Larry Summers Urges Tax Hike On Top 1% As Economy Languishes In 'New And Dangerous Territory'
By
Shanthi Rexaline, Benzinga Editor
June
6, 2023 8:33 AM | 2 min read
Former
Treasury Secretary Larry
Summers took to Twitter on Tuesday to express his
worst fears concerning the economy. He lamented the bloating fiscal deficit.
What
Happened: “For
all of the post-financial crisis/pre-pandemic period, I feared secular
stagnation and opposed fiscal alarmism,” Summers tweeted. “But now I am alarmed
because we are in new and dangerous territory,” he said.
The
former Treasury official noted that Congressional
Budget Office's medium-term
projections were twice as large as those when the Simpson-Bowles
process was initiated in 2011.
The
Simpson-Bowles deficit reduction plan is a 2010 bipartisan report that delved
into the six ways to lower the budget deficit to 2.3% of the GDP by 2015.
To
make matters worse, Summers said he thinks the CBO projection is "way
over-optimistic." He expects the deficit to exceed 10% of GDP, which would
be by far the worst long-run fiscal outlook in the history of America.
Further
Bloating Likely: Summers
expects the short-term Treasury yields to run well over CBO's 2.3% deficit to
GDP assumption over the next decade, especially due to the high deficits.
"1% higher rates add about 1.2% to the deficit, given current
levels," he said.
Trump
tax cuts are unlikely to phase out in 2025, adding more than half a percent of
GDP deficits, the economist said.
Summers
also did not buy into the CBO's estimate of defense spending as a share of GDP
falling by 20%, given the ongoing tensions with Russia, China, Iran and North
Korea.
Adjustments
Needed: Since
a 10% deficit-to-GDP ratio is unacceptable, significant adjustment will likely
be needed, Summers said.
There
is no choice as far as rising defense and interest costs are concerned, the
economist said. He also noted that the size of the dependent aged population is
rising and prices of services the government buys like health, education, and
law enforcement tend to rise.
"All
of this suggests that returning government spending to traditional levels will
not be easy," Summers said.
The
economist favored the path to higher income. "We are an undertaxed
nation," he said.
"Raising
revenue needs to start with those most able to pay — the top 1 % — but quite
likely it cannot end there," he added. The view is in line with President Joe
Biden’s 25% billionaires tax.
Congressional
Budget Office
https://en.wikipedia.org/wiki/Congressional_Budget_Office
History
The
Congressional Budget Office was created by Title II of the Congressional
Budget and Impoundment Control Act of 1974 (Pub. L. 93-344), which was signed
into law by President Richard Nixon on July 12, 1974.[6] Official operations
began on February 24, 1975, with Alice Rivlin as director.[7]
The
CBO's creation stems from a fight between President Richard Nixon and a
Democratic-controlled Congress. Congress wanted to protect its power of the
purse from the executive.[4][8] The CBO was created "within the legislative
branch to bolster Congress’s budgetary understanding and ability to act.
Lawmakers' aim was both technical and political: Generate a source of budgetary
expertise to aid in writing annual budgets and lessen the legislature’s
reliance on the president's Office
of Management and Budget."[4] In 2015, the Brookings Institution
reported that since its creation, the CBO has since supplanted the OMB
"as the authoritative source of information on the economy and the budget
in the eyes of Congress, the press, and the public."
Connecting
the Dots:
Lawrence H. Summers was the
National Economic Council chairman for the Barack Obama administration and
a trustee at the Brookings Institution (think tank).
Foundation to Promote Open Society was a funder
for the Brookings Institution (think tank) and the Aspen
Institute (think tank).
George Soros was the chairman for the Foundation to Promote
Open Society.
Preeta Bansal is
a fellow at the Aspen Institute (think tank)
and was a general counsel & senior policy adviser for the U.S.
Office of Management and Budget (OMB).
Christopher
Edley Jr. was an associate director for economics & government for
the U.S. Office of Management and Budget (OMB) and is a
board of adviser’s member for the American Constitution Society.
Open Society Foundations was a funder for
the American Constitution Society.
George Soros is the founder
& chairman for the Open Society Foundations.
Faith Elizabeth
Gay is a board of adviser’s member for the American
Constitution Society and was an attorney at Sidley
Austin LLP.
Michelle Obama was a lawyer at Sidley Austin LLP.
Barack Obama is
the president for the Barack Obama administration and was an intern
at Sidley Austin LLP.
Cameron F. Kerry is
a senior counsel at Sidley Austin LLP, John F. Kerry’s brother
and a fellow at the Brookings Institution (think tank).
Foundation to Promote Open Society was a funder
for the Brookings Institution (think tank).
George Soros was the chairman
for the Foundation to Promote Open Society.
Lawrence
H. Summers was a trustee at the Brookings Institution (think
tank) and the National Economic Council chairman for the Barack
Obama administration.
Resources:
Past Research
Former
Treasury Secretary Summers: My 'Best Guess' US Will Hit Recession Soon
(Connecting the Dots: Larry Summers, Meet the Press, NBC, ABC, Soros, Federal
Reserve & Janet Yellen) (Past Research on Larry
Summers)
MONDAY,
JULY 25, 2022
https://thesteadydrip.blogspot.com/2022/07/former-treasury-secretary-summers-my.html
Improper
Food Stamp Payments Hit $2.6 Billion (Past Research
on the U.S. Office of Management and Budget (OMB)
THURSDAY,
JULY 7, 2016
https://thesteadydrip.blogspot.com/2016/07/improper-food-stamp-payments-hit-26.html
Hours
After John Kerry Demands Green Transition Accelerated – His Emissions Closet
Swings Wide Open (Connecting the Dots: Cameron Kerry, John Kerry, Teresa Heinz
Kerry, Soros, the Climate Reality Project, the Brookings Institution (think
tank), the EPA and onto the FDA, Pfizer & Johnson & Johnson. It’s the
Network That Never Ends. One Project (Climate Change) Just bleeds into the Next
(Covid Project)) (Past Research on Cameron Kerry
& Sidley Austin LLP)
THURSDAY,
JULY 21, 2022
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