Former Treasury Secretary Larry Summers railed against President Trump’s massive tax and spending bill, saying no objective economist would characterize the legislation as a boon to the economy.
“There is no economist anywhere, without a strong political agenda, who is saying that this bill is a positive for the economy. And the overwhelming view is that it is probably going to make the economy worse,” Summers told ABC News’s George Stephanopoulos in a Sunday interview on “This Week.”
“Think about it this way,” he continued. “How long can the world’s greatest debtor remain the world’s greatest power? And this is piling more debt onto the economy than any piece of tax legislation in dollar terms that we have ever had.”
Trump on Friday signed into law his potentially legacy-setting policy bill, encompassing a wide array of campaign promises and agenda items, from military and immigration measures, to major cuts to national healthcare, to numerous industrial incentives.
The heart of the bill, however, is an extension of the 2017 tax cuts.
Without those tax cuts, the bill is expected to cut deficits by $500 billion over 10 years, according to The Congressional Budget Office and the Joint Committee on Taxation.
But with those cuts included in the accounting, the cost is $3.3 trillion, or about 9.1 percent of the total U.S. debt stock of $36 trillion. This number does not include additional interest costs necessary to pay for the debt.
Revenues from tariffs are expected to offset a significant portion of the cost at about $2.5 trillion, not counting macroeconomic and debt-service costs, but are still less than the overall cost of the bill.
The White House, however, has argued that the economic growth sparked by the bill will alleviate the costs. The White House Council of Economic Advisers issued a report projecting up to approximately $11 trillion in deficit reduction from growth, higher tax revenue and savings on debt payments.
Asked in the interview to respond to that report, Summers said, “It is respectfully nonsense.”
“None of us can forecast what’s going to happen to economic growth,” he added.
“What we can forecast is that when people have to hold government debt instead of being able to invest it in new capital goods, new machinery, new buildings, that makes the economy less productive,” he continued. “What we can forecast is that when we’re investing less in research and development, investing less in our schools, that there is a negative impact on economic growth.”
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