How a key Clinton-Obama adviser finds himself at odds with Biden’s economic agenda: report
Economist Larry Summers was a highly influential figure in the last two Democratic presidential administrations, serving as secretary of the U.S. Treasury Department under President Bill Clinton and heading the National Economic Council under President Barack Obama. But reporter David J. Lynch, in an article published by the Washington Post this week, outlines some of the ways in which Summers has been at odds with President Joe Biden on economic policy.
Clinton, Obama and Biden are all centrists. Obama, with the blessing of the Democratic National Committee, picked Biden as his running mate in 2008's presidential election as a way of emphasizing his centrist leanings. But Biden, much to the delight of liberals and progressives in his party, has stressed that the COVID-19 pandemic and the recession it triggered call for aggressive economic intervention — and that, according to Lynch, has put him at odds with Summers.
Lynch explains, "Summers, 66, who drafted economic blueprints for the past two Democratic presidents and was a top candidate to lead the Federal Reserve Board under President Barack Obama, has emerged in recent weeks as the loudest critic of President Biden's approach to reviving the pandemic-era U.S. economy. The Harvard University professor — who advised Biden for a time last summer — warns that the president's stimulus plan may trigger the highest inflation in more than half a century and could cost Democrats the chance to make lasting investments in the economy."
Lynch adds, however, that Summers' "arguments also have been swatted aside by his erstwhile allies in the White House, the Treasury Department and the Federal Reserve, who argue that the economy is in desperate need of help."
"The extraordinary clash between a globally recognized Democratic economist and a Democratic president hoping to enact the most transformative liberal agenda since the Great Society involves both the central issues of the day and the lessons of history," Lynch observes. "If he, at times, uses dramatic language, Summers nonetheless has given voice to an unpopular opinion that many in the Democratic camp say deserves consideration. Few other Democratic economists have aired such concerns; some say doing so might harm Biden's ability to translate his fragile congressional majority into decisive action."
A key part of Biden's Built Back Better agenda has been the American Rescue Plan Act of 2021, the $1.9 trillion COVID-19 relief/economic stimulus package that the president recently signed into law. Summers views the American Rescue Plan as way too costly, while liberal economists like New York Times columnist Paul Krugman — a student of New Deal and Great Society economics — has been stressing that the U.S. economy needs aggressive government intervention.
Claudia Sahm, a former Federal Reserve national economist, discussed Summers' views with the Post, saying, "The discussion he's trying to push is one we should have, but it's so out of proportion. And since (the bill) passed, he's gotten more and more vicious."
Summers, during an interview with the Post, stressed that while the U.S. economy — in light of the COVID-19 recession — needed some stimulus, he believes the American Rescue Plan goes too far.
"I know the bathtub has been too empty," Summers told the Post. "But one has to think about what the capacity of the bathtub is and how much water we're trying to flow into it…. We're taking substantial risks."
Sahm, however, doesn't view the American Rescue Plan as risky. And she told the Post that Summers doesn't have as much influence with the Biden Administration as he did with the Clinton Administration or the Obama Administration
"He still has some sway, but he doesn't have as much sway as he used to," Sahm said of Summers. "He's used to having the ear of the president. And now, he doesn't."
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