In an interview on Bloomberg Wall Street Week, former Treasury Secretary Larry Summers said that some of Trump’s economic proposals could be extremely inflationary and damaging to the US economy in other ways. Bloomberg reports:
When it comes to fiscal policy, he is worried about the ideas Donald Trump is discussing in his reelection bid. Big increases in budget deficits, a weaker dollar and a “direct threat to central bank independence” all point to more demand. Put that together with limits on supply — including tariff threats and “greater restrictions” on the labor market — and he sees a “dangerous” situation.
Most alarming is Trump’s floating the prospect of replacing income taxes with tariffs, said Summers, who called it “a prescription for the mother of all stagflations.”
Former US Treasury Secretary @LHSummers says that a proposal to replace income tax revenue with revenue from tariffs would be the most inflationary proposal he has seen in his lifetime.
