1
00:00:10,440 --> 00:00:15,000
Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.

2
00:00:15,080 --> 00:00:18,319
Speaker 1: I'm Joe Wisenhal and I'm Tracy Hallaway. Tracy, you know,

3
00:00:18,440 --> 00:00:22,040
Speaker 1: one of the things that I think is most surprising

4
00:00:22,280 --> 00:00:25,840
Speaker 1: or striking about the Biden administration, of the first two

5
00:00:25,920 --> 00:00:30,360
Speaker 1: years of the Biden administration is how slim the sort

6
00:00:30,360 --> 00:00:34,040
Speaker 1: of congressional majority was, like just fifty seats in the Senate,

7
00:00:34,120 --> 00:00:40,920
Speaker 1: extremely narrow and yet legislatively an incredibly consequential two years.

8
00:00:40,920 --> 00:00:43,240
Speaker 1: I would say, Yeah, I'm trying to think of all

9
00:00:43,440 --> 00:00:46,159
Speaker 1: the big spending bills that happened past. But you had

10
00:00:46,200 --> 00:00:50,400
Speaker 1: like the Inflation Reduction Act, you had a climate bill, uh,

11
00:00:50,520 --> 00:00:54,840
Speaker 1: you had the the emergency sort of fiscal um stuff

12
00:00:54,840 --> 00:00:57,800
Speaker 1: that was announced right at the beginning of COVID. There's

13
00:00:57,840 --> 00:01:00,320
Speaker 1: a lot that happened. Yeah, and of course do as

14
00:01:00,400 --> 00:01:05,440
Speaker 1: the Chips Act as well, So it's really consequential. Also

15
00:01:05,840 --> 00:01:09,800
Speaker 1: usage of the Strategic Petroleum Reserve in kind of a

16
00:01:09,880 --> 00:01:13,800
Speaker 1: novel way. Just like a very big two years. And

17
00:01:13,880 --> 00:01:16,960
Speaker 1: when we think about these bills, and you know, Obama

18
00:01:17,040 --> 00:01:19,920
Speaker 1: had a pretty big to his first two years, and

19
00:01:20,040 --> 00:01:23,680
Speaker 1: pretty big because Obamacare got passed during that time, you know,

20
00:01:23,800 --> 00:01:26,399
Speaker 1: it seems too many, and I guess I would say

21
00:01:26,440 --> 00:01:29,039
Speaker 1: I would include myself in that category that like, not

22
00:01:29,240 --> 00:01:31,679
Speaker 1: just are these sort of big pieces of legislation that

23
00:01:31,720 --> 00:01:35,279
Speaker 1: got passed, but kind of a break from how past

24
00:01:35,319 --> 00:01:40,600
Speaker 1: presidents have treated economic management, specifically with things that seemed

25
00:01:40,640 --> 00:01:45,000
Speaker 1: to resemble like industrial policy. Yes, it's funny that you

26
00:01:45,040 --> 00:01:48,840
Speaker 1: said industrial policy because I see people use the term

27
00:01:48,920 --> 00:01:53,520
Speaker 1: industrial strategy a lot. It's almost like industrial policy has

28
00:01:53,600 --> 00:01:57,440
Speaker 1: like negative connotations. But you're right, You're right. It feels

29
00:01:57,560 --> 00:02:00,880
Speaker 1: much more I also don't know if interval ninist is

30
00:02:00,920 --> 00:02:03,760
Speaker 1: the right word, but it feels much more active in

31
00:02:04,080 --> 00:02:09,480
Speaker 1: identifying choke points in the economy, things that are important

32
00:02:09,560 --> 00:02:14,000
Speaker 1: either from a strategic perspective or maybe they're important for

33
00:02:14,480 --> 00:02:18,400
Speaker 1: overall quality of life for Americans, um and prices and

34
00:02:18,480 --> 00:02:22,520
Speaker 1: things like that, and then doing something about it right

35
00:02:22,680 --> 00:02:28,840
Speaker 1: identifying say, domestic battery consumption, identifying battery materials, identifying the

36
00:02:28,960 --> 00:02:33,040
Speaker 1: need to have good chip fabrication domestically. This was not

37
00:02:33,360 --> 00:02:36,800
Speaker 1: an approach that Trump took. It wasn't approach that Obama took.

38
00:02:36,840 --> 00:02:39,160
Speaker 1: I don't think I was an approach that Bush talk.

39
00:02:39,440 --> 00:02:42,080
Speaker 1: So it feels very new, and so it is a

40
00:02:42,120 --> 00:02:45,000
Speaker 1: good time to like take stock of what was done

41
00:02:45,040 --> 00:02:47,000
Speaker 1: in the last two years and sort of like how

42
00:02:47,200 --> 00:02:53,040
Speaker 1: will we evaluate ultimately the success of these pieces of legislation. Absolutely,

43
00:02:53,160 --> 00:02:55,639
Speaker 1: and we really do have the perfect guests to do that.

44
00:02:55,840 --> 00:02:59,919
Speaker 1: Sometimes sometimes that line is like, okays it the perfect guest.

45
00:03:00,240 --> 00:03:02,560
Speaker 1: In this case, I believe that actually is the case

46
00:03:02,720 --> 00:03:05,400
Speaker 1: because we are going to be speaking with Brian des

47
00:03:05,480 --> 00:03:09,120
Speaker 1: He is the head of the President's National Economic Council,

48
00:03:09,680 --> 00:03:13,639
Speaker 1: involved in all of these sort of major actions, and

49
00:03:13,960 --> 00:03:17,080
Speaker 1: he's leaving. This is we're recording this February fifteen. This

50
00:03:17,200 --> 00:03:19,880
Speaker 1: is his last week on the job. He's getting a

51
00:03:20,040 --> 00:03:24,080
Speaker 1: very I assume, much needed break. So, Brian, thank you

52
00:03:24,160 --> 00:03:27,560
Speaker 1: so much for coming back on odd lots. Thank you

53
00:03:27,600 --> 00:03:29,680
Speaker 1: both for having me. I'm excited to be here. Thank you.

54
00:03:29,720 --> 00:03:32,440
Speaker 1: So let's start with that. I mean, like, so I

55
00:03:32,520 --> 00:03:35,480
Speaker 1: alluded to this in the beginning, but you know, I

56
00:03:35,480 --> 00:03:39,000
Speaker 1: would like your take on it, which is a you know,

57
00:03:39,760 --> 00:03:44,440
Speaker 1: it has biodynamics so to speak, been characterized as industrial

58
00:03:44,520 --> 00:03:49,360
Speaker 1: policy and setting aside terminology, how much do you perceive

59
00:03:49,600 --> 00:03:52,960
Speaker 1: this approach to economic management is having been a sort

60
00:03:52,960 --> 00:03:56,120
Speaker 1: of major break from the likes of which we saw

61
00:03:56,240 --> 00:04:00,720
Speaker 1: under Trump, Obama and other previous presidents. Well, I think

62
00:04:00,760 --> 00:04:03,800
Speaker 1: that we have a long history in the United States,

63
00:04:04,320 --> 00:04:08,560
Speaker 1: going back to even the early days of this country

64
00:04:08,760 --> 00:04:15,600
Speaker 1: in experimenting or utilizing industrial strategies, and you guys were

65
00:04:15,640 --> 00:04:19,599
Speaker 1: talking about the industrial strategy industrial policy to different terms.

66
00:04:20,120 --> 00:04:22,080
Speaker 1: I think it is the case that over the course

67
00:04:22,120 --> 00:04:25,919
Speaker 1: of the last forty years, there were forces that really

68
00:04:25,960 --> 00:04:31,920
Speaker 1: pushed the concept of industrial policy into being viewed as

69
00:04:31,960 --> 00:04:34,960
Speaker 1: a sort of dirty word, or being viewed as somehow

70
00:04:35,440 --> 00:04:40,560
Speaker 1: um inconsistent with a capitalist, market based economic system and

71
00:04:40,560 --> 00:04:43,200
Speaker 1: the things that you need. I also think over that

72
00:04:43,240 --> 00:04:46,080
Speaker 1: time the world has changed in pretty important and fundamental

73
00:04:46,120 --> 00:04:50,200
Speaker 1: ways and has brought back into clear relief the economic

74
00:04:50,320 --> 00:04:55,560
Speaker 1: need for something approximating an industrial strategy. And I think

75
00:04:55,600 --> 00:04:58,719
Speaker 1: it's totally fair and right to look at the Biden

76
00:04:58,760 --> 00:05:03,040
Speaker 1: economic strategy and this through line between, in particular the

77
00:05:03,040 --> 00:05:06,600
Speaker 1: three big bills that were passed, the Infrastructure Bill, the

78
00:05:06,680 --> 00:05:10,039
Speaker 1: Chips and Science Act, and the Inflation Reduction Act. You

79
00:05:10,120 --> 00:05:14,400
Speaker 1: see a common thread, which is use public investment to

80
00:05:14,480 --> 00:05:18,080
Speaker 1: try to crowd in private investment in key areas of

81
00:05:18,080 --> 00:05:21,920
Speaker 1: the economy where we believe, for strategic or economic purposes,

82
00:05:22,279 --> 00:05:27,640
Speaker 1: we want to increase productive potential. So clean energy, innovation, semiconductors,

83
00:05:28,520 --> 00:05:31,160
Speaker 1: high value infrastructure. These are places where we are on

84
00:05:31,240 --> 00:05:34,919
Speaker 1: apologic getically saying the private market on its own is

85
00:05:34,960 --> 00:05:38,880
Speaker 1: not going to generate sufficient industrial capacity or a sufficient

86
00:05:38,880 --> 00:05:41,320
Speaker 1: output in the United States to meet our economic and

87
00:05:41,360 --> 00:05:44,719
Speaker 1: security needs, and so therefore we do need an explicit

88
00:05:45,160 --> 00:05:47,920
Speaker 1: and active strategy. I think the way I would frame

89
00:05:47,920 --> 00:05:50,480
Speaker 1: it as an active and energetic government approach to try

90
00:05:50,560 --> 00:05:55,080
Speaker 1: to lay the foundation and crowd in private capitalist scipe.

91
00:05:56,560 --> 00:06:03,120
Speaker 1: So you mentioned America having a long history of industrial strategy.

92
00:06:03,200 --> 00:06:05,719
Speaker 1: Can you expand on that a little bit more, because

93
00:06:05,720 --> 00:06:09,039
Speaker 1: I think you do tend to get or one does

94
00:06:09,120 --> 00:06:13,200
Speaker 1: tend to see a knee jerk reaction amongst Americans over

95
00:06:13,480 --> 00:06:19,440
Speaker 1: government interference rather than perhaps government guiding, um, you know,

96
00:06:19,720 --> 00:06:26,400
Speaker 1: more capital and more money into strategically important things and industries. Well,

97
00:06:26,400 --> 00:06:27,839
Speaker 1: I think if you look back at history, we have

98
00:06:27,920 --> 00:06:32,000
Speaker 1: seen some of our greatest moments and opportunities for innovation

99
00:06:32,080 --> 00:06:36,080
Speaker 1: have been connected to this idea of having an industrial strategy.

100
00:06:36,640 --> 00:06:41,880
Speaker 1: Hamilton's was, in fact, I think the first principle thinker

101
00:06:42,040 --> 00:06:46,200
Speaker 1: and doer to lay out the idea that having a

102
00:06:46,279 --> 00:06:49,360
Speaker 1: government role in supporting the build out of a domestic

103
00:06:49,400 --> 00:06:54,640
Speaker 1: system of manufacturing was important for economic and national security reasons,

104
00:06:55,320 --> 00:06:58,680
Speaker 1: and that the private market alone wasn't going to wasn't

105
00:06:58,720 --> 00:07:02,560
Speaker 1: going to solve that. Um. You saw it in Lincoln's time,

106
00:07:02,600 --> 00:07:05,560
Speaker 1: investing in the internet, intercontinental railroad. You saw it in

107
00:07:05,560 --> 00:07:07,359
Speaker 1: the fifties and the sixties in the wake of the

108
00:07:07,360 --> 00:07:12,200
Speaker 1: Second World War, investing not only in physical infrastructure but

109
00:07:12,240 --> 00:07:14,960
Speaker 1: in our research and innovation base. Obviously a lot of

110
00:07:14,960 --> 00:07:17,920
Speaker 1: that connected to the space race, but I think the

111
00:07:17,920 --> 00:07:21,000
Speaker 1: best historical analog to what we're trying to do now

112
00:07:21,160 --> 00:07:23,720
Speaker 1: is the nineteen sixties, where you saw both a significant

113
00:07:23,720 --> 00:07:28,600
Speaker 1: investment in physical infrastructure and also in our innovation infrastructure

114
00:07:28,640 --> 00:07:32,720
Speaker 1: as well. You know, with the Chips Act, obviously there's

115
00:07:32,760 --> 00:07:36,160
Speaker 1: a lot of constern nation about the idea that you know,

116
00:07:36,680 --> 00:07:41,480
Speaker 1: the world needs semiconductors, and we produced fewer and fewer

117
00:07:41,520 --> 00:07:44,480
Speaker 1: of them here domestically, and this is a reason to

118
00:07:44,560 --> 00:07:47,400
Speaker 1: be concerned what happens if the supply were to be

119
00:07:47,560 --> 00:07:51,960
Speaker 1: disrupted with great with the with the Inflation Reduction Act,

120
00:07:52,360 --> 00:07:55,280
Speaker 1: you know, a big part of the goal there is

121
00:07:55,360 --> 00:08:00,560
Speaker 1: accelerating the fight against climate change, but also there is

122
00:08:00,600 --> 00:08:04,280
Speaker 1: this sort of geopolitical element, particularly about China's dominance with

123
00:08:04,440 --> 00:08:08,160
Speaker 1: certain materials for batteries and so forth. When it comes

124
00:08:08,200 --> 00:08:12,720
Speaker 1: to passing legislation, how much does it help if the

125
00:08:12,840 --> 00:08:17,200
Speaker 1: issue at hand is somehow couched in real or perceived

126
00:08:17,200 --> 00:08:20,520
Speaker 1: geopolitical competition. Well, I think a couple of things help.

127
00:08:21,440 --> 00:08:25,280
Speaker 1: One is a clear connection to why is it important

128
00:08:25,320 --> 00:08:30,920
Speaker 1: to build domestic industrial capacity here at home? And with

129
00:08:31,000 --> 00:08:34,800
Speaker 1: respect to clean energy, you know, the United States has

130
00:08:34,840 --> 00:08:38,760
Speaker 1: a competitive advantage with respect to energy, lower cost energy,

131
00:08:38,880 --> 00:08:42,520
Speaker 1: and we have an imperative to address the climate crisis.

132
00:08:43,160 --> 00:08:46,240
Speaker 1: And the basic theory of the investments in the Inflation

133
00:08:46,280 --> 00:08:51,120
Speaker 1: Reduction Act is around providing long term technology neutral incentives

134
00:08:51,480 --> 00:08:56,080
Speaker 1: to dramatically drive down the cost of low carbon and

135
00:08:56,160 --> 00:09:00,600
Speaker 1: zero carbon technologies in the United States at scale, which

136
00:09:00,600 --> 00:09:05,480
Speaker 1: will have a global benefit but will create significant economic

137
00:09:05,559 --> 00:09:09,520
Speaker 1: strength here at home. So having that story um and

138
00:09:09,559 --> 00:09:13,360
Speaker 1: having that credible story very important. Second thing that's important

139
00:09:13,440 --> 00:09:15,800
Speaker 1: and is true of all of these investments both but

140
00:09:15,920 --> 00:09:19,720
Speaker 1: both on cleanergy and semiconductors, is that they are explicitly

141
00:09:19,800 --> 00:09:22,720
Speaker 1: place based, in the sense that if you're a member

142
00:09:22,720 --> 00:09:24,960
Speaker 1: of Congress or you're thinking about this in terms of

143
00:09:24,960 --> 00:09:27,720
Speaker 1: what is it actually going to mean? The goal is

144
00:09:27,760 --> 00:09:32,760
Speaker 1: to encourage actual investments in places, particularly in places that

145
00:09:33,200 --> 00:09:36,640
Speaker 1: have where their productive potential has not been fully realized.

146
00:09:36,640 --> 00:09:38,840
Speaker 1: And that means parts of the country that you know

147
00:09:38,920 --> 00:09:43,000
Speaker 1: that have been that have not fully benefited from higher

148
00:09:43,600 --> 00:09:48,760
Speaker 1: economic expansions. That helps too, because it allows people to see, um,

149
00:09:48,800 --> 00:09:51,080
Speaker 1: the way in which this might concretely help their district.

150
00:09:51,160 --> 00:09:53,760
Speaker 1: And it's what you see. We see the changing politics

151
00:09:53,840 --> 00:09:56,120
Speaker 1: of this. On the ground. You see a number of

152
00:09:56,520 --> 00:10:00,240
Speaker 1: either read or purple districts around the country where now

153
00:10:00,280 --> 00:10:03,000
Speaker 1: there's a historic amount of investment in building it, whether

154
00:10:03,040 --> 00:10:07,480
Speaker 1: it's a battery factory or new production of hydrogen or

155
00:10:07,600 --> 00:10:12,120
Speaker 1: small modular nuclear reactors, and these become sources of jobs

156
00:10:12,120 --> 00:10:17,199
Speaker 1: and economic opportunity and revitalization in their own right. Um.

157
00:10:17,240 --> 00:10:20,000
Speaker 1: And then you know, I think that they I guess

158
00:10:20,000 --> 00:10:22,720
Speaker 1: what I would say about that. Your the geopolitical point

159
00:10:22,720 --> 00:10:25,440
Speaker 1: in your part of your question is that I don't

160
00:10:25,480 --> 00:10:28,000
Speaker 1: think any of this can be done and thought of

161
00:10:28,040 --> 00:10:30,880
Speaker 1: in a vacuum. We've made mistakes in policy in the

162
00:10:30,920 --> 00:10:33,440
Speaker 1: past of trying to think of the sort of free market,

163
00:10:33,480 --> 00:10:36,640
Speaker 1: the global free market as a as a as a monolith.

164
00:10:36,760 --> 00:10:39,960
Speaker 1: And one of the things, particularly in the post pandemic

165
00:10:40,160 --> 00:10:42,319
Speaker 1: environment is that we have to be very clear eyed

166
00:10:42,360 --> 00:10:47,920
Speaker 1: and realistic about the state of geopolitical and global economic competition.

167
00:10:48,480 --> 00:10:52,280
Speaker 1: And so therefore, whether you're you have to identify those

168
00:10:52,280 --> 00:10:56,000
Speaker 1: places in those areas where China, through non market practices

169
00:10:56,120 --> 00:11:00,920
Speaker 1: and a stated commitment to dominate certain industries, has ended

170
00:11:01,000 --> 00:11:06,480
Speaker 1: up expropriating technology and distorting the market in ways that

171
00:11:06,600 --> 00:11:08,960
Speaker 1: we have to grapple with realistically, and we can't ignore.

172
00:11:09,360 --> 00:11:13,480
Speaker 1: And so that is certainly always part of the conversation.

173
00:11:13,920 --> 00:11:16,320
Speaker 1: In some cases it's a you know, in some cases

174
00:11:16,360 --> 00:11:19,840
Speaker 1: it adds an additional argument to the case, but in

175
00:11:19,880 --> 00:11:23,840
Speaker 1: all cases it has to be very present. We can't

176
00:11:23,840 --> 00:11:27,880
Speaker 1: ignore those things anymore. So just on this note, I mean,

177
00:11:27,920 --> 00:11:32,800
Speaker 1: there is a fine line between strategic industrial policy and

178
00:11:33,600 --> 00:11:37,520
Speaker 1: protectionism and beggar thy neighbor type policies. And we have

179
00:11:37,679 --> 00:11:41,480
Speaker 1: seen some U S allies make noise about, you know,

180
00:11:41,720 --> 00:11:45,600
Speaker 1: some of the issues embedded in bills that happened past um,

181
00:11:45,720 --> 00:11:48,240
Speaker 1: you know, specifically the Inflation Reduction Act and maybe the

182
00:11:48,320 --> 00:11:52,199
Speaker 1: Chips Act UM. And then when it comes to China specifically,

183
00:11:52,240 --> 00:11:54,800
Speaker 1: we have seen the Biden administration in some respects go

184
00:11:55,000 --> 00:11:59,440
Speaker 1: harder on China's technology sector than um, you know, even

185
00:11:59,559 --> 00:12:05,600
Speaker 1: the previous Trump administration. How do you encourage strategically important

186
00:12:06,240 --> 00:12:11,360
Speaker 1: industrial initiatives and capabilities in the US without causing issues

187
00:12:11,960 --> 00:12:16,680
Speaker 1: or tensions with other countries. Yeah, it's a great question. Look,

188
00:12:16,679 --> 00:12:19,920
Speaker 1: I think the first important thing is when we're identifying

189
00:12:20,320 --> 00:12:23,920
Speaker 1: elements of an industrial strategy, it's important to recognize that

190
00:12:24,000 --> 00:12:28,920
Speaker 1: with clean energy and semiconductors, you both have sectors or

191
00:12:28,960 --> 00:12:33,600
Speaker 1: areas where the world, the global economy is significantly short supply.

192
00:12:34,360 --> 00:12:36,280
Speaker 1: So over the next decade, we're going to need to

193
00:12:36,360 --> 00:12:40,959
Speaker 1: significantly advance the rate of semiconductor production, both legacy and

194
00:12:41,120 --> 00:12:46,760
Speaker 1: cutting edge semiconductor production all around the globe. Clean energy, uh,

195
00:12:46,960 --> 00:12:50,120
Speaker 1: we are in every jurisdiction on the planet going need

196
00:12:50,280 --> 00:12:54,800
Speaker 1: going to need to significantly scale clean energy production in

197
00:12:54,880 --> 00:13:00,520
Speaker 1: terms of electrons, storage, distribution, transmission. That needs to happen everywhere.

198
00:13:00,559 --> 00:13:06,160
Speaker 1: So when there is a globally a need for greater supply,

199
00:13:06,760 --> 00:13:10,320
Speaker 1: you have less concern about the sort of traditional critique,

200
00:13:10,559 --> 00:13:13,280
Speaker 1: which is that you have a fixed supply and then

201
00:13:13,320 --> 00:13:17,880
Speaker 1: you're going to create an inefficient um uh, an inefficient

202
00:13:18,160 --> 00:13:20,920
Speaker 1: subsidy race to try to uh, you know, buy off

203
00:13:21,000 --> 00:13:23,680
Speaker 1: a fixed supply in both of these areas, you don't

204
00:13:23,720 --> 00:13:27,160
Speaker 1: have that operating. That's number one. Number two is if

205
00:13:27,160 --> 00:13:30,079
Speaker 1: you look at the Inflation Reduction Act in particular, our

206
00:13:30,160 --> 00:13:33,120
Speaker 1: allies don't really have anything to fear and have a

207
00:13:33,160 --> 00:13:37,840
Speaker 1: lot to gain by the United States providing this long

208
00:13:37,960 --> 00:13:42,680
Speaker 1: term technology technology neutral set of incentives. The principal effective

209
00:13:42,679 --> 00:13:46,199
Speaker 1: which will be to drive down the cost of deployable

210
00:13:46,360 --> 00:13:52,120
Speaker 1: clean energy technologies. So our investments, for example, in accelerating

211
00:13:52,440 --> 00:13:56,920
Speaker 1: deployable low cost hydrogen or deployable low cost small modular

212
00:13:57,000 --> 00:14:00,640
Speaker 1: nuclear reactors will have a very significant global benefit because

213
00:14:00,640 --> 00:14:04,160
Speaker 1: it means those technologies are deployable at lower cost and

214
00:14:04,280 --> 00:14:07,559
Speaker 1: greater scale uh worldwide. We've seen this in the past

215
00:14:07,600 --> 00:14:11,160
Speaker 1: in Germany's investment in solar technology two decades ago, the

216
00:14:11,240 --> 00:14:14,880
Speaker 1: United States investment in solar and wind technology a decade ago,

217
00:14:15,440 --> 00:14:19,360
Speaker 1: and that generates benefits. At the same time, it's also

218
00:14:19,360 --> 00:14:22,880
Speaker 1: important that we take seriously and work with our partners

219
00:14:22,880 --> 00:14:27,160
Speaker 1: and allies and identify common challenges. We all benefit from

220
00:14:27,200 --> 00:14:31,640
Speaker 1: having more secure supply chains and clearer access to the

221
00:14:31,680 --> 00:14:35,320
Speaker 1: inputs and the components necessary to build out semiconductors, to

222
00:14:35,400 --> 00:14:38,280
Speaker 1: build out clean energy inputs, we've all seen and we've

223
00:14:38,280 --> 00:14:41,920
Speaker 1: all experienced what happens when those supply chains are brittle

224
00:14:42,080 --> 00:14:44,800
Speaker 1: and they break. So there's a lot of opportunity to

225
00:14:44,920 --> 00:14:48,960
Speaker 1: partner together. But in the main, when the world needs

226
00:14:49,040 --> 00:14:51,960
Speaker 1: much greater supply and you have the the US government

227
00:14:52,000 --> 00:14:54,800
Speaker 1: stepping up and saying we are going to drive greater

228
00:14:54,880 --> 00:14:59,240
Speaker 1: supply in a way that drives down costs of deployable technology,

229
00:14:59,400 --> 00:15:02,480
Speaker 1: that's a much more opportunity than constraint from the world

230
00:15:02,600 --> 00:15:22,400
Speaker 1: count Since you mentioned driving down prices of important clean

231
00:15:22,520 --> 00:15:26,280
Speaker 1: energy components, I mean, it is true that China has

232
00:15:26,320 --> 00:15:30,920
Speaker 1: made a lot of investment into renewable tech, including solar panels.

233
00:15:30,960 --> 00:15:35,960
Speaker 1: So how does the administration balance I guess the need

234
00:15:36,120 --> 00:15:40,440
Speaker 1: to build up some of that capability at home with

235
00:15:40,680 --> 00:15:44,920
Speaker 1: the efficiencies and perhaps the lower, you know, the lower

236
00:15:44,960 --> 00:15:50,600
Speaker 1: cost of production of Chinese made renewable technology like solar panels.

237
00:15:51,080 --> 00:15:54,120
Speaker 1: I think the experience of the last several years underscores

238
00:15:54,320 --> 00:15:57,200
Speaker 1: how important it is for the United States and for

239
00:15:58,880 --> 00:16:04,040
Speaker 1: our allies as well, to have reliable access to secure

240
00:16:04,080 --> 00:16:09,320
Speaker 1: supply chains that are not reliant on China dominating certain

241
00:16:09,360 --> 00:16:13,800
Speaker 1: technologies and certain industries. We need to diversify those supply

242
00:16:13,920 --> 00:16:17,120
Speaker 1: chains um. That in the main means that we need

243
00:16:17,120 --> 00:16:21,040
Speaker 1: to build capacity here in the United States, including as

244
00:16:21,080 --> 00:16:26,920
Speaker 1: you mentioned, in upstream solar technologies, including an upstream battery technologies.

245
00:16:27,400 --> 00:16:31,040
Speaker 1: A lot of the actual I P the original technology

246
00:16:31,080 --> 00:16:36,160
Speaker 1: that has gone into these uh these outputs was created

247
00:16:36,200 --> 00:16:38,800
Speaker 1: in the United States, and over the course of a

248
00:16:38,880 --> 00:16:44,160
Speaker 1: decade or two, the Chinese model was to take or

249
00:16:44,440 --> 00:16:50,320
Speaker 1: expropriate that technology, use massive subsidies and non market interventions

250
00:16:50,360 --> 00:16:53,080
Speaker 1: with the goal of trying to then dominate those industries.

251
00:16:54,000 --> 00:16:56,880
Speaker 1: That model is not something that we can rely on

252
00:16:57,800 --> 00:17:02,040
Speaker 1: over the um. Over the long term. We need diversification,

253
00:17:02,920 --> 00:17:05,359
Speaker 1: and so that has to be that has to be

254
00:17:05,359 --> 00:17:07,399
Speaker 1: a priority, and it has to be a geopolitical and

255
00:17:07,440 --> 00:17:10,399
Speaker 1: an economic priority to do so. And so the question is,

256
00:17:10,440 --> 00:17:12,159
Speaker 1: how can you do that in a way that is

257
00:17:12,200 --> 00:17:15,440
Speaker 1: the most efficient and effective. And that's what I think

258
00:17:15,480 --> 00:17:18,080
Speaker 1: we're trying to do now, which is provide these long

259
00:17:18,160 --> 00:17:20,480
Speaker 1: term incentives. You know, I I talked to a lot

260
00:17:20,520 --> 00:17:23,679
Speaker 1: of companies and CEOs who are trying to assess the

261
00:17:23,680 --> 00:17:26,679
Speaker 1: impact of the inflation reduction now, for example, and what

262
00:17:26,760 --> 00:17:30,199
Speaker 1: I hear consistently is we now have the certainty that

263
00:17:30,240 --> 00:17:33,360
Speaker 1: we need. These incentives are highly efficient because they are

264
00:17:33,920 --> 00:17:36,240
Speaker 1: technology neutral and they're locked in for the long term.

265
00:17:36,320 --> 00:17:38,159
Speaker 1: So we now have the certainty that we need to

266
00:17:38,200 --> 00:17:42,359
Speaker 1: plan against that, and that's going to allow the kind

267
00:17:42,359 --> 00:17:44,080
Speaker 1: of build out in the United States that I don't

268
00:17:44,119 --> 00:17:46,280
Speaker 1: think we've seen in the past decade. I said in

269
00:17:46,320 --> 00:17:49,400
Speaker 1: the introduction that the first two years, these first two

270
00:17:49,440 --> 00:17:53,480
Speaker 1: years of the bind administration have been almost shockingly consequential.

271
00:17:53,560 --> 00:17:55,520
Speaker 1: But in a way like I kind of think that

272
00:17:55,600 --> 00:17:58,879
Speaker 1: might be premature, because well, the Chips Act and the

273
00:17:58,920 --> 00:18:03,000
Speaker 1: Inflation Reduction Act are both big bills that take on

274
00:18:03,119 --> 00:18:06,280
Speaker 1: big challenges. We don't know that they're going to be

275
00:18:06,440 --> 00:18:08,840
Speaker 1: a success. And I think the jury is obviously, you know,

276
00:18:08,840 --> 00:18:11,320
Speaker 1: we're going to have to wait several years, you know,

277
00:18:11,400 --> 00:18:15,440
Speaker 1: going to the Chip sac specifically, you know, at what point,

278
00:18:15,520 --> 00:18:18,679
Speaker 1: I don't know, five years, ten years, two years, What

279
00:18:18,800 --> 00:18:21,119
Speaker 1: should we look at. What are the benchmarks that we

280
00:18:21,160 --> 00:18:26,560
Speaker 1: should say this worked or didn't. Absolutely, and I think

281
00:18:26,640 --> 00:18:28,760
Speaker 1: you are right that the proof of the pudding here

282
00:18:28,840 --> 00:18:31,840
Speaker 1: is going to be in the execution and the implementation

283
00:18:32,040 --> 00:18:35,960
Speaker 1: across time. With respect to the Chips Act, the most

284
00:18:36,000 --> 00:18:39,439
Speaker 1: important outcome metric, even you know, across all of the

285
00:18:39,480 --> 00:18:43,160
Speaker 1: outputs of semiconductor fabs that dot the landscape of the

286
00:18:43,359 --> 00:18:49,359
Speaker 1: American economy is, have we changed that downward trajectory where

287
00:18:49,359 --> 00:18:54,159
Speaker 1: we used to produce about the global chip capacity and

288
00:18:54,200 --> 00:18:57,920
Speaker 1: we're now down to Have we changed the trajectory where

289
00:18:58,400 --> 00:19:02,479
Speaker 1: today none of the leading edge chips sort of the

290
00:19:02,520 --> 00:19:05,520
Speaker 1: most cutting edge technology are made in the United States?

291
00:19:05,880 --> 00:19:09,120
Speaker 1: And are we moving back to a place not where

292
00:19:09,240 --> 00:19:11,080
Speaker 1: the United States is producing all of the world's chips

293
00:19:11,119 --> 00:19:13,119
Speaker 1: or even most of the world's chips. That's not. But

294
00:19:13,240 --> 00:19:17,000
Speaker 1: the goal is to build capacity back to a place

295
00:19:17,040 --> 00:19:20,800
Speaker 1: where we have the core elements of it, of the

296
00:19:20,840 --> 00:19:27,400
Speaker 1: innovation base around the chip technology and the core capabilities

297
00:19:27,960 --> 00:19:31,879
Speaker 1: of manufacturing at scale through fabs in the in the

298
00:19:31,960 --> 00:19:34,200
Speaker 1: United States, we can we will be able to look

299
00:19:34,320 --> 00:19:37,240
Speaker 1: forward and back a decade from now and say how

300
00:19:37,480 --> 00:19:40,920
Speaker 1: far along that journey have we made. I think we're

301
00:19:40,920 --> 00:19:44,720
Speaker 1: off to a very strong start. Even before we have

302
00:19:45,600 --> 00:19:48,159
Speaker 1: given out the grants under the Chips Act. We're seeing

303
00:19:48,600 --> 00:19:52,080
Speaker 1: companies across the sector, in the industry and across the

304
00:19:52,119 --> 00:19:57,199
Speaker 1: country moving forward and breaking ground on facilities. So we

305
00:19:57,280 --> 00:19:59,520
Speaker 1: are off, I think, to a strong start, but that

306
00:19:59,600 --> 00:20:02,480
Speaker 1: the proof will will be in the putting there. And

307
00:20:02,520 --> 00:20:04,240
Speaker 1: I would add in addition to chips in the i RA,

308
00:20:04,440 --> 00:20:09,240
Speaker 1: I wouldn't site of the infrastructure investment because really the

309
00:20:09,280 --> 00:20:10,879
Speaker 1: way that I think about this is you have to

310
00:20:10,920 --> 00:20:14,640
Speaker 1: look at how those three piece of legislation interact, and

311
00:20:15,320 --> 00:20:18,800
Speaker 1: some of the investments that were in the infrastructure law

312
00:20:19,640 --> 00:20:24,119
Speaker 1: are actually going to be key to unlocking the potential

313
00:20:24,920 --> 00:20:28,760
Speaker 1: of the clean energy and the semiconductor investments as well.

314
00:20:29,359 --> 00:20:30,919
Speaker 1: Now all of that has you are right, all of

315
00:20:30,960 --> 00:20:33,760
Speaker 1: that has to work together. There's lots of things that

316
00:20:33,840 --> 00:20:36,560
Speaker 1: we need to keep an eye on and keep focused

317
00:20:36,560 --> 00:20:39,960
Speaker 1: on the flip side of it, though, is you know,

318
00:20:40,520 --> 00:20:43,840
Speaker 1: it's been decades since the United States has been able

319
00:20:43,880 --> 00:20:46,760
Speaker 1: to say that we now have enacted law through Congress

320
00:20:46,760 --> 00:20:49,520
Speaker 1: and on the other side, these kind of multi year

321
00:20:49,720 --> 00:20:54,840
Speaker 1: public investments tools at the ready, and you know that

322
00:20:55,359 --> 00:20:58,320
Speaker 1: really does represent a you know, we're in a different place.

323
00:20:58,320 --> 00:21:00,440
Speaker 1: We're in a very different place were before. So I

324
00:21:00,480 --> 00:21:03,560
Speaker 1: want to ask one more follow up on chips specifically,

325
00:21:03,600 --> 00:21:07,280
Speaker 1: And you mentioned, you know, the the incentives to build

326
00:21:07,480 --> 00:21:10,920
Speaker 1: fabs here, and as you said, there already have been announcements.

327
00:21:10,960 --> 00:21:13,720
Speaker 1: It seems very likely that we are going to see

328
00:21:13,840 --> 00:21:16,680
Speaker 1: more building that being said, you know, when I think

329
00:21:16,680 --> 00:21:19,600
Speaker 1: about like the crowding in effect that you mentioned and

330
00:21:19,680 --> 00:21:22,639
Speaker 1: past positive experiences that the US has had with it,

331
00:21:22,960 --> 00:21:26,040
Speaker 1: you know, one of the stories is not just the

332
00:21:26,119 --> 00:21:29,760
Speaker 1: incentives of the public money, but the public buyer. The

333
00:21:29,800 --> 00:21:32,399
Speaker 1: fact that whether it's the Defense Department, whether it was

334
00:21:32,520 --> 00:21:35,760
Speaker 1: NASA was a huge buyer of semiconductors in the past.

335
00:21:36,359 --> 00:21:37,840
Speaker 1: And you know, one of the things I read in

336
00:21:37,920 --> 00:21:40,879
Speaker 1: Chip Wars was they were talking about how like the

337
00:21:41,000 --> 00:21:44,240
Speaker 1: NASA in particular was a great accelerant of consumer tech

338
00:21:44,320 --> 00:21:48,520
Speaker 1: because it the miniaturization drive to fit technology onto the

339
00:21:48,640 --> 00:21:52,920
Speaker 1: rocket accelerated gains that then helped create the consumer tech

340
00:21:53,000 --> 00:21:57,480
Speaker 1: market because smaller things, you know, make for good consumer products.

341
00:21:57,880 --> 00:21:59,920
Speaker 1: Is that going to be a challenge, Like that scene

342
00:22:00,040 --> 00:22:04,840
Speaker 1: is different than past successful areas of industrial strategy, the

343
00:22:04,960 --> 00:22:08,200
Speaker 1: lack of that sort of like buyer of last resort

344
00:22:08,560 --> 00:22:10,760
Speaker 1: for domestic made tech, and is that going to be

345
00:22:10,760 --> 00:22:13,760
Speaker 1: a challenge? Well, you mentioned tip Wards is a great book,

346
00:22:13,760 --> 00:22:18,280
Speaker 1: and and we have we have benefited from Chris Miller's

347
00:22:18,320 --> 00:22:22,119
Speaker 1: the author's insight along even the last year quite a

348
00:22:22,119 --> 00:22:25,840
Speaker 1: bit all the way. Yeah, I think so it is

349
00:22:25,880 --> 00:22:28,560
Speaker 1: absolutely the case. One of the one of the under

350
00:22:29,320 --> 00:22:34,840
Speaker 1: represented issues in the semiconductor market is recognizing how important

351
00:22:34,960 --> 00:22:39,360
Speaker 1: the customer is and the end customer is. And one

352
00:22:39,359 --> 00:22:41,480
Speaker 1: of the most interesting conversations that we've had over the

353
00:22:41,480 --> 00:22:43,399
Speaker 1: course last year was when the President went out to

354
00:22:43,480 --> 00:22:47,320
Speaker 1: Phoenix to u t SMC. They're Brown, They're a a

355
00:22:47,440 --> 00:22:51,880
Speaker 1: groundbreaking for their second fab and we met there at

356
00:22:51,880 --> 00:22:55,680
Speaker 1: t s MC, not only with the leadership of that company,

357
00:22:55,880 --> 00:22:58,840
Speaker 1: but with Tim Cook from Apple, Lisa Suit from a

358
00:22:59,000 --> 00:23:03,399
Speaker 1: m D of the are big consumers, and around the table,

359
00:23:03,560 --> 00:23:06,560
Speaker 1: the conversation was very instructive to your point, which is

360
00:23:06,600 --> 00:23:10,359
Speaker 1: that the the outcomes here are as much about the

361
00:23:10,440 --> 00:23:14,919
Speaker 1: end consumer as they are about the the producer, and

362
00:23:15,000 --> 00:23:19,240
Speaker 1: that interplay between the two is critical. Now now to

363
00:23:19,280 --> 00:23:22,400
Speaker 1: your question, where does the US government play in being

364
00:23:22,440 --> 00:23:25,480
Speaker 1: a buyer of last resort or being an innovator by

365
00:23:25,520 --> 00:23:28,320
Speaker 1: dint of our purchasing power. Well, there's two parts of

366
00:23:28,320 --> 00:23:30,880
Speaker 1: the semiconductor pieces that are important. One is there are

367
00:23:31,359 --> 00:23:37,240
Speaker 1: critical chip technologies for core national security priorities, for actual

368
00:23:38,080 --> 00:23:42,520
Speaker 1: um munitions and other elements of our national security complex,

369
00:23:42,760 --> 00:23:45,119
Speaker 1: where we are, in fact the last the buyer of

370
00:23:45,200 --> 00:23:48,199
Speaker 1: last resort, and we have a huge incentive for innovation

371
00:23:48,760 --> 00:23:53,600
Speaker 1: around downscaling, around durability in all all manner of different

372
00:23:53,640 --> 00:23:56,840
Speaker 1: weather conditions and otherwise. So that is one element and

373
00:23:56,880 --> 00:23:59,439
Speaker 1: I think that that will that will become relevant. But

374
00:23:59,520 --> 00:24:01,320
Speaker 1: the other part, the part of the Chips Act that

375
00:24:01,359 --> 00:24:03,880
Speaker 1: people have paid less attention to, is there's these big

376
00:24:03,880 --> 00:24:06,800
Speaker 1: grants to encourage the building of fabs, but there's also

377
00:24:06,840 --> 00:24:09,639
Speaker 1: eleven billion dollars, a historically large amount of money to

378
00:24:09,720 --> 00:24:16,199
Speaker 1: invest in building research and innovation close to the building

379
00:24:16,240 --> 00:24:20,320
Speaker 1: of chip fabs to try to rejuvenate the innovation base

380
00:24:20,400 --> 00:24:23,920
Speaker 1: and the research base for key leading edge to chip

381
00:24:23,960 --> 00:24:27,879
Speaker 1: technology technological applications. And that research will be done in

382
00:24:27,920 --> 00:24:32,240
Speaker 1: conjunction with the Department of Defense. UH. The other services

383
00:24:32,320 --> 00:24:35,560
Speaker 1: will be done with the National Labs. And that's also

384
00:24:35,600 --> 00:24:37,199
Speaker 1: a key part of this because at the end of

385
00:24:37,200 --> 00:24:41,359
Speaker 1: the day, if you don't actually created an ecosystem for innovation,

386
00:24:42,119 --> 00:24:44,800
Speaker 1: then the fab you build will, by the time you

387
00:24:44,840 --> 00:24:46,600
Speaker 1: build it will be sort of out of sync with

388
00:24:46,640 --> 00:24:48,920
Speaker 1: where your customers are going to want to be down

389
00:24:48,960 --> 00:24:51,400
Speaker 1: the road. Just on this note, you know, Joe kind

390
00:24:51,400 --> 00:24:53,720
Speaker 1: of asked you the forward looking question of how do

391
00:24:53,760 --> 00:24:56,159
Speaker 1: you evaluate the success of all these programs I'm going

392
00:24:56,200 --> 00:24:59,080
Speaker 1: to ask you a backwards looking question, but I always

393
00:24:59,080 --> 00:25:01,240
Speaker 1: wanted to you know, I always wanted to hear your

394
00:25:01,240 --> 00:25:05,200
Speaker 1: perspective on this. But how do you actually go about

395
00:25:05,240 --> 00:25:10,280
Speaker 1: identifying these sorts of choke points in the US economy

396
00:25:10,440 --> 00:25:14,600
Speaker 1: in real time or these areas that require additional investment?

397
00:25:14,680 --> 00:25:19,240
Speaker 1: Because some things, okay, sure, post COVID, maybe they became obvious,

398
00:25:19,400 --> 00:25:21,479
Speaker 1: like the fact that we had a bunch of ships

399
00:25:21,520 --> 00:25:24,119
Speaker 1: waiting to unload at the ports. That was something that

400
00:25:24,160 --> 00:25:26,679
Speaker 1: we could see and everyone could talk about it. But

401
00:25:26,800 --> 00:25:31,119
Speaker 1: what is the process for actually identifying these areas of

402
00:25:31,160 --> 00:25:34,560
Speaker 1: strategic interest? Do people come to you and talk to

403
00:25:34,600 --> 00:25:39,200
Speaker 1: you about, you know, potential investments or how does it work? Exactly? Well,

404
00:25:39,240 --> 00:25:40,919
Speaker 1: it works in a couple of ways. The first is

405
00:25:41,000 --> 00:25:44,040
Speaker 1: that a lot of what we have been focused on

406
00:25:44,080 --> 00:25:46,720
Speaker 1: over the course of the last two years and really

407
00:25:46,720 --> 00:25:48,960
Speaker 1: the eight that eighteen month period of really trying to

408
00:25:49,359 --> 00:25:52,679
Speaker 1: design and craft and work with Congress on legislation, I

409
00:25:52,720 --> 00:25:56,560
Speaker 1: was trying to execute and implement on identified priorities that

410
00:25:57,240 --> 00:25:59,840
Speaker 1: people have been working on for several years. And even

411
00:26:00,000 --> 00:26:02,439
Speaker 1: where we came into office that the president as a

412
00:26:02,480 --> 00:26:06,639
Speaker 1: candidate was identifying as priorities, and so particularly if you

413
00:26:06,760 --> 00:26:11,280
Speaker 1: think about what is needed to drive the deployment of

414
00:26:11,320 --> 00:26:14,840
Speaker 1: clean energy at scale and low cost. That's been work

415
00:26:14,920 --> 00:26:19,920
Speaker 1: that has been underway scientifically, technologically, in policy terms for

416
00:26:20,000 --> 00:26:22,919
Speaker 1: some significant set of years, but but in terms of

417
00:26:22,960 --> 00:26:25,560
Speaker 1: how we operate from the government side. One of the

418
00:26:25,560 --> 00:26:27,800
Speaker 1: first things we did here in the first month in

419
00:26:27,880 --> 00:26:31,439
Speaker 1: office was the President exist issued an executive order and

420
00:26:31,480 --> 00:26:35,560
Speaker 1: we launched this effort to try to study in a

421
00:26:35,640 --> 00:26:39,600
Speaker 1: deep way supply chain resilience and supply chain vulnerabilities across

422
00:26:39,640 --> 00:26:43,160
Speaker 1: the economy. Because to try to actually identify choke points

423
00:26:43,160 --> 00:26:47,800
Speaker 1: where you had that intersection between economic and national security

424
00:26:48,200 --> 00:26:52,679
Speaker 1: risks and also places of opportunity where you might be

425
00:26:52,720 --> 00:26:56,000
Speaker 1: able to use public investment to actually solve a problem

426
00:26:56,000 --> 00:26:58,160
Speaker 1: with the private market on its own wasn't going to solve.

427
00:26:58,240 --> 00:27:01,720
Speaker 1: And so we ran a process over six months and

428
00:27:01,800 --> 00:27:05,440
Speaker 1: twelve months of trying to ask our experts at the agencies,

429
00:27:05,480 --> 00:27:10,520
Speaker 1: whether it was in biopharmaceutica sceutical products, or semiconductors or

430
00:27:10,760 --> 00:27:13,919
Speaker 1: clean energy upstream components, to say, tell us what you

431
00:27:14,000 --> 00:27:17,320
Speaker 1: know about based on the existing research and data and otherwise,

432
00:27:17,520 --> 00:27:20,280
Speaker 1: and try to pull that together into a more comprehensive

433
00:27:20,320 --> 00:27:22,960
Speaker 1: diagnostic of where do we see the gaps, where do

434
00:27:23,000 --> 00:27:26,119
Speaker 1: we see the challenges. That work is hard work to

435
00:27:26,160 --> 00:27:29,040
Speaker 1: do at the same time that we're in the frenzied

436
00:27:29,080 --> 00:27:31,960
Speaker 1: pace of the ports are shutting down, the ports of

437
00:27:32,080 --> 00:27:34,720
Speaker 1: ports are overclogged, or we have a you know, a

438
00:27:34,760 --> 00:27:39,520
Speaker 1: particular problem around fertilizer, or you know, or uh, Vladimir

439
00:27:39,560 --> 00:27:42,080
Speaker 1: Putin decides to invade Ukraine, and we have all of

440
00:27:42,080 --> 00:27:45,600
Speaker 1: these fast moving issues in the world. But it's also

441
00:27:45,680 --> 00:27:50,240
Speaker 1: important work to do to take advantage of the expertise

442
00:27:50,320 --> 00:27:53,359
Speaker 1: and the embedded knowledge base across the executive branch. So

443
00:27:53,400 --> 00:27:56,320
Speaker 1: we've tried to do those in tandem. I think some

444
00:27:56,359 --> 00:27:59,280
Speaker 1: of the most important work that we have done exists

445
00:27:59,359 --> 00:28:02,520
Speaker 1: in those ports. For example, we have these now we

446
00:28:02,640 --> 00:28:05,199
Speaker 1: issued reports on the one year anniversary of that that

447
00:28:05,320 --> 00:28:08,879
Speaker 1: kind of went through these different six difference key supply chains.

448
00:28:08,920 --> 00:28:13,639
Speaker 1: We studied and analyzed. Some of those conclusions were immediately

449
00:28:13,680 --> 00:28:16,400
Speaker 1: adopted and built into for example, of the Chips act

450
00:28:16,800 --> 00:28:20,320
Speaker 1: as it um as it ultimately passed, because you know,

451
00:28:20,359 --> 00:28:22,399
Speaker 1: it took us in the legislative process a bit longer

452
00:28:22,400 --> 00:28:24,880
Speaker 1: than we had originally anticipated to get that bill done,

453
00:28:25,440 --> 00:28:28,240
Speaker 1: So it's a work in progress and iterative building on

454
00:28:28,359 --> 00:28:30,960
Speaker 1: work that's done before, but really trying to do that

455
00:28:31,160 --> 00:28:33,920
Speaker 1: study at the same time that you're managing fire girls. Okay,

456
00:28:33,960 --> 00:28:37,840
Speaker 1: so you mentioned um this sort of like the fire

457
00:28:37,920 --> 00:28:41,360
Speaker 1: drill hair unfired challenge of dealing with all of these

458
00:28:41,400 --> 00:28:44,640
Speaker 1: supply chain issues in real time, which is a good

459
00:28:44,720 --> 00:28:47,520
Speaker 1: opportunity for me to pivot a little bit to the

460
00:28:47,680 --> 00:28:51,800
Speaker 1: current macro conditions because we have seen a lot of

461
00:28:52,000 --> 00:28:55,880
Speaker 1: supply chain healing by almost any objective measure. I don't

462
00:28:55,880 --> 00:28:58,480
Speaker 1: think there are the big lines at the ports the

463
00:28:58,520 --> 00:29:01,600
Speaker 1: way there were. Many of the eruptions seemed to be fading,

464
00:29:01,760 --> 00:29:06,600
Speaker 1: and yet inflation still uncomfortably high. We got a CPI

465
00:29:06,800 --> 00:29:09,600
Speaker 1: report that kind of came in line this week, but

466
00:29:09,720 --> 00:29:11,840
Speaker 1: I think when people looked at it, they're like, this

467
00:29:11,920 --> 00:29:14,280
Speaker 1: is not an economy where we're on some sort of

468
00:29:14,280 --> 00:29:19,200
Speaker 1: like glide path down to two per cent? Why is

469
00:29:19,320 --> 00:29:24,200
Speaker 1: inflation still so persistently high? In your view, after all

470
00:29:24,240 --> 00:29:27,000
Speaker 1: of the supply chain healing, a lot of the transitory

471
00:29:27,040 --> 00:29:32,240
Speaker 1: factors having passed. Well, everything about the economy today is unique,

472
00:29:32,280 --> 00:29:34,080
Speaker 1: and one of the things I take away from two

473
00:29:34,200 --> 00:29:38,160
Speaker 1: years is an extraordinary amount of humility that almost all

474
00:29:38,200 --> 00:29:42,760
Speaker 1: of the confident projections about the ways in which past

475
00:29:42,840 --> 00:29:46,360
Speaker 1: models applied to the current situation would operate have proved

476
00:29:46,400 --> 00:29:50,440
Speaker 1: to be at best challenged and often wrong. I think

477
00:29:50,440 --> 00:29:52,040
Speaker 1: that if you look at the course of the last

478
00:29:52,920 --> 00:29:55,160
Speaker 1: six months, if you look at the last two quarters,

479
00:29:55,640 --> 00:29:58,440
Speaker 1: I think you we continue to see that story, which is,

480
00:29:58,920 --> 00:30:07,520
Speaker 1: we have seen meaningful progress in inflation moderating into an

481
00:30:07,600 --> 00:30:12,040
Speaker 1: environment where we have continued to see ongoing labor market

482
00:30:12,120 --> 00:30:16,200
Speaker 1: resilience and ongoing resilience at the consumer level. The recent

483
00:30:16,280 --> 00:30:19,840
Speaker 1: consumer data that we have gotten, I think was surprising

484
00:30:20,200 --> 00:30:24,880
Speaker 1: to some as well in that respect, and so I

485
00:30:24,920 --> 00:30:28,760
Speaker 1: think that that moderation in the context of a resilient

486
00:30:28,840 --> 00:30:31,120
Speaker 1: labor market and a resilient consumer was something that a

487
00:30:31,160 --> 00:30:33,600
Speaker 1: lot of people thought was not going to come to

488
00:30:33,640 --> 00:30:36,200
Speaker 1: pass over the course of the last six months. And

489
00:30:36,240 --> 00:30:39,680
Speaker 1: so the question now going forward is and we continue

490
00:30:39,760 --> 00:30:44,920
Speaker 1: to see that progress in moderation on the inflation side

491
00:30:45,640 --> 00:30:48,640
Speaker 1: without having to give up all of the economic gains

492
00:30:48,680 --> 00:30:53,120
Speaker 1: associated with the resilient labor market and consumer and business

493
00:30:53,120 --> 00:30:56,880
Speaker 1: balance sheets. As I look forward, I certainly think there's

494
00:30:57,680 --> 00:31:01,400
Speaker 1: a good and clear path for that to happen. It

495
00:31:01,560 --> 00:31:03,800
Speaker 1: does involve some of the you know, some of the

496
00:31:03,840 --> 00:31:08,400
Speaker 1: elements on the inflation side. The dynamics on goods and

497
00:31:09,200 --> 00:31:13,720
Speaker 1: services and housing are all distinct right now, and so well,

498
00:31:14,400 --> 00:31:17,120
Speaker 1: I we always try to check ourselves from doing the

499
00:31:17,200 --> 00:31:20,440
Speaker 1: kind of great decomposition of pulling every element in or

500
00:31:20,480 --> 00:31:23,720
Speaker 1: out of the inflation numbers, which we've all done over

501
00:31:23,760 --> 00:31:26,560
Speaker 1: the course of time. We know that, you know, the

502
00:31:26,600 --> 00:31:30,040
Speaker 1: housing data that's in the inflation prints we're seeing now

503
00:31:30,480 --> 00:31:33,960
Speaker 1: probably reflects actual economic circumstances from about six months ago.

504
00:31:34,280 --> 00:31:36,440
Speaker 1: You guys have spent a lot of time on the

505
00:31:36,840 --> 00:31:40,040
Speaker 1: housing related topics, so I know you know that well,

506
00:31:40,080 --> 00:31:43,040
Speaker 1: and so you know, I think that if we look

507
00:31:43,080 --> 00:31:45,000
Speaker 1: forward to the both to the next six months, but

508
00:31:45,040 --> 00:31:48,200
Speaker 1: a little bit beyond, I do think that the fact

509
00:31:48,200 --> 00:31:50,920
Speaker 1: that we've got a degree of resilience in our labor

510
00:31:50,960 --> 00:31:54,960
Speaker 1: market and we have companies in no small part because

511
00:31:55,000 --> 00:31:58,440
Speaker 1: of our policy looking forward and investing through this transition

512
00:31:59,680 --> 00:32:03,560
Speaker 1: give us a unique set of economic strengths that very

513
00:32:03,600 --> 00:32:07,240
Speaker 1: few other countries have right now to sort of navigate

514
00:32:07,280 --> 00:32:25,520
Speaker 1: through this next leg of this long term You know,

515
00:32:25,720 --> 00:32:30,080
Speaker 1: you were the sort of unacknowledged inspiration for a recent

516
00:32:30,200 --> 00:32:35,240
Speaker 1: Add Thoughts episode about the price of plastic and the idea,

517
00:32:36,040 --> 00:32:39,200
Speaker 1: the idea that maybe you know, packaging costs had gone

518
00:32:39,280 --> 00:32:43,080
Speaker 1: up a lot, and packaging is on virtually everything that

519
00:32:43,120 --> 00:32:45,959
Speaker 1: we buy. Can you talk a little bit more in

520
00:32:45,960 --> 00:32:50,720
Speaker 1: a sort of more granular way about unexpected pockets of

521
00:32:50,800 --> 00:32:54,440
Speaker 1: inflation over the past few years. What surprised you most

522
00:32:54,720 --> 00:32:57,200
Speaker 1: in that respect or what do you think was most

523
00:32:57,280 --> 00:33:01,680
Speaker 1: impactful for the overall American experience when it comes to

524
00:33:01,800 --> 00:33:05,520
Speaker 1: higher prices. Well, I'll tell you one of my persistant

525
00:33:05,600 --> 00:33:08,200
Speaker 1: sources of frustration, and it goes to the issue that

526
00:33:08,240 --> 00:33:13,000
Speaker 1: you are describing, which is why have we seen the

527
00:33:13,080 --> 00:33:19,760
Speaker 1: kind of stickiness in inflation for packaged foods. So we've

528
00:33:19,800 --> 00:33:23,240
Speaker 1: obviously looked a lot at food at home inflation, which

529
00:33:23,240 --> 00:33:25,880
Speaker 1: is a wonky kind of one of one of those

530
00:33:25,920 --> 00:33:29,200
Speaker 1: bad wonky Ethan euphemisms, which actually means food that you

531
00:33:29,240 --> 00:33:32,120
Speaker 1: buy at the grocery store, and that if you decompose

532
00:33:32,200 --> 00:33:36,320
Speaker 1: food at the grocery store. We've seen meaningful we've seen

533
00:33:36,400 --> 00:33:41,360
Speaker 1: cooling overall in that category, but most in fresh foods

534
00:33:41,480 --> 00:33:44,600
Speaker 1: and in meat and other proteins, where that the really

535
00:33:44,680 --> 00:33:46,840
Speaker 1: high run up in some of those categories has come

536
00:33:46,880 --> 00:33:49,920
Speaker 1: down quite significantly over the course of the last six months.

537
00:33:50,000 --> 00:33:52,760
Speaker 1: We'll put eggs aside. Exist is a is a separable

538
00:33:52,840 --> 00:33:55,960
Speaker 1: issue because of the Avian flu. The place where there's

539
00:33:56,000 --> 00:33:59,120
Speaker 1: really been persistence is in these packaged too goods and

540
00:33:59,200 --> 00:34:01,800
Speaker 1: packaged products. And I and we have spent a lot

541
00:34:01,840 --> 00:34:04,840
Speaker 1: of time on the phone with the ceo s and

542
00:34:04,920 --> 00:34:09,600
Speaker 1: teams at the major grocery stores and tried to understand

543
00:34:09,640 --> 00:34:12,799
Speaker 1: what's going on there when they interact with their suppliers.

544
00:34:12,840 --> 00:34:15,319
Speaker 1: Why is it that they're not able to, you know,

545
00:34:15,360 --> 00:34:19,240
Speaker 1: put more pressure constructor pressure on them to bring prices

546
00:34:19,239 --> 00:34:22,560
Speaker 1: down through the supply chain. And I think that there

547
00:34:22,719 --> 00:34:25,560
Speaker 1: is a an issue there that we need to spend

548
00:34:25,560 --> 00:34:28,799
Speaker 1: more time on looking in the future around why and

549
00:34:28,920 --> 00:34:33,000
Speaker 1: how the packaging itself of the food because most of

550
00:34:33,000 --> 00:34:35,640
Speaker 1: the you know, in this category, most of the cost

551
00:34:35,920 --> 00:34:39,360
Speaker 1: is not actually the food input itself, it's the packaging

552
00:34:39,480 --> 00:34:41,920
Speaker 1: and it's the other elements that go in. You know,

553
00:34:41,960 --> 00:34:44,600
Speaker 1: It's like you look at a box of cereal, that

554
00:34:44,960 --> 00:34:48,799
Speaker 1: principal cost is associated with the packaging and the like.

555
00:34:49,520 --> 00:34:52,640
Speaker 1: And so that has been a persistently sticky one and

556
00:34:52,680 --> 00:34:54,840
Speaker 1: I think it's been frustrating to the to some of

557
00:34:54,880 --> 00:34:58,440
Speaker 1: the some of the end retailers. I think we are

558
00:34:58,520 --> 00:35:02,560
Speaker 1: starting to see that, but the low through has been

559
00:35:02,560 --> 00:35:05,239
Speaker 1: frustrating and surprising that it takes a longer period of

560
00:35:05,280 --> 00:35:10,360
Speaker 1: time for those that changes in the upstream supply of

561
00:35:10,400 --> 00:35:14,040
Speaker 1: the input components to actually flow through to the outputs.

562
00:35:14,520 --> 00:35:17,240
Speaker 1: I think there are some competitive issues that probably would

563
00:35:17,680 --> 00:35:19,879
Speaker 1: merit greater scrutiny when we get to the other side

564
00:35:19,920 --> 00:35:23,160
Speaker 1: of this. I want to ask. I guess it's like

565
00:35:23,320 --> 00:35:27,480
Speaker 1: a how DC works question, and maybe I'm the only

566
00:35:27,480 --> 00:35:29,880
Speaker 1: one interested in this, but you know, like one area

567
00:35:30,000 --> 00:35:33,760
Speaker 1: in which the Biden administration's approach seems to have clearly

568
00:35:33,880 --> 00:35:38,200
Speaker 1: reduced inflation is through the SPR and the selling of oil,

569
00:35:38,400 --> 00:35:41,560
Speaker 1: reducing gasoline prices, and it's something that we've talked a

570
00:35:41,560 --> 00:35:44,600
Speaker 1: lot about on this show over the last year and

571
00:35:44,600 --> 00:35:48,319
Speaker 1: a half or so. But my question is, actually, you know,

572
00:35:48,680 --> 00:35:51,640
Speaker 1: when they say, okay, you're gonna we're gonna sell oil

573
00:35:51,680 --> 00:35:54,319
Speaker 1: from the SPR with this commitment to buy it, and

574
00:35:54,360 --> 00:35:57,600
Speaker 1: then there's this long process where it's like, Okay, the

575
00:35:57,680 --> 00:35:59,960
Speaker 1: Department of Energy has to spend all this time coming

576
00:36:00,040 --> 00:36:02,320
Speaker 1: up with the rules for the auction and the tender

577
00:36:02,520 --> 00:36:04,359
Speaker 1: to buy back the oil at some point in the

578
00:36:04,360 --> 00:36:08,400
Speaker 1: future unnecessary component. Why does that take so long? I

579
00:36:08,440 --> 00:36:12,920
Speaker 1: mean everyone reports to the same boss, the president. Why

580
00:36:13,080 --> 00:36:15,040
Speaker 1: does it Why can't it be one of these things

581
00:36:15,080 --> 00:36:17,960
Speaker 1: where the President says, I want to do this, and

582
00:36:18,000 --> 00:36:20,319
Speaker 1: then it's like and get the rules, and like the

583
00:36:20,360 --> 00:36:22,080
Speaker 1: next week they're like, all right, this is how we're

584
00:36:22,080 --> 00:36:24,520
Speaker 1: gonna do it. What is the sort of like process

585
00:36:24,520 --> 00:36:27,320
Speaker 1: by which is like, are still waiting on the Department

586
00:36:27,320 --> 00:36:29,879
Speaker 1: of Energy to come up with the explanation? Like, why

587
00:36:29,880 --> 00:36:33,760
Speaker 1: do things seem to take so long? You're like channeling

588
00:36:33,800 --> 00:36:36,640
Speaker 1: my inner monologue of frustration as any c director on

589
00:36:36,640 --> 00:36:40,200
Speaker 1: a daily basis learn in this seat about how the

590
00:36:40,800 --> 00:36:44,640
Speaker 1: executive branch actually operates. Well, well, look, I mean you're

591
00:36:44,840 --> 00:36:46,879
Speaker 1: the specific example you're raising is I think a good

592
00:36:46,880 --> 00:36:49,439
Speaker 1: example of both the ways in which you can move

593
00:36:49,480 --> 00:36:52,919
Speaker 1: both really quickly and then also where you can't. So,

594
00:36:53,600 --> 00:36:55,160
Speaker 1: you know, in the wake of in the wake of

595
00:36:55,480 --> 00:36:57,840
Speaker 1: about a year ago, right in the wake of Putin's invasion,

596
00:36:58,400 --> 00:37:02,680
Speaker 1: when we took a policy decision and the President took

597
00:37:02,719 --> 00:37:05,440
Speaker 1: a policy decision that it was right and appropriate to

598
00:37:05,640 --> 00:37:10,320
Speaker 1: execute a historically large sale out of the strategic petroleum reserve.

599
00:37:10,560 --> 00:37:14,479
Speaker 1: That action happened on a very expedited basis. We went

600
00:37:14,560 --> 00:37:17,359
Speaker 1: to our international allies. We had to convene the at

601
00:37:17,400 --> 00:37:21,160
Speaker 1: the within the i e A, the International Energy Agency,

602
00:37:21,200 --> 00:37:24,319
Speaker 1: with our partners and allies to get agreement around a

603
00:37:24,320 --> 00:37:29,040
Speaker 1: coordinated response. We then needed to actually execute operationally to

604
00:37:29,120 --> 00:37:32,400
Speaker 1: release oil from the reserve, which is actually not a

605
00:37:32,400 --> 00:37:36,680
Speaker 1: single reserve. It's a set of caverns, salt caverns underground

606
00:37:36,760 --> 00:37:40,440
Speaker 1: where oil is stored. That happened historically fast, and it

607
00:37:40,560 --> 00:37:46,320
Speaker 1: historically large scale and stretched the physical capacity of the

608
00:37:46,840 --> 00:37:51,440
Speaker 1: reserve itself in significant ways. And so one of the

609
00:37:51,480 --> 00:37:54,799
Speaker 1: things that we're now facing is that there is a

610
00:37:54,840 --> 00:37:58,520
Speaker 1: lot of operational and maintenance work that needs to take

611
00:37:58,560 --> 00:38:02,719
Speaker 1: place in order to maintain the capacity for these reserves.

612
00:38:02,719 --> 00:38:06,640
Speaker 1: They're they're fascinating reserves. They actually are caverns that they

613
00:38:06,719 --> 00:38:09,520
Speaker 1: aren't static, They actually breathe, and they you know, they

614
00:38:09,560 --> 00:38:11,759
Speaker 1: sort of moved back and forth because they are these

615
00:38:11,760 --> 00:38:15,919
Speaker 1: physical facilities, and if you differ maintenance associated with them,

616
00:38:16,280 --> 00:38:20,680
Speaker 1: then you're actually going to reduce the ability to to

617
00:38:20,840 --> 00:38:23,920
Speaker 1: release from the reserves in a moment of crisis. So

618
00:38:23,960 --> 00:38:25,799
Speaker 1: we're actually in a period right now where we need

619
00:38:25,840 --> 00:38:29,200
Speaker 1: to prioritize some important maintenance on that front. It also

620
00:38:29,280 --> 00:38:32,239
Speaker 1: underscores to my mind the need to do a larger

621
00:38:32,480 --> 00:38:36,680
Speaker 1: infrastructure upgrade of the Strategic Petroleum Reserve itself to address

622
00:38:36,680 --> 00:38:39,440
Speaker 1: some of these issues there are. There also is, to

623
00:38:39,480 --> 00:38:42,200
Speaker 1: your point, though, this question of how do we move

624
00:38:42,239 --> 00:38:46,200
Speaker 1: more nimbly, two new ideas that we have not done before.

625
00:38:46,360 --> 00:38:50,120
Speaker 1: So the idea of how you how the Department Energy

626
00:38:50,160 --> 00:38:53,040
Speaker 1: goes into the market and does a commitment to purchase

627
00:38:53,920 --> 00:38:56,799
Speaker 1: down the forward price curve is an idea that in

628
00:38:56,920 --> 00:38:59,640
Speaker 1: concept makes a lot of sense. In execution is novel

629
00:39:00,040 --> 00:39:02,520
Speaker 1: and so from illegal and a practical and an operational

630
00:39:02,560 --> 00:39:04,680
Speaker 1: perspective you have to take. You have to take the

631
00:39:04,719 --> 00:39:07,920
Speaker 1: time to figure out how to do something that is novel. Certainly,

632
00:39:07,960 --> 00:39:10,200
Speaker 1: I think I could name lots of examples where I

633
00:39:10,239 --> 00:39:13,279
Speaker 1: personally would have liked to see that novel process work

634
00:39:13,360 --> 00:39:17,480
Speaker 1: more quickly. There's also a lot of reasonable imprudent reasons

635
00:39:17,480 --> 00:39:20,160
Speaker 1: why you don't want it to move too quickly, because

636
00:39:20,719 --> 00:39:23,759
Speaker 1: you know you don't want to do something that might

637
00:39:23,800 --> 00:39:27,960
Speaker 1: have unintended consequences, for example, pushing the limits of the

638
00:39:28,000 --> 00:39:31,160
Speaker 1: physical capacity of the reserve beyond the point at which

639
00:39:31,200 --> 00:39:34,680
Speaker 1: you would then take away an emergency release opportunity since

640
00:39:34,719 --> 00:39:38,799
Speaker 1: you mentioned novel new ideas and just going back to

641
00:39:38,880 --> 00:39:41,200
Speaker 1: the grocery aisle for a second, and the idea of

642
00:39:41,239 --> 00:39:45,000
Speaker 1: maybe lower input costs not necessarily being passed on to

643
00:39:45,080 --> 00:39:49,480
Speaker 1: the consumer in a timely fashion. Biden has talked about

644
00:39:49,480 --> 00:39:53,200
Speaker 1: this idea of corporate greed at various points and potential

645
00:39:53,239 --> 00:39:56,040
Speaker 1: price gouging at a time when a lot of Americans

646
00:39:56,040 --> 00:39:59,800
Speaker 1: are under pressure by higher from higher prices. And I

647
00:40:00,040 --> 00:40:05,040
Speaker 1: know there's corporate minimum tax included in the Inflation Reduction Act,

648
00:40:05,760 --> 00:40:08,839
Speaker 1: but is there anything else that could be done on

649
00:40:08,880 --> 00:40:12,320
Speaker 1: that front? I mean, Germany has been experimenting with price

650
00:40:12,400 --> 00:40:16,280
Speaker 1: controls on gas. In the UK, there's the windfall tax

651
00:40:16,320 --> 00:40:19,040
Speaker 1: on oil and gas companies, which is something that Biden

652
00:40:19,080 --> 00:40:23,120
Speaker 1: has mentioned. Um, is there more you can do on that? Well?

653
00:40:23,120 --> 00:40:25,200
Speaker 1: The President has been talking in recent days about the

654
00:40:25,280 --> 00:40:31,080
Speaker 1: rationale behind increasing the tax on corporate stock by backs.

655
00:40:31,520 --> 00:40:35,960
Speaker 1: We implement We implemented a one tax excise tax on

656
00:40:36,080 --> 00:40:39,520
Speaker 1: buybacks in the Inflation Reduction Act and in the presence

657
00:40:39,520 --> 00:40:42,240
Speaker 1: budget that will come out in a couple of weeks,

658
00:40:42,960 --> 00:40:45,799
Speaker 1: he will pro propose to quadruple that to a four

659
00:40:45,880 --> 00:40:49,560
Speaker 1: percent excise tax. But I think the other thing to

660
00:40:49,680 --> 00:40:53,520
Speaker 1: do in this context is, you know, it's less about greed,

661
00:40:54,080 --> 00:40:59,279
Speaker 1: because you know, there is a part of the constructive

662
00:40:59,280 --> 00:41:04,279
Speaker 1: impulse of capitalism is for people to be motivated by

663
00:41:04,480 --> 00:41:08,359
Speaker 1: um by profit, but instead identifying those parts of our

664
00:41:08,400 --> 00:41:13,720
Speaker 1: economy where we have insufficient competition and so that profit

665
00:41:13,760 --> 00:41:18,120
Speaker 1: mode it turns into generating really negative outcomes for consumers

666
00:41:18,239 --> 00:41:20,359
Speaker 1: or for workers. And so the other thing I think

667
00:41:20,360 --> 00:41:23,319
Speaker 1: this president has done and can do more of, is

668
00:41:23,360 --> 00:41:29,440
Speaker 1: trying to be more aggressive about identifying places where, either

669
00:41:29,640 --> 00:41:34,400
Speaker 1: through regulatory or in some cases deregulatory steps, we can

670
00:41:34,480 --> 00:41:40,360
Speaker 1: increase competition in markets and actually reduce the ability for

671
00:41:41,920 --> 00:41:47,120
Speaker 1: incumbents to actually generate profits in a way that actually,

672
00:41:47,640 --> 00:41:50,880
Speaker 1: you know, has negative economic outcomes. My favorite example of

673
00:41:50,920 --> 00:41:55,279
Speaker 1: this is on hearing aids, where we eliminated a rule

674
00:41:55,400 --> 00:41:59,040
Speaker 1: that required hearing aids to be sold required a prescription

675
00:41:59,560 --> 00:42:01,719
Speaker 1: before you could get hearing it, and so now hearing

676
00:42:01,760 --> 00:42:04,000
Speaker 1: it's can be sold over the counter at drug stores

677
00:42:04,080 --> 00:42:08,000
Speaker 1: and the like. Um that was a deregulatory step, but

678
00:42:08,080 --> 00:42:11,120
Speaker 1: what it's done is that it's opened up this new

679
00:42:11,120 --> 00:42:15,560
Speaker 1: playing field for competition where there's now new new technological

680
00:42:15,560 --> 00:42:19,839
Speaker 1: innovation to try to sell lower cost hearing rates. Those

681
00:42:19,840 --> 00:42:22,719
Speaker 1: folks who are innovating are motivated by the ability to

682
00:42:22,719 --> 00:42:25,359
Speaker 1: make a ton of money, But they're making a ton

683
00:42:25,400 --> 00:42:28,000
Speaker 1: of money with more innovative products that will end up

684
00:42:28,760 --> 00:42:32,919
Speaker 1: costing the end consumer less. And so you know, that's

685
00:42:32,920 --> 00:42:36,759
Speaker 1: the kind of step where you're using more fairer and

686
00:42:36,800 --> 00:42:40,520
Speaker 1: more open competition to generate better economic outcomes. There's a

687
00:42:40,520 --> 00:42:43,719
Speaker 1: lot of other places where there's opportunity to do that

688
00:42:44,520 --> 00:42:48,080
Speaker 1: on the labor market with noncompete agreements, etcetera. I think

689
00:42:48,120 --> 00:42:51,480
Speaker 1: that that's another place where this president, this administration can

690
00:42:51,520 --> 00:42:54,919
Speaker 1: continue to break in the ground. So I think it's

691
00:42:55,000 --> 00:42:58,120
Speaker 1: fair to say that with Republicans having one control of

692
00:42:58,200 --> 00:43:02,280
Speaker 1: Congress that the legis late of window for anything significant

693
00:43:02,400 --> 00:43:06,759
Speaker 1: is certain is closed for the next two years. UM,

694
00:43:06,760 --> 00:43:10,160
Speaker 1: maybe some marginal stuff, you know. The one sort of

695
00:43:10,320 --> 00:43:13,840
Speaker 1: area in which I don't perceive the Biden administration to

696
00:43:13,880 --> 00:43:18,040
Speaker 1: have made major gains or built upon was anything sort

697
00:43:18,080 --> 00:43:22,440
Speaker 1: of related to permanent um sort of welfare state expansion.

698
00:43:22,480 --> 00:43:26,560
Speaker 1: The child tax credit was left to expire. Nothing was

699
00:43:26,760 --> 00:43:33,160
Speaker 1: ultimately done on things like universal childcare or expanding childcare benefits, etcetera.

700
00:43:33,560 --> 00:43:37,040
Speaker 1: In your view sort of looking back, like why is that?

701
00:43:37,239 --> 00:43:40,240
Speaker 1: Was it? Just? Look, there's only so much that any

702
00:43:40,360 --> 00:43:44,120
Speaker 1: Congress can really focus on. Was it the fault of

703
00:43:44,200 --> 00:43:46,440
Speaker 1: high inflation and the fact that there is not an

704
00:43:46,520 --> 00:43:50,600
Speaker 1: appetite to increase sort of sort of you know, social

705
00:43:50,640 --> 00:43:53,600
Speaker 1: benefits spending at a time of high inflation that SAPs

706
00:43:53,640 --> 00:43:57,080
Speaker 1: political will? Why was that a hard area to sort

707
00:43:57,080 --> 00:44:02,080
Speaker 1: of consolidate or make gains up. Well, first, one caveat

708
00:44:02,120 --> 00:44:06,360
Speaker 1: to your point, which is that because of the expansions

709
00:44:06,920 --> 00:44:10,200
Speaker 1: that was that were first enacted in the Rescue Plan

710
00:44:10,520 --> 00:44:13,800
Speaker 1: and then extended in the Inflation Production Act, this president

711
00:44:13,880 --> 00:44:18,480
Speaker 1: has actually signed into law the largest structural expansion in

712
00:44:18,560 --> 00:44:23,360
Speaker 1: healthcare coverage, the second largest since the nineteen sixties, the

713
00:44:23,400 --> 00:44:27,840
Speaker 1: largest being the Affordable Care Act increase in the number

714
00:44:27,920 --> 00:44:31,960
Speaker 1: of people getting healthcare through the Affordable Care Act exchanges,

715
00:44:32,040 --> 00:44:35,480
Speaker 1: and that has led to us having the lowest uninsured

716
00:44:35,560 --> 00:44:39,240
Speaker 1: rate in history. So that I think is an important caveat,

717
00:44:39,320 --> 00:44:43,359
Speaker 1: non trivial caveat to um But I take your your

718
00:44:43,440 --> 00:44:46,120
Speaker 1: your overall point. I think that part of what we

719
00:44:46,200 --> 00:44:50,440
Speaker 1: need to do is to break out of a narrative

720
00:44:50,719 --> 00:44:55,400
Speaker 1: that looks at things like UH, the child tax credit

721
00:44:55,800 --> 00:45:00,839
Speaker 1: and more affordable and accessible childcare as social programs, and

722
00:45:00,880 --> 00:45:05,520
Speaker 1: make more clearly and aggressively the economic case with respect

723
00:45:05,520 --> 00:45:09,440
Speaker 1: to labor supply and with respect to UH, you know,

724
00:45:09,719 --> 00:45:15,680
Speaker 1: family balance sheets, about why investing in UH in kids

725
00:45:15,760 --> 00:45:19,560
Speaker 1: and families in this country is a is a core

726
00:45:19,640 --> 00:45:23,040
Speaker 1: at core an economic priority and an economic issue that

727
00:45:23,040 --> 00:45:26,759
Speaker 1: would actually have the impact of increasing labor supply and

728
00:45:26,800 --> 00:45:31,719
Speaker 1: reducing price pressures in our economy across time, while also

729
00:45:31,760 --> 00:45:36,360
Speaker 1: obviously generating better health and better educational outcomes for our kids.

730
00:45:36,719 --> 00:45:40,120
Speaker 1: So I think the economic case is really quite compelling,

731
00:45:40,600 --> 00:45:42,719
Speaker 1: but I think we need to make it and make

732
00:45:42,719 --> 00:45:48,120
Speaker 1: it more clearly and avoid the sense in which that

733
00:45:48,200 --> 00:45:51,800
Speaker 1: type of policy falls into a different category, a different

734
00:45:51,800 --> 00:45:56,160
Speaker 1: category of social policy or family policy, and therefore is

735
00:45:56,440 --> 00:45:59,200
Speaker 1: thought of differently. These need to be thought of as

736
00:45:59,200 --> 00:46:01,959
Speaker 1: sort of core acton coomic priorities and things that could

737
00:46:02,000 --> 00:46:06,480
Speaker 1: help in accelerating this transition that we are in the

738
00:46:06,480 --> 00:46:09,840
Speaker 1: irony right now, is that things that we could do

739
00:46:09,960 --> 00:46:15,640
Speaker 1: right now that would increased labor supply without adding to

740
00:46:16,520 --> 00:46:21,359
Speaker 1: the federal deficit would be extraordinarily helpful in accelerating this

741
00:46:21,440 --> 00:46:24,160
Speaker 1: transition that we are in, even as the FED is

742
00:46:24,200 --> 00:46:26,360
Speaker 1: engaged in a sort of in there in a in

743
00:46:26,440 --> 00:46:31,719
Speaker 1: a monetary tightening cycle. Since we're doing your exit interview,

744
00:46:32,800 --> 00:46:35,440
Speaker 1: can I ask do you have any regrets or is

745
00:46:35,440 --> 00:46:38,359
Speaker 1: there anything that you would have done differently? I mean,

746
00:46:38,400 --> 00:46:42,120
Speaker 1: for instance, the big criticism of the American Rescue Plan

747
00:46:42,200 --> 00:46:45,080
Speaker 1: was that perhaps it could have been more targeted so

748
00:46:45,120 --> 00:46:48,680
Speaker 1: as to avoid a big bump in inflation. Or with

749
00:46:48,719 --> 00:46:51,160
Speaker 1: the p P P there's a lot of discussion about,

750
00:46:51,280 --> 00:46:53,640
Speaker 1: you know, maybe that could have been more targeted to

751
00:46:53,800 --> 00:46:56,280
Speaker 1: so that you would avoid some of the fraud issues

752
00:46:56,320 --> 00:46:58,640
Speaker 1: that have since emerged. Is there anything you would have

753
00:46:58,680 --> 00:47:02,400
Speaker 1: done differently? You know, if I look back, there's on

754
00:47:02,480 --> 00:47:05,160
Speaker 1: a daily and weekly basis, I think there's like there's

755
00:47:05,960 --> 00:47:08,440
Speaker 1: there's dozens of micro things that as I will have

756
00:47:08,520 --> 00:47:11,680
Speaker 1: time to reflect, I probably will see opportunity for us

757
00:47:11,719 --> 00:47:14,759
Speaker 1: to have done differently at the margin on all of

758
00:47:14,800 --> 00:47:19,640
Speaker 1: the big decisions. I think history will ultimately judge, but

759
00:47:19,719 --> 00:47:23,759
Speaker 1: I I, as we sit here today, I feel quite

760
00:47:23,760 --> 00:47:26,680
Speaker 1: confident that the President and we made the right call.

761
00:47:27,239 --> 00:47:30,920
Speaker 1: Understanding that the legislative process is imperfect, you end up

762
00:47:30,960 --> 00:47:35,040
Speaker 1: with imperfect pieces of legislation. At the end of the day,

763
00:47:35,200 --> 00:47:38,160
Speaker 1: I do think one thing that is a a reality.

764
00:47:38,680 --> 00:47:41,080
Speaker 1: But but if you could have changed it would have

765
00:47:41,440 --> 00:47:46,000
Speaker 1: would have been better. Is that you mentioned earlier. But

766
00:47:46,040 --> 00:47:49,720
Speaker 1: if you think about it, the President made the call

767
00:47:49,880 --> 00:47:55,439
Speaker 1: for the American Rescue Plan on January. He signed into

768
00:47:55,520 --> 00:47:59,799
Speaker 1: law of the Inflation Reduction Act on August two. That's

769
00:48:00,000 --> 00:48:02,720
Speaker 1: five d and seventy nine days. It was a long time.

770
00:48:03,000 --> 00:48:07,759
Speaker 1: It was a long process of legislative interaction, which I

771
00:48:07,880 --> 00:48:10,320
Speaker 1: was appropriate and necessary to try to get done what

772
00:48:10,400 --> 00:48:13,760
Speaker 1: we were trying to get done in a very narrowly

773
00:48:14,120 --> 00:48:17,120
Speaker 1: divided Congress. But I think it was also a wearing

774
00:48:17,160 --> 00:48:19,919
Speaker 1: process and it was more difficult for the American people

775
00:48:19,960 --> 00:48:25,240
Speaker 1: to fully understand the thread of legislative sausage making over

776
00:48:25,320 --> 00:48:29,000
Speaker 1: that long period. So you know, in a perfect world,

777
00:48:29,400 --> 00:48:33,040
Speaker 1: you could could collapse that time and have gotten more

778
00:48:33,120 --> 00:48:36,960
Speaker 1: quickly to the task of implementation that this administration is

779
00:48:37,040 --> 00:48:40,160
Speaker 1: now in. Um we don't live in a perfect world.

780
00:48:40,200 --> 00:48:43,200
Speaker 1: And at the end of the day, more important is

781
00:48:43,239 --> 00:48:46,439
Speaker 1: to get the right type of legislation done. But that's

782
00:48:46,440 --> 00:48:48,520
Speaker 1: certainly something that you know, that's a that has been

783
00:48:48,520 --> 00:48:52,279
Speaker 1: a reality of the past two years. Briandes, thank you

784
00:48:52,440 --> 00:48:56,239
Speaker 1: so much for coming back on odd lots, and even

785
00:48:56,239 --> 00:48:58,680
Speaker 1: though this is your last week at the administration, doesn't

786
00:48:58,719 --> 00:49:00,440
Speaker 1: mean this has to be the last time you come on.

787
00:49:00,680 --> 00:49:03,959
Speaker 1: Looking forward to talking again at some point. UH really

788
00:49:04,000 --> 00:49:07,359
Speaker 1: appreciate giving us an hour of your time is great.

789
00:49:08,719 --> 00:49:11,239
Speaker 1: Thank you guys, Uh and UH and I look forward

790
00:49:11,239 --> 00:49:28,200
Speaker 1: to talking to Thank thanks so much well, Tracy. I

791
00:49:28,560 --> 00:49:31,440
Speaker 1: definitely thought that it was a treat getting to speak

792
00:49:31,480 --> 00:49:34,080
Speaker 1: to Brian on his last week. And again, you know,

793
00:49:34,160 --> 00:49:37,440
Speaker 1: it has been an extraordinary two years. But the proof

794
00:49:37,520 --> 00:49:40,279
Speaker 1: that any of it will matter, you know, will come

795
00:49:40,320 --> 00:49:43,640
Speaker 1: in the years ahead of whether the dials turn on,

796
00:49:43,719 --> 00:49:46,600
Speaker 1: like our domestic capacity and all these things. Absolutely, I

797
00:49:47,000 --> 00:49:49,520
Speaker 1: do think it is kind of crazy that we still

798
00:49:50,040 --> 00:49:53,640
Speaker 1: don't necessarily seem to have a firm idea of exactly

799
00:49:53,640 --> 00:49:58,040
Speaker 1: how inflation works. One of our oldest fingers here. Yeah,

800
00:49:58,080 --> 00:50:01,640
Speaker 1: for some years, right, well for years, Sorry to bring

801
00:50:01,680 --> 00:50:03,480
Speaker 1: it up again, but you know, for years it was

802
00:50:03,640 --> 00:50:07,880
Speaker 1: wise and inflation higher, and now it's wise and inflation lower.

803
00:50:07,960 --> 00:50:11,480
Speaker 1: And we're doing all these things, and we haven't necessarily

804
00:50:11,520 --> 00:50:15,080
Speaker 1: seen companies pass on the savings, and it's going to

805
00:50:15,160 --> 00:50:17,480
Speaker 1: take time for a lot of these efforts to come

806
00:50:17,520 --> 00:50:21,440
Speaker 1: to fruition. Anyway, I thought that was a fascinating discussion. Um.

807
00:50:21,480 --> 00:50:25,320
Speaker 1: I loved his point about packaging um and this idea

808
00:50:25,480 --> 00:50:29,160
Speaker 1: that you know, maybe there are sort of unappreciated factors

809
00:50:29,200 --> 00:50:33,000
Speaker 1: going into certain elements of inflation. Absolutely, you know, just

810
00:50:33,239 --> 00:50:37,839
Speaker 1: also the sort of like the big historical ebbs and

811
00:50:37,920 --> 00:50:41,440
Speaker 1: floods of as he put it, a government that is

812
00:50:41,520 --> 00:50:45,840
Speaker 1: active in the domestic economy making prioritization, trying to crowd

813
00:50:46,040 --> 00:50:48,400
Speaker 1: in investment, and it feels like, you know, it's like

814
00:50:48,440 --> 00:50:50,480
Speaker 1: one of those things where like that really did go

815
00:50:50,600 --> 00:50:55,040
Speaker 1: out of favor for style for decades, for decades. Probably,

816
00:50:55,080 --> 00:50:58,080
Speaker 1: I think the inflation of the nineteen seventies following on

817
00:50:58,360 --> 00:51:00,239
Speaker 1: some of the more active years in the night teen

818
00:51:00,320 --> 00:51:04,000
Speaker 1: sixties helped kill that. So you know, it'll be interesting

819
00:51:04,000 --> 00:51:07,200
Speaker 1: to see like how long this persists. And you know,

820
00:51:07,239 --> 00:51:10,560
Speaker 1: one of the striking things to me is like deficit politics,

821
00:51:10,600 --> 00:51:12,640
Speaker 1: how much they've gone away, how much you don't really

822
00:51:12,680 --> 00:51:15,439
Speaker 1: hear about them? Are people worrying about you know so much?

823
00:51:15,480 --> 00:51:18,200
Speaker 1: Like there's clearly, I would say, on both sides of

824
00:51:18,760 --> 00:51:22,480
Speaker 1: the aisle, for maybe different reasons, there's a greater appetite

825
00:51:22,800 --> 00:51:24,640
Speaker 1: for the government to have like this, like you know,

826
00:51:25,080 --> 00:51:30,200
Speaker 1: an active economic player. Yeah, I do wonder I have

827
00:51:30,280 --> 00:51:32,600
Speaker 1: to say in the future, what happens if so now

828
00:51:32,640 --> 00:51:36,359
Speaker 1: we're basically pulling forward a lot of investment, and what

829
00:51:36,520 --> 00:51:39,880
Speaker 1: happens if in a few years, you know, the economy

830
00:51:39,960 --> 00:51:44,439
Speaker 1: starts to slow, maybe the government is more constrained um

831
00:51:44,440 --> 00:51:46,640
Speaker 1: and it's spending ability. I know, you don't like to

832
00:51:46,680 --> 00:51:51,160
Speaker 1: hear that show, or at least politically like feels more

833
00:51:51,239 --> 00:51:55,359
Speaker 1: constrained um. And then what happens because it does feel like, yes,

834
00:51:55,400 --> 00:51:57,640
Speaker 1: all of this is needed, but it also feels like

835
00:51:57,640 --> 00:52:00,200
Speaker 1: you're sort of front loading a lot of this well,

836
00:52:00,239 --> 00:52:03,160
Speaker 1: and then you know specifically, you know, and that's kind

837
00:52:03,160 --> 00:52:05,560
Speaker 1: of why I asked that question about, well, what is

838
00:52:05,600 --> 00:52:09,440
Speaker 1: the government's role as a buyer last resort, which is that, Okay,

839
00:52:09,440 --> 00:52:12,800
Speaker 1: what happens if we build the semitic conductor manufact plans

840
00:52:13,080 --> 00:52:14,640
Speaker 1: and then we have a downturn? So it's gonna be

841
00:52:14,680 --> 00:52:17,440
Speaker 1: downturns ahead in the future, and you know, there is

842
00:52:17,560 --> 00:52:21,120
Speaker 1: not a space race going on, et cetera, Like are

843
00:52:21,120 --> 00:52:23,040
Speaker 1: they going to be idol factories? Are they gonna be

844
00:52:23,120 --> 00:52:26,200
Speaker 1: oversupplied factories? So like cheap goods or you know, a

845
00:52:26,600 --> 00:52:29,760
Speaker 1: price war like these are still like big questions about

846
00:52:29,880 --> 00:52:33,000
Speaker 1: how how all of this stuff will play out. Yeah, alright,

847
00:52:33,040 --> 00:52:35,000
Speaker 1: shall we leave it there? Let's leave it there. This

848
00:52:35,080 --> 00:52:38,000
Speaker 1: has been another episode of the All Thoughts podcast. I'm

849
00:52:38,040 --> 00:52:40,760
Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy

850
00:52:40,760 --> 00:52:43,480
Speaker 1: Alloway and I'm Joey Isn't All. You can follow me

851
00:52:43,719 --> 00:52:46,600
Speaker 1: on Twitter at the Stale Work. You can follow Brian

852
00:52:46,680 --> 00:52:49,799
Speaker 1: I think his personal I suspect he'll be tweeting from

853
00:52:49,840 --> 00:52:53,440
Speaker 1: at Brian c d s, his personal account that he

854
00:52:53,520 --> 00:52:56,439
Speaker 1: used before taking the job. I think he's probably gonna

855
00:52:56,480 --> 00:52:59,800
Speaker 1: go back to that account book we'll see Follow or

856
00:53:00,040 --> 00:53:03,840
Speaker 1: do sers Kerman Rodriguez at Kerman Ermann and Dash Bennett

857
00:53:03,880 --> 00:53:08,000
Speaker 1: at Dashbot. Follow all the Bloomberg podcasts at podcasts and

858
00:53:08,040 --> 00:53:11,160
Speaker 1: for more odd Lots content, go to Bloomberg dot com

859
00:53:11,200 --> 00:53:14,480
Speaker 1: slash odd Lots, where we blog, post transcripts, and we

860
00:53:14,480 --> 00:53:17,279
Speaker 1: have a newsletter that comes out every Friday. Go there

861
00:53:17,320 --> 00:53:19,120
Speaker 1: and sign them. Thanks for listening.