Summers Responds: Don't break out the champagne yet.

• Author: Summers, Lawrence

I am glad to see that the commentators share my sense of concern about the capacity of policy and the will of policymakers to respond to the next downturn. I am more anxious than most for several reasons.

First, I take a less favorable view of the last few years than many. While the crash of 2008 was contained more quickly than could reasonably have been expected, policy--between fiscal and monetary--was cumulatively understimulative between 2010 and 2015. This is not widely accepted, which makes me less than confident that policy will do better next time.

Second, as several commentators note, next time more of the stabilization burden will fall on fiscal policy because of limits on how much rates can be brought down. The risks that appropriate actions will not be taken because of some combination of misguided concern about excessive government debt and Washington dysfunctionality seem high. Recall that even with a major financial crisis under way, a new president with a strong mandate, and that president in possession of Congressional majorities, the passage of the too-small and too-temporary Recovery Act was a close run thing.

Third, if the next downturn involves major strains in the financial system, I worry about the capacity of the federal government to respond. Dodd-Frank curtails in important ways the U.S. Federal Reserve's capacity to support troubled institutions even at moments of systemic risk. Getting the Troubled Asset Relief Program of the next crisis through Congress...