AP
- Biden's economic agenda could make inflation worse, former Treasury Secretary Larry Summers said.
- That's because Biden's policy is based on wrong principals, he said at a recent event.
- "We do not have a problem of a shortfall of jobs … We do have a problem with costs."
President Joe Biden's economic agenda is "increasingly dangerous" and could make inflation worse, according to Larry Summers.
At a recent event hosted by the Peterson Institute for International Economics, the former US Treasury Secretary said he largely agrees with the Inflation Reduction Act and the CHIPS Act, which encourage domestic manufacturing.
But Summers said he disagrees with the principle behind those policies, warning that they could contribute to higher prices.
"It is wrong to suppose that manufacturing-based economic nationalism is a route to higher incomes or better standards of living for the middle class," he said on Tuesday, per CNN's report. "We do not have a problem of a shortfall of jobs … We do have a problem with costs."
The manufacturing policies also ignore the benefits of globalization and trade with other countries, which has lowered inflation, Summers said.
"That is why I am so concerned by the administration's attitudes, or non-attitudes, toward trade," he added.
Summers also took issue with Biden's new antitrust guidelines, saying they "discard" the traditional focus lowering consumer prices.
"Yes, we should enforce the antitrust law more than we have over the last 30 years ... But we should do that in service of a doctrine of higher incomes through lower costs for consumers," he added.
A White House spokesperson told CNN that investments in infrastructure, clean energy, and chip production are making the US economy more resilient, noting that the pandemic and Russia's war on Ukraine have shown how supply chains can be disrupted.
Despite strong criticism from some commentators, other economists have defended Biden's economic plan. Bidenomics has largely been a success, Nobel economist Paul Krugman said, given the dramatic fall in inflation over the past year.
The June consumer price index was up 3% from a year ago, still above the Fed's 2% target but down sharply from the 9.1% annual rate in June 2022.