Biden rejects ex-Obama adviser Larry Summers' suggestion stimulus too big: “We can’t do too much"

Bipartisanship laughing off calls from Washington's consultant class to scale back the size of COVID stimulus

By Jon Skolnik
February 5, 2021 9:21PM (UTC)
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US President-elect Joe Biden delivers remarks on the public health and economic crises at The Queen theater in Wilmington, Delaware on January 14, 2021. - President-elect Joe Biden will propose injecting $1.9 trillion into the US economy when he takes office next week, as evidence mounts that the recovery from the sharp downturn caused by Covid-19 is flagging. (JIM WATSON/AFP via Getty Images)

Democrats are laughing off calls from Washington's consultant class to scale back the size of COVID stimulus and appear ready to move without Republican support, signaling a significant end to any hope for the bipartisan bill previously called for by Joe Biden and moderate Democrats in the Senate.  

In a meeting on Friday with Democratic leaders and committee heads pulling together another COVID-19 relief bill, the president ignored the advice of ex-Obama advisor Larry Summers, who suggests in a new Washington Post op-ed that the Biden administration that "the magnitude of what is being debated" can have harsh "consequences for the dollar and financial stability."

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"If I have to choose between getting help right now to Americans who are hurting badly and getting bogged down in a lengthy negotiation, or compromising on a bill that's up to the crisis, that's an easy choice," Biden said at the White House on Friday, signaling his willingness to push the bill through without bipartisan support. 

House Speaker Nancy Pelosi, D-CA, later suggested Democrats are simply ignoring the warnings from the former Treasury Secretary, saying in a press conference, "We didn't talk about Larry Summers." 

In his op-ed, Summers penned what many "liberal wonks have been whispering about for weeks," according to Politico, demanding that Biden's "bold" plan to provide Americans with $1.9 trillion in Covid-19 relief be "accompanied by careful consideration of risks and how they can be mitigated." 

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In predictably abstruse language, Summers warns Biden of ratcheting up undue inflation, which he claims, would have "consequences for the dollar and financial stability." Summers also warned Biden that he is risking the depletion of funds that might otherwise be used for other public investments. "If the stimulus proposal is enacted, Congress will have committed 15 percent of GDP with essentially no increase in public investment to address these challenges," he said. "After resolving the coronavirus crisis, how will political and economic space be found for the public investments that should be the nation's highest priority? Is the thinking that deficits can prudently be expanded longer and further?"

Summers' wonkish hand wringing, likely to be co-opted by conservatives with an interest in "austerity orthodoxy" (as Summers calls it), was met with sharp criticism by those on the left who are intent on seeing immediate relief rather than fiscal responsibility. 

Sen. Brian Schatz, D-HI, took to Twitter to call out the economist's history of failed fiscal conservatism.

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https://twitter.com/brianschatz/status/1357700340037074946

"Why would we listen to the economist who admits he went too small last time if he's warning us to go small again?" Schatz asked

Biden's economic policy advisor Jared Bernstein specifically called out Summers, strongly disagreeing with his assessment. "I think he's wrong. I think he is wrong in a pretty profound way," Bernstein said in a CNN appearance, "We have consistently said the risks of going too small are much greater than the risks of too much."

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On Friday, after an hours-long proceeding known as "vote-er-ama," Congress passed a budget resolution that will allow Democrats to legislate the COVID-19 relief package without GOP support. The resolution passed 51-50 on a party-line vote, with Vice President Kamala Harris casting one of her first tying breaking votes in the Democrats' favor.

Although 49,000 jobs were added in the month of January, according to Friday's latest jobs report, the U.S. is still down 10 million jobs since the start of the pandemic. "The one thing we learned is we can't do too much here," Biden said in the meeting, "The end result is … not just the macroeconomic impact on the economy and our ability to compete internationally," said the President, "It's people's lives."


Jon Skolnik

Jon Skolnik is a staff writer at Salon. His work has appeared in Current Affairs, The Baffler, AlterNet, and The New York Daily News.

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