Larry, Larry quite contrary

From: POLITICO West Wing Playbook - Friday May 28,2021 09:32 pm
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West Wing Playbook

By Alex Thompson , Theodoric Meyer and Victoria Guida

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Welcome to POLITICO’s West Wing Playbook, your guide to the people and power centers in the Biden administration. Did someone forward this to you? Subscribe here! Have a tip? Email us at westwingtips@politico.com.

LARRY SUMMERS isn’t in the Biden administration, but he is in their heads.

Some in the White House dismiss him as old news. Others continue to consult him. At least a few worry that his critiques could be right.

Whatever one thinks of him, BILL CLINTON ’s Treasury secretary and BARACK OBAMA’s first National Economic Council director has become an unlikely avatar of the loyal opposition to the Biden White House.

He has said JOE BIDEN’s signature $1.9 trillion American Rescue Plan was too large and could lead to inflation, and went so far as to tell Bloomberg News in March, “I think this is the least responsible macroeconomic policy we’ve had in the last 40 years”—a quote Republicans gleefully repeated. He reiterated his warning of the dangers of inflation this week in a Washington Post op-ed, writing that “the focus of our macroeconomic policy needs to change.”

The dominant view inside the West Wing is that Summers concerns are misplaced and that he should sit this one out. Longtime Summers critics believe he’s been sounding off because he’s not in the administration.

A White House official said the administration still believes that the risk of doing too little remains much greater than the risk of inflation. And Federal Reserve Chair JEROME POWELL says that higher inflation should only be temporary while the economy works out the kinks of emerging from the pandemic, although the central bank is watching incoming data closely.

Still, some administration officials have quietly wondered if Summers was right about the rescue package being too big. While many outside economists back Biden’s approach, others also say Summers represents a silent minority of center-left economists who would speak out more if not for fear of crossing the White House.

“A lot of what he's saying is what everyone is saying over coffee and whispering,” said one prominent economist who proved the point by only saying so anonymously. “He’s an outlier in the public debate because the people that have megaphones aren't saying this on the Democratic side, but he's well within a consensus view in the economics profession.”

KEN ROGOFF , Summers’ colleague at Harvard who has also been criticized by the ascendant left-wing of the party, told West Wing Playbook that “it's very courageous of him to make [his arguments] in this world where there's this, basically, cancel culture, and there are plenty of people who probably want to do that to Larry.”

Rogoff said that he largely agreed with the Biden team’s agenda but also believes that Biden’s first legislative package was too big. “It clearly was ill-timed, was too big,” he said before noting the optics may ultimately work to Biden’s benefit. “Politically, it may have been very smart.”

Summers may not find his role as the object of progressive ire all too uncomfortable, considering how often he has played it before. But the fact that he’s enduring it while outside the circles of power and not within them is a sign of how far economic policy-making has shifted since the Obama administration.

In 2008, Obama was well aware of Summers’ divisive reputation—from his pursuit of deregulation to his theories about why women weren’t better represented in the field of science—but concluded, "I needed him, his country needed him,” as he wrote in his recent memoir. Obama wrote that he even promised (at the suggestion of RAHM EMANUEL) to nominate Summers as the next chair of the Federal Reserve if he first took the NEC chair position, a promise he later reneged on in the face of opposition from the left, particularly Sen. ELIZABETH WARREN (D-Mass.).

Now, the Biden administration is more likely to approvingly blast out an email with the latest PAUL KRUGMAN column than the latest Summers one (Krugman, notably, did not outright dismiss inflation fears in his column today). While senior Biden officials like BRIAN DEESE and GENE SPERLING are colleagues and friends with Summers, the administration is also chock-full of Summers critics—economists who believe that decades of Democratic economic policy that failed to address wage stagnation, outsourcing and rising inequality led to the rise of DONALD TRUMP.

But Summers has some prominent names in his corner too.

The inflation fears he has articulated—which have been seized on by Republicans—were also echoed by WARREN BUFFETT recently said in remarks that caught Wall Street’s attention. . “We are seeing very substantial inflation,” Buffett said.

The White House has taken notice too. Biden tried to counter such concerns in a speech Wednesday in Cleveland by pointing to rising wages and making the case that their economic goals were loftier than micro-managing inflation. “We want to get something economists call ‘full employment,’” he said, referring to an economic state where enough people have jobs that employers start to raise wages to attract workers.

The White House said the speech was not a response to any one person or criticism but rather a new articulation of the values Biden has always run on.

Still, the remarks were an implicit departure from recent Democratic administrations that had folks like Summers.

BHARAT RAMAMURTI, a deputy NEC director who came from Warren’s team, tweeted afterwards: “I can’t remember the last President who so clearly and unequivocally embraced full employment as their economic goal.”

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PRESIDENTIAL TRIVIA

With the Partnership for Public Service

How many presidents were veterans of the Civil War?

(Answer at the bottom.)

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The Oval

POLITICS AT THE PUMP The White House tried to get ahead of stories about high gas prices as people travel over Memorial Day Weekend. Press Secretary JEN PSAKI blasted out a statement arguing that the increases aren’t really that bad.

“[W]hile prices have increased from the lows last year—as demand drastically dipped—prices at just about $3 per gallon are still well in-line with what they’ve been in recent decades.,” she said.

SOME BIPARTISANSHIP, FINALLY: Republican West Virginia Gov. JIM JUSTICE’s English bulldog, the inexplicably named BABYDOG , appears to have captured hearts in the White House today after the governor told West Virginians that “if you won’t do it for your family, you’ve got to get vaccinated for Babydog.”

“I haven't stopped thinking about Babydog since the moment I saw this tweet early this morning,” White House regional communications director IKE HAJINAZARIAN tweeted. “She's so perfect. She just wants you to get vaccinated.”

Filling the Ranks

The White House announced three nominations today, one of which dedicated WWP readers would have known about from yesterday’s newsletter: RUFUS GIFFORD to be the State Department’s chief of protocol, KATHLEEN MILLER to be the Pentagon’s deputy comptroller and LARRY TURNER to be inspector general at the Department of Labor.

Advise and Consent

AT LAST, LANDER CONFIRMED — The Senate confirmed ERIC LANDER to be Biden’s top scientist, after a long delay in his confirmation process , JULIA ARCIGA reports.

Biden announced Lander as his pick before he took office, but the nomination process was delayed, in part, because of questions about Lander’s relationship to JEFFREY EPSTEIN. Lander said he met Epstein twice and never took his money for research.

Lander will be the first director of the White House Office of Science and Technology Policy to be part of the president’s Cabinet. He was Biden’s last Cabinet nominee awaiting confirmation, but Biden’s Cabinet still isn’t complete — he hasn’t nominated an Office of Management and Budget director since NEERA TANDEN’s nomination fell through.

The Senate also confirmed several other nominees today: MICHAEL McCORD to be Defense’s comptroller; RONALD MOULTRIE to be undersecretary for intelligence and security; ANTON GEORGE HAJJAR to be a governor of the United States Postal Service; and several Foreign Service nominees.

 

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Agenda Setting

IT’S BUDGET DAY: Biden’s $6 trillion budget request stitches his most ambitious spending plans — his $2.3 trillion infrastructure plan, his $1.8 trillion families proposal and $1.5 trillion in discretionary spending to fund federal agencies for the upcoming fiscal year — into one massive proposal, CAITLIN EMMA reports.

The long-delayed document assumes a federal budget gap of more than $1 trillion for the next decade. SHALANDA YOUNG , Biden’s acting Office of Management and Budget director, told reporters today that it would reduce the deficit in the long run “because its front-loaded investments are more than paid for through permanent tax reform that will ensure corporations and the wealthiest Americans pay their fair share.”

MORE ANALYSIS: Biden’s budget projects economic growth of two percent or less per year for most of the next decade, after factoring in inflation, BEN WHITE notes. That’s not much different than the sluggish pace the U.S. endured in the decade after the financial crisis and the Great Recession. Some analysts suggested that the administration is essentially admitting that its proposed surge in federal spending won’t actually boost the economy much at all.

Council of Economic Advisers Chair CECILIA ROUSE told reporters the economic forecasts were made in February by the CEA, the Office of Management and Budget, and the Treasury Department and that it assumed some of Biden’s spending plans but not all of them.

What We're Reading

'Pretty damn scary': Failure of Jan. 6 commission exposes Senate wounds (Our own Burgess Everett and Marianne LeVine)

Eyeing China, Biden defense budget boosts research and cuts procurement (Defense News’ Joe Gould)

U.S. inflation gauge jumps as recovery accelerates (Financial Times’ James Politi and Colby Smith)

Where's Joe

He and Virginia Gov. RALPH NORTHAM delivered remarks in Alexandria on the progress of Virginia’s coronavirus vaccination efforts.

Later, Biden and first lady JILL BIDEN, headed to Hampton, Va., where Biden spoke at the Joint Base Langley-Eustis. From there, the two headed to Wilmington, Del.

Where's Kamala

She delivered the keynote address of the U.S. Naval Academy graduation at Navy-Marine Corps Memorial Stadium in Annapolis, Md. She traveled with her sister MAYA HARRIS and brother-in-law TONY WEST along with her director of speechwriting KATE CHILDS GRAHAM.

The Oppo Book

SAMANTHA POWER, Biden’s U.S. Agency for International Development director, is a working mother and sometimes geopolitics complicates parenthood.

Power described in a 2019 interview with Time magazine how her oldest son, DECLAN , would attempt to get her attention while she was working: “I’m on the phone,” during talks on Russian sanctions, “and Declan is frustrated yet again that he can’t get my attention and he marches away saying, ‘Putin, Putin, Putin! When is it going to be Declan, Declan, Declan?'”

Power is back in government and Putin remains president, so Declan—sorry, bud—you may have to wait a bit longer.

HELP US OUT — Do you have a story — that’s potentially embarrassing but not too mean or serious — you think we should use for an "Oppo Book" item? Email us: westwingtips@politico.com

Trivia Answer

Seven — ANDREW JOHNSON, ULYSSES S. GRANT, RUTHERFORD B. HAYES, JAMES GARFIELD, CHESTER ARTHUR, BENJAMIN HARRISON and WILLIAM MCKINLEY.

We want your tips, but we also want your feedback as we transition to West Wing Playbook. What should we be covering in this newsletter that we’re not? What are we getting wrong? Please let us know.

Edited by Sam Stein

 

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