Lawrence Summers is probably not getting invited to any Georgetown cocktail parties any time soon. Bill Clinton's former treasury secretary, who chaired the National Economic Council under Barrack Obama, has more recently developed into a thorn in the side of his own party's big spending Progressives, especially those in the Biden administration.
It began quite early on: in March of 2021, just two months after Joe Biden entered the White House, Summers slammed the president's $1.9 trillion Covid relief package as, "the least responsible macroeconomic policy we’ve had in the last 40 years.” While sympathetic to "arguments for providing relief to those hurt by the economic fallout of the pandemic, investing in controlling the virus, and supporting consumer demand," Summers was clearly shocked by the degree to which "the policy discussion has not fully reckoned with the magnitude of what is being debated.”
The U.S. government had already spent a tremendous amount of money on Covid since the virus made its way to our shores from its origins in Wuhan, China. Lockdowns and other pandemic policies had increased unemployment and weighed down economic productivity. Meanwhile government indebtedness was way up. But here was the Biden administration, spending nearly $2 trillion at the stroke of a pen a full year into the pandemic apparently just because Donald Trump got to do it before him. It was utterly irresponsible.
Much to the annoyance of his fellow liberals, Summers continued to prophesy the advent of serious inflation. And to their even greater annoyance— it was clearly a shot at Summers when Biden claimed "no serious economist" believes "there’s unchecked inflation on the way"—he kept being proved right.
As inflation numbers skyrocketed, Summers pivoted to arguing that the administration and Federal Reserve weren't doing enough to address the real problem. In particular, he worried about the Fed's comparatively small increases in interest rates being too little, too late. He suggested that this might be because the Fed "still believes that inflation is in fact transitory and that it will evaporate as supply chains are restored." For Summers, this line of thinking "never seemed plausible, given accelerating residential and wage inflation and room for acceleration in the costs of health care, airfare and lodging. It seems even less plausible today, with war in Ukraine and Covid lockdowns in Asia."
I hope the Administration does not contribute to inflation macro economically by offering unreasonably generous student loan relief or micro economically by encouraging college tuition increases... Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.
Now the economist has begun to gesture at one of the key drivers of inflation, namely the significant increase in energy rates due to shortages at the point of consumption. “It’s kind of insane that we have truck and trains carrying oil all over this country, rather than constructing pipelines, which would permit accessing more resources and cheaper, safer transmission,” Summers told the Boston Globe’s Globe Summit earlier this month.
He's right once again. In fact, we at The Pipeline have argued that Biden's cancellation of Keystone XL (particularly if understood as a prefigurement of the administration's overarching anti-resource sector policy) was more or less the administration's "original sin," from which the rest of its economic woes and problems have flowed.
Of course, environmentalism is the contemporary Left's sacred cow, so even a prominent liberal like Summers calling for a course correction is unlikely to bring one about. Still, they can't say they weren't warned. Nor can we.