Larry Summers, a top economic advisor to former President Obama, lambasted the $ 1.9 trillion coronavirus stimulus package signed by President BidenJoe BidenTensions between Russia and China rise with White House New challenges emerge for Biden after strong start Feinstein has opened the door to support for filibuster reform READ MORE earlier this month as the “least responsible” economic policy in 40 years.
Speaking during Bloomberg Television’s “Wall Street Week” on Friday, Summers presented his forecast for the economy in light of the relief program.
“I think this is the least responsible macroeconomic policy we have had in the past 40 years,” Summers said.
“I think fundamentally he’s motivated by the intransigence of the Democratic left and the intransigence and completely unreasonable behavior of the entire Republican party,” he continued.
Summers warned that there is a one-third chance that inflation will accelerate in the next few years, with the United States possibly facing stagflation or economic stagnation.
Summers also warned that the United States would not see inflation because the Federal Reserve “hits the brakes”, destabilizing markets and plunging the economy close to a recession.
“There are more risks right now that macroeconomic policy itself has gray consequences than I can remember,” Summers said. “There have been some terribly serious times in the past, but then macroeconomic policy was trying to stabilize things.”
“There is now a real risk that macroeconomic policy will be very destabilizing things,” he concluded.
Summers, who served as Treasury Secretary under former President Clinton, was one of the few left-wing economists to criticize the US $ 1.9 trillion bailout.
In an editorial for the Washington Post in February, he warned that the inflation risk associated with the proposal could have “consequences for the dollar and financial stability.”
The Biden administration pushed back on inflation fears, citing the risks of not doing enough to stimulate the economy due to the pandemic.