Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: For our Bloomberg audiences worldwide. I'm David Weston and we're
Speaker 2: joined now by Larry Summers of Harvard. Larry, thank you
Speaker 2: so much for joining us. You've spent much of your
Speaker 2: career when you've written in Washington as a professor at
Speaker 2: Harvard and then as president of Harvard as well. So
Speaker 2: we want to ask you about this letter that came
Speaker 2: in on Friday from the United States government. I've read
Speaker 2: the letter carefully. Set aside for the moment some of
Speaker 2: the things that some people find forraconian. Does the Trump
Speaker 2: administration have a point, particularly with respect to dealing with
Speaker 2: antisemitism and diversity of viewpoint those things you have spoken
Speaker 2: out on before.
Speaker 1: David, I've been sharply critical of Harvard, and I continue
Speaker 1: to be critical on many dimensions. Anti Semitism is still
Speaker 1: not responded to strongly enough. There are still excesses of
Speaker 1: identity politics. There's still concerns about intellectual diversity. That's all right,
Speaker 1: But here's the thing. In America, you have to follow
Speaker 1: the law and the approach the Trump administration is taking
Speaker 1: of simply announcing and across the board freeze is wildly
Speaker 1: extra legal in its approach. It is not at all
Speaker 1: consistent with the Civil Rights Act, it is probably not
Speaker 1: consistent with Harvard's First Amendment rights. And so the right
Speaker 1: thing to do was surely for Harvard to respond vigorously
Speaker 1: and strongly. All the more because this is not an
Speaker 1: isolated thing what's being done to Harvard. This is not
Speaker 1: a manifestation of a particular concern about aspects of universities.
Speaker 1: This is a part part of a broad and sweeping
Speaker 1: effort to suppress institutions that challenge the presidential administration. It's
Speaker 1: part of what's being done to law firms. It's part
Speaker 1: of what's being done to countries. It's part of what's
Speaker 1: being done to judges. It's part of what's being done
Speaker 1: to legal residents of our country. And if an institution
Speaker 1: like Harvard cannot resist tyranny when applied to it, with
Speaker 1: Harvard's fifty billion dollar endowment, with all its network, with
Speaker 1: all its prestige, then who can. So Harvard should not
Speaker 1: go interjecting itself into politics, but God, when it is
Speaker 1: the object of an extra legal set of orders and threats,
Speaker 1: I don't think it had any viable choice at all.
Speaker 1: But to respond strongly.
Speaker 2: Let's talk about that extra legal part of what you're
Speaker 2: saying at least defonic. The representative Republican from New York
Speaker 2: actually give an interview today and Arrival Network saying, listen,
Speaker 2: colleges like Harvard don't have a right to money from
Speaker 2: the government. They don't have a right to tax mayor money.
Speaker 2: And if they don't have a right to tax mayor money,
Speaker 2: can't the government put conditions on that money? Show?
Speaker 1: Here's the thing. First of all, the money is not going.
Speaker 1: It's not like the government's funding the DEI office at Harvard.
Speaker 1: Not like the government is funding the student discipline mechanism
Speaker 1: at Harvard. The government is funding researchers who are doing
Speaker 1: vitally important research on diseases like diabetes and cancer and als.
Speaker 1: Show what sense does it make to cut they're funding
Speaker 1: off because somebody doesn't like what the associate dean of
Speaker 1: students did in a student discipline case. And what remit
Speaker 1: does the government have to set as a condition the
Speaker 1: composition which beliefs are valued, in which beliefs are not
Speaker 1: valued in the Harvard Sociology department, That's not the way
Speaker 1: free speech works are in a free society. And this
Speaker 1: is supposed to be done the power of the purse.
Speaker 1: Remember by Congress. It is not the prerogative of the
Speaker 1: executive branch with three days notice, with no hearing, no
Speaker 1: judicial review, no transparent notification to Congress, as mandated by statute,
Speaker 1: to simply indiscriminately start cutting off previously promised and committed
Speaker 1: funds because it has a disagreement over an issue with
Speaker 1: the university.
Speaker 2: So, Larry, give us a sense of what is a
Speaker 2: practical matter this will mean if it continues through. You
Speaker 2: ran Harvard at one point. You know the budget, You
Speaker 2: know that fifty three billion dollars in downand there what
Speaker 2: will it do their operations?
Speaker 1: Look, they'll have to make some very important strategic choices.
Speaker 1: I hope that the university will find ways even if
Speaker 1: there is a cutoff for some interval of funds, to
Speaker 1: maintain vitally important programs, to not cut back research. But potentially,
Speaker 1: if the US government goes to war with our great universities,
Speaker 1: it means a sharp reduction in the kind of scientific
Speaker 1: progress that has caused the United States to be the
Speaker 1: envy of the world and pull so far ahead of
Speaker 1: Europe and Japan. It means the end of efforts at
Speaker 1: cures to diseases like cancer and diabetes. It means a
Speaker 1: substantial risk to our national security because one of our
Speaker 1: great national assets has been our capacity for innovation, which
Speaker 1: resides very heavily in our leading academic institutions. So a
Speaker 1: short run problem, I think that can be managed painfully
Speaker 1: until the judiciary steps in and does what's necessary, a
Speaker 1: long run war against the universities that is going after
Speaker 1: what is our hugest asset. You know, if I think
Speaker 1: about all the different sectors of the economy, it's hard
Speaker 1: to think of one where we are as dominant as
Speaker 1: in higher education. All the students from all over the world,
Speaker 1: at least until this administration came, wanted to come to
Speaker 1: the United States. A vast fraction of the world's innovation
Speaker 1: takes place in American universities. If we put at this
Speaker 1: put that at risk, we are making, I believe, a
Speaker 1: very very grave mistake. And yes, these issues should be pursued.
Speaker 1: But destroying medical research grants because you don't think people
Speaker 1: have been disciplines of early enough, it really doesn't make
Speaker 1: any sense.
Speaker 2: Laurie, I wonder if there's cautionary tail here that maybe
Speaker 2: the higher education system has become too intertwined with the government,
Speaker 2: that's why they're so dependent upon them.
Speaker 1: That there may be questions that can be asked of
Speaker 1: that kind. But gosh, if the government is not prepared
Speaker 1: to fund basic research, the research which ultimately will make
Speaker 1: possible the development of new products, I think we have
Speaker 1: a problem. If the government is not prepared to fund
Speaker 1: scholarships that promote opportunity for our poorest students, who are
Speaker 1: very able and generate social mobility, I think we have
Speaker 1: a problem. I think what we need, frankly, is a
Speaker 1: more mature relationship between the government, the broader society, and
Speaker 1: the university. Yes, the universities have made some very serious mistakes,
Speaker 1: and yes they should be pressured and pressured with escalating
Speaker 1: strength to change that. I didn't even have an objection
Speaker 1: to the way in which the Biden administration opened civil
Speaker 1: rights cases with respect to a variety of universities and
Speaker 1: anti semitism. But that's a very different thing than the
Speaker 1: kind of persecution that is involved here. And this escalated yesterday,
Speaker 1: David in a profoundly troubling way, when the President of
Speaker 1: the United States endeavored by social media to engage in
Speaker 1: an individual specific tax matter, namely Harvard's five oh one
Speaker 1: C three deduction, and to suggest that it be decided
Speaker 1: on the basis of a political ground. That's the kind
Speaker 1: of interference with the IRS that it's a sacred duty
Speaker 1: of the Treasury Secretary to resist. It's exactly what was
Speaker 1: alleged to have happened six levels down, and many people
Speaker 1: got very upset in connection with the so called Loess
Speaker 1: Learner case involving five O one C three deductions and
Speaker 1: conservative groups. If there was punishment of conservative groups, people
Speaker 1: were absolutely right to have been hugely outraged about it
Speaker 1: during the Biden administration. I don't know anything about the
Speaker 1: merits of the case, but for the President of the
Speaker 1: United States to be calling for changing the tax status
Speaker 1: of his adversaries, this is new and I believe authoritarian
Speaker 1: and a real question about our democracy.
Speaker 2: Larry, one last question, since we're on taxes and this
Speaker 2: is tax week, Basically, what do you make of the
Speaker 2: actions that the Trump administration is taking with respect to
Speaker 2: the IRS.
Speaker 1: I think it's possible that the Treasury Secretary and his
Speaker 1: senior colleagues are being seriously delinquent in their duty. I
Speaker 1: look at tens of thousands of people being pushed out
Speaker 1: of the IRS, even as tax compliance is a massive problem,
Speaker 1: and hears so many stories have increased tax cheeing as
Speaker 1: a consequence. I see the elevation of a person with
Speaker 1: no experience administrative or information technology experience to be the
Speaker 1: contemporary commissioner of the IRS, chosen on the basis of
Speaker 1: political loyalty to the Trump enterprise. I look at what
Speaker 1: are probably the extra lawful agreements entered into without even
Speaker 1: speaking to people at the IRS with respect to information
Speaker 1: sharing and immigration. I look at the president's involvement in
Speaker 1: specific cases, and I see the most important line that
Speaker 1: I thought I was supposed to defend when I was
Speaker 1: Treasury secretary, a political tax enforcement, neutral professional tax enforcement,
Speaker 1: not driven by politics. And I see that line being
Speaker 1: crossed with the Treasury Department cheering it on, and it
Speaker 1: makes me both very sad and very angry.
Speaker 2: Larry, thank you so very much, really appreciate That's Larry Summers,
Speaker 2: form treasure Secretary, now with Harvard