One is a Harvard professor, the other a Nobel laureate in economics. The y’re roughly the same age, both stars in the Democrats’ economists orbit, and both longed for the end of the Trump era. But now Larry Summers and Paul Krugman have become adversaries on a question that could determine the success of Joe Biden’s presidency: How do you advance the US economy?
Biden is planning an economic stimulus program, next to which everything that has come before has faded: the state is to distribute 1.9 trillion dollars to citizens, companies and government agencies. Since taking office, the President and his Treasury Secretary Janet Yellen have tried to convince the public, parts of the Republicans that are considered accessible, and also skeptical fellow party members of the necessity of the “American rescue plan”. But Obama’s former chief economic advisor, of all people, drove them into the parade: Larry Summers warned of the dangers of inflation “the likes of which we have not seen in a generation” and the consequences for the dollar and the stability of the financial system. In addition, the exploding budget deficits would limit the future scope for necessary investments in infrastructure. The anger among the Democrats over the intervention, which plays into the hands of the political opponent, was high. “Larry Summers gives the skunk at the Covid rescue party,” commented the capital postil “Politico”.