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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.
During 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.
“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.”
Gramm’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.
Gramm — 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.
“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.
“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.
Gramm 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.
“I’m not upset by inequality,” he said. “So he’s rich, but I am richer as a result.”
That 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.
“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.
Gramm 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.
“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.”
Both 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.
But Gramm did not hedge in his criticism, telling Summers that the “highly” was unnecessary.
“I’m against the protective tariffs, period,” he said. “I’m against the crony capitalism, period. I think there are real dangers here.”
He added that economic freedom had been the American engine of progress for years and must remain its foundation.
“If the government can threaten my livelihood, I’m not free,” he said. “My economic freedom is what sets me free.”
