According to a report by the U.S. Government Accountability Office (GAO), at the end of January 2023, less than three years after COVID-19 was declared a global pandemic, the U.S. federal government had spent about $4.6 trillion to fund various stimulus programs. More than half of that spending occurred in 2020, the last year of President Trump’s first term in office. Some economists had already sounded the alarm that such levels of expenditure in a single year were excessive. Their complaints grew louder after President Biden unveiled his $1.9 trillion American Rescue Plan soon after taking office in January 2021.

Former U.S. Treasury Secretary Larry Summers and Jason Furman, both economics professors at Harvard, together with other influential economists and financial market experts, urged the Biden administration to exercise caution. They pointed out that because pandemic-induced supply-chain bottlenecks had created shortages of goods, pumping large sums of money into such an environment would lead to runaway inflation. That outcome would then require the Federal Reserve to raise interest rates aggressively, risking a severe recession that would lead to massive job losses, they warned.

Another group, including then Treasury Secretary Janet Yellen and Paul Krugman, Nobel laureate and professor of economics at the City University of New York (CUNY), played down those fears. They advocated for large stimulus spending to quicken the pace of recovery of the stalled economy. In their view, the supply-chain problems that Messrs. Summers, Furman and others were worried about were transitory. That is why that group became known as “Team Transitory.” Their backing helped President Biden get his package through Congress.

As the country found out later, Team Transitory got it badly wrong. Inflation did spike to 9.1 percent in June 2022, a little over a year after the American Rescue Plan was passed. At the end of 2019, when COVID-19 first started, U.S. inflation was only 1.8 percent. The Federal Reserve was forced to embark on an aggressive interest rate hiking campaign to combat inflation in an effort to bring it back to the 2 percent target, just as Secretary Summers and others predicted. Three years later, that battle is still not fully won. The one good news is that the feared recession did not materialize. But that high inflation has been widely blamed for the Democrats’ devastating losses in last year’s presidential and Congressional elections.

Most economists currently fear that President Trump’s tariff policies will drive up the prices of goods and services in the U.S. The president has brushed off those concerns, saying that whatever pain is experienced will be part of a transition that the economy needs to go through to redress the unfair trade practices of other nations. In his view, they have victimized America for too long. He has in recent weeks refused to rule out a recession here in the U.S., saying that it would be a good price to pay for the much-needed changes in our trading relationships with the rest of the world.

Treasury Secretary Scott Bessent has recently echoed the president’s dismissals of the growing worries about the administration’s tariff and other policies. During his appearance last Sunday on NBC’s Meet the Press program, he also refused to rule out a recession. He argued that the stock market corrections like the one the S&P 500 and other indices have recorded in recent weeks are “healthy.” Secretary Bessent went on to say that “We are going to have a transition, and we are not going to have a crisis.”

But what if we have a crisis? Then what? We know now that the things we may think of as transient, can in fact be as sticky as glue. The 2021 Team Transitory was confident that even if the feared runaway inflation were to materialize, the Fed had the tools—interest rate hikes—to remedy the situation. Secretary Bessent did not exactly define the crisis he says we will avoid. Therefore, we don’t even know if any medicine exists to cure that malady if we were to become afflicted by it.

In his remarks yesterday following the FOMC meetings this week, Fed Chairman Jay Powell talked about risks to the economy from tariffs. But he sounded cautiously sanguine that any inflationary effects resulting from them will be short-lived. However, a growing number of economists and financial market-watchers are worried. They fear that the tariffs and other administration policies will lead to slower economic growth and higher inflation—the much-dreaded stagflation.

The optimism of President Trump and Secretary Bessent seems to be predicated on the assumption that the benefits of the tariffs will far outweigh any negative effects from whatever retaliatory measures other nations take against us. But they can’t just look at tit-for-tat tariffs. The heavy-handed nature of the president’s approach, and the disdainful manner in which he talks about America’s longstanding allies, have destroyed a lot of trust, which is a precious thing in business relationships. That will do immeasurable economic damage both in the near and long terms.

Both President Trump and Secretary Bessent are billionaires. Besides, they draw salaries from their current jobs in the public sector. There are thousands of retired ordinary Americans who depend almost exclusively—or quite heavily—on their modest stock market portfolios to meet their day-to-day expenses. For those individuals, there is nothing healthy about watching one’s accumulated wealth being destroyed so rapidly as has occurred in just the last few weeks.

The erroneous assumptions of Team Transitory in 2021 ended up doing a lot of damage that the country is still suffering from. We must hope that we are not witnessing the emergence of another version of that group of prognosticators. The medicine that President Trump and Secretary Bessent say we need to take in the short term for those promised long-term benefits seems uncomfortably too strong. It might kill us before we get the opportunity to taste the reward, assuming there is any to look forward to.