Larry Summers is a Brilliant, Arrogant, Out of Touch Jerk

The President-elect’s economic recovery advisor believes $2,000 checks will screw up the entire economy — and he’s not so sure you should get $600 checks either.

Photo: Wikimedia Commons

Every once in a while, I’m in the middle of writing my next piece or working on the book I’m allegedly writing when something out of left field stops me cold. If that ‘something’ is wrong enough, I put aside whatever I’m working on and start rage-writing — very similar to rage-tweeting, it just takes longer.

For the last four years, the ‘something out of left field’ that usually gets me going is something President Trump or one of his GOP sycophants said on television. 

The last time this phenomenon happened to me was when Larry Kudlow, the director of the National Economic Council, said he didn’t think systemic racism was a real thing — ironically failing to recognize that without the privilege provided him by that very system, one with his absence of qualifications could never reach the position he currently occupies. 

This go-around yet another Larry — specifically Larry Summers — who by sheer coincidence is a former director of the National Economic Council — is the focus of my ire. 

No, I have no particular issue with White House advisors who happen to be named Larry. Nor is my perturbation related to Summers’s alleged misogynistic comments during his tenure as president of Harvard, the way he presided over that university endowment’s $1.8 billion loss or the fact that he’s often very wrong.

I’m not even upset by the fact that he is, by his own admission, an arrogant, world-class jerk. 

My issue is that Mr. Summers, an economist rumored to be a member of the Democratic Party, has a problem with sending folks who’ve lost their jobs the $2000 relief check that seemingly everyone except him and GOP Senator Mitch McConnell wants them to receive. 

In a recent interview with Bloomberg, Summers said putting that amount of money in your hands all at once “would be a pretty serious mistake.” Heck, he isn’t even sure you should get the $600 check already signed into law. 

Bloomberg TV @BloombergTV

"$2,000 checks would be a pretty serious mistake." Former Treasury Secretary Larry Summers says larger stimulus checks to Americans could risk overheating the economy trib.al/gYJtefL

Mind you, we’re not talking about allowing billionaires to profiteer off the pandemic or another $2 trillion tax cut. We’re talking about a government rescue package for millions of unemployed Americans on the verge of eviction and literally lining up for miles at food pantries. Larry Summers has a big problem with giving those folks a few grand to help them out. 

Here’s a little background on Larry Summers…

For the record, Larry Summers is arguably one of the most brilliant economists of our generation. 

When he was on the short-list to succeed Ben Bernanke as Federal Reserve Chairman, The Atlantic laid out his impressive resumé, although they didn’t want him to get the job, his credentials are most impressive:

“Lawrence Henry Summers is one of the world’s most eminent economists. He won the John Bates Clark Medal given every two years to the nation’s best economist under 40 – an award so competitive that some economists say it’s as prestigious as a Nobel Prize. 

His fellow economists cite his work even more frequently than that of Federal Reserve Board Chairman Ben Bernanke. Summers also has more experience than any senior U.S. official in memory, including Bernanke, in dealing with the financial crises that have become the regular responsibility of Fed chairmen since the Great Depression. 

He started in the Reagan administration, when he was senior staff economist on the Council of Economic Advisers, then moved on to become Treasury secretary under President Clinton, and, finally, President Obama’s chief economic adviser in the middle of the worst financial crisis since the 1930s.

Summers holds mostly middle-of-the-road but profoundly informed views on finance that make him fairly uncontroversial as a prospective steward of the Fed’s mandate, which is to control inflation, reduce unemployment, and guide economic growth.”

So why does Summers believe relief checks are a bad idea? Because he believes handing out so-called “give-aways” to people on the verge of poverty may cause temporary inflation, which he says is terrible for the economy:

“We have stimulus already, much more than filling out the hole. And given that lots of the hole is not from the fact that people don’t want to spend, but because they can’t spend — they can’t take a flight or go to a restaurant — I don’t necessarily think that the priority should be on promoting consumer spending beyond where we are now.” 

To recap, Larry Summers has somehow convinced himself that the economy has plenty of economic stimuli already, and the reason millions of unemployed folks aren’t spending the imaginary dollars he believes they possess is because they aren’t allowed to — and not because they are flat broke due to months of joblessness. 

Did I mention Larry Summers is filthy rich? Yep, the guy sweating millions of Americans over a couple of grand is worth at least $20 million. You may think that’s hitting below the belt, and maybe you’re correct. 

That said, maybe stupendously wealthy economists like Summers — not to mention policymakers—should worry a little more about the 85 million Americans that can’t pay their bills and less about propping up big business. 

Some economists don’t think Larry’s inflation concerns pass the smell test…

Since I’m not an economist, I checked around to see if Summers’s peers share his inflation concerns. Quite a few do not. 

Take Paul Krugman, for example. He’s an economist, a columnist for The New York Times, and a professor at the City University of New York — plus he’s won a Nobel Prize.

Here’s a portion of what Mr. Krugman wrote on Twitter a few days ago (the bracketed areas are my edits to spell out his abbreviations. It’s kind of wonky, but I think you’ll get the gist:

“Maybe [Democrats] should have fought harder for more weeks of [Unemployment Insurance], but I don’t see the harm in borrowing some more money at negative real interest rates; at least some of it will go to people who need it…Increasing the checks from $600 to 2K would be a fiscal stimulus of <2% of GDP — and a fairly low-multiplier stimulus, [because] many will save their checks. So yes, it might give an already high-employment economy extra fuel, but not that much…”

After politely disagreeing with Summers’s hypothesis, Krugman calls BS as only a Nobel laureate can:

“Wait, there’s more. While I’m optimistic for the 2nd half of 2021, there’s good reason to believe that the economy was suffering from persistent weakness of demand pre-pandemic. 

It’s called secular stagnation, an idea pushed by…Larry Summers. In a [secular stagnation] economy you actually want the government pushing up demand with deficit spending, even when there isn’t a crisis. 

Better if that spending takes the form of public investment, but as with extended [Unemployment Insurance], that’s not on the table right now. So sending most people $2K checks isn’t great policy, but it’s not a “big mistake.” And it’s politically popular, so it makes sense for [Democrats] to highlight [Republican’s] refusal to do it.”

President Trump finally signed off on the relief package late Sunday night. This week, forty-four House Republicans joined the Democratic majority to pass a stand-alone bill for $2,000 relief checks by a two-thirds majority. 

There’s a strong possibility that Mitch McConnell will kill the bill in the Senate. 

But stop and let that sink in for a minute: over forty Republicans were more progressive on stimulating the economy than the economic advisor to the Democratic President-elect.

Granted, it’s probably a one-off, but maybe President-elect Biden should be more careful about his economic advisors.