| The Early: You've been one of the leading Democratic critics of Biden's economic policy. How would you grade his record so far? Rattner: It gives me no pleasure to say this, but I don't think history is going to look back on either his economic policy or the Fed's monetary policy with great favor. In retrospect, there's no question that we way overstimulated the economy relative to what was needed. No one would disagree with the fact that some amount of stimulus was certainly needed in 2020. But by the time we got to 2021 and certainly sitting here in 2022, the last thing this economy needs is more fiscal stimulus. The Early: In his State of the Union, Biden said, "One way to fight inflation is to drive down wages and make Americans poorer. I have a better plan to fight inflation. Lower your costs, not your wages." What do you make of that approach? Rattner: There are certainly elements of Biden's Build Back Better proposal and other proposals that he's made that, in the long run, could have a positive impact on inflation. The idea that in the short run you're going to somehow move around a set of costs in a way that's going to have a meaningful impact on inflation doesn't seem obvious to me. I don't believe that you need to "drive down wages" in order to restrain inflation. But you do need to reduce demand, which is what has caused a lot of this inflation. The Early: You wrote in a New York Times op-ed last month that Biden's claim that "the reason for the inflation is the supply chains were cut off" was "misleading." What do you make of Biden's recent remarks blaming Russian President Vladimir Putin for rising gas prices? Rattner: Oil prices were already rising before the Russian invasion. They'd already gotten above $80 a barrel, because the world is, broadly speaking, short of oil. The world is still using huge amounts of oil, and supplies are not growing nearly as fast. Russia certainly compounded that problem. But [Russia] is by no means the only reason why gas prices have been rising now for a couple of years. The Early: You led the White House effort to save the auto industry during the Obama administration. What do you make of the ideas that Democrats have talked about in recent weeks to bring down gas prices, such as a potential gas tax holiday? Rattner: I think you have to be careful what you wish for. We are trying to achieve an energy transition away from fossil fuels. The more you bring down gas prices, the more you encourage gasoline use. You would be amazed at how close a correlation there is between gas prices and what kind of cars people buy. So, in a way, if you're in favor of an energy transition, you should want higher gas prices, not lower gas prices. I certainly recognize the impact of high gas prices on consumers — particularly lower-income consumers. But a much better way to address that problem would be to provide a broader kind of tax relief rather than targeting lower gas prices, per se. The Early: Manchin has cited inflation as one of the reasons he's been hesitant to move forward with the Build Back Better Act. He's indicated recently that he's ready to start negotiating a more limited bill focused on energy, prescription drugs, tax hikes on the wealthy, etc. Do you think there's any reason at this point not to pass such a bill because of inflationary concerns? Rattner: I'm very much in favor of much of the Biden agenda being passed. I just want it to be properly financed and paid for. One of the problems with the original Build Back Better bill was that, in theory, it was paid for but 1) the [revenue] was spent sooner than the money was collected, and 2) several of the spending proposals were set to expire in order to make them fit into this kind of budgetary construct. And we all know that government programs don't expire that often. So I think Senator Manchin was right in pointing out those issues and in bringing a halt to it so that we can hopefully come up with a better package. The Early: If you could add one person to Biden's economic team, who would it be? Rattner: Larry Summers. The Early: And why is that? Rattner: Because Larry is the smartest, clearest-thinking economic policy person I know. Larry has been right on all of this from the beginning and it would have been great to have had his voice in the room when much of this was decided. | 
