Should-Read: Larry Summers: What History Tells Us about Trump’s Budget Fantasy

Should-Read: Larry Summers is not happy with Steve Mnuchin or Gary Cohn. I suspect that he has not registered the transformation of Goldman Sachs that took place with its shift away from relationship banking to trading plus adoption of the corporate form. High standards of integrity are an asset only if you are both playing a much-repeated game and have the mental discipline to be not short-term but long-term greedy. That last, especially, is very hard.

Larry Summers: What History Tells Us about Trump’s Budget Fantasy: “The Trump economic team has not engaged in serious analysis or been in dialogue… http://larrysummers.com/2017/05/30/what-history-tells-us-about-trumps-budget-fantasy/

…they have had nothing to say in defense of their forecast except extravagant claims…. Do they really believe that through tax cuts and deregulation they are going to accomplish more than Ronald Reagan, who after all reduced the top tax rate from 70 to 28 percent? Between 1981 and 1988, GDP per adult grew by an average of 2.5 percent, distinctly slower than what they are forecasting. Even this figure reflects a substantial cyclical tail wind….

A business trying to sell stock on the basis of a document half as hype-filled as the Trump budget would be a joke. No reputable investment bank would underwrite their offering. A great mystery here is why the experienced investment bankers in senior positions in the Trump administration hold the budget of the United States to so much lower standards of integrity than they applied in their earlier lives.