Critique of Biden's Economic Policies by Larry Summers

Former U.S. Treasury Secretary Larry Summers has been openly critical of President Joe Biden's economic policies. Despite the notable decrease in the rate of inflation under Biden's leadership, Summers takes issue with two fundamental aspects of "Bidenomics."

Trade Agreements and Industrial Policies

Summers specifically critiques the rejection of free trade agreements that aim to reduce trade barriers both domestically and internationally. Additionally, he questions the shift toward industrial policies that prioritize domestic high-tech manufacturing in order to bolster national security and create well-paying jobs.

Support for Certain Acts

During a recent event hosted by the Peterson Institute for International Economics, Summers expressed his support for the Inflation Reduction Act and the CHIPS Act. He agrees with the inclusion of significant subsidies for green energy producers in the former, emphasizing the importance of a strong climate strategy for the United States. Likewise, he acknowledges the national security argument for producing semiconductors within the country as advocated by the CHIPS Act.

Concerns about Biden Administration's Approach

Summers urges a distinction between what he agrees with from the Biden administration's actions and what he believes to be a potentially hazardous administration doctrine. He argues that the current administration is neglecting the issue of inflation, which he considers a significant economic problem for the United States. Real wages for Americans, accounting for inflation, remain below pre-COVID-19 crisis predictions, according to Summers.

Manufacturing-based Economic Nationalism

Summers asserts that while environmental and supply-chain resilience concerns are valid, advocating for manufacturing-based economic nationalism is not the path to higher incomes or an improved quality of life for the middle class.

Overall, Summers maintains his criticism of President Biden's economic policies, cautioning against certain approaches and emphasizing the significance of addressing inflation and supporting sustainable economic growth.

Summers Laments Biden's Approach to Trade

Larry Summers, an experienced economist who served in economic advisory roles in both the Clinton and Obama administrations, has expressed concern over President Biden's lack of focus on trade. Summers believes that this nonchalant attitude is causing the administration to overlook the benefits of seeking new trade agreements with economic partners.

Despite successful political efforts to discredit free trade agreements, Summers argues that these agreements have actually lowered costs for U.S. consumers and helped create well-paying jobs domestically. He believes that the Biden administration's decision to maintain tariffs on certain Chinese goods, which were implemented during President Trump's tenure, is a missed opportunity for reducing inflation.

Summers emphasizes that the steel manufacturing industry employs only 1% of workers in comparison to other industries that rely on steel in their manufacturing processes. When steel prices increase due to protectionism, all these industries suffer. Thus, he suggests that maintaining tariffs on Chinese goods may inadvertently harm domestic industries.

Additionally, Summers criticizes the Biden administration's efforts to strengthen antitrust laws, viewing them as potentially "inflationary." He argues that the newly issued merger guidelines disregard the principle of lower consumer costs and greater consumer welfare as the foundation of antitrust policy.

While inflation has decreased from its 40-year high of 9.1% to 3% in June, according to the consumer price index, Summers highlights concerns that this decline may be attributed to unsustainable decreases in energy prices.