Summers Says Biden Budget Risks Overheating U.S. Economy
(Bloomberg) -- Former Treasury Secretary Lawrence Summers said President Joe Biden’s budget is built on outdated economic forecasts and risks overheating the U.S. economy.
While Summers said Biden is right to be trying to fix infrastructure and reduce inequality, he is worried by the likelihood of large budget deficits.
“Just because you care, doesn’t mean you don’t also have to count,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin. “I am worried in both the short- and the medium-term about overheating.”
Summers, a paid contributor to Bloomberg, said the risk is of “some kind of collision between demand and supply,” reiterating a theme he has struck in warning that loose monetary and fiscal policies may drive up inflation.
He said some of the budget forecasts have been superseded by stronger activity, noting the U.S. Treasury 10-year yield is already above the 1.2% assumed in the document, which was released Friday.
The budget also predicts the U.S. economy will grow 5.2% this year, below the 6.5% median forecast of economists surveyed by Bloomberg.
“I am concerned,” Summers said. “You do have to manage the macroeconomics right.”
Summers said he would prefer the Biden administration ensure it gets the tax hikes it wants, stretch out spending and withdraw previous grants to state and local governments.
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