Latest news with #LarrySummers
Bloomberg
an hour ago
- Business
- Bloomberg
Are Central Banks Ready for AI to Rewrite the Rules of the Economy?
How will artificial intelligence reshape the global economy, central banking and financial forecasting? Larry Summers explains that AI could raise the neutral interest rate and productivity, while also introducing more uncertainty into economic modeling. Sascha Steffen of the Frankfurt School of Finance and Management adds that AI can dramatically improve forecasting accuracy and data frequency, but introduce new risks like systemic amplification, model bias and lack of transparency. (Source: Bloomberg)
Bloomberg
a day ago
- Business
- Bloomberg
Side Effects of the Big Beautiful Bill, Tariffs
Welcome to the Wall Street Week newsletter, bringing you stories of capitalism about things you need to know, but even more things you need to think about. I'm David Westin, and this week our special contributor, Larry Summers of Harvard, goes over the 'One Big Beautiful Bill,' and we take a look inside what President Donald Trump's threatened tariffs could mean for the US wine industry. If you're not yet a subscriber, sign up here for this newsletter. President Donald Trump claims his "One Big Beautiful Bill" is just what the US economy needs, and our special contributor, Larry Summers, agrees that "it's a big legislative accomplishment." But Summers says, "I don't think it's going to take the country in the right direction." He warns that "it's going to grow our budget deficits in the future very substantially," potentially leading to a "dynamic of higher deficits, larger interest rates, slower growth or worse deficits and around and around."
Los Angeles Times
5 days ago
- Business
- Los Angeles Times
From tariffs to universities, Trump's negotiating style is often less dealmaking and more coercion
WASHINGTON — President Trump prides himself on being a dealmaker, but his negotiating style is more ultimatum than compromise. In the last week, Trump has slapped trading partners with tariffs rather than slog through prolonged talks to reach agreements. He ratcheted up the pressure on the Federal Reserve to cut interest rates. And his administration launched a new investigation into higher education as he tries to reshape universities. For Trump, a deal isn't necessarily agreement in which two sides compromise — it's an opportunity to bend others to his will. While Trump occasionally backs down from his threats, the past week is a reminder that they are a permanent feature of his presidency. As Trump tightens his grip on independent institutions, there are fewer checks on his power. Republicans in Congress fear primary challenges backed by the president, and the Supreme Court is stocked with appointees from his first term. Trump recently summed up his approach when talking to reporters about trade talks with other countries. 'They don't set the deal,' he said. 'I set the deal.' Trump's allies believe his aggression is required in a political ecosystem where he's under siege from Democrats, the court system and the media. In their view, the president is simply trying to fulfill the agenda that he was elected to achieve. But critics fear he's eroding the country's democratic foundations with an authoritarian style. They say the president's focus on negotiations is a facade for attempts to dominate his opponents and expand his power. 'Pluralism and a diversity of institutions operating with autonomy — companies, the judiciary, nonprofit institutions that are important elements of society — are much of what defines real democracy,' said Larry Summers, a former Treasury secretary and former president of Harvard University. 'That is threatened by heavy handed, extortionist approaches.' Harvard has been a top target for Trump, starting in April when he demanded changes to the university's governance and new faculty members to counteract liberal bias. As Harvard resisted, administration officials terminated $2.2 billion in federal grants. The money is the lifeblood of the university's sprawling research operation, which includes studies on cancer, Parkinson's disease, space travel and pandemic preparedness. Trump has also attempted to block Harvard from hosting roughly 7,000 foreign students, and he's threatened to revoke its tax-exempt status. His administration recently sent subpoenas asking for student data. 'They'll absolutely reach a deal,' Trump said Wednesday. Administration officials also pulled $175 million from the University of Pennsylvania in March over a dispute around women's sports. They restored it when school officials agreed to update records set by transgender swimmer Lia Thomas and change their policies. Columbia University bent to Trump by putting its Middle East studies department under new supervision, among other changes, after the administration pulled $400 million in federal funding. At the University of Virginia, President James Ryan resigned under pressure following a Justice Department investigation into diversity, equity and inclusion practices. A similar investigation was opened Thursday at George Mason University. 'Federal funding is a privilege, not a right, for colleges and universities,' said Kush Desai, a White House spokesman. Such steps were unheard of before Trump took office. Ted Mitchell, president of the American Council on Education and an Education Department official under President Obama, said Trump isn't seeking deals but is 'demanding more and more and more.' 'Institutional autonomy is an important part of what makes higher education work,' he said. 'It's what enables universities to pursue the truth without political considerations.' The Fed has also faced Trump's wrath. He blames Fed Chair Jerome Powell for moving too slowly to cut interest rates, which could make consumer debt like mortgages and auto loans more affordable. It could also help the U.S. government finance the federal debt that's expected to climb from the tax cuts that Trump recently signed into law. Powell has held off on cutting the central bank's benchmark rate, as Trump's tariffs could possibly worsen inflation and lower rates could intensify that problem. Desai said the White House believes the Fed should act based on what the data currently shows, which is that 'President Trump's policies have swiftly tamed inflation.' Although Trump has said he won't try to fire Powell — a step that might be impossible under the law anyway — he's called on him to resign. In addition, Trump's allies have increased their scrutiny of Powell's management, particularly an expensive renovation of the central bank's headquarters. David Wessel, a senior fellow in economic studies at the Brookings Institution, said Trump's approach could undermine the Fed's credibility by casting a political shadow over its decisions. 'There will be real costs if markets and global investors think the Fed has been beaten into submission by Trump,' he said. Trump originally wanted to enact sweeping tariffs in April. In his view, import taxes would fix the challenge of the U.S. buying too much from other countries and not selling enough overseas. After a backlash in financial markets, Trump instituted a three-month negotiating period on tariffs. Peter Navarro, one of his advisers, said the goal was '90 deals in 90 days.' The administration announced a few trade frameworks with the United Kingdom and Vietnam, but Trump ran out of patience. He's sent letters to two dozen nations and the European Union informing them of their tariff rates, such as 30% against the EU and Mexico, potentially undercutting the work of his own negotiators. Desai said Trump's approach has generated 'overwhelming interest' from other countries in reaching trade deals and gives the U.S. leverage in negotiations. John C. Brown, a professor emeritus of economics at Clark University in Massachusetts, said the 'willy-nilly setting of tariffs according to one person's whims has no precedence in the history of trade policy since the 17th century.' 'It's just bizarre,' Brown said of Trump's moves. 'No one has done this in history.' The president has also used the threat of tariffs in an attempt to help political allies and influence other countries' court systems. He told Brazil that he would implement a 50% tariff if the country didn't drop its prosecution of former President Jair Bolsonaro, who like Trump was charged with trying to overturn an election. Inu Manak, a fellow on trade policy at the Council on Foreign Relations, said Trump's inconsistent approach will foster distrust of U.S. motives. She noted that two of the letters went to Canada and South Korea, allies who have existing trade agreements with the U.S. approved by Congress. By imposing new tariffs, she said, Trump is raising 'serious questions about the meaning of signing any deal with the United States at all.' Megerian, Boak and Binkley write for the Associated Press.
Business Insider
07-07-2025
- Business
- Business Insider
Larry Summers slams Trump's Big Beautiful Bill for its impact on the US debt and deficit
Larry Summers doesn't see much to love in the sweeping tax and budget bill President Donald Trump signed into law over the holiday weekend. On Sunday, the former US Secretary of the Treasury spoke to George Stephanopoulos of ABC News and laid out his take on the One Big, Beautiful Bill Act, taking aim at what he sees as a dire hit to America's fiscal health as a result of the historic legislative package. "There is no economist anywhere, without a strong political agenda, who is saying that this bill is a positive for the economy," Summers said. "And the overwhelming view is that it is probably going to make the economy worse." After weeks of deliberation, the One Big, Beautiful Bill Act recently passed in the House of Representatives, with Trump signing it into law on July 4. The bill is aimed at spurring economic growth through aggressive tax cuts, but economists, including those in the Congressional Budget Office, have said it will likely add trillions to the budget deficit. Summers echoed those concerns, stating that he doesn't believe that the policies will boost the economy. "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," he added. Top economists were sounding the alarm before the bill's passage this weekend. In June 2025, Nobel economists, including Paul Krugman, Joseph Stiglitz, and Simon Johnson published an open letter titled "The upside-down priorities of the House budget" through the Economic Policy Institute, a nonpartisan think tank. "The United States has a number of pressing economic challenges to address, many of which require a greater level of state capacity to navigate—capacity that will be eroded by large tax cuts," the letter stated. "The House bill addresses none of the nation's key economic challenges usefully and exacerbates many of them." The American Bankers Association has praised the bill, arguing that it could boost economic growth in the near term. However, experts from the American Enterprise Institute, a center-right think tank, have taken a policy similar to Summers', speculating that the US is unlikely to see much growth as a result of the bill.
Yahoo
07-07-2025
- Business
- Yahoo
Larry Summers Torches Donald Trump's Bill With 2 Damning Questions
Former U.S. Treasury Secretary Larry Summers on Sunday cut to the heart of Donald Trump's so-called 'Big, Beautiful Bill' with two withering questions. Summers first told ABC News' 'This Week' anchor George Stephanopoulos that he's 'never been as embarrassed for my country on July 4th.' Trump signed his signature spending and taxation legislation on Independence Day. The Clinton-era Cabinet member then flagged just some of the ways he believes Americans will lose out from Trump's signature spending and taxation legislation: 'These higher interest rates, these cutbacks in subsidies to electricity, these reductions in the availability of housing, the fact that hospitals are going to have to take care of these people and pass on the costs to everybody else and that's going to mean more inflation, more risk that the Fed has to raise interest rates and run the risk of recession, more stagflation, that's the risk facing every middle-class family in our country because of this bill.' Summers asked, 'And, for what?' 'A million dollars over 10 years to the top tenth of a percent of our population,' he replied to his own question. He followed up with a second damning question: 'Is that the highest priority use of federal money right now?' 'I don't think so,' he said. 'This is a shameful act by our Congress and by our president that is going to set our country back.' Watch here: 'This is a shameful act by our Congress and by our president that is going to set our country back.' Former Treasury Secretary Larry Summers criticized the GOP megabill, saying it makes him 'embarrassed for my country.' — This Week (@ThisWeekABC) July 6, 2025 CNN Data Chief 'Never Thought I'd See' This Stunning Shift In Sentiment 'Hateful' Trump Trashed Over 'F**king Disgusting' Line About Half The Country For Fourth Of July Trump Accused Of 'Blatant And Vile Antisemitism' With 'Deeply Dangerous' Trope
