- Former Treasury Secretary Larry Summers said Biden’s economic agenda could make inflation worse.
- That’s because Biden’s policy is based on the wrong principles, he said at a recent event.
- “We don’t have a job problem…we have a cost problem.”
According to Larry Summers, President Joe Biden’s economic agenda is “increasingly dangerous” and could make inflation worse.
At a recent event organized by the Peterson Institute for International Economics, the former US Treasury secretary said he largely agreed with the Inflation Reduction Act and the CHIPS Act, which encourage domestic manufacturing.
But Summers said he disagrees with the theory behind those policies, warning they could contribute to higher prices.
“It is wrong to believe that manufacturing-based economic nationalism is the path to higher incomes or a better standard of living for the middle class,” he said Tuesday, reports CNN. “We don’t have a job problem…we have a cost problem.”
Summers said the manufacturing policies also ignore the benefits of globalization and trade with other countries, which has reduced inflation.
“That’s why I’m so concerned about the administration’s attitude or non-attitude toward business,” he said.
Summers also took issue with Biden’s new antitrust guidelines, saying they “abandon” the traditional focus on lowering consumer prices.
He said, “Yes, we should enforce more antitrust laws than we have in the last 30 years…but we should do so in service of the principle of higher income through lower costs for consumers.”
A White House spokesman told CNN that investments in infrastructure, clean energy and chip production are making the US economy more resilient, noting that the pandemic and Russia’s war on Ukraine have shown how supply chains can be disrupted. Is.
Despite strong criticism from some commentators, other economists have defended Biden’s economic plan. Given the dramatic decline in inflation last year, Bidenomiks has been largely successful, said Nobel economist Paul Krugman.
The June consumer price index was up 3% from a year earlier, still above the Fed’s 2% target but down sharply from the 9.1% annual rate expected in June 2022.