Former Treasury Secretary Larry Summers, who served as head of the National Economic Council during the Obama administration, has slammed the Biden White House for being “behind the curve” on the inflation ravaging the economy.
“I think we’re speeding down the road at a really rapid rate,” Summers told CNN’s “Cuomo Prime Time” Wednesday. “It’s kind of a downhill road. And it’s not going to be so easy to put the brakes on here. And that’s why I’m concerned.”
Summers spoke on the same day that the Labor Department announced that its Consumer Price Index, which measures the cost of a basket of goods and services as well as energy and food, had jumped 6.2 percent in October from a year earlier — the biggest 12-month rise since 1990.
It marked the fifth month in a row that inflation had surged by more than five percent.
“I think that the policymakers in Washington, unfortunately, have almost every month been behind the curve,” Summers said Wednesday. “They said it was transitory; it doesn’t look so transitory. They said it was due to a few specific factors; doesn’t look to be a few specific factors. They said when September came and people went back to school, that the labor force would grow, and it didn’t happen.”
Summers has repeatedly sounded the alarm over inflation while the Biden administration has pushed three big spending bills since taking office in January.
One month after Biden’s inauguration, the former treasury secretary warned in a Washington Post op-ed that the administration’s $1.9 trillion COVID-19 stimulus plan could cause “inflationary pressures of a kind we have not seen in a generation.”
In March, Summers told the same outlet that the aid posed “substantial risks” of price spikes.
“This might not have struck as much a nerve if it didn’t reflect concerns that were widely felt,” he said at the time. “I know the bathtub has been too empty. But one has to think about what the capacity of the bathtub is and how much water we’re trying to flow into it.”
“The traditional role of the Fed [Federal Reserve] is to remove the punch bowl before the party gets good, right?” Summers told Axios in May. “They have announced that their new policy is to remove the punch bowl only after they have clearly seen a number of people staggering around drunk.”
Despite his warnings, Summers has backed the $1.2 trillion bipartisan infrastructure bill that recently passed Congress, as well as the $1.75 trillion social spending plan that House Democrats hope to vote on next week.
“The 10 years of the two spending bills together, A, are less than the one year of what they did last spring and, B, unlike what they did last spring, are paid for by tax increases,” he told CNN Wednesday. “I don’t think that’s an inflation problem. I think a lot of it is vitally needed investments in the future of our country.”
Still, Summers encouraged the administration to take stronger actions to combat inflation before it gets worse.
“My experience is that you should hope for the best and plan for something much less than the best,” he said. “I think that means stronger actions by the Fed, it means the administration has to be thinking about inflation.”
Earlier Wednesday, Biden admitted the stimulus payments were a key contributor to high inflation, but still backed sending out the checks.
“The irony is people have more money now because of the first major piece of legislation I passed. You all got checks for $1,400. You got checks for a whole range of things,” the president said during a speech in Baltimore.
“If you’re a mom and you have kids under the age of 7, you get $300 a month and if it’s over 7 to 17, you’re getting $360 a month,” he said, misstating the second payment amount, which is $250 per month.
“It changes people’s lives. But what happens if there’s nothing to buy and you got more money to compete for getting [goods]?” Biden asked. “It creates a real problem.”