Rising wages are a ‘feature,’ not a bug, of the post-pandemic economy, President Biden says

Biden economy speech Cleveland Ohio
U.S. President Joe Biden delivers remarks on the economy during a visit to Cuyahoga Community College in Cleveland, Ohio, U.S., May 27, 2021.

  • Wage hikes at large-scale employers are an encouraging sign for the economic recovery, Pres. Biden said on Thursday.
  • The increases are a sign workers are gaining bargaining power for the first time in decades, he added.
  • Biden noted there’s “more than ample room” to raise wages without driving inflation higher.
  • See more stories on Insider’s business page.

The wage hikes seen in recent weeks offer an encouraging hint of what the new US economy can look like, President Joe Biden said Thursday.

Large-scale employers have been raising their minimum wages as they look to attract workers through reopening. Companies such as McDonald’s, Amazon, and Under Armour have rolled out higher starting wages through May. The hikes appear to be in response to unexpected tightness in the labor market.

While millions of Americans remain unemployed, those on the sidelines are holding out for higher compensation before rejoining the workforce.

Republicans have blamed bolstered unemployment benefits for the labor shortage, saying they disincentivize jobless Americans from seeking work. Biden, however, sees a more encouraging trend behind the wage hikes. The raises “aren’t a bug” but “a feature” of the post-pandemic economy and show that workers are finally regaining bargaining power, the president said.

“Instead of workers competing for each other for jobs that are scarce, we want employers to compete with each other to attract workers,” Biden told a crowd in Cleveland, Ohio.

He continued: “That kind of competition in the market doesn’t just give workers more ability to earn a higher wage, it gives them the power and demand to be treated with dignity and respect in the workplace.”

Critics of the recent wage hikes have also deemed them a symptom of rampant inflation that could spark a new economic crisis. Stronger inflation typically does translate to higher pay, as workers demand greater compensation to counter rising prices.

Biden instead linked the raises to a reversal in long-stagnant wage growth. Worker salaries and wages have made up a smaller and smaller share of US economic output since the 1960s. At the same time, compensation for CEOs and shareholders has boomed.

Boosting compensation for workers at the bottom of the pay scale is long overdue and poses little risk to the recovery, the president said Thursday.

“We have more than ample room to raise workers’ pay without raising customer prices,” Biden added.

While several companies have announced their own wage hikes, the latest efforts to introduce a higher minimum wage at the federal level have so far failed. The Senate voted down an amendment to raise the federal wage floor in March, and lawmakers haven’t made substantial progress toward such a hike since. And with eight Democrats defecting from the party and voting against the proposal, such legislation faces an uphill climb at least until the 2022 midterms.

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Nobel prize-winning economist Paul Krugman explains why he’s more left-wing than the Modern Monetary Theory crowd

paul krugman
Paul Krugman.

  • MMT supporters are right to call for more spending, but they can still be more progressive, Paul Krugman said.
  • Where MMT sees taxes as the best way to slow inflation, Krugman argued the Fed can do the same.
  • You can lean on the Fed to slow inflation and also allow the government to spend more and keep taxes low, he said.
  • See more stories on Insider’s business page.

Modern Monetary Theory economists are the trailblazing left-wingers in the field. Nobel laureate Paul Krugman says he’s farther left than them.

Both schools are inspired by the great 2oth-century English economist John Maynard Keynes, whose theory of fiscal stimulus influenced not only FDR’s response to the Great Depression of the 1930s, but $5 trillion of federal spending amid the coronavirus recession.

Krugman was one of the “neo-Keynesians” who worked to integrate his theories with neoclassical economics of the 1950s and onward. But in recent years, MMT has taken that legacy forward, arguing that, since the US is the only power that can print US dollars, the government can spend first without raising cash through taxes.

Where the prevailing policy strategy sees budget deficits as the primary obstacle to spending, MMT asserts that inflation is the biggest risk. Taxes can then be used to slow inflation by reining in the money supply, according to the theory.

Krugman says policymakers can also rely on the Fed to handle inflation, and that’s actually a more progressive economic policy.

“MMTers, at least if they’re consistent with their own doctrine, are substantially to the right of people like me,” Krugman told Insider earlier this month. “The MMTers don’t seem to believe that monetary policy can ever be used for anything useful.”

The MMT framework existed on the fringes of economic policy before the COVID-19 crisis, but Treasury Secretary Janet Yellen has said that, so long as interest rates stay at historic lows, the government should spend what’s necessary to power the economic recovery. That’s a sharp reversal from the Obama administration’s approach, which was hindered by fears of deficit spending and the growing national debt pile.

If deficit worries took center stage in 2009, inflation is the biggest risk looming over the pandemic-era recovery. One camp, led by conservatives and moderate Democrats, is concerned that unprecedented spending and the Federal Reserve’s low rates can spark the worst inflation crisis since the 1970s.

The other, which Krugman resides in, sees inflation cooling once reopening ends and the country settles into a new normal. But while MMT supporters view taxes as the key weapon for curbing inflation, Krugman believes policymakers can rely on the Fed to keep price growth in check.

Followers of MMT, then, can be “more cautious and less willing to go wholeheartedly into progressive policies” than those who appreciate the Fed’s power, he added.

While the economy hasn’t fully rebounded yet, Krugman sees a repeat of Obama-era concerns potentially being the biggest mistake policymakers make during the recovery.

President Joe Biden has teed up another $4.1 trillion in spending on infrastructure and care programs in recent weeks, as well as several tax increases set to pay for most of the plans. Such pay-fors are appealing for those who worry about the budget deficit, but in practice, they could keep the recovery from reaching its full potential, Krugman said.

Passing more spending packages while leaving taxes untouched could keep the US from entering a demand-starved recovery like that seen after the Great Recession, he added.

“What the doctor ordered is some sustained moderate deficit spending,” he said. “That’s what worries me a little bit. That we’re still too worried about fiscal responsibility and not sufficiently worried about persistent weakness of demand.”

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Sasse will introduce legislation to redirect expanded unemployment benefits into signing bonuses for new hires

Ben Sasse
Sen. Ben Sasse (R-Nebraska) speaks during a hearing of the Senate Judiciary Subcommittee on Privacy, Technology, and the Law, on Capitol Hill.

  • Sen. Sasse says that expanded unemployment benefits have prevented people from returning to work.
  • He will propose a bill that would redirect expanded benefits into signing bonuses for new hires.
  • “We’ve got to get America and Americans up and running,” he said in a statement.
  • See more stories on Insider’s business page.

GOP Sen. Ben Sasse of Nebraska on Saturday said he would introduce legislation to grant signing bonuses to new hires, as the latest jobs report on Friday fell far short of expectations.

In an email, Sasse said that the proposed National Signing Bonus Act would redirect expanded unemployment benefits, which have been a lifeline for millions of Americans during the COVID-19 pandemic, into signing bonus payments for new hires.

Under Sasse’s plan, individuals who are hired by July 4 would receive a two-month signing bonus “equal to 101 percent of their current unemployment payment.”

As part of President Joe Biden’s $1.9 trillion COVID-19 relief package, expanded federal unemployment benefits provide $300 a week as a supplemental to state unemployment checks.

Republicans have long argued for less generous unemployment benefits, saying expanded benefits only serve to disincentivize people from returning to work. They quickly seized on the April jobs report, which showed that US employers added 266,000 jobs for the month, well below the 1 million jobs that many economists were expecting to be added to the US economy.

The April unemployment rate also rose slightly – to 6.1% from 6% – according to the Department of Labor.

“The emergency UI program is now penalizing people for going back to work,” Sasse said in the statement. “Now, as millions of Americans are vaccinated each day, we’ve got crummy job numbers – 7,400,000 jobs are available but fewer than 300,000 people returned to work last month. We’ve got to get America and Americans up and running.”

Read more: Corporate America’s response to restrictive voting laws in Georgia and Texas isn’t benevolence. It’s about economics and profit, experts say.

The US Chamber of Commerce, which last week criticized Biden’s proposed $2 trillion infrastructure bill, called for an end to the $300-a-week federal unemployment benefits after Friday’s report.

“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” the chamber’s chief policy officer, Neal Bradley, said in a statement. “We need a comprehensive approach to dealing with our workforce issues and the very real threat unfilled positions poses to our economic recovery from the pandemic.”

In February, Biden’s first full month in office, the economy added 536,000 jobs. In March, 770,000 jobs were regained.

GOP Govs. Greg Gianforte of Montana and Henry McMaster of South Carolina recently announced that their states will opt-out of receiving the expanded federal unemployment benefits at the end of June.

“I hear from too many employers throughout our state who can’t find workers,” Gianforte said last week. “Nearly every sector in our economy faces a labor shortage … We need to incentivize Montanans to reenter the workforce.”

McMaster recently echoed a similar sentiment.

“What was intended to be a short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace,” he said.

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Sen. Bernie Sanders says the US needs ‘progressive taxation’ on the wealthy to pay for Biden’s infrastructure proposal

Bernie Sanders
Sen. Bernie Sanders (I-Vermont) arrives at the House chamber ahead of President Joe Biden’s first address to a joint session of Congress on April 28, 2021.

  • Sen. Bernie Sanders called for “progressive taxation” to fund Biden’s spending proposals.
  • “Biden says the floor should be $400,000,” he noted. “Nobody under that should pay more in taxes.”
  • Sanders also brought up the need for health care reform and tackling student loan debt.
  • See more stories on Insider’s business page.

Independent Sen. Bernie Sanders of Vermont on Sunday said that the US needs to institute “progressive taxation” on inherited wealth to help fund President Joe Biden’s spending proposals, notably a $2 trillion infrastructure plan.

During an appearance on NBC’s “Meet the Press,” Sanders stressed that it was imperative that the country deals with pertinent and longstanding economic issues facing the country.

“We have massive income and wealth inequality,” he said. “Half our people live on paycheck to paycheck. We’ve got to raise the minimum wage to a living wage. You’ve got to do that.”

Progressive legislators sought to include a $15 minimum wage bill provision in the $1.9 trillion COVID-19 relief package while it was being debated in Congress earlier this year, but Senate parliamentarian Elizabeth MacDonough ruled that it could not be included in the final bill under budget reconciliation rules.

Sanders, who has long said that the nation’s infrastructure was in dire need of repair, stressed that Biden’s spending plans would be beneficial to the American public.

“We have infrastructure that is collapsing,” he said. “We’ve got to address the existential threat of climate change. When you make those investments, we create millions of good-paying jobs.”

Read more: Here’s how Biden is reshaping gender and reproductive rights with policies that are even more progressive than past Democratic presidents

Reminiscent of his 2016 and 2020 presidential campaigns, Sanders also brought up the need for health care reform and student loan debt, issues that progressives in Congress have not forgotten about.

“We are the only major country not to guarantee health care to all people as a right, the only major country not to have paid family and medical leave,” he said. “We pay the highest prices in the world for prescription drugs. Hundreds of thousands of kids can’t afford to go to college, and millions leave school deeply in debt. Well, you know what? You’ve got to address those issues.”

Sanders, who chairs the powerful Senate Banking Committee, then went after major corporations that he says haven’t paid any federal income taxes and again called for instituting a progressive estate tax rate starting at 45% on inherited wealth of more than $3.5 million.

Warren Buffett, one of the richest guys in the world, reminds us that the effective tax rate for working families is higher than it is for the billionaire class,” he said. “I do think we need progressive taxation, which says to the very rich – Biden says the cap should be, the floor should be $400,000. Nobody under that should pay more in taxes.”

He added: “The very rich and large corporations should start paying their fair share of taxes to help us rebuild America and create the jobs that we need.”

When Sanders was asked if he would back the spending proposals if they don’t come with the desired tax increases, the senator said that “the devil is in the details.”

“I think once we start discussing these issues in the Congress, there will be differences of opinion,” he said. “I think there is a consensus, at least within the Democratic caucus, that now is the time to start protecting working families and the middle class and not just the 1 percent.”

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A majority of investors and business owners have faith in Biden’s economic boom, new UBS survey finds

small business owner bakery
Jorge Sactic is the owner of Chapina Bakery in Langley Park, Maryland.

  • About 64% of investors and business owners see Biden’s policies aiding the global recovery.
  • A majority also said Biden’s measures will support global markets, according to a UBS survey.
  • The optimism comes as Biden preps another $4.1 trillion in spending to boost the economic recovery.
  • See more stories on Insider’s business page.

The Biden boom is in full swing and people like what they see.

Investors and business owners around the world are largely optimistic that the Biden administration’s economic policies will fuel a robust recovery and leave them on better footing, according to a recent UBS survey. Some 64% of respondents view the administration as having a positive impact on the global economy. Six in 10 believe the White House’s policies will support global markets.

Roughly 57% of investors and business owners said the Biden administration has benefitted their personal finances, and 54% of business owners said the policies benefitted their companies.

In just the first 100 days of his time in office, President Joe Biden has embarked on one of the most ambitious policy strategies in modern history. The president passed a $1.9 trillion stimulus measure – the second-largest in history – on March 11 and has since unveiled follow-up packages that include roughly $4.1 trillion in additional spending. Economists have largely linked soaring retail sales and stronger economic growth to the stimulus measure.

To be sure, President Joe Biden’s policies aren’t the only cause for optimism. New COVID-19 cases in the US sit at their lowest seven-day average since October, and state and local governments have been slowly rolling back lockdown measures for weeks. And while the vaccination rate has slowed, it still sits at an average 2.5 million doses per day. At the current rate, the US will reach herd immunity over the next three months, according to Bloomberg data.

In the US specifically, seven in 10 investors expressed hope about the path of the economy. That compares to just 52% three months ago and makes US investors the most positive globally, UBS said.

The share of US investors growing positive toward stocks rose to 71% from 59%. The shift underscores a broader move toward riskier assets as investors ditch the safe havens they held at the start of the pandemic and position for a swift recovery.

The responses join other sentiment gauges that have turned stronger in recent months. The University of Michigan’s consumer sentiment index rose to a fresh pandemic-era high in April, according to a Friday release. That level is the highest since March 2020. Separately, the Conference Board’s consumer confidence measure rose to its highest level since February 2020 as the healing labor market and latest round of stimulus checks boosted outlooks.

UBS interviewed 2,850 investors and 1,150 business owners around the world from March 30 to April 18. Responses were sourced from 14 markets including the US, the UK, Mexico, mainland China, Japan, Italy, Brazil, and Mexico.

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Lindsey Graham slams Biden as ‘a very destabilizing president’ who wants to ‘regulate America out of business’

Lindsey Graham
Sen. Lindsey Graham (R-South Carolina).

  • Sen. Graham slammed President Biden’s first few months in office, calling him a “destabilizing” leader.
  • “Economically, he’s throwing a wet blanket over the recovery,” Graham said of Biden.
  • The conservative senator also derided the president as “a disaster on foreign policy.”
  • See more stories on Insider’s business page.

GOP Sen. Lindsey Graham of South Carolina on Sunday blasted President Joe Biden, accusing him of being a “destabilizing” leader during his first 100 days in office.

In an interview on “Fox News Sunday,” Graham told host Chris Wallace that Biden started off his presidency straying away from the tone of his successful 2020 presidential campaign.

“During the campaign, he made us all believe Joe Biden would be the moderate choice … that court-packing was a bonehead idea,” Graham said. “All of a sudden we have a commission to change the structure of the Supreme Court. Making DC a state … I think that’s a very radical idea that will change the makeup of the United States Senate.”

He added: “AOC [Democratic Rep. Alexandria Ocasio-Cortez of New York] said his first 100 days exceeded her expectations. That’s all you need to know.”

Graham quickly laced into Biden’s overall performance.

“I think he’s been a very destabilizing president,” Graham said. “And economically, he’s throwing a wet blanket over the recovery, wanting to raise taxes in a large amount and regulate America basically out of business, so I’m not very impressed with the first 100 days.”

Biden supports raising the corporate tax rate from 21 percent to 28 percent to fund his proposed $2 trillion infrastructure bill, but he is open to negotiations with GOP lawmakers.

Read more: This millennial GOP congressman voted to impeach Trump. Now he’s trying to save his party from going off a cliff.

The conservative senator then derided the president as “a disaster on foreign policy.”

“The border is in chaos, the Iranians are off the map, he’s opening up negotiations with the Iranian regime and they haven’t done a d— thing to change,” he said. “Afghanistan’s going to fall apart. Russia and China are already pushing him around, so I’m very worried.”

Republicans have criticized the Biden administration’s immigration policies, including their approach to housing the unaccompanied minors who have fled to the US-Mexico border in recent months.

Conservatives have also cast doubt on Biden’s timetable to withdraw troops from Afghanistan, along with his long-term approach for dealing with Presidents Vladimir Putin of Russia and Xi Jinping of China.

As Biden approaches his 100th day in office, a new Fox News poll shows Biden with a 54 percent job approval rating, while 43 percent disapproved of the president’s performance.

Graham expressed that he was in the latter category.

“I like Joe Biden, but I’m in the 43 percent,” he said.

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Half of Americans want a major overhaul to the US economy, Pew says

NYSE Wall Street coronavirus
  • Half of Americans believe the US economy needs “major changes” or to be “completely reformed.”
  • People largely backed job training but were less supportive of universal basic income, Pew said.
  • Support for economic reform was far more common among liberals than conservatives, Pew added.
  • See more stories on Insider’s business page.

As the US enters a new normal, half of its population is ready for an economy that’s starkly different from that which came before.

About 40% of surveyed Americans believe the economy “needs major changes” as it emerges from the coronavirus pandemic, according to a Pew Research report published Thursday. One in 10 Americans said they saw a need for the country’s economic systems to be “completely reformed.”

Source: Pew Research Center

Conversely, only 12% of the US sees no need for economic change. Roughly 38% said the country’s economy needs only “minor” changes.

Pew conducted a survey across the US, UK, France, and Germany from November 10 to December 23. More than 4,000 adults across the four countries responded.

When asked which potential economic policies should be instituted, three-quarters of surveyed Americans said it’s “very important” that the government provide more job and skills training for workers. Nearly half of respondents deemed an increase of government benefits to the poor as “very important,” and 44% said it’s critical the government contribute to affordable housing.

About 45% said it’s very important for lawmakers to lift taxes on the wealthy. President Joe Biden proposed such tax hikes to cover the costs of his upcoming American Families Plan, which includes funds for universal pre-K, paid family and medical leave, and an extended child tax credit. The White House has said it won’t lift taxes on households earning less than $400,000 per year.

Only 31% of Americans characterized universal basic income as “very important,” making it the least supported of the five potential policies. Still, that marks a shift from discussions a decade ago, when universal basic income lingered on the fringes of progressive economic policy.

Support for economic reform was far more common among left-leaning respondents. More than three-quarters of US adults on the left said the country needs a complete overhaul or major changes, according to Pew. That compares to just 32% of right-leaning respondents and 46% from moderates.

Support of stricter government regulation received a more mixed response. Half of surveyed Americans said it’s generally bad for society if the government regulates business, while 46% said such regulation is good. That differs from responses in Europe, where the majority of residents in the UK, France, and Germany supported business regulation.

Even if major economic changes remain years away, Americans are largely optimistic as the country rebounds. Roughly 78% of US respondents said they have either “somewhat good” or “very good” chances at improving their standard of living. Only 7% said they have “very bad” chances, and 11% said their odds are “somewhat bad.”

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AOC says Biden’s infrastructure plan is way too small – she wants a $10 trillion package

alexandria ocasio-cortez aoc
Rep. Alexandria Ocasio-Cortez (D-NY).

  • An ideal infrastructure plan would spend $10 trillion, Rep. Alexandria Ocasio-Cortez said.
  • The plan Biden unveiled Wednesday is “encouraging” in scope but can be bigger, she said on MSNBC’s “Rachel Maddow Show.”
  • A larger plan could create tens of millions of jobs and vastly improve housing and health care, she said.
  • See more stories on Insider’s business page.

President Joe Biden has repeatedly said he aims to “go big” with plans to revitalize the US economy. For Rep. Alexandria Ocasio-Cortez, the administration’s $2 trillion infrastructure plan isn’t big enough.

The president unveiled the American Jobs Plan on Wednesday as a follow-up to the $1.9 trillion stimulus approved in March. The package includes spending on traditional infrastructure projects like roads and bridges as well as measures to cut down on carbon emissions and address the country’s housing shortage. The bill’s massive price tag is meant to be spread out over eight years, completely paid for over 15 years by tax hikes for corporations.

“It’s big, yes. It’s bold, yes. And we can get it done,” Biden said in a speech announcing the plan.

More progressive members of the Democratic party see room to be even more ambitious. The package’s scope is “really encouraging,” she said, but to really get to a plan that tackles America’s challenges, “we’re talking about realistically $10 trillion over 10 years.” That would cover the “ideals” sought by progressive lawmakers, Ocasio-Cortez said Wednesday on MSNBC’s The Rachel Maddow Show.

“I know that may be an eye-popping figure for some people, but we need to understand that we are in a devastating economic moment,” she said. “We have a truly crippled health-care system and a planetary crisis on our hands, and we’re the wealthiest nation in the history of the world.”

Such a plan would create tens of millions of “good union jobs,” improve the country’s health care, revamp infrastructure, shore up housing supply, and bring carbon emissions in line with standards set by the Intergovernmental Panel on Climate Change, the representative from New York added.

To be sure, the American Jobs Plan is only half of Biden’s latest spending push. The White House plans to unveil a package aimed at upgrading care facilities and education, named the American Families Plan. The proposal will likely include measures for universal pre-K, free community college, and extending child tax credits included in the March stimulus bill.

The White House is reportedly willing to spend $4 trillion across the two packages, a sum that would bring recovery spending under his term to nearly $6 trillion. Democrats so far have accepted the plan.

Democratic Sen. Joe Manchin of West Virginia – a moderate member of the party with a huge influence on Senate agenda – backed $4 trillion in infrastructure spending in January, saying such spending is necessary to bring back the nearly 10 million jobs still lost to the pandemic.

Manchin’s support marks a shift from the intraparty disagreements seen just years ago. More moderate members of the party increasingly support economic policy that centers working-class Americans, Ocasio-Cortez said.

“People really are starting to understand that these issues are no longer fringe progressive demands, but they are consensus builders,” she added.

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Larry Summers, who called out inflation fears with Biden’s $1.9 trillion COVID-19 relief package, says the US is seeing ‘least responsible’ macroeconomic policy in 40 years

Larry Summers
Former US Treasury secretary Larry Summers.

  • Larry Summers said that the US is seeing the “least responsible” macroeconomic policy in decades.
  • The former Treasury secretary been critical of Biden’s $1.9 trillion COVID-19 relief package.
  • Summers said there’s “a one-third chance” of significant inflation over the next few years.
  • See more stories on Insider’s business page.

Former US Treasury Secretary Larry Summers said that the country is seeing the “least responsible” macroeconomic policy of the past 40 years, resting the blame on lawmakers on both sides of the aisle.

Summers offered the negative economic forecast during an appearance on Bloomberg Television’s “Wall Street Week” on Friday. Summers has vocally criticized President Joe Biden’s recently signed $1.9 trillion COVID-19 relief package, saying it could overheat the economy.

“The [Federal Reserve] has stuck to its guns on no rate hikes for years and years and continuing to grow its balance sheet,” he told Bloomberg. “What is kindling is now igniting. I’m much more worried that we’ll have either inflation or a pretty dramatic fiscal-monetary collision.”

He added: “I think this is the least responsible macroeconomic policy we’ve had in the last 40 years. I think fundamentally, it’s driven by intransigence on the Democratic left and intransigence and completely unreasonable behavior on the whole of the Republican party.”

Summers, who served in Bill Clinton’s Cabinet and directed the National Economic Council in 2009 and 2010 under former President Barack Obama, argued that the country is “running enormous risks.” He said he believes there’s “a one-third chance that inflation will significantly accelerate over the next several years.”

He offered additional scenarios pertaining to the country’s economic outlook.

“There’s a one-third chance that we won’t see inflation, but that the reason we won’t see it is that the Fed hits the brakes hard, markets get very unstable, and the economy skids closer down to a recession,” he said. “I think there’s about a one third chance that the Fed and the Treasury will get what they’re hoping for and we’ll get rapid growth that will moderate in a non-inflationary way.”

He added: “There’s the real risk that macroeconomic policy will be destabilizing.”

Read more: Meet the presidential confidants, Delaware’s closely-knit and well-positioned congressional delegation, Joe Biden’s entrusted with cementing his legacy

For months, Summers has been sounding the alarm of inflation fears, writing an op-ed in The Washington Post in January where he wrote that Biden’s relief package could cause “inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”

While Summers praised the COVID-19 package’s “ambition” and its “rejection of austerity orthodoxy,” he stated that garnering legislative support for tax increases or spending reductions could prove to be difficult and might pose a “risk of inflation expectations rising sharply.”

Treasury Secretary Janet Yellen had a different perspective, encouraging robust stimulus measures.

“It’s a big package, but I think that we need to go big now, and that we can afford to go big,” Yellen told PBS NewsHour anchor Judy Woodruff in an interview shortly before the legislation was approved by the Senate.

Yellen has also repeatedly dismissed concerns of inflation. “I’ve spent many years studying inflation and worrying about inflation. And I can tell you we have the tools to deal with that risk if it materializes,” she told CNN in January.

The Biden administration has been vigilant about not repeating the legislative and political mistakes of the $787 billion American Recovery and Reinvestment Act of 2009, which was signed into law by former President Barack Obama in response to economic impacts of the Great Recession.

The stimulus measure, which was championed by Obama and congressional Democrats, became a political liability for the party in the 2010 midterm elections, which saw the GOP retake the House and make sweeping gains across the country.

White House Council of Economic Advisors chair Cecilia Rouse said on MSNBC’s “The Sunday Show with Jonathan Capehart” last week that not doing enough to help the economy would pose a bigger threat, especially as the country is working to end the COVID-19 pandemic.

“When one makes an economic investment, there are risks,” she said. “There is a risk that this [relief package] will overheat the economy and cause inflation. However, it’s really in our estimation that the risk of doing too little is actually greater the risk of doing too much.”

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