Summers: We Need to Worry More about ‘Fiscal Restraint’ in Inflation Fight, Deficits ‘Are Going to Start to Rise Rapidly’

On Thursday’s broadcast of MSNBC’s “Andrea Mitchell Reports,” Harvard Professor, economist, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers said that as the Federal Reserve tries to fight inflation, policymakers should be “worried a bit more about fiscal restraint because I think we’re on a path where budget deficits are going to start to rise rapidly again and that can be problematic in terms of inflation.”

Summers said that while the Federal Reserve will be the main factor in fighting inflation, “The administration did something right and important with its aggressive use of the Strategic Petroleum Reserves. The — I think measures that make it easier to produce energy are desirable in holding prices down. I would like to see tariff reductions that I believe could contribute as much as 2% to reducing inflation. I would like to see us worried a bit more about fiscal restraint because I think we’re on a path where budget deficits are going to start to rise rapidly again and that can be problematic in terms of inflation. … I think the steps that we’ve taken to expand infrastructure, for example, will, over time, have benefits. I think, in the short run, there are things we could do like the reduction in tariffs, like making it easier to site projects more quickly that would be helpful.”

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