Larry Summers, a top economic adviser to former President Obama, blasted the $1.9 trillion coronavirus stimulus package signed by President BidenJoe BidenJill Biden campaigns for McAuliffe in Virginia Fill the Eastern District of Virginia Biden: Those who defy Jan. 6 subpoenas should be prosecuted MORE earlier this month as the “least responsible” economic policy in 40 years.
Speaking on Bloomberg Television’s “Wall Street Week” on Friday, Summers outlined his predictions for the economy in light of the relief package.
“I think this is the least responsible macroeconomic policy we’ve had in the last 40 years,” Summers said.
“I think fundamentally, it’s driven by intransigence on the Democratic left and intransigence and completely unreasonable behavior on the whole of the Republican party,” he continued.
Summers warned that there was a one-third chance that inflation would accelerate over the next several years, with the U.S. possibly facing stagflation, or economic stagnation.
Summers also warned that the U.S. wouldn’t see inflation because the Federal Reserve would “hit the brakes,” destabilizing the markets and sinking the economy close to a recession.
“There are more risks in this moment that macroeconomic policy itself will cause gray consequences than I can remember,” Summers said. “There’ve been terribly serious moments in the past, but then macroeconomic policy was trying to stabilize things.”
“Now there’s the real risk that macroeconomic policy will be very much destabilizing things,” he concluded.
Summers, who served as Treasury secretary under former President Clinton, was one of the few left-leaning economists that has been critical of the $1.9 trillion American Rescue Plan.
In an op-ed for The Washington Post in February, he warned that risk of inflation associated with the proposal could have “consequences for the dollar and financial stability.”
The Biden administration has pushed back against inflation fears, citing the risks of not doing enough to stimulate the economy due to the pandemic.