Summers says his challenge will be to stay the course

Thursday, June 17, 1999 | 4:02 a.m.

Summers now holds the No. 2 slot at the Treasury Department and is seeking to succeed Robert Rubin, who announced plans last month to leave the post. Summers received the support of many members of the Senate Finance Committee, which held a hearing on his nomination.

The committee's chairman, William Roth, R-Del., said his panel expects to vote on and approve Summers' nomination on Tuesday. "I think it would be overwhelming" Roth said of the committee's support for the nomination.

Roth said he hoped Summers' nomination - which is also subject to approval by the full Senate - will be taken up by that chamber before July 4. Full Senate approval is expected.

Rubin - credited with policies boosting the nation's economic growth, reducing its debt and spurring jobs - has said he would like to leave his post by July 4.

Summers, 44, joined Treasury in 1993 as undersecretary for international affairs. He has served since 1995 as deputy to Rubin.

"Larry, you have some big shoes to fill," Roth said.

In the three-hour hearing Thursday, senators questioned Summers on a wide range of domestic and international economic matters. Topics included: the health of the U.S. steel industry; reform of Social Security and Medicare; Japan's economic health; the dismal U.S. savings rate; efforts for China to become a member of the World Trade Organization; and the International Monetary Fund's proposed sale of some gold to help support a program to give the nation's poorest countries debt relief.

Sen. Richard Bryan, D-Nev., sharply criticized the Clinton administration's support for the sale of IMF gold reserves, but said after the hearing he still intended to vote for Summers' confirmation.

"He is preimmenintly qualified," Bryan said.

Bryan said the gold sale would further erode international gold prices and cripple the industry in Nevada, the third-leading producer of gold in the world behind South Africa and Australia.

Summers didn't break any new policy ground during the hearing and stuck to the Treasury Department's existing policies on all of these issues.

"At Treasury the right course has been set," Summers told lawmakers. "Our challenge will be to carry on."

On the steel controversy, Summers expressed sympathy for U.S. steel industry, which has closed down plants and cut back jobs in response to cheap steel imports from Japan, South Korea, Russia and other countries. However, he said he would recommend that the White House veto legislation setting quotas on steel imports.

"My concern would be the retaliation consequences," Summers said. A better approach, he suggested, is vigorously enforcing U.S. trade law.

Steel-state Sen. Jay Rockefeller, D-W.Va., who said he intends to move forward in the Senate with a steel-import quota bill, nonetheless threw his support behind Summers' nomination.

"You are superbly qualified for this," Rockefeller said.

Summers also was questioned frequently on President Clinton's plans to shore up Social Security and Medicare - the nation's retirement programs - using projected budget surpluses. Republicans have criticized the specifics of Clinton's plan and also asked Summers about the prospects of carving out some of the budget surplus for an income tax cut many Republicans want.

Summers, consistent with the administration's position, said that it "would not be prudent in a fiscal sense" to have a tax cut until effective frameworks for Social Security and Medicare reforms are agreed to.

On other matters, Summers reiterated his commitment to a strong dollar as a key part of his economic strategy. "I believe that a strong currency is very much in our national interest. No nation can devalue its way to prosperity."

Summers said "there's room for improvement" for the IMF to better deal with financial crises around the world. And he told the panel that supports efforts to reform the IRS and get an oversight board up and running soon and that he'll work hard to come up with ways to encourage Americans - whose savings' rate is at an all-time low - to save more.