Larry Summers blasts 'free lunch' ideology of left-wing Democrats

By Chris Matthews

Former U.S. Treasury Secretary said government investments don't pay for themselves

Former U.S. Treasury Secretary Larry Summers took aim Monday at some in the progressive movement who he said are not taking seriously the costs associated with government programs aimed at creating jobs and boosting economic growth.

Progressive Democrats "believe in a set of free lunch economic propositions" wherein government spending on strategic sectors will create more jobs and that the resulting economic activity means these investments "will pay for themselves," Summers said at an event staged by the Council on Foreign Relations Monday afternoon.

Read more: Larry Summers says the Fed and investors are 'badly wrong' on inflation's path

Summers called this line of thinking "progressive Lafferism", in reference to the conservative economist Arthur Laffer who became famous advocating for the idea that tax cuts could actually increase government revenue by stimulating economic activity.

Summers said that he supports the bipartisan CHIPS Act and Infrastructure bills as necessary investments to bolster U.S. competitiveness in sectors like semiconductor manufacturing, but argued that the Biden administration was initially too ambitious in its legislative agenda, originally labeled Build Back Better.

"I think they were considerably better in the form they were passed than they were in the form they were originally proposed," Summers said.

The former Obama administration official has been a vocal critic of some Biden economic policies, including the American Rescue Plan, passed in the first weeks of the president's term.

He warned at the time that the law was the "least responsible" economic policy in generations that risked "creating inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability."

-Chris Matthews

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06-25-24 1024ET

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