Former Treasury Secretary Lawrence Summers is advising Joe Biden’s presidential campaign on economic policy, including its plans to revive the U.S. economy after the coronavirus pandemic, according to five people familiar with his involvement.
The Obama and Clinton administration veteran’s role will likely roil progressives who view his past work on the 2009 recovery as too favorable to big banks. That’s awkward for the Biden campaign at a time when it is trying to win the trust of former supporters of Bernie Sanders and Elizabeth Warren.
Summers was the first name on the “Biden do not reappoint list” published last month by the American Prospect’s Robert Kuttner, who wrote that Summers in 2009 “not only lowballed the necessary economic stimulus and ended it prematurely, but he successfully fought for rescuing the biggest banks rather than taking them into temporary receivership.”
Summers’s involvement in Biden’s campaign, however, would likely reassure Wall Street that Biden is not moving too far to the left from the centrist positions that earned him his establishment support.
Opposition from the left kept Summers from being nominated for Federal Reserve Chairman by President Barack Obama in September 2013, when a handful of Senate Democrats, including Warren, Sherrod Brown, Jon Tester and Jeff Merkley, complained to the White House that he was too lax on financial regulation. Summers withdrew his name from consideration after weeks of debate within the White House about a possibly difficult confirmation fight.
Current Fed Chairman Jerome Powell’s term expires in early 2022.
A Biden aide, speaking on condition of anonymity, said the campaign is in touch with a “very large and well-rounded” group of informal advisers and “looks forward” to engaging with progressive leaders.
Summers did not immediately respond to requests for comment.
Biden’s campaign has confirmed the names of just a few of the dozens of economists who are advising him, including two of Biden’s former White House chief economists, Jared Bernstein and Ben Harris, and Heather Boushey, president and CEO of the Washington Center for Equitable Growth.
If elected, Biden will face a severely battered economy, with unemployment now nearly twice as high as it reached in 2009 because of pandemic-related lockdowns.
Summers was director of Obama’s National Economic Council in 2009 and 2010 and played a key role in that administration’s response to the financial crisis, making him a familiar presence to Biden, who helped lead that response.
A former president of Harvard University and still a tenured professor there, Summers works as a commentator on Bloomberg Television and its Wall Street Week program.
Summers wrote a paper in 2019 proposing a “pragmatic approach” to raising $4 trillion in federal revenue from the rich, through higher capital gains taxes, the closure of loopholes and greater Internal Revenue Service oversight of tax returns. Biden has already proposed some of those ideas.
Summers was critical of Sanders’s and Warren’s wealth tax during the Democratic primary and has specifically called out the work of two economists, Emmanuel Saez and Gabriel Zucman, who advised the two former candidates on those plans.
“For progressives to invest their energy in a proposal that the Supreme Court has better than a 50% chance of declaring unconstitutional, that has very little chance of passing through the Congress, whose revenue potential is extraordinarily in doubt — for that to be the defining element in the progressive agenda in the United States, it seems to me to potentially sacrifice an immense opportunity,” he said at a Peterson Institute for International Economics panel in October.
Progressives are also critical of his role in the Clinton administration’s push to deregulate the financial services industry. He also faces skepticism from some outside economics for comments he made 15 years ago, while serving as Harvard’s president, on women in science and engineering.
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