At a Harvard Kennedy School event moderated by former university president Lawrence H. Summers, ex-Senator Phil Gramm voiced strong disapproval of the Trump administration’s economic strategies, particularly its decision to acquire equity in private enterprises. He warned that government ownership of corporate shares, even when initiated with noble intentions, opens the door to corruption and preferential treatment over time.
Gramm emphasized that such interventions undermine fair market dynamics, stating that once public authorities begin selecting which firms to invest in, the process becomes vulnerable to repeated misuse. His remarks followed the administration’s move to purchase a 10 percent stake in Intel, justified on grounds of national security due to the company’s critical role in semiconductor manufacturing—a rare step for the federal government, typically reserved for preventing corporate collapse.
The Texas politician, who served over twenty years in Congress, also challenged conventional poverty metrics, arguing that official data fails to account for transfer payments and tax benefits. He noted that when including refundable tax credits, food assistance, housing subsidies, and Medicaid, the perceived income gap narrows significantly. According to him, the disparity between the highest and lowest income quintiles drops from a commonly cited 16.7-to-1 ratio to roughly 4-to-1 when these factors are considered.
Gramm maintained that disparities in wealth are not inherently problematic, but rather stem from variations in individual ability, work ethic, and innovation. Citing Elon Musk’s achievements with ventures like Starlink, he suggested that societal gains often accompany personal enrichment.
“I don’t resent inequality,” Gramm stated. “His wealth doesn’t diminish me—in fact, I benefit from it.”
Summers countered by referencing cases like Warren Buffett, whose net worth can grow substantially even in years when taxable income is negligible or negative. He questioned the logic of treating such scenarios as income-free, calling the idea potentially absurd.
In response, Gramm argued that crafting tax policy around rare financial complexities isn’t practical and advocated for a simpler, more uniform system. He stressed that economic liberty is foundational to American prosperity and cautioned against policies that allow state interference in private enterprise.
“If my ability to earn a living can be jeopardized by government action, then I am not truly free,” he said. “Economic autonomy is what guarantees my freedom.”
Both participants expressed concern over interventionist economic models, with Summers warning that cronyism, trade barriers, and political influence on monetary policy threaten democratic capitalism. Gramm went further, rejecting protective tariffs and favoritism outright, calling them dangerous departures from free-market principles.
— news from The Harvard Crimson
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Former Senator Phil Gramm Slams Trump’s Economic Policy At HKS Talk
Former United States Senator Phil Gramm condemned the Trump administration’s economic policy and efforts to take equity stakes in private companies at a Harvard Kennedy School talk on Tuesday afternoon. n nDuring the event — which was moderated by former Harvard President Lawrence H. Summers — Gramm argued that once the government begins owning shares in businesses, even with good intentions, the practice inevitably invites corruption and spirals into favoritism. n n“It’s ripe for corruption and special treatment,” he said. “Even if your intentions are good, and even if your first selectees are good, you’ve got to accept the fact that it’s going to be used over and over and over again.” n nGramm’s criticism came just over a month after the Trump administration announced it had acquired a 10 percent stake in Intel, a move officials justified as essential to national security given the tech giant’s role in semiconductor production. The federal government has rarely purchased portions of U.S. companies before, and only done so in the past to prevent a firm from becoming insolvent. n nGramm — who represented Texas for more than two decades, first as a Democrat and later as a Republican — argued that official statistics dramatically overstate poverty and exaggerate the wealth gap, claiming that transfer payments and taxes are ignored in Census Bureau surveys. n n“When you see that the poverty family has an income of $29,000, that’s not counting a refundable tax credit, because they don’t take taxes into account,” he said, before adding that standard measures also exclude food stamps, rent subsidies, and Medicaid. n n“If you count all those things, the ratio of the top quintile to the bottom is not 16.7 to one, but four to one,” he added. n nGramm insisted that inequality was not a problem in itself, but rather a reflection of differences in talent, effort, and innovation. He turned to billionaire entrepreneur Elon Musk as an example, arguing that ordinary Americans are better off as a result of his success with products like Starlink, the satellite internet company. n n“I’m not upset by inequality,” he said. “So he’s rich, but I am richer as a result.” n nThat remark set up a testy exchange with Summers, who pushed back by pointing to investors like Warren Buffett. In years when Buffett’s taxable income was minimal or negative, Summers said, his wealth still soared. n n“Wouldn’t you say that saying Warren Buffett had no income, or if he had negative income — maybe the government should have sent him a refund — wouldn’t you say that was kind of madness?” Summers asked. n nGramm shot back that exceptions like Buffett’s were too complicated to build tax policy around and suggested that a broad-strokes tax system with no outliers was unfeasible. n n“A purer, simpler system is what I would like to have,” Gramm said. “But I don’t think people are asked to pay taxes or feel guilty about some stock going up.” n nBoth men ultimately came out against the Trump administration’s approach to U.S. economic policy. Summers warned that “highly crony capitalist, highly interventionist” policies — including tariffs, political pressure on the central bank, and favoritism in trade — posed a profound threat to the American project. n nBut Gramm did not hedge in his criticism, telling Summers that the “highly” was unnecessary. n n“I’m against the protective tariffs, period,” he said. “I’m against the crony capitalism, period. I think there are real dangers here.” n nHe added that economic freedom had been the American engine of progress for years and must remain its foundation. n n“If the government can threaten my livelihood, I’m not free,” he said. “My economic freedom is what sets me free.”