WEBVTT - How To Stop The Recession From Happening Right Now 0:00:10.840 --> 0:00:14.680 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.760 --> 0:00:19.600 I'm Joe Was and I'm Tracy Halloway. So Tracy, today 0:00:19.680 --> 0:00:23.159 we are going to have the fastest follow up to 0:00:23.280 --> 0:00:26.240 a past guest that we've ever had, I think, because 0:00:26.239 --> 0:00:28.280 of course we've had some guests a few times or 0:00:28.280 --> 0:00:30.680 at least twice, but this time we were talking to 0:00:30.720 --> 0:00:33.800 someone that we talked to literally just a few weeks ago. Yeah. 0:00:33.960 --> 0:00:36.960 I think that's kind of a marker of how much 0:00:37.200 --> 0:00:40.960 has changed in markets and the economy in that short time, 0:00:41.040 --> 0:00:44.480 because when we spoke to this particular person, I think 0:00:44.520 --> 0:00:48.559 it was either late January or early February. Obviously the 0:00:48.560 --> 0:00:52.880 coronavirus was a concern, especially in China, but it had 0:00:53.040 --> 0:00:56.760 yet to really take off in places like Europe and 0:00:56.800 --> 0:00:59.560 the US. Now all of that is changing. People are 0:00:59.560 --> 0:01:01.880 worried abou out the economy, and of course we've seen 0:01:02.040 --> 0:01:05.960 a massive sell off in markets. Right since that discussion, 0:01:06.480 --> 0:01:09.720 we've had a de facto stock market crash, one of 0:01:09.760 --> 0:01:14.280 the fastest declines ever, breathtaking moves day after day, and 0:01:14.360 --> 0:01:19.880 now extremely serious and legitimate worries that a recession could 0:01:19.920 --> 0:01:22.640 be imminent. So we're talking about a recession as a 0:01:22.720 --> 0:01:25.039 sort of theoretical thing that at some point was likely 0:01:25.120 --> 0:01:28.040 to come. But now we're talking about a possible recession 0:01:28.360 --> 0:01:31.880 right here and right now, really globally, but also you know, 0:01:31.920 --> 0:01:35.160 specifically in the West and in the US right and 0:01:35.200 --> 0:01:37.880 of course, because we are talking about a potential recession, 0:01:37.959 --> 0:01:41.280 that means people inevitably are talking about what we can 0:01:41.360 --> 0:01:44.280 do to stop it. We've already seen the Federal Reserve 0:01:44.720 --> 0:01:47.440 do an emergency rate cut, but a lot of the 0:01:47.480 --> 0:01:50.880 focus is on fiscal stimulums. Right That's the big question 0:01:50.960 --> 0:01:54.320 is whether DC can get it together in a way 0:01:54.360 --> 0:01:59.320 that it rarely can to spend money to blunt the 0:01:59.400 --> 0:02:02.400 impact of these of this virus, which is expected to 0:02:02.400 --> 0:02:06.440 be traumatic. So without further introduction. A few weeks ago, 0:02:06.560 --> 0:02:09.840 we spoke to Claudia Psam, she's the director of macroeconomic 0:02:09.919 --> 0:02:14.280 policy at the Washington Center for Equitable Growth, and our 0:02:14.320 --> 0:02:17.080 discussion was, again it was theoretical, is what do you 0:02:17.120 --> 0:02:21.239 do to hold the recession if you see one coming? 0:02:21.639 --> 0:02:24.760 How should spending get out the door in a timely manner. 0:02:25.080 --> 0:02:27.959 We were not thinking of the discussion at that time 0:02:28.240 --> 0:02:31.880 as something like, oh, here's an imminent playbook that we need. 0:02:32.160 --> 0:02:35.320 But really we are in that position now. So without 0:02:35.520 --> 0:02:38.600 further ado, let's get right to it. Claudia, thank you 0:02:38.720 --> 0:02:40.960 very much for coming back on the podcast. Yeah, thank 0:02:41.000 --> 0:02:43.160 you for having me back. I appreciate it. So, just 0:02:43.240 --> 0:02:47.680 in your view, how serious are the recession risks right 0:02:47.680 --> 0:02:50.080 now for the US economy. I think the risks are 0:02:50.320 --> 0:02:55.600 incredibly serious. Uh, the events are fast moving right So 0:02:55.639 --> 0:02:58.280 if we were talking this time last week, I would 0:02:58.360 --> 0:03:01.720 not I've been say we should, we should be really concerned. 0:03:01.720 --> 0:03:05.120 This is not looking good as last week went on, 0:03:05.880 --> 0:03:07.880 I think, especially for me, I felt like we know 0:03:07.919 --> 0:03:10.080 how to do this, We know the fiscal tools that 0:03:10.200 --> 0:03:12.359 need to be deployed when we face a risk to 0:03:12.400 --> 0:03:15.560 the economy. Coronavirus is unique in many ways, but in 0:03:15.560 --> 0:03:17.679 a lot of ways it isn't. It's just something that's 0:03:17.720 --> 0:03:20.880 threatening on the economic side, something that's threatening the ability 0:03:20.880 --> 0:03:22.400 of people to go to work. People do want to 0:03:22.400 --> 0:03:24.480 go buy stuff Like this is what a threat to 0:03:24.520 --> 0:03:27.240 the U. S economy looks like. We know how to 0:03:27.280 --> 0:03:29.720 fight that. We've got the tools, we have experience from 0:03:29.720 --> 0:03:32.360 the last decade, but we need fiscal policy. And I'm 0:03:32.360 --> 0:03:34.840 sure we'll talk a lot about why monetary isn't enough. 0:03:34.960 --> 0:03:39.960 But to see, um, Larry Cudlo do the interview on 0:03:39.960 --> 0:03:43.560 Friday where he essentially said, yeah, we don't we don't 0:03:43.560 --> 0:03:45.960 really need the fiscal or it just there wasn't a 0:03:46.040 --> 0:03:49.680 really forceful we're going to do all it takes on 0:03:49.720 --> 0:03:52.920 the fiscal side, and between that and then the markets 0:03:53.120 --> 0:03:55.480 and you know, the Sunday night was really bad and 0:03:55.520 --> 0:03:57.680 the treasury. So all of this has just made me 0:03:58.880 --> 0:04:01.600 really concerned and concerned to the point not that oh, 0:04:01.720 --> 0:04:04.680 recession looks like it's you know, could happen that like 0:04:04.720 --> 0:04:07.800 if we do not act fast, like it is going 0:04:07.840 --> 0:04:11.160 to be a recession, Like I just um, and it 0:04:11.200 --> 0:04:12.800 doesn't have to I think this was so hard for 0:04:12.800 --> 0:04:15.000 me is it does not have to happen at all. 0:04:15.640 --> 0:04:19.680 Like if we were to act now, then this is 0:04:19.720 --> 0:04:21.480 this is gonna be painful. It's gonna be painful that 0:04:21.520 --> 0:04:23.760 people that get sick, some people will lose their job. 0:04:23.800 --> 0:04:25.479 We're not gonna be able to act fast enough and 0:04:25.520 --> 0:04:28.160 be able to help everybody. But it does not have 0:04:28.200 --> 0:04:30.640 to take the US economy down, and we're in such 0:04:30.680 --> 0:04:33.560 a good place right now. It's just it's tragic to 0:04:33.640 --> 0:04:37.559 like cut off this expansion. So Claudia, on that note, 0:04:37.720 --> 0:04:41.680 why do you think there is this resistance to fiscal 0:04:41.920 --> 0:04:45.800 stimulus stuff so far? So, like I said, we have 0:04:45.880 --> 0:04:48.440 all the economic tools. This is just a matter of 0:04:48.480 --> 0:04:52.000 political will or physical policy makers have all the tools 0:04:52.000 --> 0:04:55.880 they need, you know, that's that's not my lane the politics. 0:04:55.920 --> 0:04:57.960 But I will say having been a forecaster, I mean 0:04:58.000 --> 0:05:01.279 I worked on all of the a stimulus from two 0:05:01.320 --> 0:05:06.040 thousand and eight, especially stimulustracted a household, so I stimulus 0:05:06.080 --> 0:05:08.360 payments two thousand nine, two thousand tend making work paid 0:05:08.360 --> 0:05:10.720 two thousand eleven and twelve, payroll tax cut. I mean 0:05:10.760 --> 0:05:13.000 I followed all those. I've had to analyze them for 0:05:13.080 --> 0:05:16.000 the staffs macro forecast. I did research on every single 0:05:16.040 --> 0:05:20.320 one of those. I know the research and I I 0:05:20.320 --> 0:05:23.160 mean I cried at the end of like they didn't 0:05:23.200 --> 0:05:27.159 extend anything like that's the payroll tax cut expired. That 0:05:27.240 --> 0:05:29.760 was the last of the stimulus. The unemployment rate was 0:05:29.800 --> 0:05:33.440 still high, like way too high, and there was all 0:05:33.440 --> 0:05:36.719 the discussions of austerity. And this doesn't just hit on 0:05:36.720 --> 0:05:39.479 one side of the political spectrum. And we had very 0:05:39.520 --> 0:05:44.800 senior macro economists who were in positions of leadership in 0:05:45.160 --> 0:05:48.920 various organizations saying yeah, we just we got too much debt, 0:05:49.279 --> 0:05:51.560 we gotta we gotta pull back, tighten the belt straps, 0:05:51.839 --> 0:05:56.400 and it I mean, it was um unconscionable what that 0:05:56.440 --> 0:05:59.200 meant to the people who really already had their belts 0:05:59.240 --> 0:06:04.120 their belts tightened as much as they could. So I like, 0:06:04.160 --> 0:06:06.479 I'm not as naive now because like they did it 0:06:06.520 --> 0:06:10.240 when it was so bad that like I just anyways, 0:06:10.240 --> 0:06:12.160 but it's you know, you you'd hope that there were 0:06:12.240 --> 0:06:15.359 lessons learned, Like we learned last time. We should have 0:06:15.440 --> 0:06:17.680 learned is that you have to act fast, and when 0:06:17.680 --> 0:06:19.599 you act fast, you gotta go big. You gotta go 0:06:19.680 --> 0:06:21.279 big to start with because that might be the only 0:06:21.279 --> 0:06:24.080 bite at the apple, and then you've got to stick 0:06:24.120 --> 0:06:27.600 with it because if you don't like there, there are 0:06:27.760 --> 0:06:32.360 long term costs for everyone in the economy. So yeah, 0:06:32.520 --> 0:06:34.640 that's like something I mean, Ay, what you say is 0:06:34.640 --> 0:06:36.760 like something that I've been thinking a lot about, which 0:06:36.800 --> 0:06:39.320 is I thought, you know, we had learned some of 0:06:39.360 --> 0:06:43.560 these lessons after the Great Financial Crisis that like, it 0:06:43.640 --> 0:06:46.960 doesn't pay to weight, it doesn't pay to be particularly cautious. 0:06:47.320 --> 0:06:49.840 The game is to go big and prevent it, and 0:06:49.880 --> 0:06:52.680 then you have the same old cast of characters all 0:06:52.839 --> 0:06:55.040 saying the same thing like, oh, worried about how we're 0:06:55.040 --> 0:06:56.520 going to pay for it, and we have the fiscal 0:06:56.560 --> 0:06:59.680 space and maybe we'll do something small and targeted. But 0:06:59.760 --> 0:07:02.880 as you note, uh, you know, the recovery from the 0:07:02.920 --> 0:07:06.680 crisis was shockingly slow, and I didn't realize it up 0:07:06.760 --> 0:07:09.120 until yesterday. I was looking at the chart how we 0:07:09.160 --> 0:07:12.360 didn't return to pre crisis levels of unemployment rate till 0:07:14.160 --> 0:07:16.240 that's in my mind. Maybe I would have thought it was. 0:07:18.200 --> 0:07:23.880 There's incredibly long lasting scars from the crisis. But we've 0:07:23.920 --> 0:07:26.800 been talking about fiscal stimulised. One of the things that 0:07:26.840 --> 0:07:29.320 we talked about when you were on the podcast a 0:07:29.320 --> 0:07:31.200 few weeks ago, and everyone should go listen to that 0:07:31.240 --> 0:07:34.360 because that really like sort of gives your whole body 0:07:34.360 --> 0:07:37.000 of work or a lot more of It is the 0:07:37.000 --> 0:07:40.360 importance of just getting cash into people's hands. That that's 0:07:40.400 --> 0:07:42.360 the key thing that we need to do right now. 0:07:42.480 --> 0:07:45.720 So talk about the importance of just putting money in 0:07:45.760 --> 0:07:48.200 peoples on bank accounts right here. Yeah, So when I 0:07:48.240 --> 0:07:51.520 talk about this fiscal response, so in a recession, I 0:07:51.520 --> 0:07:54.040 think there's two principles that we should be working on. 0:07:54.040 --> 0:07:57.000 One is we should go wide. So that's this idea 0:07:57.000 --> 0:08:00.000 of giving money to everybody, like give every man, woman, 0:08:00.000 --> 0:08:02.680 and child, United States five find a way to do it. 0:08:03.040 --> 0:08:06.280 So that's that's covering the breadth. I think it is important, 0:08:06.280 --> 0:08:08.200 and you're going to hear a lot more people talking 0:08:08.240 --> 0:08:12.600 about targeted stimulus, so I think that can. I think 0:08:12.640 --> 0:08:14.840 we should have that. People who get sick right now, 0:08:14.880 --> 0:08:18.320 people who are quarantined, they should get money. They should 0:08:18.360 --> 0:08:21.120 get more money because they're they're the ones that are sick, 0:08:21.120 --> 0:08:24.400 they're they're suffering the most. Give them more. But I 0:08:24.440 --> 0:08:29.200 think if we bypass the give something to everyone, we 0:08:29.360 --> 0:08:32.880 are going to really amp up the risk that this 0:08:32.920 --> 0:08:38.000 spreads and becomes a recession because right now, well right now, 0:08:38.040 --> 0:08:41.040 people are freaking out right because they don't because they 0:08:41.120 --> 0:08:44.200 don't know if they are going to get sick, They 0:08:44.200 --> 0:08:45.920 don't know if someone their family is going to get sick. 0:08:46.000 --> 0:08:49.760 And the vast majority, like way up into the income distribution, 0:08:50.360 --> 0:08:54.120 people they spend what they make, right so you're there 0:08:54.120 --> 0:08:57.280 are many people who are one paycheck even some cut 0:08:57.320 --> 0:09:01.600 hours away from serious financial district as. So if you 0:09:01.679 --> 0:09:04.719 know that about yourself and you don't know if you're 0:09:04.720 --> 0:09:06.480 going to get the virus, and you don't know if 0:09:06.520 --> 0:09:08.360 you're gonna be out for two weeks from work and 0:09:08.360 --> 0:09:11.400 you won't get paid. If you're out, then you're not 0:09:11.480 --> 0:09:15.280 going to go out and buy like the new washing machine, 0:09:15.640 --> 0:09:19.440 or put the offer on the house, or you know, 0:09:19.600 --> 0:09:21.800 by go out to the rest. There's just so many 0:09:21.840 --> 0:09:23.839 things that you'll do right now to cut back because 0:09:23.840 --> 0:09:29.319 you don't know if Americans across the country do that 0:09:29.480 --> 0:09:33.840 all at once in the next couple of months. Like that, 0:09:33.840 --> 0:09:35.800 that's how you take an economy with a three and 0:09:35.840 --> 0:09:40.240 a half percent unemployment rate, really solid GDP growth and 0:09:40.240 --> 0:09:42.920 turn it into a recession because like that, once that 0:09:43.000 --> 0:09:46.440 dynamic gets going, it doesn't matter how much you give 0:09:46.559 --> 0:09:49.439 to the like you know, five percent of the population 0:09:49.520 --> 0:09:54.240 that becomes severely ill. We could get past the virus 0:09:54.320 --> 0:09:57.480 itself and have the economy already be into a tailspin 0:09:57.600 --> 0:10:01.480 that you can't then arrested easily as you could right 0:10:01.800 --> 0:10:04.880 now if you just told people we got your back, 0:10:05.240 --> 0:10:08.720 like we're on this. What do you say to critics 0:10:08.760 --> 0:10:11.800 who make the point that given the uncertainty that you 0:10:11.880 --> 0:10:14.319 just described, so people don't know if they're going to 0:10:14.440 --> 0:10:16.840 have a job in the next few weeks. They don't 0:10:16.840 --> 0:10:18.920 know if they can go outside of their houses. Just 0:10:19.120 --> 0:10:23.240 massive uncertainty for households at the moment. So if there's 0:10:23.280 --> 0:10:25.559 that level of uncertainty, how do you know people are 0:10:25.600 --> 0:10:30.040 actually going to spend the additional money that you give them? 0:10:30.080 --> 0:10:32.200 And I should just mention that here in Hong Kong 0:10:32.520 --> 0:10:36.200 we already have this happening. Hong kongers are getting cash 0:10:36.280 --> 0:10:39.600 handouts of a little over a thousand U S dollars 0:10:39.600 --> 0:10:43.400 paid directly into their bank accounts. And the joke over here, 0:10:43.440 --> 0:10:47.200 although clearly it's not very funny given the situation, is 0:10:47.200 --> 0:10:50.440 that everyone is just going to either save it or 0:10:50.920 --> 0:10:53.040 use it to buy, you know, a few rolls of 0:10:53.080 --> 0:10:56.040 toilet paper and some face masks. Yeah. So this this 0:10:56.120 --> 0:11:02.760 has been the longstanding critique of these stimulus payments, tax rebates, uh, 0:11:03.160 --> 0:11:06.360 the the difference. So, and I think they make for 0:11:06.400 --> 0:11:09.800 a good story, right And and a lot of times 0:11:09.880 --> 0:11:12.560 people telling the story like maybe it fits them, like 0:11:12.640 --> 0:11:14.800 I don't like every dollar that comes into me. I 0:11:14.800 --> 0:11:16.520 don't just go out and spend it because I've got 0:11:16.559 --> 0:11:18.800 I've got a cushion. The fact that matters in the 0:11:18.880 --> 0:11:21.200 United States, and this is different than a lot of 0:11:21.200 --> 0:11:25.240 other developed countries. We do not have a good safety net. 0:11:25.600 --> 0:11:29.959 We do not have financial buffers, Like a huge fraction 0:11:30.040 --> 0:11:34.440 of US households do not have a paychecks worth, let 0:11:34.440 --> 0:11:37.720 alone like five worth of money just sitting around that 0:11:37.760 --> 0:11:40.520 they can access quickly. So we're in a much more 0:11:41.040 --> 0:11:45.120 fragile place than other countries. And then on top of that, 0:11:45.480 --> 0:11:49.160 there is research. There is incredibly good research from the 0:11:49.200 --> 0:11:51.880 two thousand one tax rebates and the two eight stimulus 0:11:51.880 --> 0:11:55.200 payments that says people will spend it, like I just 0:11:55.760 --> 0:11:58.320 but but this this trope will not go away, like 0:11:58.440 --> 0:12:01.040 this is I have talking to someone who's been a 0:12:01.080 --> 0:12:06.960 lot of conversations with um Republican economic staff, and time 0:12:07.000 --> 0:12:08.599 and again they say, well, but they're just going to 0:12:08.720 --> 0:12:11.480 save it, you know, the wonky term of Riccardian equivalence, 0:12:11.760 --> 0:12:13.720 like if I give you a dollar, but you know 0:12:13.840 --> 0:12:15.840 sometimes the government's going to take it back when you 0:12:15.960 --> 0:12:18.400 save it. Or I was talking to someone who does 0:12:18.480 --> 0:12:22.040 the like permanent income hypothesis, like I give you a 0:12:22.080 --> 0:12:24.400 dollar and I'm going to calculate the annuity value of 0:12:24.400 --> 0:12:26.240 it over the rest of my life and spend it 0:12:26.320 --> 0:12:29.200 like those are just wonderful, like theoretical models, but like 0:12:29.240 --> 0:12:32.480 those people don't exist well, I mean Riccardian equivalent people 0:12:32.480 --> 0:12:34.720 just like there's like ten of them in the world. Um, 0:12:34.760 --> 0:12:37.520 but the you know, the permanent income hypothesis, there are 0:12:37.520 --> 0:12:41.400 people who have more money that they really do smooth 0:12:41.400 --> 0:12:44.840 it out. But there are a lot of US households 0:12:44.920 --> 0:12:47.560 that for various reasons, and there's a lot of different 0:12:47.559 --> 0:12:50.640 models kind of thinking about why this happens. They keep 0:12:50.679 --> 0:12:54.160 their spending and their income really closely tied, so it 0:12:54.280 --> 0:12:57.400 is very and a lot of them like they don't 0:12:57.440 --> 0:12:59.840 have a lot of income, right, may mean wage growth 0:13:00.000 --> 0:13:02.439 has not been good. Like if you give them money, 0:13:02.480 --> 0:13:04.920 they will spend it. And this is something that as 0:13:05.000 --> 0:13:07.760 economists we get wrapped into this with our models. Or 0:13:07.840 --> 0:13:09.800 if you don't want to do this, you come you 0:13:09.840 --> 0:13:13.680 grab a defunct economist model and say that's the truth. 0:13:14.240 --> 0:13:16.040 But like if you just went out and grabbed ten 0:13:16.080 --> 0:13:17.640 people in front of the White House instead, if I 0:13:17.640 --> 0:13:19.559 gave you five bucks, what would you do with it? 0:13:20.760 --> 0:13:23.200 I mean they'd say they'd spend it, Like it's not 0:13:23.280 --> 0:13:26.400 a I don't know, and and I have heard discussions 0:13:26.400 --> 0:13:28.080 about well, you know, we don't want people to go 0:13:28.160 --> 0:13:30.240 out to the store, and we don't want them to spend. 0:13:30.280 --> 0:13:32.960 And I'm like, first of all, this is why I 0:13:32.960 --> 0:13:35.080 think you should go broadly. Right, there are parts of 0:13:35.120 --> 0:13:38.160 the country right now. It's not like the just the 0:13:38.280 --> 0:13:40.480 virus isn't there yet, Like let's get ahead of this. 0:13:40.600 --> 0:13:42.360 Let people spend, and frankly, like you can do a 0:13:42.400 --> 0:13:45.480 lot of spending sitting in your living room, right. This 0:13:45.559 --> 0:13:48.600 is I just it's like we want to talk ourselves 0:13:48.640 --> 0:13:52.440 out of doing something, which totally reminds me of like 0:13:52.520 --> 0:13:55.400 two thousand and seven, Like we knew things were going 0:13:55.400 --> 0:13:57.360 wrong in the housing market. We knew, but we just 0:13:57.480 --> 0:14:00.679 kept saying, well, but it's okay because look at this 0:14:00.720 --> 0:14:04.840 other good data, Like we're getting such a clear early warning, 0:14:05.000 --> 0:14:07.400 like we get to watch the train coming at us 0:14:07.840 --> 0:14:10.599 Italy shut down the country, Like but we have the 0:14:10.679 --> 0:14:12.480 train coming at us and we're like, oh, it's gonna 0:14:12.480 --> 0:14:15.800 be okay, It's I'll be okay, Like, oh, get out 0:14:15.800 --> 0:14:32.280 of the wake. Yeah, it's really amazing to see the 0:14:32.320 --> 0:14:35.320 stuff that's happening in Italy now because it's very similar 0:14:35.360 --> 0:14:38.360 to the stuff we saw happen in China in January 0:14:38.400 --> 0:14:41.240 and February, and I think back then, no one thought 0:14:41.360 --> 0:14:45.080 that democracy in the West was ever going to be 0:14:45.160 --> 0:14:47.920 able to shut down its population in the way that 0:14:48.000 --> 0:14:52.720 China did. Um just on the notion of safety nets 0:14:52.880 --> 0:14:55.720 in the US, you mentioned this idea that the safety 0:14:55.720 --> 0:14:58.120 net just isn't quite there in the same way it 0:14:58.240 --> 0:15:02.600 is for some other developed country ease would expanding that 0:15:02.760 --> 0:15:07.200 so that safety net be a preferable option here as 0:15:07.200 --> 0:15:10.960 opposed to handouts, if you could do it, would replacement 0:15:11.000 --> 0:15:16.120 wages or expanded unemployment insurance or something like that be 0:15:16.120 --> 0:15:20.240 better than payouts. So I think there's a way to 0:15:20.280 --> 0:15:23.040 answer that question on the economics, and I think there's 0:15:23.040 --> 0:15:26.360 a way to answer it on the politics. I I 0:15:26.440 --> 0:15:30.360 advocate for this going wide and giving everyone money, not 0:15:30.480 --> 0:15:34.600 because I think everyone needs FI Okay, I do it 0:15:34.640 --> 0:15:36.640 because I think that's something you can do the fastest, 0:15:37.080 --> 0:15:40.520 and I think it's the most politically feasible. I mean, 0:15:40.520 --> 0:15:42.840 nothing is really politically feasible right now, but it feels 0:15:42.840 --> 0:15:46.080 to me like that is because everybody gets it. Once 0:15:46.080 --> 0:15:50.600 you get into targeting unemployment insurance, food stamps, any of 0:15:50.600 --> 0:15:52.800 these are a good example, there can be this feeling 0:15:52.840 --> 0:15:58.520 of well, I saved up. I worked hard so that 0:15:58.560 --> 0:16:00.600 when there was a tough time in my I didn't 0:16:00.600 --> 0:16:03.120 have to go get food stamps. Why should I, as 0:16:03.120 --> 0:16:05.520 a taxpayer, pay for somebody else to go get food 0:16:05.520 --> 0:16:08.080 stamps when I know they were out, you know, taking 0:16:08.080 --> 0:16:11.080 their kids out to dinner before they got laid off. 0:16:11.640 --> 0:16:15.240 So I think there's this aspect of if we make 0:16:15.280 --> 0:16:18.840 sure that everybody knows we the government is here, we're 0:16:18.840 --> 0:16:21.360 going to help all of you, then it might give 0:16:21.400 --> 0:16:23.320 some space to be like, Okay, well, now that we've 0:16:23.320 --> 0:16:25.960 helped everybody, we really do need to especially help those 0:16:26.280 --> 0:16:29.120 who get hit hard. But I think if you just 0:16:29.240 --> 0:16:31.640 targeted to the ones who really need it, the United 0:16:31.640 --> 0:16:37.160 States hesitive um a very troubling history of those people 0:16:37.160 --> 0:16:39.000 who need to help the most, we are the least 0:16:39.080 --> 0:16:42.400 likely to give it to them. So like, I don't 0:16:42.560 --> 0:16:45.120 if you know, in a perfect world, i'd want the 0:16:45.120 --> 0:16:47.720 safety net to be better. I'd want the money, like 0:16:47.960 --> 0:16:50.760 serious amounts of money to go to the people who 0:16:50.800 --> 0:16:53.040 need it most. But I'm afraid that if we don't 0:16:53.080 --> 0:16:56.240 do something broad, if they won't get anything. When we 0:16:56.320 --> 0:16:59.960 talk to you before, the focus of our discussion was 0:17:00.040 --> 0:17:03.440 not merely the sort of theoretical how to stop a 0:17:03.440 --> 0:17:05.920 recession from happening one day. But some of the work 0:17:06.000 --> 0:17:09.440 that you've done, what's that? What you what's called the 0:17:09.520 --> 0:17:12.680 some rule named after you, which is, Okay, the unemployment 0:17:12.760 --> 0:17:15.920 rate rises to above a certain threshold, it tends to 0:17:15.960 --> 0:17:19.480 be a good recession indicator. That's when the checks should 0:17:19.480 --> 0:17:23.040 go out again. People should listen to that episode. We're 0:17:23.040 --> 0:17:25.760 not there yet in the actual data. And as you 0:17:25.880 --> 0:17:30.720 said yourself, um, your perception of the recession risks has 0:17:30.840 --> 0:17:34.879 massively heightened even since this time last week. So in 0:17:34.880 --> 0:17:38.879 a way, this some rule would almost be probably too slow, 0:17:39.000 --> 0:17:43.320 given how quickly this crisis is coming upon us in 0:17:43.359 --> 0:17:46.480 the stock market crash and so forth. So in light 0:17:46.560 --> 0:17:50.960 of that, what would what is the ideal? Um A, 0:17:51.440 --> 0:17:53.879 what's the well, you know, just like what is the 0:17:53.880 --> 0:17:57.800 basis or what is the best approach right now? Given 0:17:57.840 --> 0:18:01.080 the uniqueness of the situation, the severe to speed, the 0:18:01.160 --> 0:18:04.399 unexpectedness to get the cash out the door? Right, So 0:18:04.480 --> 0:18:08.080 I think we should hit go now. Right, As you said, 0:18:08.119 --> 0:18:11.720 there's no there's no reason to wait for the unemployment 0:18:11.800 --> 0:18:15.280 rate to jump noted noticeably, so like the sombarle isn't 0:18:15.280 --> 0:18:19.040 going to trigger for months, right, we could start seeing 0:18:19.119 --> 0:18:22.359 unemployment begin to rise, but we're we're starting in a 0:18:22.440 --> 0:18:26.040 really good place, right, But unemployment rate, once it gets going, 0:18:26.280 --> 0:18:30.439 it doesn't stop. And like again, we can see unlike 0:18:30.440 --> 0:18:33.840 two thousand eight, where we were the epicenter of the disruption, 0:18:34.160 --> 0:18:38.160 the recession, the financial crisis, we got an advanced warning 0:18:38.800 --> 0:18:41.480 like this is happening overseas, like it starts in China 0:18:41.520 --> 0:18:44.320 and Asian But you know, so like this is different 0:18:44.359 --> 0:18:48.000 because um, we don't need the unemployment rate to tell 0:18:48.080 --> 0:18:50.600 us that something bad is working its way through the 0:18:50.640 --> 0:18:54.120 global economy, right, So the thing so I wouldn't wait 0:18:54.160 --> 0:18:57.399 until the sowar triggers. I do think one of the 0:18:57.440 --> 0:19:00.080 benefits of the recession ready volume. So that was and 0:19:00.200 --> 0:19:03.000 I had the proposal in there's several others. There's been 0:19:03.040 --> 0:19:06.840 other discussions in the past year about automatic stabilizers in 0:19:06.920 --> 0:19:09.320 a lot of circles, which is which is really heartening. 0:19:09.640 --> 0:19:14.200 So that means there is legislative text ready to go 0:19:15.200 --> 0:19:18.680 or very close, right, So it might have been being 0:19:18.760 --> 0:19:22.879 prepared for automatic stabilizers. And frankly, a lot of this 0:19:23.119 --> 0:19:25.600 the recession ready volume, Every single one of the proposals 0:19:25.600 --> 0:19:28.199 we did was something that had been implemented in some 0:19:28.320 --> 0:19:32.560 form before, right, So that legislative text literally is sitting 0:19:32.600 --> 0:19:36.320 on the shelf somewhere, so you can just take that structure, 0:19:36.480 --> 0:19:39.760 like we thought, Like I thought really hard myself and 0:19:39.920 --> 0:19:41.720 looking at the research about, Okay, if I want to 0:19:41.720 --> 0:19:44.199 get money out to people a lot of people quickly, 0:19:44.560 --> 0:19:46.880 what's the best way to do that? And I came 0:19:46.920 --> 0:19:52.359 down on one time payment dollars, one time check, electronic 0:19:52.400 --> 0:19:56.920 payment as opposed to doing a change, you know, the 0:19:56.960 --> 0:19:59.280 payroll tax cut. Like that was one that I looked 0:19:59.280 --> 0:20:01.840 at because that had and done in the Great Recession. 0:20:02.119 --> 0:20:04.280 So like that's a decision point of like, Okay, you 0:20:04.280 --> 0:20:07.120 want to get money out, correspons gets money out. It's like, okay, 0:20:07.160 --> 0:20:08.800 how can we do that best? And I'm like, okay, here, 0:20:08.800 --> 0:20:10.600 based on the data and the research and the evidence, 0:20:11.000 --> 0:20:13.840 do a one time payment right. And there's like in 0:20:13.880 --> 0:20:16.720 each of the different the Unemployment Insurance Chapter had a 0:20:16.800 --> 0:20:20.520 lot of really thoughtful ideas about how to strengthen that program. 0:20:20.640 --> 0:20:23.600 I think right now, the the f maps of the 0:20:23.600 --> 0:20:27.000 federal share of funding that goes to Medicaid would be 0:20:27.040 --> 0:20:31.520 an excellent way to push out a lot of money fast. Um, 0:20:31.560 --> 0:20:34.080 So there's all these structures. I think, one, well, there's 0:20:34.080 --> 0:20:35.679 a lot of things that are unfortunate we're in the 0:20:35.720 --> 0:20:38.960 situation we are today. Uh. Some of the things that 0:20:39.280 --> 0:20:42.959 was specifically like what I had proposed, Uh, we are 0:20:43.480 --> 0:20:46.000 the idea of doing things making automatic stabilizers. Then you 0:20:46.040 --> 0:20:49.119 can build the logistics so the one time payments they 0:20:49.119 --> 0:20:52.680 have only gone out on a discretionary basis, So it's 0:20:52.720 --> 0:20:55.240 not like unemployment insurance where we already have this program 0:20:55.240 --> 0:20:57.560 set up. So one of the things that I have 0:20:57.640 --> 0:21:00.520 been racking my brain over is, Okay, I want to 0:21:00.520 --> 0:21:04.639 get people to everybody, how would I do that logistically 0:21:05.000 --> 0:21:07.680 so that like money could start coming out right away 0:21:08.240 --> 0:21:11.600 and that it gets It's tricky, like you can't do 0:21:11.680 --> 0:21:13.639 what you did in two thousand eight with the stimulus 0:21:13.640 --> 0:21:16.879 payments because the I R S can't there in the 0:21:16.880 --> 0:21:19.960 middle of tax season. They can't process anything on the fly. 0:21:20.880 --> 0:21:23.720 I mean, money can't go out until May, so and 0:21:23.760 --> 0:21:26.399 I would I don't want to wait until May for 0:21:26.520 --> 0:21:28.560 people to get five. So I've spent a lot of 0:21:28.600 --> 0:21:29.960 time thinking about what you could do it this way, 0:21:29.960 --> 0:21:32.760 and you could do it that way, and um, but 0:21:32.920 --> 0:21:35.280 that's but I'm not sure anybody wants to do it 0:21:35.320 --> 0:21:38.639 at all. So, like in some options, you start losing 0:21:38.640 --> 0:21:43.720 the window if you don't move. So so let's say, okay, 0:21:43.760 --> 0:21:47.200 somehow mechanically we get that check out to every individual 0:21:48.160 --> 0:21:51.000