Lawrence Summers, the former Treasury Secretary under Bill Clinton, director of the National Economic Council under Barack Obama, president of Harvard, and Chief Economist at the World Bank, wrote a post-Christmas editorial for Bloomberg entitled, “Trump’s $2000 Stimulus Checks are a Big Mistake.” It’s a classic:
Some argue that while $2,000 checks may not be optimal support for the post-Covid economy, taking stimulus from $600 to $2,000 is better than nothing. They need to ask themselves whether they would favor $5,000, or $10,000 — or more. There must be a limiting principle.
The genesis of this Summers article is a perfect tale in microcosm about how America’s intellectual elite manages to lose elections to people like Donald Trump. It’s a two-step error. First, they put people like Summers in charge of economic policies. Then, they let them talk in public.
Summers the day before Christmas appeared on Bloomberg to offer his initial thoughts on why $2000 checks must be bad: he looked at which politicians were supporting the plan, and worked backward. “When I see a coalition of Josh Hawley, Bernie Sanders and Donald Trump getting behind an idea, I think that’s time to run for cover,” he said, adding: “When you see the two extremes agreeing, you can almost be certain that something crazy is in the air.”
"$2,000 checks would be a pretty serious mistake."— Bloomberg TV (@BloombergTV) December 24, 2020
Former Treasury Secretary Larry Summers says larger stimulus checks to Americans could risk overheating the economy https://t.co/Ui1v0zd7Hz pic.twitter.com/ITF6slQwKf
After delivering that cheery message, Summers got feces-pelted on the Internet:
Larry Summers (pictured below, far right) thinks $2000 per person is excessive. pic.twitter.com/pDqTSHWblU— Jeet Heer (@HeerJeet) December 25, 2020
No other way to say it...Larry Summers is a piece of shit. https://t.co/6yZ910V53l— Yashar Ali 🐘 (@yashar) December 24, 2020
Here's "key economic decision-maker in the Obama administration" (and friend to Jeffrey Epstein) Larry Summers arguing AGAINST giving struggling Americans $2K. https://t.co/FZRByGeHZW— Peter Daou (@peterdaou) December 24, 2020
Seeing that his comments “lit up the Twittersphere,” Summers then sat down to compose an article doubling down on his reasoning. Essentially, he argued that from an econometric point of view, we’re already overdoing it on the help front. If you were under the impression that huge numbers of people are living off meals from food banks and/or are at risk in an eviction crisis, you were wrong.
Noting that “total employee compensation” is “only running about $30 billion per month behind the Covid baseline,” he insisted that $200 billion more in tax rebates per month over the next quarter would “equal an additional seven times the loss of household wage and salary income over the next quarter.”
He then showed a graph explaining that “because of the legislation passed in 2020, total household income… has exceeded normal levels relative to the economy’s potential more or less since the pandemic began.” The good news, as a result, is that “the existing stimulus bill is sufficient to elevate household income relative to the economy’s potential to abnormally high levels — unheard of during an economic downturn.”
The whole piece reads like an extended New Yorker cartoon, in which an evictee with empty pockets is about to dive after a rotten apple core in a dumpster, only to be blocked by a cauldron-bellied Harvard economist in a $3000 Zegna suit. Caption: “Actually, total household income relative to the economy’s potential sits at abnormally high levels.”
There are of course different positions one could take on the question of stimulus checks, but the issue with people like Summers is the utter predictability of their stances. Summers belongs to a club of neoliberal thinkers who’ve dominated American policy for decades. From Bob Rubin to Tim Geithner to Jason Furman to Michael Froman and beyond, the people one friend jokingly refers to as the “Rubino Crime Family” are all basically the same person, affectless technocrats who play up reputations as giant-brained intellectuals — I always imagine them with bulbous Alien Nation heads — while reveling in cold, hard truths about the limits of government assistance.
Read the rest here.