BROOKLINE, Mass. — Larry Summers thinks it’s “crazy” that President Donald Trump spends so much time bragging about how great he’s been for the stock market.
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The former Treasury secretary and current Harvard professor argues that Trump, who tweets regularly about new stock market records, is setting himself up for a crushing blow if markets tumble.
“It’s crazy for a president to wrap himself in the stock market,” Summers said in an interview for the POLITICO Money podcast from his home in this leafy Boston suburb. “The market goes up and the market goes down and if you take credit when the market goes up, I don’t see how you can avoid taking responsibility when the market goes down.”
Summers said avoiding daily market commentary was a hallmark of the presidential administrations in which he served, those of Bill Clinton and Barack Obama. “In both administrations I’ve been part of, we talked about how we focused on the fundamentals and if the fundamentals stayed strong over time, then markets would take care of themselves,” he said.
And Trump is giving himself far too much credit for the market advance, Summers said. “It’s a great exaggeration of the powers of a president, when the truth is that presidents are not responsible for the vast majority of fluctuations in the stock market. And if you look at markets around the world, they’ve mostly moved in parallel — and some have moved up more than the U.S. market.”
Summers also assailed the GOP tax plan, H.R. 1 (115), dismissing it as the fever dream of Republican donors and supported by promises of rosy economic growth that are unlikely to materialize. He cited retention of a tax benefit for private-equity fund managers, elimination of an adoption tax credit and the phasing out of the inheritance tax, among other issues, as fundamentally undermining the GOP tax plan.
“It is hard to see any common thread or coherent principle except for rewarding moneyed interests that is behind that set of proposals,” Summers said.
House lawmakers and Trump administration officials selling the tax plan say it would boost corporate prospects and deliver widespread benefits to middle-class taxpayers.
The economist and onetime Harvard president also blasted Treasury Secretary Steven Mnuchin for asserting that the tax plan, which centers on reducing the corporate tax rate, will unleash so much growth that it won’t cost anything and will instead help pay down the federal debt.
“There is a range of estimates that a reasonable and thoughtful person could have and then there are estimates that if you have them you can really only have them if you were ignorant to the subject or if you were being motivated by politics,” said Summers, who has emerged as a leading critic of the GOP plan on the left.
“And I’m afraid the claims of Secretary Mnuchin that this would generate so much economic growth that it would pay for itself falls into that category. I’m not aware of so irresponsible an estimate coming from a Treasury secretary in the last 50 years.”
A Treasury spokesman declined to comment on Summers’ remarks.
Summers also had a warning for all of Trump’s current economic advisers. “The business advisers who resigned from President’s Trump’s advisory boards because they couldn’t be part of what he stood for will be remembered very well by history,” he said. “But those who remain will be remembered in the same way that many of Richard Nixon’s colleagues are remembered.”
In the wide-ranging conversation, Summers also reflected on his failed candidacy to become chair of the Federal Reserve four years ago. Summers was initially Obama’s top choice for the job but a campaign by progressives in favor of Janet Yellen ultimately derailed Summers’ chances.
“I generally look forward, not backward, and I try to be an optimistic person and so I don’t dwell on moments of maximum conflict,” Summers said. “It wasn’t the easiest month of my life, but I think my wife would say things have worked out much for the better given the four years we’ve had together here in Boston and given the opportunities that I’ve had to participate on a range of issues in the public debate.”
Summers also said he felt good about what he accomplished in his five-year tenure as Harvard’s leader, from increased scholarships to a greater focus on undergraduate life. But he expressed regret over comments in 2005 about how innate differences in boys and girls might help explain the lack of female scientists and mathematicians at top universities.
He said he never believed that and doesn’t believe it now. “I’m hugely regretful and terribly sorry, as I made clear at the time, that I spoke in a way that suggested that I and more importantly Harvard had some different attitude. That was absolutely never my intention nor is it my values.”
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