Biden ally Larry Summers, a former treasury secretary, said $2,000 stimulus checks would be a 'serious mistake' that could overheat the economy
Former Treasury Secretary Larry Summers Robin Marchant / Getty Images
Former US Treasury Secretary Larry Summers told Bloomberg Friday that $ 2,000 stimulus checks would be a "pretty serious mistake" for Americans.
Summers, who reportedly served as an advisor to President-elect Joe Biden's campaign, said boosting consumer spending was the wrong path to economic recovery.
The controls could overheat the US economy, he told Bloomberg.
US President Donald Trump has so far refused to sign a pandemic relief bill with $ 600 checks for Americans. The checks should be for $ 2,000 instead. The Democrats support larger checks.
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Larry Summers, the former Treasury Secretary who reportedly advised President-elect Joe Biden, believes that $ 2,000 stimulus checks are "a pretty serious mistake" that could overheat the US economy.
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Congress on Monday approved a $ 2.3 trillion pandemic relief package that included $ 600 checks for Americans in trouble. On Thursday, US President Donald Trump instead requested checks for $ 2,000 and refused to sign the bill. Democrats support these larger checks, and House spokeswoman Nancy Pelosi plans to vote on them Monday.
Summers, who served as Treasury Secretary at the end of Bill Clinton's presidency and director of the National Economic Council at the beginning of Barack Obama's administration, told Bloomberg it was better to be incentivized than not - but encouraging consumer spending through custom checks is the wrong way to go to keep the economy moving.
He said he was "not even sure I'm that excited about the $ 600 checks," let alone the $ 2,000 checks.
The bill "would likely pay out $ 200 billion to $ 250 billion a month for the next three months," Summers said.
"The amount of compensation is about $ 30 billion per month below what we would have expected. GDP is about $ 70 billion per month below what we would have expected ... We already have incentives, much more than just filling in the hole, "he said.
"And since a lot of the hole isn't from the fact that people don't want to spend, but because they can't spend - they can't catch a flight or go to a restaurant - I don't think that should necessarily be the priority in promoting Consumer spending is beyond our current level, "he said.
Delivering checks to Americans for $ 2,000 would be a "fairly serious mistake that would risk temporary overheating," he added.
Read more: Joe Biden hires around 4,000 political staff to work in his administration. So, 3 experts say you can increase your chances of getting one of these jobs.
Summers advised the Biden campaign this year, Bloomberg reported, but will not play a role in the Biden administration.
Progressive groups called on Biden in May to ditch Summers and criticized the former finance minister's economic record.
Democrats appear to agree on the idea of bigger economic controls, and a Democratic attempt to push them was blocked by Republicans in the House Thursday. Progressive Democrats in particular responded positively to Trump, saying the $ 600 checks weren't enough.
"When you see the two extremes match up, you can be almost certain that something crazy is in the air," said Summers, adding that "it's time to run for cover" when Sen. Bernie Sanders and Trump are coordinated.
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