Larry Summers is sticking with it. By “it” I mean what’s morphed into a professional gig centered almost entirely around criticizing Joe Biden’s $1.9 trillion virus relief plan, and especially the direct payments at the center of the proposal.
It’s worth taking a step back to remember where the idea for $2,000 stimulus checks came from in the first place.
Donald Trump proposed those checks in a surprise video posted to his now defunct Twitter account late in December. The video, which caught the GOP flat-footed, was somewhat befuddling. On one hand, it seemed like an effort to buy a win for Republicans in the Georgia Senate runoffs, but Trump’s own claims of voter fraud in the state arguably undercut GOP turnout in some locales. Another explanation is that Trump was attempting to bolster his populist bonafides and otherwise rally support ahead of a last-ditch effort to stay in office. That effort ended in disaster two weeks later.
Trump paired his demand for bigger checks with a threat to stymie the must-pass government funding bill. He eventually relented. Stimulus payments remained at $600.
Summers almost immediately criticized the idea of sending Americans $2,000, castigating it as a kind of lunatic Frankenstein proposal. “When I see a coalition of Bernie Sanders and Donald Trump getting behind an idea, I think that’s time to run for cover,” he said at the time.
Amid what I think it’s fair to call a public backlash, Summers began defending himself. Eventually, he wrote an Op-Ed explaining why $2,000 stimulus checks were dangerous. It wasn’t entirely convincing.
Since then, he’s kept up the drumbeat, mostly in paid remarks carried by Bloomberg Television’s “Wall Street Week,” which airs on Friday evenings, hours after most people have tuned out.
During comments that were set to air in this week’s edition of the program, Summers warned that the Fed will have to hike rates next year.
“I’d expect rate hikes to be well underway by the end of 2022,” he said, arms crossed in feigned consternation, even he sported a somewhat off-putting grin.
Asked by the network’s David Westin if the Fed’s hand will be “forced by inflation,” Summers said “a combination of inflation and perhaps an overheating economy and fiscal policy on fire” will combine to compel tighter monetary policy.
His remarks came after a week that featured numerous data points which ostensibly argued for an imminent uptick in price pressures, even as CPI remains muted — officially anyway.
Summers went on to echo the notion that the Fed is unprepared. Officials aren’t “recognizing the era they’re headed into,” he said, likening the current environment to the 1970s. “They’re going to have to start recognizing the reality of those challenges,” he added.
Janet Yellen continues to press the issue on stimulus, and the juxtaposition between her position and Summers’s take has been the subject of media attention. Yellen isn’t backing down.
She reiterated her stance in an interview with CNBC this week. “We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing,” she said. “I think the price of doing too little is much higher than the price of doing something big.”
Summers isn’t likely to win many plaudits in the court of public opinion for his latest remarks, that’s for sure. While there is growing evidence to support the contention that price pressures are building (and perhaps quickly), positioning yourself between millions of jobless Americans and literal free money is perilous from a public relations perspective. The figure (below) represents households with children.
Not that Summers cares. He doesn’t have to worry about money. He’s got plenty.
And even if he didn’t, Bloomberg is paying him as a contributor, which at the current juncture entails writing him a check to explain why the government shouldn’t write everyone else a check.
“I can’t imagine a lower-priority use of federal resources than improving consumer balance sheets,” he said Friday.