Washington - Former US
Treasury Secretary Lawrence Summers attacked the policy proposals of Donald
Trump on several fronts, saying the president-elect’s plans for
deregulation were setting the stage for the next financial crisis.
“The deregulation in some
areas like finance is hugely dangerous,” Summers said Sunday in an interview on
Fox News Channel. “Who wants to go back to the era of predatory lending? Who
wants to go back to the era of vastly over-levered banks?”
Members of Trump’s
transition team have vowed to dismantle the 2010 Dodd-Frank Act, the principal
legislative response to the 2008-09 global financial crisis, although Trump
himself has given mixed signals on Wall Street regulation. During his campaign,
he railed against Dodd-Frank, which greatly increased restrictions on banks
operating in the US, but also said he would reinstate a separation between bank
lending and securities underwriting, which was removed in 1999.
Read also: Toyota stocks tumble after Trump criticism
Summers, former chief
economic adviser to President Barack Obama and Treasury secretary under
President Bill Clinton, also took aim at Trump’s protectionist rhetoric.
That’s already caused a plunge in the Mexican peso, giving Mexican
manufacturing an extra advantage over U.S. competitors.
Jawboning automakers
“Every business deciding
whether to locate in Ohio or Mexico is finding Mexico 20 percent cheaper,” said
Summers, who’s now a Harvard University professor. “That’s a huge tilt against
the United States.”
The peso has lost 14 percent
against the dollar since the November 8 election.
Trump, via Twitter, has
jawboned a number of companies, including automakers General Motors Co. and
Toyota Motor Corp., on their plans for expansion in Mexico. “Toyota Motor said
will build a new plant in Baja, Mexico, to build Corolla cars for US. NO WAY!
Build plant in US or pay big border tax,” Trump said in a Twitter post on January
5.
Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.
— Donald J. Trump (@realDonaldTrump) January 5, 2017
Trump’s plans to reduce
corporate taxation, Summers said, would “hugely increase inequality” and could
also help strengthen the dollar, further hurting US exporters and the people
who work for them.
While Summers favors a big
increase in infrastructure spending in the US as a way to boost productivity
and growth, he called Trump’s plans on that front “a Potemkin village of
nothing.”
Trump’s proposal called for
filling an estimated $1 trillion “10-year funding gap” of spending on bridges,
highways and airports through private investment and tax credits. Prospects for
the plan in Congress among Republican lawmakers are unclear.
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