- Former US Treasury Secretary Larry Summers told Bloomberg on Friday that $ 2,000 stimulus checks for Americans would be a “very serious mistake”.
- Summers, who was said to have been a campaign advisor to President-elect Joe Biden, said increasing consumer spending is the wrong path to economic recovery.
- Checks could overheat the US economy, he told Bloomberg.
- U.S. President Donald Trump has so far refused to sign a pandemic relief bill containing $ 600 checks for Americans, saying the checks should be $ 2,000. Democrats support bigger checks.
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Larry Summers, the former US Treasury secretary who allegedly advised President-elect Joe Biden, believes that $ 2,000 stimulus checks would be a “very serious mistake” that could overheat the US economy.
Congress on Monday approved a $ 2.3 trillion pandemic aid package containing checks for $ 600 for struggling Americans. On Thursday, U.S. President Donald Trump asked for checks for $ 2,000 and he refused to sign the bill. Democrats support these bigger checks, and House Speaker Nancy Pelosi plans to hold a vote on them on Monday.
Summers, who was Treasury secretary at the end of Bill Clinton’s presidency and director of the National Economic Council at the beginning of Barack Obama’s administration, told Bloomberg that it would be better to have stimuli than not – but to promote consumer spending through Individual checks were the wrong way to keep the economy moving.
He said “I’m not sure I’m so excited about the $ 600 check”, let alone the $ 2,000 check.
The bill “would likely pay $ 200 billion to $ 250 billion a month for the next three months,” said Summers.
“The level of compensation is about $ 30 billion a month below what we expected. The GDP is about 70 billion per month below what we expected … We already have stimulus, much more than filling the hole, “he said.
“And given that a large part of the hole doesn’t come from the fact that people don’t want to spend, but because they can’t spend – they can’t get on a plane or go to a restaurant – I don’t necessarily think the priority should be to promote spending beyond where we are now, ”he said.
Handing over checks for $ 2,000 to Americans would be a “very serious mistake that could cause temporary overheating,” he added.
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Summers was advising Biden’s campaign this year, Bloomberg said, but will not have a role in Biden’s administration.
Progressive groups in May urged Biden to abandon Summers, criticizing the former Treasury secretary’s economic policy record.
Democrats seem united behind the idea of greater stimulus checks, and a Democratic attempt to promote them was blocked by House Republicans on Thursday. Progressive Democrats, in particular, reacted positively to Trump, saying the $ 600 checks were not enough.
“When you see the two extremes agreeing, you can almost be sure that something crazy is in the air,” Summers said, adding that when Senator Bernie Sanders and Trump are aligned, it’s “time to run for cover.”