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Larry Summers has President Biden’s ear — but not always his support

White House officials want the influential economist on their side, even if they don’t take his advice all the time

Larry Summers at the unveiling of White House portraits of former president Barack Obama and former first lady Michelle Obama. (Michael Reynolds/EPA-EFE/REX/Shutterstock)
13 min

President Biden spent more than an hour in the Oval Office in late August with former treasury secretary Larry Summers, prompting some aides to marvel that he had granted such a lengthy audience to a combative economist who had assailed the economic management of Biden and the Federal Reserve as the “least responsible” in four decades.

The meeting set off fresh speculation inside the White House about the influence of what some aides jokingly call Biden’s “shadow” director of the National Economic Council — a position actually held by Brian Deese — and the uncertain stature of Treasury Secretary Janet L. Yellen, who has sometimes struggled to get Biden to back her recommendations.

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That same day, Aug. 25, Biden announced he would cancel up to $20,000 in student loan debt for most borrowers, a move Summers publicly and vocally opposed. Summers had privately told White House aides that he would soften his criticism if they also ended a moratorium on loan payments — exactly the policy Biden ended up implementing. The president did not mention the issue in their meeting, according to people familiar with the matter, who spoke on the condition of anonymity to discuss a private conversation that has not previously been reported.

Biden’s moves — inviting Summers into the Oval Office, then picking and choosing from his advice — reflect the broader White House strategy over the last year toward the influential economist and onetime Harvard president, whose support the administration covets but whose counsel it sometimes rejects.

After being ignored in discussions over the White House’s $1.9 trillion economic rescue package early last year, Summers emerged as a powerful critic of Biden — giving Republicans a political weapon as inflation skyrocketed and the president’s economic approval ratings cratered.

Since then, White House officials have worked on what some privately characterize as a campaign to manage Summers, trying to make sure he feels heard — if not always heeded. Summers is in routine contact not only with Yellen and Deese but also Chief of Staff Ron Klain, with whom he communicates roughly weekly, as well as the president himself, with whom he has spoken privately around a half-dozen times over the last year.

Just how much the White House listens to Summers could shape how the economy fares — and Biden’s political fortunes. Summers is still seen as toxic by many of Biden’s supporters, both for his work in previous Democratic administrations whose economic policies are now viewed as inadequate and for comments he made at Harvard that suggested more men than women go into science because of innate differences between sexes. And he’s much more hawkish on inflation than many of Biden’s advisers, saying Americans may have to endure high unemployment to get prices under control. But he maintains respect from powerful figures around Washington — and from Biden, whom he’s known for at least three decades.

“They see Larry as a very important political player with a major platform. Whether they’re really listening to him, or simply listening to him to make him feel good — it’s hard to say,” said a longtime associate of Summers who is also in touch with several senior White House officials and spoke on the condition of anonymity to disclose private conversations. “It’s certainly a bit of both.”

The White House said in a statement that Biden speaks regularly with a broad range of experts on economics and other policies, pointing out he has spoken on the phone with Citigroup executive Jane Fraser and former GOP treasury secretary Hank Paulson in recent weeks, while also meeting in person with Wall Street analysts Seth Carpenter and Mark Zandi. A White House official said the president has spoken with Summers about the same number of times since taking office as he speaks with Yellen every month.

“I never discuss any aspects of private conversations with public officials, but I have certainly tried both in public and private to share macro-economic perspectives," Summers said in a statement. "I wish fewer of my inflation fears had played out.”

Past Democratic presidents Barack Obama and Bill Clinton elevated Summers to top roles in their administrations, reflecting their broader willingness to follow the advice of economic “wise men” over other major constituencies — unions, pollsters or powerful lawmakers in Congress.

But now, across a broad range of issues, from tariffs to stimulus, from unions to student loans, the PhD economists viewed as formidable under Obama and Clinton are losing internal battles to advisers more focused on politics, national security and other policy matters. Biden has proven much more willing to rely on populist calculations over the opinions of some elite macroeconomists, including critics with as much backroom influence in Washington as Summers.

It is a striking shift for Democrats, and one that implicitly recognizes the perception that Donald Trump’s rise was fueled by White working-class dissatisfaction with the party’s past economic record. Yellen, the most esteemed economist in the administration, has lost internal battles in which she has tried to ease tariffs on China to alleviate inflation and limit the size of Biden’s student debt relief plan, people familiar with the matter said.

Instead, White House economic policy is more likely to be determined by Klain and Deese — lawyers with extensive experience in crafting government policy, but not trained economists.

The change captures a shift in the party — also spurred by Trump — as Democrats pay more attention to powerful gestures and less to following the intellectuals and policy savants often perceived as out of touch with political currents. In the Obama administration, Summers helped shoot down some of then-Vice President Biden’s proposals to revive manufacturing for blue collar workers that he viewed as likely to prove ineffective, although the two worked together on the same side of the Detroit auto bailout. But critics say there are significant risks to this newer approach, pointing to soaring inflation — which Summers warned of, only to be ignored — as evidence.

“The economists are in a much more reactive position than they were in the Obama administration,” said one senior Biden administration official, speaking on the condition of anonymity to reflect internal dynamics. “They are being told, ‘Here’s what the policy is.’ There may be some flexibility to change things on the edges, but in general, by the time they weigh in, the policy has already been set.”

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Summers is not shy about denouncing policy missteps, and the pundits and opinion leaders who dominate official Washington discourse see him as an important voice. The onetime candidate to lead the Federal Reserve has been unsparing in his denunciations of the central bank, which he believes has moved too slowly to raise interest rates to curb inflation.

At a private meeting of the Aspen Economic Strategy Group in August, with roughly 40 people in the room, Summers directly confronted two Fed regional bank presidents. Summers told the Fed officials — Neel Kashkari and Susan M. Collins — that the central bank had taken too long to recognize inflation, were moving too slowly and were misleading the American people by downplaying the likelihood that bringing down high prices would cause a recession.

Kashkari responded directly to Summers with an impassioned defense of the Fed, leading to a heated and previously unreported exchange that stunned the crowd of economic bigwigs.

“The message to them was: ‘Everything you’re doing is wrong,’ ” one person in the room said. “It was unbelievable.”

In a statement, Summers said, “I did feel at the time that the Fed was substantially unrealistic in its soft-landing views. I think Chairman Powell in his Jackson Hole speech and his most recent press conference was much more realistic on the soft-landing risks.”

Administration aides largely dismissed Summers at the outset of Biden’s presidency, due to a combination of his ideological baggage — helping to deregulate Wall Street under Clinton, for instance — and his comments at Harvard about gender differences. By the time Biden took office, many Democrats were frustrated by the Obama administration’s economic record, as well, believing it was too cautious about solving the country’s big problems.

Economists who served under Clinton and Obama flatly reject this criticism as misguided, arguing that the political constraints of those eras — far more than their recommendations — explain why Democratic presidents stayed away from bolder economic ideas, such as endorsing a bigger stimulus in the wake of the 2008 Great Recession. But they are viewed by many of the party’s leaders as disconnected from the country’s economic mood.

“The combination of being wrong about what’s going on, being out of touch of what’s going on, and not having solutions that work has really diminished economists as a class,” said Celinda Lake, a Democratic pollster who has worked for Biden, Clinton and many Democratic senators. “Joe Biden has always been more populist than they were. It’s certainly been a big difference.”

But the White House’s initial distance from Summers emerged as a major public relations problem. As the White House moved to enact its $1.9 trillion American Rescue Plan last March, Summers argued it was far too large. Internally, the administration’s economists only played a secondary role in determining its scope. Yellen, who was wary of the price tag as well, was not involved in setting the final dollar amount but had told Biden to aim for a large figure, as the Wall Street Journal first reported and The Washington Post confirmed — although she later defended it vocally.

How Larry Summers went from Obama’s top economic adviser to one of Biden’s loudest critics

From his perch outside the administration, Summers repeatedly slammed the policy as reckless, and Republicans constantly pointed to criticism from a top Democratic economist. Biden officials worked to contain the damage as concerns about the fastest price hikes in four decades helped lower the president’s approval rating. The president spoke to Summers over the summer, emphasizing that they were taking his counsel seriously. Aides say Biden enjoys talking to Summers, who conveys his worldview with authority.

Summers and Jason Furman, another Harvard professor who served as a top economist for Obama, also worked to push the Inflation Reduction Act, a centerpiece of the administration’s economic policy, with Summers calling Sen. Joe Manchin III (D-W.Va.) as negotiations were in flux. Allies say Summers is motivated by a desire to ensure Democratic policymakers succeed, fearing the damage posed by the GOP and Trump.

“He’s really one of the most brilliant human beings, one of the most brilliant economists there is,” said Mark Sobel, a former senior Treasury official who worked with Summers in the Clinton administration. “His views should always be sought out, and policymakers should be loathe not to take his views into account. Perhaps his delivery comes with an edge, or a little bit of bite, but the substance of what he says is extraordinary valuable.”

Summers has wielded significant influence in some areas: The big boost in enforcement at the Internal Revenue Service as part of the Inflation Reduction Act came in part from research Summers did with Natasha Sarin, one of his protegees who now works at the Treasury Department. During Biden’s campaign, Summers and Sarin worked on aspects of the global corporate minimum tax, one of Yellen’s priorities. He was a vocal advocate for tapping the Strategic Petroleum Reserve when oil prices spike, which Biden has done multiple times.

Many of Biden’s top economic advisers worked directly for Summers at various points and maintain close ties to him. Deese served as a top Summers aide during the Obama administration. Gene Sperling, who Biden picked to implement the American Rescue Plan, worked closely with Summers in the last two administrations, and Cecilia Rouse, the chair of the Council of Economic Advisers, had Summers as an adviser in graduate school.

Yet on other key issues, Summers’s influence has been limited. For instance, both Summers and Yellen have urged White House officials to ease tariffs on China, arguing that repealing import duties Trump imposed would lower consumer prices. Biden has so far rejected these pleas, with administration officials wary of granting relief to China without securing a meaningful concession.

As inflation rose last year, liberals in Congress clamored for the White House to attack large corporations for taking record profits and passing costs onto consumers. Summers and Furman pushed back strongly, warning that there was no evidence that increased corporate greed was to blame. With pollsters telling the administration that the liberal message was persuasive with voters, Biden at times criticized corporate consolidation for the inflationary spike, castigating the meatpacking and energy industries and breaking with the economists.

White House allies split over inflation plan as Biden focuses on corporate greed

Summers and Furman similarly opposed the push by the party’s liberal flank to cancel significant amounts of student debt. Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative leaning think tank, said the decision underscored Democratic economists’ lack of power: “If previous Democratic presidents had done something like Biden tried to do in canceling student debt, previous Democratic treasury secretaries would have been able to stop that, and I wonder why that did not happen this time.” Many Democrats believe Biden’s approval ratings with young voters have gone up because of the announcement.

Summers’s influence may be soon headed for its biggest test yet. He has been adamant that the central bank needs to clamp down aggressively on high inflation and the tight labor market with large interest rate hikes. Labor unions close to the administration, however, have been equally adamant that the Fed may be clamping down too hard, throwing millions of workers out of their jobs. The bank has already raised its key interest rate by 3 percentage points this year and plans two more hikes before 2023.

So far, Biden has emphasized the central bank’s independence. But if the economy begins to tip toward a recession as inflation falls, the president will be under pressure to criticize the Fed for pushing interest rates so high — and ignore Summers again.