Playbook PM: Does the WH owe Larry Summers an apology?

From: POLITICO Playbook - Wednesday Nov 10,2021 06:39 pm

Nov 10, 2021

By Ryan Lizza, Garrett Ross and Eli Okun

Presented by

On Feb. 4, as President JOE BIDEN’s nearly $2 trillion stimulus bill was making its way through Congress, LARRY SUMMERS took to the Washington Post with a warning:

“[W]hile there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability. This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem. But given the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply. Stimulus measures of the magnitude contemplated are steps into the unknown.”

It was better, Summers argued, to take some of the short-term ARP money that risked fueling inflation and devote it towards the longer term policies in the follow-up legislation that became BIF and BBB.

The reaction from the White House was fierce. Top advisers rushed to the cameras to push back. Summers was “flat-out wrong” that Biden’s team was “dismissive” of inflation risk, said economic adviser JARED BERNSTEIN, who repeated what would become the Biden mantra on the stimulus: “the risks of doing too little are far greater than the risks of going big.”

Privately, White House officials were withering in their attacks on Summers.

The White House continued to downplay inflation throughout the spring and summer. “We think the likeliest outlook over the next several months is for inflation to rise modestly,” Bernstein wrote in April, “and to fade back to a lower pace thereafter.” The following month, when asked about inflation concerns, White House press secretary JEN PSAKI said, “Our economists have conveyed that they feel that the impact of our proposals will be transitory.”

They were wrong.

Finally in August, with inflation showing no signs of the tapering Berstein predicted, with Summers arguing he may have understated the inflationary risks, and with polls showing that voters wanted Biden to focus on rising prices, the president finally shifted. His infrastructure and reconciliation packages, he now argued, were actually designed to fight inflation.

“If your primary concern right now is inflation, you should be even more enthusiastic about this plan,” the president said.

This morning, the Labor Department announced that the “consumer price index, which is a basket of products ranging from gasoline and health care to groceries and rents, rose 6.2% from a year ago,” CNBC’s Jeff Cox reports — more than experts had expected, and the nation’s highest annual inflation rate since November 1990.

In a statement this morning, Biden again tried to spin the news as a call to arms to pass the reconciliation package: “Going forward, it is important that Congress pass my Build Back Better plan, which is fully paid for and does not add to the debt, and will get more Americans working by reducing the cost of child care and elder care, and help directly lower costs for American families by providing more affordable health coverage and prescription drugs.”

— Where Americans are seeing the most inflation (year over year): gasoline prices are up 49.6% … fuel oil up 59.1% … utility natural gas up 28.1% … used cars and trucks up 26.4% … beef prices are up 20.1% … pork up 14.1% … bacon up 15.4% … chicken up 8.8% … eggs up 11.6% … milk up 4.3% … apples up 6.7% … coffee up 4.7% … peanut butter up 6% … baby food up 7.9% … prices for furniture and bedding costs had their biggest jump since 1951 … prices for new cars and trucks had their biggest jump ever … More from BLS

— Bleak news as winter arrives: “The Energy Department forecasts that heating bills will be up to 54% higher this winter than last, as a result of higher energy prices and somewhat cooler temperatures,” writes NPR’s Scott Horsley.

— The BBB might now be a harder sell. Sen. JOE MANCHIN (D-W.Va.), for instance, is not happy: “By all accounts, the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse. From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.” More from WaPo’s Seung Min Kim, Jeff Stein and Tyler Pager

There is a lesson here about the insularity of this White House: Summers was correct about inflation, but Biden’s economists dismissed him and some attacked him personally. It took months for them to fully come around — and it only happened after Biden’s approval rating suffered from voters’ perception that he wasn’t attentive to their concerns, a shellacking in the off-year elections in which inflation was a top concern and blindingly obvious data like that released today.

Good Wednesday afternoon.

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THE WHITE HOUSE

THREE AMIGOS REASSEMBLE — Next Thursday, Biden will host Canadian PM JUSTIN TRUDEAU and Mexican President ANDRÉS MANUEL LÓPEZ OBRADOR at the White House to discuss “the coronavirus pandemic, climate change, immigration and economic growth” in the first joint meeting of the three countries’ leaders since 2016, AP’s Aamer Madhani and Zeke Miller report.

WHERE AMERICA IS MIA — On the world stage, Biden is largely going it alone at the moment. The Senate so far “has confirmed only a fraction of Mr. Biden’s nominees, while the president has yet to nominate ambassadors to many other countries,” WSJ’s Courtney McBride writes . And while the vacancies haven’t produced any overarching issues, the absences are felt in smaller ways. “Foreign service officers in temporary assignments lack the status and access of a Senate-confirmed ambassador. Governments that adhere to strict protocol won’t permit diplomats below the level of ambassador to meet with heads of government or foreign ministers. And in a delicate situation, an ambassador is seen as representing the president.”

BIDEN VS. OPEC — As gas and heating-oil prices rise to their highest levels since 2014, Biden is “urging the Organization of the Petroleum Exporting Countries to increase production to ease shortages and lower prices. OPEC has so far rebuffed those appeals,” report WSJ’s Benoit Faucon and Timothy Puko. “The White House has limited options for a quick fix. What’s more, Mr. Biden’s calls for OPEC to pump more oil have opened him to brickbats from the domestic oil industry, which says that his energy policies aimed at slowing climate change will worsen shortages.”

CLIMATE FILES

WHAT DO YA HAVE ON DRAFT? — A draft of the final document that will wrap up the COP26 climate summit was released today, showing that leaders will express “alarm and concern” over how bad things already are, AP’s Seth Borenstein, Aniruddha Ghosal and Frank Jordans report in Glasgow. “The early version of the document circulating at the negotiations in Glasgow, Scotland, also impresses on countries the need to cut carbon dioxide emissions by about half by 2030 — even though pledges so far from governments don’t add up to that frequently stated goal. In a significant move, countries would urge one another to ‘accelerate the phasing out of coal and subsidies for fossil fuels’ in the draft, though it has no explicit reference to ending the use of oil and gas.”

DON’T MISS POLITICO’S SUSTAINABILITY SUMMIT: Join POLITICO's Sustainability Summit on Tuesday, Nov. 16 and hear leading voices from Washington, state houses, city halls, civil society and corporate America discuss the most viable policy and political solutions that balance economic, environmental and social interests. REGISTER HERE.

ALL POLITICS

MAKING HISTORY — KIMI COLE is launching a campaign for lieutenant governor in Nevada and seeking to break a barrier for the transgender community. “Cole, the chair of the Nevada Democratic Rural Caucus, would be the first openly transgender statewide elected official in the country if she won, according to her campaign,” Holly Otterbein writes . “‘We’re setting some precedents, obviously,’ said Cole, who shared her launch first with POLITICO. ‘But it’s not the key issue. People will focus on something like that and put a label on it and think they know what’s going on. I’ve been working around the state and across the aisles for so long.’”

WATCH: House GOP plots to keep advantage for 2022 midterms: The GOP saw the stirrings of a full-fledged suburban revival from Virginia to New Jersey after their gubernatorial elections last week. Now, Republicans could hardly be better poised to recapture the House majority. This week, Ally Mutnick joins Ryan to break down what advantages Republicans have heading into the 2022 midterms.

CONGRESS

SCOOP — Natalie Fertig, POLITICO’s ace cannabis reporter, writes that Sen. ELIZABETH WARREN (D-Mass.) “called on President Joe Biden today to make good on his campaign platform that no one should be in jail for cannabis-related crimes by pardoning all non-violent federal cannabis offenders.” Warren sent a letter to the president asking him to use his pardon power to honor the campaign promise. “Our country’s cannabis policies must be completely overhauled, but you have the power to act now,” she wrote in the letter, which was also signed by fellow Democratic Sens. ED MARKEY (Mass.) and JEFF MERKLEY (Ore.).

A message from Altria:

Altria’s companies are leading the way in moving adult smokers away from cigarettes toward less harmful choices. See how we’re moving.

THE PANDEMIC

THE MANDATE PUZZLE — At the VA Department, the agency is trying to fall in line with Biden’s mandate that all federal employees get vaccinated. The “VA now says that 90 percent of all of its 422,000 workers have either uploaded their validation or sought a religious or health exemption, according to numbers provided to POLITICO,” Natasha Korecki reports . “The persistence of a (at least) 10 percent unvaccinated pool of VA workers represents a narrow but troubling gap that has been seen after similar vaccine mandates were instituted for government contractors and large private businesses. And it once more shows how data on vaccine mandate compliance has become a Rorschach test for the Covid fight.”

— Biden’s vaccine mandate for companies applies to those that have 100 or more employees. But what if you employ, say, 99? While the rule doesn’t necessarily apply to them, it is something of a gray area, NYT’s Emma Goldberg reports — one “that has left some companies on the cusp fielding calls from wary employees. Some bosses are weighing whether to delay hiring to keep head counts in the 90s as they grapple with people who remain resistant to vaccination, and want assurances that the mandate will not apply to them. … The vast majority of American employers — nearly six million of them — do not meet the 100-worker standard.”

BEYOND THE BELTWAY

HATE GETS A PLATFORM IN COURT — The federal civil trial in Charlottesville, Va., over the deadly 2017 Unite the Right rally has turned into a stage for white supremacists, WaPo’s Ellie Silverman writes . “Some of the defendants have been ousted from social media such as Facebook and the dating site OkCupid, but in this courtroom, they’ve found a new platform to amplify their racist views, put on performances they boast about on podcasts, radio shows and in live during-the-trial chats, and to attack their opponents. … Hundreds of people are listening to the daily public audio broadcast of this trial brought by people who intend to hold white supremacists accountable for the rally violence.”

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TRUMP CARDS

STEELE DOSSIER UPDATE — Russian foreign policy expert IGOR DANCHENKO “pleaded not guilty Wednesday to providing false information to the FBI as it investigated ties between the 2016 Trump presidential campaign and Russia,” Josh Gerstein reports. Judge ANTHONY TRENGA “set a trial in the case for April 18, but there were immediate indications that the pretrial proceedings in the case could drag out due to the need to produce a large volume of documents about the underlying investigation.”

PLAYBOOKERS

SPOTTED: Former President George W. Bush was the keynote speaker at the Jefferson Educational Society Global Summit speaker series in Erie, Pa., on Tuesday night, where he was introduced by former Pennsylvania Gov. and DHS Secretary Tom Ridge , who is an Erie native. Pic … Also in attendance: Sen. Pat Toomey (R-Pa.), Steve Scully (who interviewed Bush), Andrew Card, Kathleene Card, Michelle Ridge, Lesley Ridge, Mark Holman, Ed Cash, Ferki Ferati, Charles Brock, Justin Klamerus, Ginny Thornburgh, Becky Wolfkiel, Homer Mosco and Arlene Mosco.

SPOTTED at a screening of and reception for the new movie “Hive” at the Ritz-Carlton Georgetown on Tuesday evening: Kosovar President Vjosa Osmani, Dua Lipa, Blerta Basholli, Yll Uka, Yllka Gashi and Fahrije Hoti.

MEDIA MOVE — Brittany Shepherd will join ABC News as a reporter in the network’s political unit. She most recently was at Yahoo News.

TRANSITIONS — Zachary Kiser is now director of government relations and advocacy for NephCure Kidney International. He is a House Select Subcommittee on the Coronavirus Crisis and Sherrod Brown alum. … Colin Driscoll is now district scheduling and outreach coordinator for Rep. David Cicilline (D-R.I.). He most recently was supervisor at the Concannon Fitness Center at Providence College and is a former intern for Cicilline.

ENGAGED — Pat Maillet, legislative counsel for Rep. Betty McCollum (D-Minn.), and Parker Van de Water, an administrative assistant for the House Appropriations Committee, got engaged on Saturday in front of the Capitol. The two initially bonded over a shared love of appropriating, spotting dogs around the Capitol complex and exploring D.C. together. Pic

WELCOME TO THE WORLD — Michelle Patterson, director of science and clinical external comms at Pfizer, and Joe Patterson, manager of public affairs at Friends of Cancer Research, welcomed Avery Charles Patterson on Monday. He came in at 6 lbs, 13 oz. Pic