Summers to GOP: Stimulus is working

President Barack Obama's top economic adviser, Larry Summers, defended the stimulus bill in a letter to Republican congressional leaders on Monday.

House Republicans wrote the White House last week to encourage the administration to create new tax breaks for businesses in order to spur job creation. But Summers fired back, saying that the stimulus package has succeeded in stabilizing the overall economy and correcting the housing and financial markets.

"Thanks largely to the Recovery Act, alongside an aggressive financial stabilization plan and a program to keep responsible homeowners in their homes, we have walked a substantial distance back from the economic abyss and are on the path toward economic recovery," Summers wrote to House Minority Leader John Boehner (R-Ohio).

Republicans have long criticized the stimulus package for not creating enough jobs. Criticism mounted after September's jobs report showed that the unemployment rate had ballooned to 9.8 percent.

House Minority Whip Eric Cantor (R-Va.) and some Democrats last week even expressed openness to a second stimulus package based on job creation. Summers, however, said that the stimulus was doing enough to create jobs.

"Most importantly, we have seen a substantial change in the trend of job loss," Summers wrote to Boehner.

Among the proposals touted in the Republicans' letter were a 20 percent tax deduction for small businesses based on their income, a reduction in individual income tax rates, the ability of small businesses to form associations to buy healthcare plans and an expansion of health savings accounts, which may be squeezed by some health insurance proposals.

UPDATED 11:16 A.M.

In a statement in response to Summers's letter, Boehner said, "We need to help small businesses create jobs, but the Democrats' proposals for more of the same stimulus spending are the wrong approach and an acknowledgement [sic] that the first one isn’t working.

"We're pleased the White House is reviewing the substance of our ideas and we hope that review doesn’t take long," he added.

This story was updated at 11:23 a.m.