Larry Summers, former President Obama’s chief economic adviser, attacked the $ 1.9 trillion coronavirus stimulus package signed by President Biden
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Speaking on Bloomberg Television’s “Wall Street Week” on Friday, Summers set out his predictions for the economy in light of the relief package.
“I think this is the least responsible macroeconomic policy we’ve had in the last 40 years,” Summers said.
“I think it’s fundamentally driven by intransigence on the Democratic left and the intransigence and completely unreasonable behavior of the entire Republican party,” he continued.
Summers warned that there was a third of the chances that inflation would accelerate over the next few years, with the possibility that the United States would face stagflation or economic stagnation.
Summers also warned that the U.S. would not see inflation because the Federal Reserve would “slow down,” destabilizing markets and plunging the economy close to a recession.
“There are more risks right now that macroeconomic policy itself is causing serious consequences than I remember,” Summers said. “There have been terribly serious times in the past, but then macroeconomic policy was trying to stabilize things.”
“Now there is a real risk that macroeconomic policy will destabilize things a lot,” he concluded.
Summers, who served as Secretary of the Treasury under former President Clinton, was one of the few left-wing economists to be critical of the $ 1.9 trillion U.S. bailout plan.
In an op-ed for the Washington Post in February, he warned that the inflation risk associated with the proposal could have “consequences for the dollar and financial stability.”
The Biden administration has backed down against fears of inflation, citing the risk of not doing enough to stimulate the economy due to the pandemic.