Thursday, April 7, 2022

POLITICO NIGHTLY: Larry Summers’ I-told-you-so inflation tour

 


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BY BEN WHITE

Presented by Human Rights Watch

Larry Summers

Larry Summers | Chip Somodevilla/Getty Images

WINNING TIME  Larry Summers, the human economic airhorn that keeps blowing in West Wing ears, is declaring vindication. Again.

The former Treasury secretary under President Bill Clinton and senior adviser and one-time Fed Chair candidate under President Barack Obama wrote in an op-ed today, noting that critics of his big inflation warnings were all wrong. And he, so far at least, has been dead-on accurate. Which he isn’t shy about reminding everyone.

In an interview with Nightly today, Summers blew off any concerns about declaring victory too often. He said it was important to take on critics’ objections to his inflation theories one by one.

He also noted that inflation wasn’t the only thing he got right: “What’s been less highlighted is my predictions that pushing for such a massive rescue act would endanger much of the Build Back Better agenda.” That’s exactly what happened, Summers said.

Inflation, he noted in his Washington Post op-ed, is way higher than the White House or Fed thought it would be. And predictions from President Joe Biden and Fed Chair Jerome Powell that inflation would be “transient” are now dead. It’s still here, and it’s getting worse.

Summers also isn’t ready to concede that Biden and the Fed are taking the problem seriously enough even now. “The question isn’t whether inflation will come down from about 8 percent on the current policy path,” Summers wrote in the latest example of a column that will be cursed and fumed over at the White House. “It is whether it will come down to an acceptable level. That’s a very different proposition.”

Summers in the interview gave the Fed some credit for its recent pivot to tightening mode. But he added that it isn’t enough yet. “They’ve come an enormously long way to recognizing reality,” Summers said. “But they still don’t have a realistic forecast of the relationship between the economy and inflation.”

The numbers back Summers up even as his arguments (as opposed to those of a much more White House-beloved columnist, Paul Krugman of the New York Times) have angered even Summers’ friends in the White House.

Summers went out of his way to poke at Krugman in the op-ed over the Nobel Prize-winning columnist’s seemingly new contention that only inflation expectations matter when talking about federal investments. Not current rates.

In the interview with Nightly, Summers said Krugman’s take on only caring about inflation expectations is inconsistent with Krugman’s “previous stance of yelling at people who make up new arguments to support previously held positions. Because it feels like that’s what he’s doing here.”

There have long been policy disputes between Krugman (and many on the left) and Summers on Summers’ views of the risks of inflation and ever-larger deficits. But it’s a bit personal as well, as Krugman has emerged as a hero of the administration and the left while Summers keeps getting beat up on.

Summers has been arguing since at least February 2021 that Biden’s big spending agenda plus strong post-Covid price pressure would drive inflation much higher very quickly. That’s exactly what’s happened as inflation hit close to 8 percent in February and could be closer to a scary 9 percent in March on soaring gas, food and housing prices. The Fed’s annual target for inflation is closer to 2 percent, and the central bank only just now started to bump up rates.

Summers first spiked the ball in an interview with POLITICO in July. “These figures and labor market tightness and the behavior of housing markets and asset prices are all rising in a more concerning way than I worried about a few months ago,” he said at the time. “This raises my degree of concern about an economic overheating scenario.”

Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at bwhite@politico.com, or on Twitter at @morningmoneyben.

 

A message from Human Rights Watch:

There is food in the market, but families have no cash to buy it. Health workers are ready to save lives, but there are no salaries or supplies. Learn More.

 
WHAT'D I MISS?

A view of the monument with a signature which reads

A view of the monument with a signature which reads "Borodianka" at the entrance to the town in Ukraine. | Anastasia Vlasova/Getty Images

— Biden under pressure to punish Russia until Putin’s gone: Evidence that Russian troops murdered hundreds of Ukrainian civilians is leading some U.S. lawmakers to insist that America and its allies keep sanctions on Moscow so long as Vladimir Putin remains in power — even if he withdraws from Ukraine. The sentiment is likely to grow in a Congress where anti-Putin feeling is strong and bipartisan. It could put the White House in a tricky position, making it potentially harder to bring peace to Ukraine by enticing Putin through sanctions relief.

— Mariupol’s dead put at 5,000: The mayor of the besieged port city of Mariupol put the number of civilians killed there at more than 5,000 today, as Ukraine collected evidence of Russian atrocities on the ruined outskirts of Kyiv and braced for what could become a climactic battle for control of the country’s industrial east. Ukrainian authorities continued gathering up the dead in shattered towns outside the capital amid telltale signs Moscow’s troops killed civilians indiscriminately before retreating over the past several days.

— Satellite companies join the hunt for Russian war crimes: The expanding constellations of commercial spy satellites that have been capturing high-resolution photos and radar images of Russian troop movements are proving to be a game-changing tool for international authorities and human rights groups that are aggressively working to document Russia’s targeting of civilians in Ukraine.

 

INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED:  Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today.

 
 

— Democrats spar with oil industry on gas prices, but GOP blames Biden: Democrats tore into oil company executives for high gasoline prices at a hearing today of the House Energy and Commerce Committee, while Republicans used the event to try to pin the blame on Biden’s green energy push. The hearings are congressional Democrats’ latest attempt to shield themselves from voters’ anger over the surge in pump prices to record highs above $4.33 a gallon last month after Russia invaded Ukraine.

— Judge issues first outright acquittal of Jan. 6 riot defendant: Following a two-day bench trial, New Mexico engineer Matthew Martin was acquitted today on four misdemeanor charges by Judge Trevor McFadden . Martin claimed that he thought police allowed him into an entrance near the Capitol Rotunda. McFadden said that, based on video of the scene, that assertion was at least plausible and prosecutors failed to prove the case beyond a reasonable doubt.

— GOP laying early plans for Hunter Biden probes: Top House Republicans are vowing to dig into the overseas business dealings of the president’s son if they claim the majority next year, as is expected — picking a battle with the Justice Department and Democratic lawmakers around some of the same themes that defined the Trump administration’s tempestuous relationship with Congress. The younger Biden’s connections to a Chinese energy company are already under the DOJ’s microscope, with a grand jury hearing testimony earlier this year as part of an investigation into his tax dealings and possible violations of foreign lobbying laws.

 

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NIGHTLY NUMBER

37 percent

The percentage of registered voters polled who say Justice Clarence Thomas “definitely” should remove himself from any cases related to the 2020 presidential election in the wake of revelations that the justice’s wife pushed Trump administration officials to illegally overturn Biden’s victory, according to a new POLITICO/Morning Consult poll. Sixteen percent said he “probably” should, 28 percent of voters said he should not, and 19 percent don’t know.

 

DON'T MISS ANYTHING FROM THE 2022 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is excited to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage and insights from the 25th annual Global Conference. This year's event, May 1-4, brings together more than 3,000 of the world’s most influential leaders, including 700+ speakers representing more than 80 countries. "Celebrating the Power of Connection" is this year's theme, setting the stage to connect influencers with the resources to change the world with leading experts and thinkers whose insight and creativity can implement that change. Whether you're attending in person or following along from somewhere else in the world, keep up with this year's conference with POLITICO’s special edition “Global Insider” so you don't miss a beat. Subscribe today.

 
 
PARTING WORDS

Attorney General Merrick Garland arrives to a press conference at the Justice Department today in Washington.

Attorney General Merrick Garland arrives to a press conference at the Justice Department today in Washington. | Anna Moneymaker/Getty Images

FROM FETE WELL TO GET WELL  — Commerce Secretary Gina Raimondo and Attorney General Merrick Garland revealed today they had tested positive for Covid-19, becoming the latest D.C. figures to contract the virus in what is taking on signs of a new wave pummeling the capital city.

By this afternoon, the spread of the virus had gotten further inside the White House and seemingly closer to the president, with Vice President Kamala Harris’ communications director, Jamal Simmons, announcing that he too had become infected. Harris “was in close contact to the Vice President as defined by CDC guidance,” the VP’s office said, adding that Harris would both follow CDC guidelines and “plans to continue with her public schedule.” Simmons had been at a White House event the day before celebrating the passage of the Affordable Care Act. While there, he was seen shaking hands and talking to former President Barack Obama, who recently tested positive for Covid-19. Both were mask-less.

Scores of reporters and elected officials have revealed — privately and publicly — in recent days that they have Covid. It’s touched Congress, the White House and major newsrooms. It’s impacted going-away parties and insider gatherings. It’s cast a shadow over the functions of Biden as well, though the White House says he remains virus-free and has not yet had what is deemed to be a close contact.

The origins of the wave are unclear. But signs point to a few events that have likely contributed to the spread. Raimondo’s announcement, for one, comes days after she was a featured speaker at the annual Gridiron Club dinner in Washington, D.C., an event that saw a who’s who of Beltway officials and journalists in attendance. Garland also attended the event.

Democratic Reps. Adam Schiff (Calif.) and Joaquin Castro (Texas) announced Tuesday that they had contracted Covid after attending the dinner Saturday night as well. Both Reps. Katherine Clark (D-Mass.) and Scott Peters (D-Calif.) announced today that they, too, had tested positive, though neither attended the dinner.

 

A message from Human Rights Watch:

This is Afghanistan today. The Taliban are carrying out extrajudicial killings and abductions, repressing media, and imposing draconian restrictions that violate the rights of women and girls. On March 23, they reneged on promises to allow girls to go back to secondary school.

At the same time, the US government has cut off Afghanistan's economy from the rest of the world and suspended support for salaries for teachers and health workers.

The country is on the brink of economic collapse. Millions are at risk of starvation - especially women and girls, who face greater obstacles to getting food. Without a functioning economy, most families have lost their ability to feed themselves. Their most basic rights - to food, health, and life itself - are under assault.

Learn More.

 

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