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00:00So Larry I guess the really big issue this week for the economy was his one point nine trillion dollar stimulus package that was announced by President elect Biden. You've been the secretary treasurer. You've been there when there is a huge package that you had to get out of Capitol Hill. Let me start with the most obvious question. Perhaps where's the most bang for the buck. What is really going to make the most difference in the economy. This is probably the boldest economic proposal since the Great Society and perhaps the boldest economic proposal since the New Deal. One way to look at it is this. In 2009 the incoming Obama administration proposed a fiscal plan that represented filled perhaps 40 percent of the output gap. This plan would be perhaps three times as large as the output gap so relative to the size of the economic problem we're talking about something more than five times as large. And that reflects a conviction that surely right that too little was done in 2008 but 2009. But five times is a lot. It also reflects a interesting and I think important desire to combine the macroeconomic element with the structural fairness element. And so these would be historic reductions in child poverty if achieved through the child care credit. I think that the most important pieces of this package are the reinforcements of the vaccination effort and the support for state and local governments. I think the question about this package is going to be how the macro economics add up. And here I think it's important to understand that this was probably as much an attempt to frame a debate that's going to come as it was a proposal to be implemented in its literal floor. And so I don't think the right question is whether this package would overheat the economy. I think if it were passed as written it would overheat the economy. But will this shift the debate towards our doing more. Will this shift the debate towards doing more for those who've been left behind. I think there. The answer is yes. But we are going to have to watch this economy very carefully. And I do think that conventional wisdom is underestimating the risks of hitting capacity. And if we do anything approaching this we are going to be managing the economy with the accelerator more on the floor than at any time in peacetime history. So Larry you say it frames the debate. Do we have time for that debate. Does the economy have time for that debate. Because there's going to be in all likelihood a back and forth. It doesn't look like as you suggest the Republicans are just going to say yes. Some moderate Democrats might not say yes if this takes three months or more could it be longer term structural damage to the economy. Do we need some things done right now. I think three three or four months would be a long time but I think that's why it's so important that the incoming administration work with the all the actors to get a nine hundred billion dollar package passed just a month ago. That nine hundred billion dollar package in and of itself given that it was all there wrong over three to six months is far larger than the fiscal stimulus we had in 2008. And so I think this does give us a little bit of time to work this out. The other concern I have is that I think the vice president was right. Vice president president elect was right in his campaign to put so much emphasis on build back better. And I worry that all the emphasis that's going to flow to this is going to take energy both political and economic and fiscal space away from the fundamental investments. Larry you mentioned the money you're going to given to people. Part of this package is fourteen hundred dollars more to individuals. That takes up that two thousand dollar magic number. We've talked about that before. You've expressed some skepticism whether make sense. We have various anecdotes but some people do need that money. Some people frankly don't. They've kept their jobs. They've kept their employment. Do you believe that this may be a risk to this package. Ironically one that may be more politically palatable including to some Republicans. Look I by my lights the fourteen hundred dollars that would go to my children is not an attractive use of public money. On the other hand it's universality serves to make it more attractive. And the authors of this package have put in a variety of other things that are tilted very much towards the poor. The refundable child tax credit for example. But I think we're saying the same thing gave it which is the risks here are on the side of we're just doing so much on such a scale to give money to people in a way that isn't completely targeted that that may use up space that could have been used for much more fundamental and important investments. Larry we'll be talking about this for some time to come. No doubt about it. Let's move on to another subject very much in the news this week which is a social media a lot of searches for social media particularly in light of that that attack the insurrection really on Capitol Hill. What do you make of the various calls on social media to reregulate itself and to exclude some of the entities that actually were communicating leading up to that attack. We're going to have to work this through as a society justice and to work it through with the printing press was invented just as at the eve of television. There were a whole set of fairness doctrines and the like. My sense is that the standards of what can be communicated is not a question that can be left only to corporate leaders and that corporate leaders are going to have to implement policies. But there's going to need to be a much clearer framework provided in law. And from my perspective the more important questions are these questions and the questions about privacy relative to the antitrust anti monopoly questions that have gotten so much attention. And indeed I worry that if you multiply the number of networks and you multiply the number of social media outlets it might even make it harder just to interfere with the organization of insurrections. So I think that issues right there in focus and it's an issue more for constitutional scholars than it is for economists. That law of unintended consequences. Let's conclude this week with a quick round of summer says three quick questions. Number one we have increasingly divided. Republican Party is a divided Republican Party. Ultimately good or bad for the economy. Probably bad I think that in general when parties are able to cohere better deals can be struck better and we can address problems more effectively. We also have an impeached president had a tough first time in history one and the president's been impeached a second time. The question is what happens in the Senate is a conviction of Donald J. Trump in the Senate even after his left office. Is that good or bad for the economy. I probably good is probably good for the country because it will accelerate. He is leaving our national life as a highly visible figure. But whether it's good enough to be worth the various costs of the process it's something I'll leave to politicians to judge. And finally bitcoin very much in the news now. Backup pushing its forty thousand dollars. Is it a bubble or not. I'm not going to predict its fluctuations over the next six months but I think some institution like it is here to stay. I don't think the whole thing is going to collapse. I think that having run off and then runway down and then moved moved back. It looks much more resilient. And therefore I think people are there to move towards it. And as people move towards it given the finite risks of its supply that's going to be a factor working to to raise prices.

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Economy Can Handle Overheating From Biden's Stimulus Plan: Summers

Former U.S. Treasury Secretary Lawrence H. Summers, a Wall Street Week contributor and adviser to Pres.-elect Joe Biden's campaign, says the economy will overheat if Biden's stimulus plan is passed as written, but Summers says the consideration should be about supporting those who are left behind. He joins David Westin on "Bloomberg Wall Street Week." (Source: Bloomberg)

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