INJECT IT INTO MY VEINS:
Economist Larry Summers has been the kingpin of every economic calamity Democrats have weathered over the last three decades. But Barack Obama’s National Economic Council chair during the Great Recession finds himself as persona non grata this week after penning an op-ed undermining the $1.9 trillion COVID relief package President Joe Biden is trying to push through Congress.
Summers’ treatise spread from wonk to wonk in the White House like a venereal disease—and was about as well-received. One aide characterized the response as “widespread disagreement.” White House economists had already been booked for media hits to discuss the January jobs report, airtime that permitted many administration voices to rebuke Summers in unison. “The president and the administration have a lot of respect for Professor Summers, but we disagree here,” Bharat Ramamurti, a deputy NEC director, told CBS Radio. Jared Bernstein, a progressive labor economist and member of Biden’s Council of Economic Advisors who served alongside Summers in the Obama administration, was less polite. “I think he’s wrong,” Bernstein told CNN on Friday morning. “I think he’s wrong in a pretty profound way.
Summers also took jabs from Senate Democrats, even the most moderate of whom have largely backed the size of the White House’s proposal. During a meeting of Senate chiefs of staff on Friday morning, an aide to Senate Majority Leader Chuck Schumer (D-N.Y.) thanked everyone for maintaining the party line, acknowledging that some of their bosses believed the package was either too much or not enough, according to a source familiar with the meeting. “And then there’s Larry Summers,” the aide said, “who can’t decide if we’re doing too much or not enough—but knows that, whatever we’re doing, is wrong.”
In a not-so-distant political era when both parties sympathized with deficit hawkery, Summers’ point might have had more purchase. But the administration has maintained there is far more risk in doing too little than too much in its efforts to save the economy from pandemic-induced collapse. Summers’ op-ed fell at an especially awkward time for his argument: The Department of Labor’s January jobs report painted a more dire portrait of unemployment than most economists had even predicted, galvanizing the White House’s push for going big.
“One of the lessons from the Great Recession is that you need to not only be big and bold upfront, but you have to take out some insurance against the possibility that other things can go wrong,” says Gene Sperling, who replaced Summers as Obama’s NEC chair in 2011 and has been an informal advisor to Biden. He names the worse-than-expected jobs report and unknown emerging COVID variants as factors that require extra padding. “If you were to ask me how to weigh the risks between a potential surge of inflation versus the potential risk our labor market getting stuck in the mud, it’s not really a close call.” (Sperling called Summers’ op-ed both “misguided” and “inconsistent” with Summers’ own recent writings that have urged policymakers to ignore the conventional deficit concerns in the midst of economic collapse.)
The fact that Schumer feels comfortable dunking Larry’s head in the toilet, in particular, is highly encouraging. (I also think he’s exactly right that this is as much or more about Summers having Listen To Me I Am The Smartest Guy In This Room syndrome as any actual ideological dispute.)
Also encouraging is is Jen Psaki gently but cuttingly deflating the bad faith questions of the WHCA:
Transactional politicians like Biden are more or less valuable depending on the political context, but one thing about them is they like winning, and Biden seems to have been heavily influenced by what happened the last time they listened to the complaints of phony “deficit hawks” in 2009-10. Good.