Former Clinton Treasury Secretary Larry Summers Comes Out Against $2,000 Stimulus Checks

Topline

 Liberal economist Larry Summers said Thursday sending out $2,000 stimulus checks to Americans would be a “mistake,” making him the first prominent Democratic figure to come out against more direct relief.

Larry Summers, former U.S. Treasury secretary, speaks during an Economic Club of New York event in … [+] New York, U.S., on Wednesday, May 16, 2018

Photographer: Mark Kauzlarich/Bloomberg © 2018 Bloomberg Finance LP Key Facts

In an interview with Bloomberg, Summers argued the federal government shouldn’t focus on boosting consumer spending with direct assistance because it runs the risk of a “temporary overheat” of the economy.

Summers noted he’s not “enthusiastic” about $600 checks either, which both parties in Congress already agreed to, for the same reason.

Summers advised President-elect Biden’s campaign, according to Bloomberg, and previously served as Bill Clinton’s Treasury Secretary and Obama’s National Economic Council director.  

Summers is generally seen as a left-of-center economist—but he’s previously drawn criticism from progressives for favoring policies that helped big banks as well as mismanaging stimulus negotiations during the Great Recession under Obama. 

Crucial Quote

“You think about it, the $908 billion stimulus bill probably would pay out $200-250 billion a month for the next three months. The level of compensation is running about $30 billion a month below what we would have expected it would. GDP is running about 70 billion a month below what we would have expected it would … 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,” he said.

Chief Critics

Progressives immediately slammed Summers for being out-of-touch with struggling Americans on the brink of eviction, homelessness and hunger without assistance from the government.

Key Background

After months of negotiations, Republicans and Democrats in Congress finally agreed on a bipartisan Covid-19 relief bill with $600 checks to individual Americans. But in a surprise move, President Donald Trump this week threatened to veto the measure unless it includes $2,000 checks, blindsiding Republicans who fought against more relief. Democrats support the idea and they even brought it to an initial vote by unanimous consent, but House Republicans rejected it Thursday.