Comedian and political commentator Jon Stewart and former U.S. Treasury Secretary Larry Summers got into a heated exchange about the state of the economy during an episode of Stewart’s eponymous show, “The Problem With Jon Stewart.”
On Friday, Summers argued that the U.S. government’s stimulus measures have resulted in inflation, rising prices and wages.
“What happened to us is we had massive stimulus and an economy that could only produce so much. So we had a huge level of demand, and those huge levels of demand kept pushing up prices and pushing up wages,” he explained. “But ultimately, it was, you put too much water in the bathtub, you put too much demand into the economy, and you get high and rising prices.”
In discussing wages and employment, Summers said, “There are certain sicknesses you can have where there’s a drug, and it has side effects, and everybody hates the side effects, and no doctor wants their patient to suffer the side effects. But if you don’t address the sickness, you can have a bigger problem down the road.”
Stewart, however, fired back, saying, “The stock market assets have gone up 150%. CEO pay has gone up 1,500%. Workers wages haven’t gone up at all. I think you’re misdiagnosing the sickness.”
“The most serious problem in the U.S. economy has been the cleavages between those like you and me, who are very fortunate. That’s why we need a strategy and strengthening economic labor power. Is it an issue that somebody whose control is over setting interest rates and printing money can do much about?” Summers asked in response.
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Speaking later about economic recovery, Stewart said, “This pandemic was the first time the government, in my opinion, did the thing that they’re supposed to do in a crisis. When you look at the stimulus payments that went out, you know, 70% of it was being used for rent and food.”
“And if you look at the recovery in the pandemic versus the recovery from 2008, when you stimulated the economy at the demand level, jobs had plunged in the pandemic and then they shot back up. The recovery in 2009 was painstaking, but the stock market did great. So our fiscal policy and our monetary policy has always been on the side of corporate easing,” he added.
“If you talk to African American voters, if you talk to Hispanic voters, talk to voters who don’t have college degrees, they regard the country’s biggest problem as having to do with inflation,” Summers retorted. “So while you may see this as having been tremendously successful, our fellow Americans who don’t live as comfortably as you and I do have a lot of questions.”
Touching on the topic of corporate profit, Stewart told the former Treasury Secretary, “But what you’re not addressing is not all of inflation was stimulus. The tools that we have, though, are basically saying to somebody, everyone’s paying more for gas and groceries, and that’s really hard. So here’s what we’re going to do: We’re going to throw 10 million of them out of work so that we all don’t have to share that burden. Why aren’t we attacking corporate profit in any way? Because that’s been estimated to be 30% of inflation, 40% of inflation?”
Summers responded by saying that he didn’t think that “it’s a tenable view that all of a sudden corporations became greedy.”
At that point, Stewart cut Summers off, pointing out that there had been recordings and reports where corporate executives had spoken highly of their increased profits during earnings calls.
The former Treasury Secretary had earlier said that the Federal Reserve shouldn’t be spooked by the recent banking crisis into easing its campaign to contain inflation.
“It would be very unfortunate if, out of solicitude for the banking system, the Fed were to slow down its rate of interest-rate increase beyond what was appropriate given the credit contraction,” Summers said during an interview with Bloomberg.
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