Parts of Joe Biden’s so-called Bidenomics strategy are becoming “increasingly dangerous,” according to former White House official Larry Summers who worked with the current president under Barack Obama.
Speaking at an event held by the Peterson Institute for International Economics on Tuesday, Summers—who served as Treasury secretary in the Clinton administration and was director of the National Economic Council under President Obama—argued there were certain aspects of the current administration’s economic agenda that could end up pushing prices even higher.
At the end of June, the president gave a speech that touted “Bidenomics”—a raft of economic policies that he sold as a cure for the trickle-down economics of the Reagan era, famously dubbed “Reaganomics.”
What is ‘Bidenomics’?
His interventionist approach involves using taxes and government subsidies in a way meant to strengthen the middle class and, in theory, propel the economy into growth.
Bidenomics, he argued, would help America invest in new technologies, create jobs, and improve social mobility.
Much of the policy is also centered around reviving U.S. manufacturing and boosting factory jobs.
What’s the issue?
Summers said that while he agreed with much of what the Biden administration has done economically—including the passing of the Inflation Reduction Act—he was anxious about the president’s approach to trade, the focus on boosting U.S. manufacturing, and the principles underpinning the administration’s antitrust clampdown.
“I am profoundly concerned by the doctrine of manufacturing-centered economic nationalism that is increasingly put forth as a general principle to guide policy,” Summers said.
Summers suggested that the Biden administration’s stance was taking the wrong approach to encouraging economic growth.
“We do not have a problem of a shortfall of jobs,” he said. “We do have a problem of costs.”
Noting that Americans’ spending power is “not where we would like [it] to be,” Summers argued that it was “wrong to suppose that manufacturing-based economic nationalism is a route to higher incomes or better standards of living for the middle class.”
He argued that those designing economic policy should beware falling victim to the “fallacy” that industrial policies such as those encompassed in the Bidenomics package offer “some kind of route to prosperity.”
Industrial policy refers to intervention by the state to encourage economic transformation.
A spokesperson for the White House did not respond to Fortune’s request for comment.
U.S. economy growing
The invention of Bidenomics comes at a time when the president is keen to take ownership of the economic landscape, with inflation stabilizing, the odds of a recession declining, and the labor market remaining robust.
The White House is using it as a buzzword to win over voters on Biden’s economic record ahead of the 2024 presidential election.
Economic data released on Thursday showed that the U.S. economy grew faster than expected in the second quarter of the year, boosting the president’s Bidenomics record.
Meanwhile, U.S. inflation cooled for the 12th consecutive month in June, slowing to 3%.
“The economy is growing, and we’re lowering costs for families,” the White House said in a statement after the GDP data release. “That’s Bidenomics at work. Today’s report shows that the economy grew at a 2.4% annual rate in the second quarter while inflation fell significantly.”
It isn’t just Summers that the approach has failed to win over, however.
Republicans have hijacked the term and are using it as a slur that blames Biden for the historically high inflation that’s squeezed American budgets over the past year.
And earlier this month, JPMorgan CEO Jamie Dimon said in an interview that “when they write books about this 10 years from now, a lot is going to be about how it didn’t work.”
Meanwhile, recent polling showed that just 33% of Americans approve of Biden’s leadership on economic issues.
