Larry Summers: 'least responsible' Economic Policy In 40 Years

Summers was on the record before ARPA was passed that it was too big:

Summers calculated that in 2009, the gap between actual and estimated potential output was $80 billion a month and that the Obama stimulus covered about half of the shortfall. 

At the moment, Summers estimates the gap to be at $50 billion a month and said the Biden stimulus would address three times that.

Furthermore, Summers noted that in 2009, unemployment was skyrocketing and projections of future consumer spending looked bleak. 

In the current climate, unemployment is falling and economists believe consumers could be poised to start spending some of the $1.5 trillion in accumulated savings from the lockdown.

And this was what he said last week on PBS, and it's not exactly anti-Democrat:

“I think this is the least responsible macroeconomic policy we’ve had in the last 40 years,” Summers said. 

“I think fundamentally, it’s driven by intransigence on the Democratic left and intransigence and completely unreasonable behavior on the whole of the Republican party,” he continued.

“There are more risks in this moment that macroeconomic policy itself will cause gray consequences than I can remember,” Summers said. “There’ve been terribly serious moments in the past, but then macroeconomic policy was trying to stabilize things.” 

“Now there’s the real risk that macroeconomic policy will be very much destabilizing things,” he concluded.

In principles, we talk about how the problem with the slowness of politics is that the same policy can be countercyclical at one point in the business cycle, and procyclical a few months later as conditions improve. That's what Summers is driving at.

Here's a longer piece from the Washington Post entitled "How Larry Summers Went from Obama's Top Economic Advisor to One of Biden's Loudest Critics". It's interesting, but I also found that they seemed to quote a whole lot more pro-Biden/ARPA people than they did people who support Summers' position.

Summers was also the author of a 57 page memo that was not supposed to see the light of day, but which was outed in The New Yorker in 2012. It was written while Obama was still President-elect, and Summers was part of the transition team. It asserted that the practical limit to how big the "Obama stimulus package" could be was about a third smaller than it ultimately was. Summers got outvoted then too. But today, the impression of the effects of the "Obama stimulus package" amongst economists is that it was vastly overrated. To me that sounds like Summers was right. Of course, the "Biden stimulus package"  is about 140% bigger than the "Obama stimulus package", it was preceded by 2 big stimulus packages, the economy is only about 25% larger now than it was then, and the unemployment rate ... even after including people who have dropped out of the labor force is lower than it was in 2009-10.

Lastly, you might want to go to this transcript of an interview with Ron Suskind. He wrote an insider account of the Obama administration in 2014. In it he discusses Summer's openly voiced view that the Obama administration lacked "adults in the room". (You don't have to read the whole thing: just do a CTRL+F and search for occurrences of 'adult' in the webpage). It kind of seems like the teenagers have finally ditched the adults in the Biden White House.