ed in the Washington Post and said the costs associated with testing and tracing would be far less when compared to the $2 trillion Coronavirus Aid, Relief, and Economic Security Act introduced in January. The funds would also provide far greater benefits to the U.S. economy, while potentially reducing the transmission rate, he claimed.

"Suppose this required testing every American every week and that each test cost $20," Summers said, adding they were pessimistic suppositions. "The $6.6 billion price tag would be less than one-tenth of the weekly cost of the Cares Act."

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Lawrence Summers, then-White House chief economic adviser, speaks at the Buttonwood Gathering in New York in 2009. He called on the U.S. to spend a lot more money on coronavirus testing and contact tracing in order to get the economy running again. (AP)

He added that tracing methods -- used to follow up on positive cases -- would only cost about 1 percent of the current stimulus package.

Being proactive instead of reactive to the virus would help the most in the long run, but only if the U.S. is willing to devote the necessary resources, he said. The small amount that could be spent on both testing and tracing is especially important because he believes the U.S. is overstating the current virus impact on the economy and underinvesting in the necessary health measures.

With the virus estimated to be ravaging the gross domestic product by 20 percent, or roughly $80 billion dollars a week, the former Harvard University president said that simply reopening the economy won't work.

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He wrote that people would still be hesitant to go out in public without the feeling of security that testing or contract tracing would give them. Summers added that fear is a far greater threat to the economy than the current lockdowns.

Opening the economy without the necessary testing infrastructure would also lead to new waves of the disease, which in turn would prolong the impact on the economy, Summers said.

He also believes we should spend more on masks and the production of potential vaccines -- instead of trying to compensate for the economic losses from the coronavirus pandemic.

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"Amounts of money that are small compared to the economic losses we are suffering are immense relative to battling the virus," Summers said. "They should be the first priority going forward."