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**FEBRUARY 5, 2021**

Kuttner on TAP

Larry Summers's Churlish Payback to Biden

****

Larry Summers was quietly dumped from Joe Biden's economic team last
year. I had written an investigative article
on how
Summers had managed to fall upwards despite successive pieces of
disastrous policy advice-and why he should be kept as far from a Biden
administration as possible. Mercifully, Team Biden agreed.

Now Summers, in a Washington Post column
,
has neatly proven my point. He's also proven once again that he's a
vindictive SOB.

In the column, as Biden is fighting hard to deliver on his $1.9 billion
relief package, Summers choses this moment to argue that the package is

**too big**. Thank God Summers is only purveying his advice in the pages
of

**The Washington Post**, and not from inside the administration where
someone might take him seriously.

But Summers has also proven once again what a lousy economist he is.
After a characteristically disingenuous opening paragraph,
congratulating Biden for his boldness ("Its ambition, its rejection of
austerity orthodoxy and its commitment to reducing economic inequality
are all admirable"), Summers then sticks in the knife.

This admirable, bold package is too large by a factor of three. Why?
Summers quotes misleadingly from a Congressional Budget Office analysis.
Please read this carefully:

[The] Congressional Budget Office estimates suggest that with the
already enacted $900 billion package
-but
without any new stimulus-the gap between actual and potential output
will decline from about $50 billion a month at the beginning of the year
to $20 billion a month at its end. The proposed stimulus will total in
the neighborhood of $150 billion a month ... at least three times the
size of the output shortfall.

Got it? The Biden proposal is three times the projected loss of economic
output, so it's three times too big.

But most of the Democrats' proposal is not about a macroeconomic gap.
It's directed toward vaccine supply and distribution, and relief for
struggling schools and flattened state and local budgets and public
services. Only about $420 billion goes for direct payments to
individuals, and some of that will replenish savings or pay down debt
(as opponents of the Biden plan have argued in other contexts).

Summers is a macroeconomist, but there's more to an effective economy
and society than macro. Help with schools and vaccines may have partial
spillover into macro stimulus, but it is also needed for its own sake.

Lyndon Johnson famously said, when the question arose of whether to
reappoint J. Edgar Hoover as FBI director, "Better to have him inside
the tent, pissing out."

In Summers's case, it's better to have him outside the tent, pissing
in the wind.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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