0:00

I. Think there's been a longstanding debate

0:03

between the political people and not just

0:05

around Biden, but in the Democratic

0:07

Party generally. And the economic policy staffs.

0:09

Economic policy staffs have basically been saying

0:12

for years. Look, Mister. President. We've

0:14

got a good story to tell

0:16

here on Jobs on Inequality rising

0:19

wages for poor people. But.

0:21

The political people. I think they just look at

0:23

the polls and this a lot by his approval

0:25

rating on the economy as you say, forty percent.

0:27

So their advice has been nothing to steer away

0:30

from that if he can. I think that sort

0:32

of argument seem to win out earlier in the

0:34

ear, and Biden was very much emphasizing the sudden

0:36

non economic. Arguments. But

0:38

he seems to have flipped a bit and last few weeks.

0:45

That's. My colleague John Cassidy John

0:47

has been tracking the By Administration's

0:49

economic strategy since the beginning, not

0:51

com. Mais litter the envy of the world.

0:54

And here, President Biden, Talk about it.

0:56

You'd think that Americans would be celebrating

0:58

in the streets. Fifteen million new jobs

1:00

and class. three. Years or record

1:02

for record. But

1:05

if you look at the pause, while Americans

1:07

might be feeling slightly better about the economy,

1:09

they aren't actually giving Biden that much credit

1:12

should they be. And what exactly is Bidens

1:14

plan? You're listening to the political scene and

1:16

how if I get and I'm a senior

1:18

editor at The New Yorker. So.

1:28

John. I. Wanted to start with

1:30

a really basic question, which is basically how

1:32

we measure whether the economy is doing well,

1:34

they're doing poorly, What are the main measures

1:36

that economists use and then what are the

1:38

measures that voters years and are they different?

1:41

Yeah. I mean, that's very good Question

1:43

Does a whole variety of economic statistics

1:45

which economists and policymakers look up? The

1:48

most basic one is Gdp, which is

1:50

a measure of all the output of

1:52

the economy. Gdps hi mean generally means

1:54

the economy's doing well. We're the most

1:56

obvious one is the unemployment rate. People

1:58

care a lot about. jobs so obviously

2:00

the number of jobs and the number of

2:03

people are out of work is an enormous

2:05

one. The general public

2:07

do look at those but what we found

2:09

over the last few years is that the

2:11

general public also look very closely at the

2:13

cost of living, basically the rate of inflation

2:16

consumer prices which for decades really nobody looked

2:18

at that closely because we've had this incredible

2:20

period since the early 1990s

2:22

of low inflation, prices rising so

2:24

slowly that most people didn't even

2:27

notice them rising very much. What

2:29

happened then was during the pandemic there

2:31

was this great supply shock, prices of

2:34

virtually everything, particularly goods, went

2:36

up very rapidly and that came as

2:38

a huge shock to people and

2:40

their wages weren't rising nearly as

2:42

rapidly and basically for the last

2:45

four years we've been dealing with the economic aftermath

2:47

of that shock. So it

2:49

seemed like about a year ago a lot

2:51

of economists believed that we were headed for a recession.

2:54

You've written about this a lot. The recession

2:56

didn't happen and I know that the reasons why it

2:58

didn't happen are heavily subject

3:00

to debate but what's your best explanation for why

3:02

we were able to avoid it? Again

3:05

that's another good question. You have to go back

3:07

to why most economists thought that there was going

3:09

to be a recession which basically do with interest

3:11

rates. Again we had a very

3:13

long period of very low interest rates. Mortgage rates

3:16

were down to two and a half percent you

3:18

remember before the pandemic. What

3:20

happened is when inflation rose the Federal

3:22

Reserve which has a mandate to keep

3:24

stable prices and maximize employment decided to

3:26

raise interest rates. It held off for

3:28

a while and got a lot of

3:31

criticism for that but eventually it decided

3:33

to act pretty dramatically and he

3:35

raised interest rates from virtually zero to over

3:37

five percent by the middle of last year.

3:42

If you just use standard economic models which

3:44

you see in the textbooks most people would

3:46

expect that to produce a recession because interest

3:48

rates rise. It's more expensive for people to

3:51

borrow. It would usually produce a shock in

3:53

the housing market and would

3:55

knock the economy into a recession. A

3:57

mild one maybe but some sort of recession. That

4:00

didn't happen this time for a number of

4:02

reasons which economists are still debating. One very

4:04

important one is that the housing market never

4:06

cracked. Even though mortgage rates have gone from

4:09

like 2% to 2.5% to 8%, I think they're about 7%

4:13

now, house prices have kept going

4:15

up, which is sort of unprecedented really. And

4:18

a lot of people's wealth is tied up

4:20

in their houses, so as long as their house

4:22

prices still going up, people tend to feel that

4:24

they're relatively well off. That's helped

4:26

prop up spending. So businesses, it

4:29

turns out, a lot of them had

4:31

locked in very low interest rate loans

4:33

during the early years of the pandemic

4:35

or even below. So when

4:37

interest rates went up, it didn't affect their

4:39

borrowing very much because as I say, they

4:41

were already locked in. So we didn't see

4:43

the sort of feed through to businesses having

4:45

a sort of cost shock and laying off

4:47

people either. So the net

4:49

impact of it all has been basically

4:52

that higher interest rates haven't made the

4:54

economy nearly as hard as most economists

4:56

expected. So what else

4:58

are we seeing with the economy right now, just going

5:00

back to those measures that we used to kind

5:02

of figure out whether the economy is doing well,

5:04

like inflation, you know, unemployment, where would you say

5:07

that we're at? Well, I mean, I think you

5:09

have to take them in terms. I mean, the

5:11

great news about the economy over the last few

5:13

years has been the employment story. For

5:15

decades, economists thought unemployment rate had to be sort

5:17

of 5% or 6% to

5:20

keep inflation low. And

5:22

by the time we've taken unemployment rate down to the

5:24

threes for two years now, it's been

5:26

under 4%. And

5:29

that hasn't led to higher inflation, but it's had

5:31

a lot of very beneficial impacts in

5:33

other ways. Obviously, when there's low unemployment rate,

5:36

it means that, you know, there's a lot of plentiful

5:38

jobs. And what we found

5:40

is that when you take unemployment rate down

5:42

to a very low rate, employers have to

5:44

pay higher wages even to people in the

5:46

past, they were able to pay very low

5:48

wages. So the big beneficiaries

5:51

of the low unemployment era have

5:53

been Low paid workers,

5:55

non-college workers, even high school graduates

5:57

who I'm sure you know have.

6:00

In a big sort of victims of

6:02

Less Forty Years for bicyclists sincerely Nineteen

6:04

seventies Though this section of the workforce

6:06

have seen their wages stagnate on in

6:08

a lot of cases even fall in

6:11

real terms. What's happened since Twenty Twenty

6:13

is that actually their wages have gone

6:15

up faster than the rest of the

6:17

workforce, so he seems incredible reversal in

6:20

wage inequality so that that's the great

6:22

news and that some unemployment story. Inflation

6:25

you asked about as well. Of course that's

6:27

an enormous stories that the flip side to

6:29

what's happened and I think is is the

6:31

reason why are and ratings haven't risen. Even

6:33

though the rate of inflation has come down

6:36

very sharply, it was up to like nine

6:38

percent in the summer of two thousand and

6:40

twenty two and a things down to close

6:42

to three percent. Now though some figures this

6:44

morning it's gone up slightly, but it's basically

6:47

running close to three percent the I'm. Reduction.

6:49

In inflation in a that's good news

6:52

but the regular consumer a ghost, the

6:54

suit market whatever doesn't see that very

6:56

much because just because the rate of

6:58

prices going up as fallen doesn't mean

7:00

actual prices of for a fall in

7:02

in absolute terms to look at things

7:04

like eggs, fuel oil, Price.

7:07

Of cause chicken, they've all still considerably

7:09

higher than they were in two Thousand

7:11

and Twenty, even though they fall, and

7:14

quite so in some cases have fallen

7:16

cry sharply over last year or so.

7:18

So I think that's one reason why

7:21

the sort of improving economy and the

7:23

phone inflation hasn't fed through you know,

7:25

Tibetans poll ratings is also I think

7:28

a lag involved here, and that it's

7:30

taken a long time for people to

7:32

even realize that inflation is falling and

7:35

and we're now seeing that actually. If

7:37

you look at this is sort of a

7:39

distinction between the what people call the economic

7:41

sentiment and indexes which is how do you

7:43

feel about the economy, how's your family? During

7:45

relative two years ago a year ago those

7:47

numbers of I see gone up quite a

7:49

lot of last few months, but they haven't

7:52

yet sent through to Biden. Ratings are that

7:54

the may just be a lag always tests.

7:56

That's the big question of next six months,

7:58

whether they do feed through. That we

8:00

want to get into. Why is positive developments

8:02

have been affected by his approval rating? Yeah

8:04

but first I just want talk a little

8:06

bit more about how much we can kind

8:08

of a these positive economic developments to. Biden.

8:10

Omics when I think the just only attribute

8:13

some of the moment or whoever the president.

8:15

they always get too much credit for newcomers

8:17

doing well and too much blame on is

8:19

doing badly. It's always a combination of factors.

8:22

Have a see: the White House doesn't run

8:24

monetary policy, so Federal Reserve is, you know,

8:26

partly responsible what happens, but that the level

8:28

of demand in the economy and fiscal policy

8:31

and things like that do matter. And I

8:33

think there's a consistent story here. this bidens

8:35

policies. We should be very expansionary from a

8:37

fiscal point of view at the big stimulus

8:40

program with. Start of his presidency

8:42

with why the American Rescue Act

8:44

which was one point nine trillion

8:46

program and the were a whole

8:48

series of more sort of structural

8:50

reforms, the infrastructure bill, the chipset

8:52

and the Am Inflation Reduction Act

8:55

which was media another set of

8:57

spending program Largely they've certainly help

8:59

prop up the economy and last

9:01

few years I think when historians

9:03

look back with a big change.

9:06

In by know makes will be the

9:08

industrial policy the it's him to stimulate

9:11

manufacturing in the United States, particularly semiconductors,

9:13

but also some manufacturing Some extent. that

9:15

was a reaction to Trump and his

9:17

economic nationalism, but Trump talked about doing

9:20

other stuff and much to do. much.

9:22

In the end, when you just look

9:24

at manufacturing construction, it went up sixty

9:27

percent Osha, which we haven't seen that

9:29

since immediate postwar years. Clinics.

9:32

That would you say? That Biden. Strategy when it comes

9:34

to the economy as is Innovative Rally I

9:36

don't think I'm in. some of it's not

9:38

in of a diva mean you know infrastructure

9:41

bills for decades were bipartisan affairs and mean

9:43

what's in of a diversity managed to get

9:45

it through because Trumpet of is the a

9:47

promise for four years to an infrastructure bill

9:50

and never did anything and you just have

9:52

to drive around the country to see a

9:54

decaying roads and bridges and railways etc. been

9:56

obvious for decades of us is under investing

9:58

in public infrastructure. The innovative

10:01

side of the policy has been

10:03

much more on the industrial policy

10:05

side, particularly the big spur to

10:07

green manufacturing. A few remember back

10:09

to the star, the Biden Administration

10:11

or not. so discussions of the

10:13

Green New Deal Muslim posts where

10:15

is put into bill by Better

10:17

Act. Still by Better Act was

10:19

Bidens original big proposal that went

10:21

down when Joe Manchin and Cinema

10:23

refused to bucket so seem for

10:25

the started two thousand twenty two

10:27

Bidens economic package it basically been

10:29

killed. But then in the

10:31

summer to agree to deal with

10:33

mansion and rescued large parts of

10:36

it especially the green parts of

10:38

it in the Inflation Reduction Act

10:40

and that included about four hundred

10:43

billion dollars over ten years for

10:45

investments in subsidies basically for green

10:47

energy produces wind, solar, hydro power,

10:50

and purchases of electric vehicles, retrofitting

10:52

buildings to make them more energy

10:54

efficient, etc. On an address

10:56

your base you say well the they're pretty obvious

10:58

policies but we never managed to get them through

11:00

before. So. Thinking about the Inflation

11:03

Reduction Act, it was supposed to expand

11:05

tax credit for Americans buying electric vehicles.

11:07

That then it turns out that it's

11:09

actually hard for electric vehicle manufacturers. Tip

11:11

off I for inclusion and so I'm

11:13

wondering if you can talk about how

11:15

the by an administration has responded when

11:17

proposals that look really good on paper

11:19

is can't implemented in a clean. Way rely

11:21

on seven. I'm twenty three. Moment of has

11:23

the big this big issue electric vehicles as

11:25

been the boundaries. The. United States just

11:27

didn't have the capacity to build butter is

11:29

for a long time. These details had a

11:31

regulations on the Saudi went into effect to

11:33

the start of the she is A lot

11:36

of Tesla vehicles for example are not eligible.

11:38

Now it's of for the some thousand five

11:40

hundred. Around.

11:45

Problem with itself. I don't think Isps much

11:47

pain. The foreign concern is just that So

11:49

far the market for like two vehicles is

11:51

not as big as people expected. Nothing less

11:53

lot to do with fact that the rest

11:55

of the infrastructure isn't implies. A

11:57

Boston weren't. Two, three,

12:00

Miles and you going to break down

12:02

on the freeways. still the biden plan

12:04

does. Having a didn't have a lot

12:06

of subsidies for people to build national

12:08

charging networks test was doing nothing but

12:10

conceivable. Tesla couldn't have mainly and recharging

12:12

company but again of the of an

12:14

attack a while to go into effect

12:16

so would you see his fault and

12:18

General Motors of the moment I see

12:20

cutting back on their electoral vehicle plans

12:22

because I'm in a saucepan is expected

12:24

but over the long term we still.

12:26

I had it for electric. Vehicles

12:32

because they have the infrastructure in place.

12:34

So again, it's a case of the

12:37

Us trying to catch up. Can

12:40

have some progress is are responding to

12:42

bind policies like the child tax credit

12:44

for instance. He. I'm in his. It's

12:46

a very good question. Generally speaking of

12:48

ministers are lot of progressives who

12:50

angry a burden for various things particularly

12:53

goes and now, but on the

12:55

erm economics, I don't think he basically

12:57

has carried most progressive with him. largely

12:59

because as you said, the child

13:01

tax credit was is a really biggest

13:04

anti poverty program we've seen since the

13:06

Ninety Six isn't out of a

13:08

dramatic impact on child poverty. Good looking.

13:10

talking about introducing child allowances as they

13:13

call him in the Uk for

13:15

fifty years in other pass the world

13:17

is. The sort of commonly accepted policy

13:19

the you don't want kids growing up

13:21

in poverty so you give their parents

13:23

cash on a universal basis and so

13:25

it's popular. you just have to pop.

13:29

Up on decline. someone.

13:32

Found. Isis.

13:35

biden plan originally so did that i'm

13:37

not completely universally but the for the

13:40

phase outward pretty high level so and

13:42

us majority of families were rams were

13:44

eligible for it some studies say reduced

13:46

to poverty and so to twenty one

13:48

twenty two by fifty percent but of

13:51

course it's very expensive and they only

13:53

put it in because of that the

13:55

only put it in for euro to

13:57

it than lapsed biden in his them

14:00

proposal, which came out earlier this week, is

14:03

proposing to reinstate it,

14:05

but again, only for a year,

14:07

because it is a big, expensive

14:09

proposal. But I think certainly the

14:11

progressives I interview and talk with saw

14:14

that that anti-poverty program was a big

14:16

deal. And Biden's also proposed

14:18

some other sort of big expansions to

14:20

the social safety net, including

14:23

universal preschool, childcare

14:25

programs for people who earn under $100,000 a

14:27

year, programs

14:30

to subsidize long-term care for the

14:33

elderly. These are all

14:35

big progressive programs that progressives have

14:37

supported for decades, and Biden hasn't

14:40

introduced them all, of course, but I think he's

14:42

taken them further than any other previous president. Yeah,

14:45

I mean, even what he's done with student loan debt, he couldn't

14:47

cancel it entirely, but I mean, even what he did seemed

14:49

like it was a huge step forward. It's

14:51

certainly bigger than anything that's been done previously. Again,

14:53

a lot of progressives on that

14:55

one think he didn't go far enough. But as

14:57

you say, compared to what's been done previously, it

15:00

was a big deal. And the people who received

15:03

the cancellations, I'm sure, are very grateful.

15:09

So, Don, I'd like to get your take on Biden's State of

15:12

the Union speech, but first we're going to take a quick break.

15:17

You'll hear more of the political scene from The New Yorker

15:19

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15:25

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is a daily politics podcast from KQED

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weird. Who

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16:00

But whatever happens this election year,

16:02

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it wherever you listen to podcasts.

16:18

John, prior to the State of the Union

16:20

address, you wrote a piece laying out how

16:22

you thought Biden should promote his economic achievements

16:24

and his future goals in the speech. Now that

16:26

you've watched the State of the Union, I'm wondering how

16:28

you think he did. Well, he didn't

16:30

use any of my particular lines. I don't think

16:33

I had one about the US

16:35

winning the gold medal in recovering from the pandemic,

16:37

which I thought he might steal, but he didn't.

16:39

So that was okay. But

16:41

the general line was the same. I mean,

16:43

he put a lot of emphasis on on

16:46

the economic recovery from the pandemic. Biden's

16:48

basic pitch is, look, when I took over,

16:50

we were still in the pandemic, the country

16:52

was still in a crisis. I've got us

16:54

through it. It's been tough time, but a

16:56

lot of the policies I introduced are now

16:58

starting to kick in favorably. We need to

17:00

sort of finish the job. That's his basic

17:02

message. And I think that, you know,

17:04

it was the right thing to do. If you

17:07

remember when Biden launched his reelection campaign earlier in

17:09

the year, the initial emphasis

17:11

was all on Trump and the dangers

17:13

of democracy. That's obviously a huge issue

17:15

and needs highlighting. But it's an issue

17:17

which tends to play with Democrats rather

17:19

than with swing voters. You know, if

17:21

you just look at the opinion polls

17:23

and ask voters what they think the

17:26

biggest issues are, the economy still ranks

17:28

right at the top. So I think

17:30

any president running for reelection has to

17:32

center his message on the economic, his

17:34

economic record and what he plans to

17:36

do in the second term. And I

17:38

think the state of the union was

17:40

basically an attempt to sort of pivot in that

17:42

direction. Obviously he, you know, he

17:44

didn't make the pro-democracy argument again and lots

17:46

of warnings about Trump, but it was accompanied

17:49

with a, you know, a big economic focus.

17:51

And I think that was the right thing

17:53

to do. So one

17:55

of the negative things that Biden pointed out during his

17:57

speech last week is needs

18:00

to come down. The Fed just published

18:02

its monthly inflation report, which shows that it's actually

18:04

risen a bit, indicating that it's going to take

18:06

some time for inflation to return to normal. What

18:09

are the main reasons for that? There

18:12

are two sides to the inflation picture.

18:14

Number one was the big increase in

18:16

the price of goods, that stuff, all

18:19

the stuff we import from China, clothes,

18:22

car components, electronics,

18:24

etc., etc. During

18:26

the pandemic, because of the supply chain issues,

18:28

the price of all these things went up

18:30

enormously. Over the last

18:32

couple of years, that's basically all

18:34

gone away. The supply chain crisis,

18:36

partly due to Biden's policies and

18:38

partly just due to the pandemic

18:40

receding, shipping fees, etc., have gone

18:43

back down to where they were

18:45

roughly. So that side of

18:47

inflation has basically gone away. But

18:49

what happened is some particular things,

18:51

food particularly, partly to do

18:53

with the avian flu, but partly to do with

18:56

companies not passing along cost reductions

18:58

and making higher profits, and

19:00

also some service prices have gone up

19:03

because wages have risen quite a lot. So

19:06

companies like fast food chains have seen their wages go

19:08

up and you see that reflected

19:10

in higher prices of fast food, etc. Takeout

19:13

food of all descriptions is a lot more

19:15

expensive than it was. So the

19:18

basic story is you've done the easy part of

19:20

getting inflation down. As I said, it's come

19:22

all the way down from 9% to

19:24

3%. But the Fed has

19:26

this arbitrary target of 2%, and

19:29

getting from 3% to 2% looks like

19:32

it's going to be pretty difficult and

19:34

pretty prolonged. And that's where there's

19:36

this whole debate about whether the Fed is

19:38

going to get interest rates this year, or whether it's

19:40

going to keep them where they are. It

19:43

almost feels like weight loss or something, where it's

19:45

easier to lose the first 50 pounds than it

19:47

is to lose the last five. Yeah, I know.

19:49

I mean, that's a very good analogy. I mean, again,

19:51

this is sort of. it's a very complicated debate. There's

19:53

some statistical issues involved. One of the prices that hasn't

19:55

come down much at all. The Fact is still going

19:58

up is as much as it has been. By

20:00

the government or Iran's of

20:02

apartments. And if you look

20:04

at the price of new rentals on the

20:06

market they have actually have gone down a

20:09

bit. The statisticians keeps a world is gonna

20:11

fade so into the official prices are few

20:13

months but we we be waiting for a

20:15

year also known as I'm Fed Through conceivably

20:17

could feed through in the next few months

20:19

which would bring the headline figure down towards

20:21

two percent. That's what the inflation doves are

20:23

saying. The inflation hawks to say no it's

20:25

not true, some prices are actually stand to

20:28

go back up said nice to actually and

20:30

a big we think it's a bit early

20:32

to say who's right on that. One. So

20:35

another thing that by talked about in the state of

20:37

the union was the increase in manufacturing. Jobs here in

20:39

the U S. And more jobs

20:41

for infrastructure projects. Like building bridges

20:43

and highways without a little bit about this

20:45

earlier, but in what way that we seen

20:47

the impact of those kinds of things? Right

20:50

now, well I think the number

20:52

of manufacturing jobs in the economy's

20:54

gonna about a hundred thousand send

20:56

some. Biden took office, which is

20:58

manufacturing jobs have been declining for

21:00

decades so relative to the number

21:02

left as the quite a big

21:04

increase it did start a bit

21:06

before Biden took office. The soda

21:08

whole restoring movement has been going

21:10

on slowly since about two thousand

21:13

and fifteen, but Bidens policies of

21:15

definitely accelerated it significantly. I actually

21:17

thought Biden could have made even

21:19

more. Of that in the State of the Union

21:21

speech, I think that would. The White House is

21:23

still a bit wary about. Trying to tell

21:25

people that the economy's gray when people telling

21:27

pollsters it's not great at all. So

21:31

there's a big political debate in

21:33

the White House you deal with

21:35

discussed. After

21:38

the break play voters are killing us. that

21:41

about the economy as Joe Biden as. If.

21:49

You have thoughts are questions about today that the

21:51

said send us an email or voice man out

21:54

to the mail at New awkward.com Be sure to

21:56

put the political scene and the subject line. Hi,

22:00

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22:02

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22:04

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wherever you get your podcasts. As

23:09

we've discussed, only 40% of Americans think

23:11

Biden is doing a good job on the economy. Which

23:14

seems at odds with the economic achievements that

23:16

we've been talking about this whole podcast. And

23:19

also the fact that Americans are starting to

23:21

feel a little bit better about the economy. I'm

23:23

just curious what you think some of the reasons

23:25

are behind this cognitive dissonance among voters. Well,

23:27

my basic view on this is that

23:29

it's just a cost of living story.

23:32

That people are still reacting to the big

23:34

increase in the cost of the living we

23:36

saw during and after the pandemic. And

23:39

the reason I think that is because it's not

23:41

just an American story. If American people, consumers, were

23:43

reacting differently to the rest of the world, I

23:45

think you'd have to look for some specific things

23:48

based on policy or Biden or whatever. But you

23:50

don't have to look at that. If you look

23:52

all around the world, you look at the UK,

23:54

which has got a centre right government. It's in

23:56

terrible shape. It's never had lower ratings. And

23:59

a lot of that... goes back to the higher inflation and higher

24:01

cost of living. You look in Germany,

24:03

they have a big – they have a center

24:05

left government which is similarly in

24:08

terrible shape. Its poll ratings are

24:10

awful. And again, that goes back

24:12

to higher inflation.

24:15

So it just turns out that high inflation

24:17

is very, very damaging for democratic governments. I

24:19

mean, Jimmy Carter obviously learned that in the

24:21

1970s when inflation was a lot higher than

24:24

it's been now. But I think

24:26

what we've rediscovered in the last few years is

24:28

that for any democratic government with their center

24:30

right, center left, Biden's obviously center left, when

24:33

you get a big cost shock like this,

24:35

it's just very, very difficult to deal with

24:37

it politically and all governments are sort of

24:40

struggling to do that. The question then

24:42

becomes how long does that last? As

24:45

you say, when people start to feel better about

24:47

the economy, which they are doing, poll after poll

24:49

shows that people think the

24:51

economy at large is doing better and that

24:53

their personal finances are improved. People not up

24:56

to 50%, but there's a Wall Street Journal

24:58

poll last week where it had gone from

25:00

like, I think, 35 to 43% in

25:03

two months, which is a big change. When

25:05

will that filter through to Biden's poll ratings? Yeah, you

25:07

have to look very closely at the ratings to see what's

25:09

changed. They've just come from a tiny bit in the last

25:11

couple of months, but it comes on

25:13

according to some economic polls, but it's very

25:15

much a poll by poll. It certainly hasn't

25:17

been the big feat through that Biden needs

25:20

really in the next few months. I'm

25:22

interested in a certain kind of high price

25:24

that Biden mentioned during the State of the

25:27

Union, which is price gouging and junk fees.

25:29

I'm wondering if you could talk a little bit about

25:31

the Bidenomics approach to that. Yeah,

25:35

I mean, I've spoken to quite a few people

25:37

around Biden about that. Actually,

25:39

in the early stage of the pandemic, there was

25:41

an argument in the White House to focus more

25:43

on that at the time because one of the

25:46

sort of strange things that happened –

25:49

not that strange in retrospect, but it seems

25:51

strange at the time – is that profit

25:53

margins went up a lot very early in

25:55

the pandemic. Basically, companies saw the

25:57

prices of their inputs going up.

26:00

a lot. But they increased prices

26:02

more than proportionately and increased their

26:04

profit margins, which you wouldn't

26:06

think they'd be able to do in

26:08

a down economy. But it worked. I

26:10

mean, you just have to look at

26:12

the profit margins of the corporations in

26:14

general, especially packaged good companies, or listen

26:16

to the chief executives talking on their

26:18

earnings calls. And they talk about this

26:20

all the time, how they've been able

26:22

to offset their cost increases with higher

26:24

prices and maintain their profit margins. So

26:27

there was an argument in the White House,

26:29

should we criticize the corporations at

26:31

the time and tell them to pass

26:33

along cost reductions when inflation started to

26:35

fall? There was even, I think, some

26:37

discussion of whether there should be sort

26:40

of profit surtaxes. Remember, the price of

26:42

oil went right through the roof. The

26:44

oil companies, the energy companies made record

26:46

profits. Other countries, including the UK, introduced

26:50

surtaxes basically like wartime, because it was

26:52

sort of wartime in the pandemic. It

26:55

was like a wartime economy. And in wartime,

26:57

you tend to have surtaxes on profits. The

26:59

UK went that direction. Biden himself, I think,

27:01

is a sort of centrist at heart and

27:03

wasn't willing to do that. I think what

27:06

you've seen in the last year or so

27:08

is he's sort of bored into those arguments

27:10

a bit more, not so much on the

27:12

profit side, but you hear him talking about

27:14

shrinkflation all the time, about how companies are

27:17

reducing the size of various things, which, you

27:19

know, is a fact. So you hear him

27:21

talking about that. And then junk fees. I

27:23

mean, I've always been amazed in the US

27:25

that that's not been a bigger issue. The

27:28

prices of things like credit card overdrafts missing

27:30

a payment by one day and being charged

27:32

$40. That has always seemed

27:34

to me to be low hanging fruit for

27:36

a sort of central party. But the Democrats,

27:39

for whatever reason, maybe they were

27:41

captured or whatever, they didn't go

27:44

in that direction, disproved some people in the

27:46

party advocating it. And I think what you're seeing

27:48

is that Biden is now sort of going

27:50

in that direction. He's not going to get

27:52

much praise from economists or the Chamber of

27:54

Commerce. But I actually think it could be

27:56

pretty popular because there are all sorts of

27:58

junk fees out there. things like airlines

28:01

charging families to sit together, etc.

28:05

Yeah, like you see the price on Google Flights

28:07

and then you click on the flight and then

28:09

when you actually are putting your credit card information

28:11

in, it goes up by like $400. I mean,

28:13

I felt like in the State of the Union,

28:15

the part where he was talking about getting a

28:17

Snickers bar and it looks like it's already half

28:19

eaten or something, that was actually really effective because

28:22

it's kind of speaking to the feeling that a

28:24

lot of people have, which is that they're getting

28:26

screwed. Yeah, well, I think as

28:28

I say, I think, you know, in

28:31

other countries that's been low-hanging fruit for a

28:33

long time for political party, not even in

28:36

the Conservative Party in Britain even as sort of

28:39

talked about this or they don't know much about it. People

28:42

do get angrier at companies and

28:45

corporations. It is pretty amazing

28:47

that we've been through this enormous economic crisis

28:49

over the last few years and corporations have

28:51

made bigger profits than ever before and

28:54

I think, you know, that's a legitimate topic for

28:56

Biden to discussion, all the ramifications of it. It's

28:58

taken him a long time to get there, but

29:00

he is finally there, it seems. During

29:02

the State of the Union, it seems like there was

29:05

like an interesting self-awareness to the way that he was

29:07

speaking. I mean, it kind of seemed like he was

29:09

essentially saying, you know, I'm aware that not everyone is

29:11

feeling these good effects of low unemployment and higher wages

29:13

and so here's some other things that I'm looking at.

29:15

I'm wondering if you have a sense of what the

29:18

White House thinks about people

29:20

not necessarily feeling good about the economy right now.

29:22

Do you think that they understand that they have

29:25

a clear messaging problem here or? Well,

29:27

I think there's a debate. I mean, I

29:30

think there's been a long-standing debate between the

29:32

sort of political people and not just around

29:34

Biden but in the Democratic Party generally and

29:37

the economic sort of policy staffs. The

29:39

economic policy staffs have basically been saying for

29:42

years, look, Mr. President, we've got a good

29:44

story to tell here on jobs, on

29:47

manufacturing jobs, on inequality, rising

29:49

wages for poor people on

29:51

minority employment. We haven't talked

29:53

about that at all but

29:55

the gap between black and white unemployment

29:58

rates is going down to a record level. Hispanics

30:00

have also benefited from

30:03

low unemployment, even people with disabilities, the unemployment

30:05

rate of people with disabilities has gone down

30:07

a lot. That's all

30:09

a very positive story to tell,

30:11

especially for a progressive party. But

30:15

the political people, I think, a lot of them just say,

30:17

this just doesn't sell. They just look at the polls and

30:19

they say, look, Biden's approval rating on the economy, as you

30:21

say, is 40%. So their

30:24

advice has been, I think, to steer away from that if you

30:26

can. And if you have to talk about the economy, talk about

30:28

it, but let's emphasize other stuff

30:31

like Trump has a threat to democracy. I think

30:33

that sort of argument seemed to win out earlier in

30:35

the year. And Biden was

30:37

very much emphasizing the sudden non-economic arguments,

30:40

but he seems to have flipped a bit in those

30:42

few weeks. Earlier

30:44

this week, Biden announced a new budget proposal

30:47

that he says will cut the deficit by

30:49

$3 trillion, mainly by increasing taxes

30:51

on companies and on the wealthy. This

30:53

was a big part of the State of the

30:56

Union address as well, that corporations and billionaires shouldn't

30:58

be paying less taxes than teachers and nurses. Can

31:00

you explain how this proposal aligns with Biden's

31:03

larger plan and the way in which

31:05

this is him trying to draw a distinction between himself

31:07

and Trump? Yeah, well, I

31:09

think a lot of the individual policies

31:11

go back to the Build Back Better plan,

31:13

which included a lot of these things. But

31:17

I think going into election year, the White House

31:19

is determined to draw a contrast between

31:21

its policies and Trump and the

31:23

Republicans. So it's emphasizing

31:26

higher taxes on the rich, both

31:28

to finance more social programs, but

31:30

also to reduce the deficit. And

31:33

as you've said, and I think I've said,

31:35

some of these individual proposals are

31:37

not new. They go back

31:39

a long way. But I think what's new

31:42

is if you put them all together, it

31:44

actually does amount to a big sort of

31:46

bold proposal to shift

31:48

the tax burden back to the rich,

31:51

which was shifted away from them in the 2017 Trump-Paul Ryan tax cut.

31:57

So make that a big political issue. big

32:00

point of contrast because of course Trump is going

32:02

to be out there saying he's for the working

32:04

man, that's his whole shtick. The Biden strategy

32:06

is to say well actually he's not for

32:09

the working man, he's for the billionaires. I'm

32:11

the one who's going to tax the billionaires

32:13

and you know even new programs like preschool

32:15

get the middle class and I think you

32:17

know that that's exactly the argument he should

32:19

be making whether it will get through is

32:21

obviously a political question but I think it's

32:23

a consistent and well-founded argument you just have

32:25

to look at the contrast between what Biden

32:27

has said the other night and what Trump's

32:29

talking about which is basically making

32:32

permanent all the 2017 tax cuts

32:34

for the rich and corporations and

32:37

having blanket tariffs that's his basic economic

32:39

program it seems permanent tax cuts for

32:41

the rich plus blanket tariffs which will

32:43

raise the prices of all imports for

32:46

you know for everybody. I think that's

32:48

a big potential weakness of to plan

32:51

politically it's just a matter

32:53

of whether Biden can sell it. A

32:55

recent CBS News poll shows voters

32:58

remember the economy being better under Trump

33:00

than under Biden. How would you compare

33:02

their economic records? Well I

33:04

mean it's you know it's a

33:06

story of a pre-pandemic and post-pandemic.

33:08

Yeah pre-pandemic the economy was doing

33:11

very well it had already started to accelerate

33:13

a bit under the end of the Obama

33:15

administration and then it did

33:17

very well in the first three years of

33:19

Trump as well you know unemployment rates were

33:21

low and their job growth

33:23

was strong GDP growth was pretty strong as

33:25

well. But then the

33:28

pandemic hit and you know

33:30

we had the deepest recession since the 1930s

33:32

and people sort of forgot about that in

33:34

2020. But I think when

33:36

people a lot of voters look back they look to the sort of

33:38

2018 2019. But

33:41

I also think because there was a big

33:43

recession and a big surge in prices after

33:46

that they sort of have

33:48

sort of rosy tinted view of the

33:50

previous era and that's obviously an issue

33:53

for the White House. Do you

33:55

think that if Biden can't get through to people on the

33:57

economy that he'll likely lose the election? I mean is that?

34:00

the main thing that you think people are going to

34:02

be thinking about when they vote in November? I

34:06

wouldn't go quite that far. I mean there are

34:08

there's been a lot of arguments of political science

34:10

making made over the last sort of a few

34:12

years that economic doesn't matter as much as it

34:14

used to do. I mean the conventional wisdom I've

34:17

been reporting on elections since 1988 which is quite

34:21

a while and you know

34:23

until I would say 2016 the

34:25

conventional wisdom was the Carville quote, you know,

34:28

is the economy stupid. Basically

34:31

presidential elections were referendums on the economy.

34:34

What we've seen with the rise of

34:36

Trump and the subsequent pandemic

34:38

is cultural issues and broader

34:40

sort of class issues. Trumping

34:42

to use the word economic

34:46

issues in a lot of cases. So

34:48

you know he takes just some political

34:50

scientists and political strategists and they think the

34:52

culture war is where it is what

34:54

determines everything now and economics is secondary.

34:58

As an economics reporter and as an

35:00

economist myself I obviously tend to emphasize

35:02

economics but you know

35:04

we'll see. I mean it is a it

35:07

I think that's an ongoing debate about the

35:10

relative importance of economics. I tend to

35:12

think it still is the

35:14

sort of primary factor but I

35:17

know it's a debate.

35:21

Yeah well it's something I'll definitely have to ask

35:23

you about as the election season goes on. Thank

35:25

you so much John. Thank you it was

35:27

fun. John

35:33

Cassidy is a staff writer at The New Yorker.

35:35

You can find his work at newyorker.com. This

35:39

has been the Political Scene. I'm Tyler

35:41

Faggot. The show is produced by Julia

35:43

Nutter and edited by Stephanie Kariuki with production

35:45

assistants from Jake Loomis and Mike

35:47

Kuchman. Our executive producer

35:49

is Steven Valentino. Chris Bannon is cutting

35:51

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35:54

theme music is by Alison Lighten-Brown. Enjoy

35:56

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