Larry Summers plugs Schumer-Manchin deal: ‘This bill is fighting inflation’

Former Treasury Secretary Larry Summers praised the agreement between Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) on a climate, health care and tax package, saying that “this bill is fighting inflation.” 

Summers, who led the Treasury Department under former President Clinton, told CNN’s John Berman on Thursday that the bill is an “important step forward” on inflation, which has been his focus. He said the legislation is “historic” for the environment and will make the country more equal. 

Summers has repeatedly expressed concerns about rising prices as inflation has reached its highest point in four decades, calling on the Biden administration to take steps to alleviate supply issues. 

The bill is set to reach to the Senate floor next week as part of a budget reconciliation package, allowing it to pass the body without needing to overcome a Republican filibuster. 

The bill would invest $369 billion in climate programs over the next 10 years, which Schumer and Manchin said would cut emissions about 40 percent by 2030. It would also allocate $300 billion to reduce the deficit, allow Medicare to negotiate lower drug prices and spend $64 billion to expand health care subsidies for the Affordable Care Act. 

Summers, who also led the National Economic Council under former President Obama, said reducing the budget deficit will lower the level of demand in the economy. Inflation occurs when too much demand exists for too little supply. 

Summers said the bill will also increase supply with the stimulation of energy production and subsidization of transitioning the economy to renewable energy. 

“Less demand, more supply and direct better bargaining for lower prices — those are the things that are involved in reducing inflation,” he said. 

The bill would also cap out-of-pocket prescription drug costs at $2,000 and implement a 15 percent corporate minimum tax. 

Summers criticized President Biden’s $1.9 trillion COVID-19 stimulus package last year, calling it the “least responsible” economic policy in 40 years. He told Berman that the bill negotiated by Manchin and Schumer that will go before the Senate is different because the proposals included in the legislation are “more than” paid for. 

“It’s fair to call this the Inflation Reduction Act because it’s directly fighting the rate of inflation,” he said.