1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:26,200 Speaker 1: member s I P. C Ye. Welcome to the Bloomberg 5 00:00:26,280 --> 00:00:31,080 Speaker 1: Surveillance Podcast. I'm Tom Keene with David Gura. Daily we 6 00:00:31,200 --> 00:00:34,640 Speaker 1: bring you insight from the best in economics, finance, investment, 7 00:00:35,040 --> 00:00:40,639 Speaker 1: and international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg 8 00:00:40,680 --> 00:00:49,360 Speaker 1: dot Com, and of course on the Bloomberg and we 9 00:00:49,440 --> 00:00:52,879 Speaker 1: say good morning Bloomberg Surveillance on Bloomberg Television and Bloomberg 10 00:00:52,920 --> 00:00:56,760 Speaker 1: Radio worldwide. A conversation with the Vice Chairman of the Fed. 11 00:00:56,840 --> 00:01:00,920 Speaker 1: He needs no introduction. Stanley Fisher's contribution economics at the 12 00:01:00,960 --> 00:01:05,200 Speaker 1: Massachusetts Institute of Technology. His work at the Bank of 13 00:01:05,280 --> 00:01:07,880 Speaker 1: Israel and now at the FAT has been critical to 14 00:01:08,080 --> 00:01:12,080 Speaker 1: stability and to economic growth within uh this world. I 15 00:01:12,200 --> 00:01:15,120 Speaker 1: dare say I would mention the International Monetary Fund and 16 00:01:15,200 --> 00:01:18,360 Speaker 1: a modest crisis of a few years ago. You gave 17 00:01:18,400 --> 00:01:22,319 Speaker 1: a speech, sir, wonderful speech at work to some undergraduates. 18 00:01:22,360 --> 00:01:25,480 Speaker 1: It was just a great, simple speech. The economy is 19 00:01:25,520 --> 00:01:30,880 Speaker 1: an extremely complicated mechanism. Are we getting more complicated because 20 00:01:30,880 --> 00:01:35,400 Speaker 1: of rising inflation? Rising inflation in Germany, rising inflation for 21 00:01:35,480 --> 00:01:39,400 Speaker 1: different reasons in the United Kingdom, and suddenly a lift 22 00:01:39,480 --> 00:01:43,760 Speaker 1: in inflation in America. It was very complicated when the 23 00:01:43,760 --> 00:01:48,800 Speaker 1: inflation rate was negative and very low. Uh. This is 24 00:01:49,240 --> 00:01:53,040 Speaker 1: we have a target of two percent inflation, and we're 25 00:01:53,080 --> 00:01:56,520 Speaker 1: heading in that direction. And so it's not making life 26 00:01:56,560 --> 00:02:00,600 Speaker 1: more complicated at the moment. Very high and lation, which 27 00:02:00,640 --> 00:02:04,880 Speaker 1: of course we will do what we have to to prevent, Uh, 28 00:02:05,480 --> 00:02:08,880 Speaker 1: could complicate the situation, but we're not there by any mean. 29 00:02:09,000 --> 00:02:12,240 Speaker 1: How do you define high inflation? Out of Walter Hollor 30 00:02:12,240 --> 00:02:15,000 Speaker 1: of another time and place I look at Dennis Lockhart 31 00:02:15,000 --> 00:02:18,520 Speaker 1: will join us on Bloomberg later today. The Atlanta Fed 32 00:02:18,600 --> 00:02:24,120 Speaker 1: numbers Sticky inflation, the Dallas inflation, the Cleveland inflation. What 33 00:02:24,320 --> 00:02:29,360 Speaker 1: is the number the statistic that begins to suggest high inflation. 34 00:02:30,280 --> 00:02:34,840 Speaker 1: Our target is two percent. Obviously you don't hit it exactly. 35 00:02:34,880 --> 00:02:38,160 Speaker 1: You hope to be very close to two percent. We're 36 00:02:38,200 --> 00:02:43,840 Speaker 1: as worried about meaning below as being above. Uh. And Uh, 37 00:02:43,880 --> 00:02:46,160 Speaker 1: you know it's something which is if you're very close 38 00:02:46,200 --> 00:02:50,720 Speaker 1: to two percent, it's not a problem if it's significantly above, 39 00:02:51,760 --> 00:02:54,959 Speaker 1: you begin to worry and you begin to act. Part 40 00:02:55,000 --> 00:02:58,800 Speaker 1: of our relationship over the years at Davos and other 41 00:02:58,880 --> 00:03:01,440 Speaker 1: important meetings has been I really don't talk to you 42 00:03:01,480 --> 00:03:05,160 Speaker 1: about the parlor game, but I unfortunately have to today. 43 00:03:05,200 --> 00:03:07,760 Speaker 1: I believe there's in IDEs of March meeting. In March 44 00:03:07,800 --> 00:03:11,720 Speaker 1: fifteenth meeting, we saw jan Hatzius and Golden sets change 45 00:03:11,760 --> 00:03:15,680 Speaker 1: their probabilities of what the Fed will do, not specifically 46 00:03:15,720 --> 00:03:18,399 Speaker 1: what will you do at the March meeting, but there's 47 00:03:18,440 --> 00:03:23,120 Speaker 1: this new inflation dynamic change. The cadence of two or 48 00:03:23,240 --> 00:03:26,520 Speaker 1: three rate increases as we go to the end of 49 00:03:26,520 --> 00:03:29,320 Speaker 1: the year. Well, I don't want to give you number 50 00:03:29,400 --> 00:03:34,000 Speaker 1: zones to two or three, but we this is consistent 51 00:03:34,120 --> 00:03:39,520 Speaker 1: with what we had sought should be happening around around now. Uh. 52 00:03:39,720 --> 00:03:42,080 Speaker 1: That is that we mean moving closer to the two 53 00:03:42,080 --> 00:03:46,080 Speaker 1: percent inflation rate and that the labor market would continue 54 00:03:46,120 --> 00:03:50,360 Speaker 1: to strengthen. If those two things happen, will will be 55 00:03:50,480 --> 00:03:54,160 Speaker 1: on the paths that we more or less expected. So 56 00:03:54,240 --> 00:03:59,800 Speaker 1: important is the idea of moving through the year. For 57 00:04:00,120 --> 00:04:03,200 Speaker 1: you're fed within the politics of Washington. As I'm sure 58 00:04:03,240 --> 00:04:07,720 Speaker 1: you're aware, Washington's in turmoil. My colleague Michael McKee was 59 00:04:07,760 --> 00:04:11,880 Speaker 1: talking to me yesterday about how the FED acts differently 60 00:04:12,040 --> 00:04:14,520 Speaker 1: as you go to year end. This year end of 61 00:04:14,600 --> 00:04:18,240 Speaker 1: two thousand seventeen, I would suggest, as different than any 62 00:04:18,240 --> 00:04:21,400 Speaker 1: other year end you've seen. Maybe you will leave, maybe 63 00:04:21,440 --> 00:04:25,640 Speaker 1: Cherry Yellen will leave. Is there a political mix to 64 00:04:26,240 --> 00:04:31,840 Speaker 1: the pressures you face in meetings later this year? We 65 00:04:31,960 --> 00:04:38,480 Speaker 1: really do not take UH make political decisions. We take 66 00:04:38,520 --> 00:04:41,760 Speaker 1: into account what is happening in the economy, what people 67 00:04:41,839 --> 00:04:47,279 Speaker 1: think about UH, and what might happen to policy. But 68 00:04:47,720 --> 00:04:51,840 Speaker 1: we're not going to make our decisions on the basis 69 00:04:51,960 --> 00:04:57,440 Speaker 1: of what what the what pressures we're getting politically, We 70 00:04:57,560 --> 00:05:00,839 Speaker 1: have targets where aiming to get the argets. Are we 71 00:05:00,920 --> 00:05:04,560 Speaker 1: still alter accommodative you on that phrase, Are we still 72 00:05:04,560 --> 00:05:07,680 Speaker 1: in the land of ultra accommodative. I think we're in 73 00:05:07,720 --> 00:05:12,880 Speaker 1: the land of accommodative. I'm not sure about ultra Well, 74 00:05:12,920 --> 00:05:14,719 Speaker 1: the Stanley Fisher would be warning to all of you 75 00:05:14,760 --> 00:05:18,400 Speaker 1: on Bloomberg Radio and Bloomberg television. Um, I love the 76 00:05:18,440 --> 00:05:21,600 Speaker 1: CFR speech of November to the Council on Foreign Relations, 77 00:05:22,000 --> 00:05:25,839 Speaker 1: and you I love your mathematics. The having of productivity 78 00:05:26,000 --> 00:05:29,920 Speaker 1: we've cut our productivity growth in half. That's the core issue. 79 00:05:30,279 --> 00:05:33,680 Speaker 1: Is it about technology? Is it about automation? Can you 80 00:05:33,720 --> 00:05:37,800 Speaker 1: give us this mysterious thing the efficiency of economy? What's 81 00:05:37,839 --> 00:05:45,560 Speaker 1: the why of our having? Uh? We've worldwide there's a 82 00:05:45,640 --> 00:05:49,320 Speaker 1: slowdown in measured productivity. There are some people who argue, 83 00:05:50,080 --> 00:05:52,800 Speaker 1: and there they have a basis for their arguments that 84 00:05:53,320 --> 00:05:58,240 Speaker 1: the data become less and less appropriate as the economy 85 00:05:58,320 --> 00:06:03,719 Speaker 1: moves to being more and more services economy. Productivity growth 86 00:06:03,800 --> 00:06:10,039 Speaker 1: was most rapid in the manufacturing sector always that's where 87 00:06:10,080 --> 00:06:13,839 Speaker 1: you see it happening. We have a very small manufacturing 88 00:06:13,920 --> 00:06:17,880 Speaker 1: sector in terms of employment. We're in fact producing roughly 89 00:06:17,960 --> 00:06:22,080 Speaker 1: the same share of DDP in manufacturing that we did 90 00:06:23,560 --> 00:06:28,720 Speaker 1: twenty years ago, but the number of workers there is 91 00:06:28,800 --> 00:06:34,080 Speaker 1: down because they've become more more productive. So the y 92 00:06:34,680 --> 00:06:39,120 Speaker 1: is that we don't really have a very good story 93 00:06:39,200 --> 00:06:42,520 Speaker 1: at the moment, whether it is measurement when there certainly 94 00:06:42,600 --> 00:06:45,200 Speaker 1: is a measurement. Fact that it's very hard to measure 95 00:06:46,400 --> 00:06:49,680 Speaker 1: as you're looking at sort of the comfort, the comfort 96 00:06:49,760 --> 00:06:54,280 Speaker 1: you have in your home and so forth. Um and uh, 97 00:06:54,720 --> 00:07:01,600 Speaker 1: we're looking at why it's declined as education of the force. Uh, 98 00:07:01,760 --> 00:07:05,040 Speaker 1: But we don't have a single factor to say that's it. 99 00:07:05,640 --> 00:07:08,080 Speaker 1: We've got it. We've just got to fix that. We've 100 00:07:08,080 --> 00:07:09,880 Speaker 1: got to do a lot of things to try and 101 00:07:09,920 --> 00:07:13,680 Speaker 1: get productivity to go up. On the international watch. Two 102 00:07:13,680 --> 00:07:16,160 Speaker 1: decades ago, you wrote I M. F Essays from a 103 00:07:16,200 --> 00:07:18,160 Speaker 1: Time of Crisis. It was a little red book. Not 104 00:07:18,320 --> 00:07:20,960 Speaker 1: Mau's red book. It was Fisher's read book, and you 105 00:07:21,000 --> 00:07:23,080 Speaker 1: had to read it if you were doing anything in 106 00:07:23,200 --> 00:07:28,000 Speaker 1: international economics. Bringing the time of crisis to the United 107 00:07:28,040 --> 00:07:30,400 Speaker 1: States of America. We have someone in the White House 108 00:07:30,440 --> 00:07:34,640 Speaker 1: now who was elected with a primal scream of we're 109 00:07:34,720 --> 00:07:38,720 Speaker 1: fed up with the international dialogue. We need wage growth 110 00:07:38,920 --> 00:07:42,680 Speaker 1: in America. How can you and how can FETE officials 111 00:07:42,800 --> 00:07:48,920 Speaker 1: assist President Trump towards wage growth? Well, wage growth has 112 00:07:48,920 --> 00:07:51,880 Speaker 1: started happening, I mean, the right of increase of wages 113 00:07:51,920 --> 00:07:56,560 Speaker 1: has gone up. It's somewhere. We're looking at numbers between 114 00:07:56,560 --> 00:07:59,680 Speaker 1: two and a half and three basically, which is not 115 00:08:00,000 --> 00:08:05,000 Speaker 1: are of where we thought it would be. And so 116 00:08:07,040 --> 00:08:09,880 Speaker 1: we can help by doing what we're supposed to do, 117 00:08:10,040 --> 00:08:15,080 Speaker 1: which is to keep inflation under control around two percent 118 00:08:15,240 --> 00:08:21,080 Speaker 1: close to two percent, and by continuing to to increate 119 00:08:22,040 --> 00:08:25,320 Speaker 1: allow the interest right to be such that the economy 120 00:08:25,360 --> 00:08:30,080 Speaker 1: will grow and employment in particular will grow. The guestament 121 00:08:30,600 --> 00:08:34,439 Speaker 1: Vice Chairman Fisher of whether inflation is persistent and will rise, 122 00:08:34,840 --> 00:08:37,439 Speaker 1: or if it will fake and move back to lower inflation. 123 00:08:38,040 --> 00:08:41,880 Speaker 1: True disinflation has been in the Japanese face this a 124 00:08:41,960 --> 00:08:44,320 Speaker 1: number of years ago. James Bullard of St. Louis has 125 00:08:44,360 --> 00:08:49,640 Speaker 1: spoken about a regime change. It is controversial in economics. 126 00:08:49,800 --> 00:08:53,040 Speaker 1: Is this a point where we see Bullard's regime change 127 00:08:53,080 --> 00:08:56,840 Speaker 1: move from low level interest rates to high level interest 128 00:08:56,960 --> 00:09:01,720 Speaker 1: rates or do you need to see more evidence were 129 00:09:01,720 --> 00:09:04,680 Speaker 1: where we've said for a long time we expect interest 130 00:09:04,760 --> 00:09:09,680 Speaker 1: rates to be gradual and if they reach levels of 131 00:09:10,040 --> 00:09:12,120 Speaker 1: previous years, it will be a matter of years, not 132 00:09:12,280 --> 00:09:16,439 Speaker 1: of not of weeks or months. And we don't know 133 00:09:16,559 --> 00:09:20,880 Speaker 1: what will happen. That's why we make decisions on policy 134 00:09:21,360 --> 00:09:27,160 Speaker 1: as we see events in the economy. So I don't 135 00:09:27,360 --> 00:09:32,959 Speaker 1: know whether we'll end up in a new regime or 136 00:09:32,960 --> 00:09:37,040 Speaker 1: whatever whatever Jim Bullet calls it. But I do know 137 00:09:37,160 --> 00:09:40,160 Speaker 1: that we will be aiming and very likely will be 138 00:09:40,240 --> 00:09:45,880 Speaker 1: close to to percent inflation UH and UH full employment, 139 00:09:45,920 --> 00:09:50,240 Speaker 1: which somewhere around where we are now, a little possibly 140 00:09:50,280 --> 00:09:53,320 Speaker 1: a bit lower. I get a lot of mail. When 141 00:09:53,320 --> 00:09:56,360 Speaker 1: I hear FED officials talk about full employment, people send 142 00:09:56,360 --> 00:09:58,840 Speaker 1: me letters and they talk about, no, we're not a 143 00:09:58,880 --> 00:10:02,679 Speaker 1: full employment at least not in my town, my community. 144 00:10:02,880 --> 00:10:04,920 Speaker 1: When when I look at the sun toll of what 145 00:10:05,000 --> 00:10:08,040 Speaker 1: you and Cherry Ellen have to deal with every day, 146 00:10:08,080 --> 00:10:12,560 Speaker 1: it is this repression, of financial repression, of societal repression 147 00:10:12,960 --> 00:10:16,080 Speaker 1: within America. How do we how do we bring the 148 00:10:16,200 --> 00:10:19,680 Speaker 1: two America's to a better good? One America is near 149 00:10:19,679 --> 00:10:23,280 Speaker 1: full employment, but another America is not. How can you 150 00:10:23,320 --> 00:10:29,280 Speaker 1: help them? Well, there are there are differences between the 151 00:10:29,360 --> 00:10:34,880 Speaker 1: states in terms of employment, and we can only we 152 00:10:35,040 --> 00:10:39,720 Speaker 1: can only bring them together by setting the framework in 153 00:10:39,720 --> 00:10:45,480 Speaker 1: which economic decisions are made. Uh namely, what can people 154 00:10:45,559 --> 00:10:48,040 Speaker 1: think about the stability of the value of the dollar? 155 00:10:49,720 --> 00:10:53,040 Speaker 1: Our two percent inflation will cause them to think if 156 00:10:53,040 --> 00:10:56,599 Speaker 1: we're there, that that we're in a stable inflation situation, 157 00:10:56,679 --> 00:11:00,920 Speaker 1: a stable price situation. And if we're at full employment, 158 00:11:00,960 --> 00:11:07,240 Speaker 1: those pressures for hiring people will will spread from state 159 00:11:07,960 --> 00:11:12,120 Speaker 1: to state. But we shouldn't exaggerate the differences. We shouldn't 160 00:11:12,200 --> 00:11:17,959 Speaker 1: exaggerate the number of states that are below that are 161 00:11:18,000 --> 00:11:23,600 Speaker 1: above the average. I've been talking to people from different states, 162 00:11:23,640 --> 00:11:27,880 Speaker 1: and late lately and everybody speak to happen to be 163 00:11:27,880 --> 00:11:30,960 Speaker 1: below the average in the last few days. There are 164 00:11:31,000 --> 00:11:35,560 Speaker 1: states like that as well. Getting the big issue is 165 00:11:35,600 --> 00:11:39,280 Speaker 1: not so much states, it's what are the professions that 166 00:11:39,360 --> 00:11:43,559 Speaker 1: people grew up in and what's happened to those professions? 167 00:11:44,200 --> 00:11:48,439 Speaker 1: And how Given that this economy has to be dynamic, 168 00:11:48,920 --> 00:11:51,520 Speaker 1: it is one of the most dynamic, if not the 169 00:11:51,559 --> 00:11:54,520 Speaker 1: most dynamic, in the world. How do we make sure 170 00:11:54,600 --> 00:12:00,439 Speaker 1: that those people whose skills are are are declining relative 171 00:12:00,480 --> 00:12:03,000 Speaker 1: to what the market needs. How do we have how 172 00:12:03,000 --> 00:12:06,880 Speaker 1: do we help then come out and get good jokes again? 173 00:12:07,200 --> 00:12:09,000 Speaker 1: One final question, I'm not going to ask you about 174 00:12:09,040 --> 00:12:12,959 Speaker 1: Russian intelligence or the other politics of Washington. The political 175 00:12:13,120 --> 00:12:16,920 Speaker 1: storm that you're Washington is in right now is remarkable, 176 00:12:16,920 --> 00:12:20,760 Speaker 1: whatever anybody's political view. People are buffeted day to day 177 00:12:20,840 --> 00:12:25,400 Speaker 1: by the news flow. In your world of economics, is 178 00:12:25,440 --> 00:12:31,120 Speaker 1: this American economy in your classic textbook dorn Bush Fisher's Stars. 179 00:12:31,320 --> 00:12:35,200 Speaker 1: Is this normal economics that we're living today or is 180 00:12:35,200 --> 00:12:41,200 Speaker 1: there something unique about our American economic experiment. We're coming 181 00:12:41,280 --> 00:12:44,200 Speaker 1: out of a period of a very long period in 182 00:12:44,280 --> 00:12:48,120 Speaker 1: which the economy had to be returned to health after 183 00:12:48,240 --> 00:12:52,320 Speaker 1: the financial craft of Great Financial Crisis of two thousand 184 00:12:52,360 --> 00:12:56,000 Speaker 1: and day two thousand and nine. Unemployment was quite high 185 00:12:56,080 --> 00:13:00,800 Speaker 1: during that period. Fortunately, as a result of policies, their 186 00:13:01,440 --> 00:13:05,440 Speaker 1: unemployment is close to its average level. But as you say, 187 00:13:05,480 --> 00:13:10,520 Speaker 1: the average isn't what happens into everybody um and I 188 00:13:10,559 --> 00:13:16,240 Speaker 1: think that's the underlying issue that we have to deal with. 189 00:13:17,240 --> 00:13:23,920 Speaker 1: And as of now, we haven't seen a major change 190 00:13:24,040 --> 00:13:27,480 Speaker 1: in the environment in which we're working. We're expecting the 191 00:13:27,520 --> 00:13:32,240 Speaker 1: economy to warm up. The election results may have had 192 00:13:32,320 --> 00:13:36,439 Speaker 1: some effect on how rapidly it seemed to warm up, 193 00:13:37,440 --> 00:13:41,480 Speaker 1: but you know, we're dearly. We have to ask where 194 00:13:41,480 --> 00:13:43,560 Speaker 1: will we be a few months from now, not what 195 00:13:43,760 --> 00:13:47,920 Speaker 1: is happening today. We haven't very much changed our view 196 00:13:47,920 --> 00:13:51,360 Speaker 1: of where we will be. We do expect the economy 197 00:13:51,400 --> 00:13:55,960 Speaker 1: to be growing at a reasonable rate, and I think 198 00:13:56,240 --> 00:13:59,400 Speaker 1: anybody who's deeply interested in this would have listened to 199 00:13:59,480 --> 00:14:05,640 Speaker 1: Janet Ellen yesterday and the day before talking about signs 200 00:14:05,720 --> 00:14:11,000 Speaker 1: of strengthening of the economy and the reason that the 201 00:14:11,080 --> 00:14:14,520 Speaker 1: Fed is a little more confident about where we're going 202 00:14:14,640 --> 00:14:19,280 Speaker 1: and how soon we'll get to full employment with with 203 00:14:19,560 --> 00:14:36,000 Speaker 1: stable prices. Jason Furman joined US now from Washington, Senior 204 00:14:36,000 --> 00:14:38,480 Speaker 1: Fellow at the Peterson Institute for International Economics, of course, 205 00:14:38,720 --> 00:14:42,000 Speaker 1: former chair of the Council of Economic Advisories under President Obama. 206 00:14:42,000 --> 00:14:44,160 Speaker 1: It's great to have you with us, and perhaps we 207 00:14:44,160 --> 00:14:46,160 Speaker 1: should begin with that interview that that just concluded that 208 00:14:46,200 --> 00:14:48,200 Speaker 1: Tom did with with stan Fisher. Let me get your 209 00:14:48,240 --> 00:14:50,080 Speaker 1: thoughts on what he had to say about the state 210 00:14:50,120 --> 00:14:53,040 Speaker 1: of the economy, in particular saying that the Central Bank 211 00:14:53,040 --> 00:14:54,360 Speaker 1: would be more or less on the path that the 212 00:14:54,360 --> 00:14:56,960 Speaker 1: FED would have expected if improvements in the the inflation job 213 00:14:57,000 --> 00:15:01,480 Speaker 1: goals continue. UM. I think that's a exactly right And 214 00:15:02,160 --> 00:15:09,280 Speaker 1: Congress assigned the FED two objectives, maximum employment and price stability. 215 00:15:09,640 --> 00:15:13,320 Speaker 1: You can argue about exactly where you think maximum employment is, 216 00:15:13,360 --> 00:15:15,480 Speaker 1: but I don't think you could argue, UM that it's 217 00:15:15,600 --> 00:15:19,160 Speaker 1: very far from where we are right now. And the 218 00:15:19,160 --> 00:15:23,480 Speaker 1: FED has defined price stability as two percent inflation, and 219 00:15:23,560 --> 00:15:27,560 Speaker 1: by their preferred measure for that, UM, we're still below it, 220 00:15:27,640 --> 00:15:31,480 Speaker 1: but getting close. UM. A number of other measures show 221 00:15:31,600 --> 00:15:34,480 Speaker 1: us above that right now, so they're they're very close 222 00:15:34,520 --> 00:15:37,200 Speaker 1: to where they want to be. What's remarkable, though, UM, 223 00:15:37,400 --> 00:15:41,080 Speaker 1: is how low the interest rate needs to be UM 224 00:15:41,120 --> 00:15:43,360 Speaker 1: in order to hit that target, and I I think that 225 00:15:43,360 --> 00:15:46,080 Speaker 1: tells us something about structural changes we've seen in our 226 00:15:46,080 --> 00:15:48,600 Speaker 1: financial markets and economy. Just let me return to that 227 00:15:48,600 --> 00:15:50,680 Speaker 1: productivity headline. Stand fish, you're saying, we don't have a 228 00:15:50,720 --> 00:15:53,280 Speaker 1: good reason for the productivity slow down we're seeing. You 229 00:15:53,280 --> 00:15:54,880 Speaker 1: and a lot of other smart people have been thinking 230 00:15:54,880 --> 00:15:57,640 Speaker 1: about this. What are the possible reasons for it? Other ways, 231 00:15:57,640 --> 00:16:00,280 Speaker 1: why are we seeing what we're seeing. One of the 232 00:16:00,280 --> 00:16:03,200 Speaker 1: biggest factors UM in the last couple of years has 233 00:16:03,640 --> 00:16:08,080 Speaker 1: been a big slowdown in business investment. In the year 234 00:16:09,000 --> 00:16:12,480 Speaker 1: for example, business fixed investment only grew at a zero 235 00:16:12,560 --> 00:16:16,640 Speaker 1: point four per cent um rate. And when you have 236 00:16:16,760 --> 00:16:19,160 Speaker 1: less equipment at your disposal workers are going to be 237 00:16:19,160 --> 00:16:23,600 Speaker 1: able to produce less per hour um. That then pushes 238 00:16:23,640 --> 00:16:25,880 Speaker 1: the puzzle back one stage, which is why then our 239 00:16:25,880 --> 00:16:29,280 Speaker 1: businesses not investing as much. I think a lot of 240 00:16:29,320 --> 00:16:32,520 Speaker 1: it has been a slowdown in global growth rates. A 241 00:16:32,600 --> 00:16:36,840 Speaker 1: slowdown in global demand means that you don't have the customers, 242 00:16:36,880 --> 00:16:40,880 Speaker 1: you don't have the order base um to justify increasing 243 00:16:40,880 --> 00:16:44,440 Speaker 1: your investment. The good news is, if that's the case, 244 00:16:44,800 --> 00:16:48,360 Speaker 1: I wouldn't expect that to be some permanent condition, and 245 00:16:48,480 --> 00:16:50,640 Speaker 1: I would think that you'd see start to see investment 246 00:16:50,640 --> 00:16:53,400 Speaker 1: bouncing back and with it some of the productivity growth 247 00:16:53,440 --> 00:16:55,640 Speaker 1: coming up. Jason, let me ask you about the role 248 00:16:55,640 --> 00:16:57,080 Speaker 1: of the election is played at what we're seeing in 249 00:16:57,080 --> 00:16:58,880 Speaker 1: the economy right now. Stanfish, you're talking a little bit 250 00:16:58,920 --> 00:17:00,800 Speaker 1: about this as well, say it may have had an 251 00:17:00,800 --> 00:17:04,440 Speaker 1: impact on how fast this economy has heated up. What's 252 00:17:04,480 --> 00:17:06,520 Speaker 1: your sense of longevity here for that? In other words, 253 00:17:06,520 --> 00:17:09,600 Speaker 1: if if the economy has gotten hotter since November, how 254 00:17:09,600 --> 00:17:11,320 Speaker 1: long is it pointed to stay as hot as it is. 255 00:17:11,680 --> 00:17:13,879 Speaker 1: You know, you've seen a big increase in confidence on 256 00:17:13,920 --> 00:17:19,119 Speaker 1: the part of businesses and consumers since the election, and 257 00:17:19,560 --> 00:17:23,760 Speaker 1: you know, if there's ultimately policies that justify that increase 258 00:17:23,800 --> 00:17:27,399 Speaker 1: in confidence, UM, it can be sustained. But if the 259 00:17:27,520 --> 00:17:30,840 Speaker 1: policies don't follow it, then you know, it could be 260 00:17:30,880 --> 00:17:34,440 Speaker 1: a wily coyote moment where you know, you think there 261 00:17:34,480 --> 00:17:36,760 Speaker 1: was a reason for all of this to happen, you 262 00:17:36,840 --> 00:17:40,320 Speaker 1: look down, you discover there's nothing underneath it. UM. You 263 00:17:40,320 --> 00:17:44,919 Speaker 1: know stock market valuations UM. You know the earnings projections 264 00:17:44,960 --> 00:17:47,359 Speaker 1: underlying them have gone sky high in the next couple 265 00:17:47,400 --> 00:17:50,720 Speaker 1: of years. If that doesn't happen, UM, we're potentially in 266 00:17:50,840 --> 00:17:53,080 Speaker 1: for for a disappointment. Before we move on, just let 267 00:17:53,119 --> 00:17:55,320 Speaker 1: me give your your sense of of the stand Fisher 268 00:17:55,400 --> 00:17:57,240 Speaker 1: that we saw this morning. He sounds like he was 269 00:17:57,240 --> 00:17:59,360 Speaker 1: pleased a lot of his forecast. I sort of come 270 00:17:59,440 --> 00:18:03,120 Speaker 1: come to come to fact. Where is this fed right now? 271 00:18:03,160 --> 00:18:05,520 Speaker 1: Is it looks they had to a real personality personnel 272 00:18:05,640 --> 00:18:09,120 Speaker 1: change here in the next year. Um? What is it retrospective? 273 00:18:09,160 --> 00:18:10,520 Speaker 1: Is it sort of thinking about what's they had? What? 274 00:18:10,520 --> 00:18:12,120 Speaker 1: What did you What sense of him did you get 275 00:18:12,119 --> 00:18:14,400 Speaker 1: from this morning? I mean I got the same sense 276 00:18:14,440 --> 00:18:16,399 Speaker 1: I've gotten every time I've talked to him, which is 277 00:18:16,440 --> 00:18:19,280 Speaker 1: that our country is incredibly lucky to have him at 278 00:18:19,280 --> 00:18:23,119 Speaker 1: our Central Bank, to have cherry yelling, Um, you know, 279 00:18:23,600 --> 00:18:28,520 Speaker 1: really really thoughtful people who are trying to do the 280 00:18:28,640 --> 00:18:32,040 Speaker 1: task um that Congress assigned to them and are doing 281 00:18:32,280 --> 00:18:35,440 Speaker 1: a quite good job. Um. But but stan is is 282 00:18:35,680 --> 00:18:40,040 Speaker 1: is soup is always just very careful, um, very judicious, 283 00:18:40,119 --> 00:18:43,840 Speaker 1: very thoughtful. Um. And and you know your viewers saw 284 00:18:43,880 --> 00:18:45,719 Speaker 1: that this morning. Let me just pivot to the other 285 00:18:45,760 --> 00:18:48,040 Speaker 1: big news we saw yesterday. The nominee to be Labory 286 00:18:48,040 --> 00:18:50,320 Speaker 1: secretary bound out. Andy puts a bound out of of 287 00:18:50,320 --> 00:18:52,800 Speaker 1: that nomination help us that to say, the role of 288 00:18:52,840 --> 00:18:54,879 Speaker 1: the Secretary of Labor in two thousand and seventeen, there 289 00:18:54,920 --> 00:18:56,320 Speaker 1: was a lot of criticism that he was not the 290 00:18:56,400 --> 00:18:57,800 Speaker 1: right man for the job in terms of what he'd 291 00:18:57,800 --> 00:19:01,320 Speaker 1: said about automation and and and the like. Uh, what 292 00:19:01,520 --> 00:19:03,080 Speaker 1: does the Secretary of Labor do in the year two 293 00:19:03,080 --> 00:19:05,560 Speaker 1: thousand seventeen? U. Well, one thing that they're gonna do 294 00:19:06,040 --> 00:19:10,520 Speaker 1: is the President has instructed them to look at the 295 00:19:10,680 --> 00:19:13,600 Speaker 1: so called fiduciary rule or conflict of interest rule. This 296 00:19:13,680 --> 00:19:18,640 Speaker 1: is something that our administration put into place to eliminate 297 00:19:18,720 --> 00:19:23,120 Speaker 1: conflicts of interest for retirement brokers who got paid for 298 00:19:23,280 --> 00:19:27,639 Speaker 1: giving in many cases, UM, in my view, bad advice. UM. 299 00:19:27,680 --> 00:19:29,640 Speaker 1: I think anyone who takes a look at that rule 300 00:19:30,040 --> 00:19:33,679 Speaker 1: would say that that rule is working, that most of 301 00:19:33,680 --> 00:19:36,880 Speaker 1: the costs associated with it for businesses have already been incurred, 302 00:19:37,520 --> 00:19:41,400 Speaker 1: and that stopping it now means we wouldn't get the benefits. 303 00:19:41,440 --> 00:19:43,840 Speaker 1: That's gonna be one really important job for Labor secretary. 304 00:19:44,400 --> 00:19:47,800 Speaker 1: More broadly, though, there's the very traditional set of you know, 305 00:19:47,880 --> 00:19:51,800 Speaker 1: labor issues, whether it's enforcement of our rules about wage 306 00:19:51,800 --> 00:19:57,520 Speaker 1: an hour, enforcement of our rules about occupational workplace safety, 307 00:19:57,720 --> 00:19:59,920 Speaker 1: and somebody that's going to take all of that seriously. 308 00:20:00,000 --> 00:20:01,920 Speaker 1: I think is is an important part of the job. 309 00:20:02,160 --> 00:20:03,720 Speaker 1: I get a lot of emails from from listeners and 310 00:20:03,720 --> 00:20:07,040 Speaker 1: from viewers on Bloomberg Television about how how handicapped the 311 00:20:07,080 --> 00:20:09,919 Speaker 1: government might be not having uh titular heads of these 312 00:20:09,960 --> 00:20:12,200 Speaker 1: agencies in place. There's been a lot of talk from Republicans, 313 00:20:12,280 --> 00:20:15,119 Speaker 1: especially about how long these confirmation processes have gone on 314 00:20:15,160 --> 00:20:18,000 Speaker 1: this time around. How handicapped are these departments right now? 315 00:20:18,119 --> 00:20:20,680 Speaker 1: Is the Labor Department handicapped by not having a permanent 316 00:20:20,840 --> 00:20:23,720 Speaker 1: Labor secretary right now? Was the Treasury Department handicapped having 317 00:20:23,760 --> 00:20:27,159 Speaker 1: to wait three weeks to get Steven Manuchan confirmed. I 318 00:20:27,200 --> 00:20:30,119 Speaker 1: think it's uh cost to not have people at the 319 00:20:30,119 --> 00:20:32,359 Speaker 1: head of these agencies. I think one could then debate 320 00:20:32,800 --> 00:20:36,040 Speaker 1: whether the problem here was that a lot of these 321 00:20:36,040 --> 00:20:40,399 Speaker 1: people faced much much less vetting, got their paperwork in, 322 00:20:40,480 --> 00:20:43,000 Speaker 1: you know, way later than previous sets in nominees did 323 00:20:43,640 --> 00:20:45,760 Speaker 1: um or whether it's the Congress, and you know, one 324 00:20:45,800 --> 00:20:48,119 Speaker 1: could debate either side of that. There's some on the 325 00:20:48,160 --> 00:20:51,640 Speaker 1: s cost all that, But you look at um non 326 00:20:51,720 --> 00:20:55,119 Speaker 1: Senate confirmed people in these agencies in the White House, 327 00:20:55,520 --> 00:20:58,200 Speaker 1: and you've been really slow to fill the inss vets 328 00:20:58,240 --> 00:21:01,000 Speaker 1: have been really slow to fill those jobs UM as well. 329 00:21:01,080 --> 00:21:03,840 Speaker 1: So I don't think you can put most of this 330 00:21:04,600 --> 00:21:07,720 Speaker 1: on the Senate Um. A lot of this is is 331 00:21:07,760 --> 00:21:11,960 Speaker 1: the personnel slowness of the administration and the rocky start 332 00:21:12,000 --> 00:21:15,800 Speaker 1: the transition god itself to what's your your pitch to 333 00:21:15,840 --> 00:21:17,919 Speaker 1: the sitting president now to feel the job that you 334 00:21:17,960 --> 00:21:20,560 Speaker 1: had during above administration to fill the chair with the 335 00:21:20,560 --> 00:21:23,399 Speaker 1: Council of Economic Advisors jops. He said that he's not 336 00:21:23,440 --> 00:21:25,919 Speaker 1: going to make that a cabinet level position. What's the 337 00:21:25,960 --> 00:21:27,920 Speaker 1: argument for doing that? What's the argument for filling it 338 00:21:27,960 --> 00:21:31,840 Speaker 1: and filling it quickly? You know, I was proud to 339 00:21:31,840 --> 00:21:35,960 Speaker 1: be a member of President Obama's cabinet um. I think 340 00:21:36,000 --> 00:21:38,520 Speaker 1: that's a good place for ci A to be UM. 341 00:21:38,520 --> 00:21:40,920 Speaker 1: But you can be a really important and influential ci 342 00:21:41,000 --> 00:21:45,160 Speaker 1: A chair without being in the cabinet um. It's impossible 343 00:21:45,200 --> 00:21:48,800 Speaker 1: to be really important influential c A chair if there 344 00:21:48,880 --> 00:21:51,960 Speaker 1: isn't actually a c chair UM in the job. So 345 00:21:51,960 --> 00:21:55,120 Speaker 1: I think the important thing is picking someone, picking someone good. 346 00:21:55,440 --> 00:21:58,400 Speaker 1: What I'd say to the president is, you know, you'll 347 00:21:58,440 --> 00:22:00,880 Speaker 1: find some stuff that help make your ace and that's 348 00:22:00,920 --> 00:22:03,600 Speaker 1: really good. And you'll also have that person telling you 349 00:22:03,640 --> 00:22:06,240 Speaker 1: a bunch of things that go against what you think. UM, 350 00:22:06,280 --> 00:22:08,960 Speaker 1: And that's even better and even more important for those 351 00:22:09,000 --> 00:22:11,359 Speaker 1: who are lost in the alphabet soup of Washington. Here 352 00:22:11,359 --> 00:22:13,359 Speaker 1: you've got the Council of Economic Advisors and you've got 353 00:22:13,359 --> 00:22:16,960 Speaker 1: the National Economic councils of these are two institutions that 354 00:22:17,000 --> 00:22:19,920 Speaker 1: share two words in their in their titles. UM. What's 355 00:22:19,920 --> 00:22:21,840 Speaker 1: the difference between them? And sort of what what does 356 00:22:21,880 --> 00:22:24,160 Speaker 1: one do differently? What? What? What's the role that Garrett 357 00:22:24,160 --> 00:22:25,639 Speaker 1: Cone is going to play versus the role that the 358 00:22:25,680 --> 00:22:27,679 Speaker 1: yet to be named a Chevy the Council of Economic 359 00:22:27,720 --> 00:22:29,720 Speaker 1: Advisors is going to do? Right? Yeah, and you're you're 360 00:22:29,720 --> 00:22:31,880 Speaker 1: asking this question to the only one who's worked at 361 00:22:31,880 --> 00:22:34,960 Speaker 1: both of them twice. UM, And I think they're they're 362 00:22:34,960 --> 00:22:39,440 Speaker 1: both really important. The National Economic Council UM is more strategic. 363 00:22:40,280 --> 00:22:48,720 Speaker 1: It runs the overall process and integrates a level of management, implementation, 364 00:22:49,320 --> 00:22:53,800 Speaker 1: UM and political considerations. The Council of Economic Advisors is 365 00:22:53,880 --> 00:22:58,040 Speaker 1: staffed by PhD economists, and the existence of the National 366 00:22:58,080 --> 00:23:01,520 Speaker 1: Economic Council me and that the Council of Economic Advisors 367 00:23:01,560 --> 00:23:05,439 Speaker 1: can actually focus more on what the right economics is 368 00:23:06,040 --> 00:23:08,960 Speaker 1: and what economics says. Knowing that at the end of 369 00:23:08,960 --> 00:23:11,760 Speaker 1: the day, that's a really important consideration, UM, but it 370 00:23:11,800 --> 00:23:14,919 Speaker 1: shouldn't be the only consideration. Politics and everything else matters. 371 00:23:14,920 --> 00:23:17,240 Speaker 1: So you have the any c being more strategic, a 372 00:23:17,280 --> 00:23:21,679 Speaker 1: little bit more political, the Council Economic Advisors being more technocratic, 373 00:23:22,119 --> 00:23:26,520 Speaker 1: more pure economics. And I've seen the two of those 374 00:23:26,560 --> 00:23:29,200 Speaker 1: work really well together. David Kurran, New York. I'm Tom 375 00:23:29,240 --> 00:23:32,560 Speaker 1: keenan news bureau in Washington with this. Jason Furman, you 376 00:23:32,640 --> 00:23:35,680 Speaker 1: may know the name. Used to see him on Bloomberg Television. 377 00:23:35,720 --> 00:23:37,560 Speaker 1: He would try out under the lawn of the White 378 00:23:37,600 --> 00:23:41,440 Speaker 1: House on a beautiful bucolic day and brag about moving 379 00:23:41,480 --> 00:23:45,480 Speaker 1: unemployment single handedly from ten percent down to four point 380 00:23:45,520 --> 00:23:48,040 Speaker 1: whatever percent. You need to take a victory lap on 381 00:23:48,160 --> 00:23:51,560 Speaker 1: that we were at ten percent nine. You and I 382 00:23:51,600 --> 00:23:55,600 Speaker 1: know that when the economy improves, unemployment it comes down 383 00:23:55,800 --> 00:23:59,600 Speaker 1: rather abruptly. But what was different this time? When the 384 00:24:00,000 --> 00:24:03,480 Speaker 1: ployment rate came down so nicely, you know, it actually 385 00:24:03,480 --> 00:24:06,120 Speaker 1: came down faster than I would have thought. In two 386 00:24:06,200 --> 00:24:09,800 Speaker 1: thousand nine, UM, Alan Krueger took a look at this 387 00:24:09,880 --> 00:24:12,040 Speaker 1: question and he found that the unemployment rate can go 388 00:24:12,160 --> 00:24:14,360 Speaker 1: up really quickly. You've seen a number of times where 389 00:24:14,359 --> 00:24:16,880 Speaker 1: it's gone up four percentage points in a year or two. 390 00:24:17,280 --> 00:24:19,560 Speaker 1: But the fastest in any O E c D country 391 00:24:19,600 --> 00:24:22,280 Speaker 1: it had ever come down after that experience like that 392 00:24:22,600 --> 00:24:26,000 Speaker 1: was seven tenths of a percent per year. In this recovery, 393 00:24:26,000 --> 00:24:28,440 Speaker 1: it felled by more than a percentage point per year 394 00:24:28,520 --> 00:24:31,879 Speaker 1: for several years um in a row. So you know, 395 00:24:31,880 --> 00:24:35,560 Speaker 1: it's surprised everyone. It consistently came in below expectations. So 396 00:24:35,640 --> 00:24:38,160 Speaker 1: then that was a victory lap. David Row for Jason 397 00:24:38,200 --> 00:24:44,840 Speaker 1: Ferman part of the negotiation without imposing and the Pearson Institute, okay, great, 398 00:24:45,160 --> 00:24:47,359 Speaker 1: except John Edwards stood on a law and I believe 399 00:24:47,359 --> 00:24:49,840 Speaker 1: in Louisiana, I'm teen years ago in said there are 400 00:24:49,840 --> 00:24:54,120 Speaker 1: two America's. Another think tank, the Economic Policy Institute, will say, 401 00:24:54,200 --> 00:24:57,600 Speaker 1: wait a minute, Jason Furman, lose the victory lap. There's 402 00:24:57,600 --> 00:25:02,280 Speaker 1: two Americas? Does cheer yelling? Still have that slack in 403 00:25:02,359 --> 00:25:05,840 Speaker 1: the economy even with a great unemployment right, you know, 404 00:25:05,880 --> 00:25:08,800 Speaker 1: there's two America's um, but when the economy does better, 405 00:25:09,000 --> 00:25:13,400 Speaker 1: those America's come closer. So you look at and incomes 406 00:25:13,440 --> 00:25:16,320 Speaker 1: grew the most at the bottom and middle of the 407 00:25:16,320 --> 00:25:21,720 Speaker 1: distribution faster than they grew at the top of the distribution. 408 00:25:21,760 --> 00:25:23,920 Speaker 1: And that's because we were running a strong economy in 409 00:25:24,760 --> 00:25:28,800 Speaker 1: it was even stronger. We don't have the income data 410 00:25:29,000 --> 00:25:32,000 Speaker 1: UM yet to take a look at that, and I 411 00:25:32,040 --> 00:25:34,320 Speaker 1: think the Fed UM, I think they're close, but I 412 00:25:34,320 --> 00:25:36,840 Speaker 1: think there's a probably a little bit more room UM 413 00:25:36,840 --> 00:25:40,040 Speaker 1: that they have. There's more room for faster real wage growth, 414 00:25:40,119 --> 00:25:44,280 Speaker 1: especially UM if productivity growth rebounds, which which is as 415 00:25:45,040 --> 00:25:47,879 Speaker 1: vice chair Fisher said, is critical. Jason, since you walked 416 00:25:47,880 --> 00:25:49,600 Speaker 1: off that White House lawn for the last time, how 417 00:25:49,640 --> 00:25:52,479 Speaker 1: much time have you spent thinking about the economic forces 418 00:25:52,520 --> 00:25:56,240 Speaker 1: that played a role in this election? Rightfully wrongfully, we 419 00:25:56,280 --> 00:25:57,920 Speaker 1: can we can debate that, but it was clear that 420 00:25:57,960 --> 00:26:00,680 Speaker 1: a lot of people who voted for and now president 421 00:26:01,240 --> 00:26:03,760 Speaker 1: sight of the economy is a reason for doing so. UM. 422 00:26:03,760 --> 00:26:05,920 Speaker 1: I've certainly spent a lot of time thinking about it, 423 00:26:05,960 --> 00:26:08,400 Speaker 1: and I think a set of concerns that people have 424 00:26:09,200 --> 00:26:13,120 Speaker 1: UM are justified. Things were moving UM in the right direction, 425 00:26:13,520 --> 00:26:16,040 Speaker 1: Things were getting better. Things could have been a lot worse. 426 00:26:16,119 --> 00:26:19,080 Speaker 1: All three of those statements are true, UM, but things 427 00:26:19,160 --> 00:26:21,920 Speaker 1: weren't good enough. And you know, people are right to 428 00:26:22,000 --> 00:26:24,000 Speaker 1: think that things weren't good enough, and people are right 429 00:26:24,080 --> 00:26:28,080 Speaker 1: to think that that requires um, you know, a policy change. 430 00:26:28,320 --> 00:26:29,960 Speaker 1: That was a policy change we were trying to make 431 00:26:30,000 --> 00:26:33,120 Speaker 1: in our administration. Much of it was being blocked um 432 00:26:33,160 --> 00:26:36,080 Speaker 1: by Congress. But I I understand where the frustration was. 433 00:26:36,119 --> 00:26:39,760 Speaker 1: I think the unfortunate thing is, um, they don't think 434 00:26:39,760 --> 00:26:44,200 Speaker 1: you're gonna see policies that deliver on that desire for change. 435 00:26:44,240 --> 00:26:46,600 Speaker 1: You've taken your your victory lap at at Thomas Behest 436 00:26:46,640 --> 00:26:48,679 Speaker 1: and we heard from some fisher talking about the economy 437 00:26:48,760 --> 00:26:51,000 Speaker 1: this warning how tenuous is the state of the U 438 00:26:51,080 --> 00:26:53,440 Speaker 1: s economy right now? If it is in decent or 439 00:26:53,480 --> 00:26:57,399 Speaker 1: good shape, how how at risk is it from from falling? 440 00:26:57,440 --> 00:27:00,119 Speaker 1: From that look, I think the economy and is is 441 00:27:00,119 --> 00:27:03,080 Speaker 1: in as good and solid shape as it can be. 442 00:27:03,720 --> 00:27:06,399 Speaker 1: You know, valuations in the stock market seem to me 443 00:27:06,440 --> 00:27:09,960 Speaker 1: a little bit frothy and and don't seem fully justified 444 00:27:10,440 --> 00:27:14,080 Speaker 1: by the changes in fundamentals that we've seen. UM. So 445 00:27:14,119 --> 00:27:18,520 Speaker 1: there's some pockets of concern, but overall, um, you know, 446 00:27:18,960 --> 00:27:24,359 Speaker 1: debt levels are relatively low. Um, balance sheets in the 447 00:27:24,400 --> 00:27:28,520 Speaker 1: financial sector are relatively healthy. A lot of the things 448 00:27:28,560 --> 00:27:30,960 Speaker 1: that we would look at a lot of the imbalances 449 00:27:31,320 --> 00:27:34,560 Speaker 1: UM are absent, but we should realize that. You know, 450 00:27:34,600 --> 00:27:37,480 Speaker 1: in any given year, it's about a fifteen percent chance 451 00:27:37,480 --> 00:27:40,480 Speaker 1: that the economy goes into recession, whether or not everything 452 00:27:40,600 --> 00:27:43,160 Speaker 1: is healthy. UM. You have that chance, and I don't 453 00:27:43,200 --> 00:27:45,800 Speaker 1: think this year, UM would be any different than than 454 00:27:45,840 --> 00:27:47,879 Speaker 1: any other in that regard. I want to talk about 455 00:27:47,880 --> 00:27:50,320 Speaker 1: the Peterson Institute in the short time that we have 456 00:27:50,560 --> 00:27:52,600 Speaker 1: left with you. What a joy to talk to Fred 457 00:27:52,640 --> 00:27:55,920 Speaker 1: Burston the other day about what he wrought Adam pose 458 00:27:56,000 --> 00:27:58,800 Speaker 1: and has picked it up with Olivia Blanchard and Nathan 459 00:27:58,920 --> 00:28:01,640 Speaker 1: Sheets joining now and you're joining, what do you want 460 00:28:01,680 --> 00:28:06,359 Speaker 1: to accomplish at the Peterson Institute? What's what's the firm 461 00:28:06,359 --> 00:28:09,240 Speaker 1: and mandate? UM? Well, I think the Peterson Institute is just, 462 00:28:09,800 --> 00:28:13,120 Speaker 1: you know, a fantastic collection of people really focused on 463 00:28:13,320 --> 00:28:19,959 Speaker 1: macroeconomic issues. Trade, UM. International economics is a really lively 464 00:28:20,000 --> 00:28:22,480 Speaker 1: internal debate. There a lot of people, don't, you know, 465 00:28:22,600 --> 00:28:25,439 Speaker 1: don't agree on all sorts of issues, UM, but everyone 466 00:28:25,440 --> 00:28:28,840 Speaker 1: agrees on the importance of evidence, and everyone has an 467 00:28:28,840 --> 00:28:32,920 Speaker 1: open mind about where that evidence leads them. UM. That's 468 00:28:32,920 --> 00:28:34,720 Speaker 1: the spirit in which I tried to run the Council 469 00:28:34,760 --> 00:28:37,919 Speaker 1: of Economic Advisors, and that's very much the spirit in 470 00:28:37,960 --> 00:28:41,560 Speaker 1: which Adam runs the Peterson Institute. What did you learn 471 00:28:41,640 --> 00:28:44,000 Speaker 1: from the Fisher interview? I know David garas to this 472 00:28:44,080 --> 00:28:46,960 Speaker 1: question before, but let's sum up with it quickly here. 473 00:28:47,120 --> 00:28:49,640 Speaker 1: What a delicate tight rope he has to walk right now. 474 00:28:49,920 --> 00:28:52,080 Speaker 1: It's just, you know, for the FED, so much of 475 00:28:52,080 --> 00:28:55,440 Speaker 1: their job depends on what productivity growth is, and so 476 00:28:55,600 --> 00:29:00,120 Speaker 1: little of what they do can actually affect productivity us 477 00:29:00,160 --> 00:29:02,280 Speaker 1: and that's one of the big the big challenges that 478 00:29:02,320 --> 00:29:05,440 Speaker 1: they face. Spoken like a think tank, Jason Furman, thank 479 00:29:05,480 --> 00:29:08,720 Speaker 1: you so much for that opposing at the Peterson Institute, 480 00:29:08,760 --> 00:29:10,880 Speaker 1: and just fabulous generous of you to be with us 481 00:29:10,880 --> 00:29:15,640 Speaker 1: this hour uh with the Vice Chairman of the FED, 482 00:29:24,040 --> 00:29:27,560 Speaker 1: brought you by Bank of America Mary Lynch. Dedicated to 483 00:29:27,640 --> 00:29:31,520 Speaker 1: bringing our clients insights and solutions to meet the challenges 484 00:29:31,680 --> 00:29:35,400 Speaker 1: of a transforming world. That's the power of global connections. 485 00:29:35,800 --> 00:29:40,720 Speaker 1: Mary Lynch, Pierce Federan Smith Incorporated, Member s I p C. 486 00:29:43,920 --> 00:29:47,760 Speaker 1: It has been an exceptional week of political economics and 487 00:29:47,920 --> 00:29:51,160 Speaker 1: economic politics. We're gonna get to that with a very 488 00:29:51,200 --> 00:29:53,720 Speaker 1: special guest here, David. What do you see up there 489 00:29:53,960 --> 00:29:56,520 Speaker 1: and I'm talking. No, I miss here. And I was 490 00:29:56,520 --> 00:29:58,720 Speaker 1: off yesterday of course, nursing this nursing this cold. I 491 00:29:58,760 --> 00:30:00,880 Speaker 1: think I finally kicked it. But you know, just watching 492 00:30:00,920 --> 00:30:02,400 Speaker 1: what's happening out of the White House, I think the 493 00:30:02,640 --> 00:30:04,880 Speaker 1: back and voice over what's going out the National Security 494 00:30:04,880 --> 00:30:07,480 Speaker 1: Council continues to interest me. And uh, you know the 495 00:30:07,960 --> 00:30:09,760 Speaker 1: story that broke last night in the Wall Street Journal 496 00:30:09,760 --> 00:30:13,120 Speaker 1: about how some intelligence agencies reportedly are holding back giving 497 00:30:13,160 --> 00:30:15,960 Speaker 1: information to the president. There's just a wrinkle after wrinkle 498 00:30:16,000 --> 00:30:19,200 Speaker 1: after wrinkle. I walked by the FBI building and that 499 00:30:19,280 --> 00:30:23,800 Speaker 1: brutalist structure, on the brutalist structure, and you know, it's 500 00:30:23,880 --> 00:30:28,080 Speaker 1: just like Chairley Molder. You know, it's like X files, 501 00:30:28,160 --> 00:30:32,080 Speaker 1: re dux overlaid upon the intelligence of the moment. He 502 00:30:32,160 --> 00:30:35,880 Speaker 1: watched every episode of x X files joining us Douglas 503 00:30:35,880 --> 00:30:40,000 Speaker 1: Holzek and who provided real national leadership at the Congressional 504 00:30:40,040 --> 00:30:43,600 Speaker 1: Budget Office a few years ago. Uh, and has just 505 00:30:43,680 --> 00:30:47,760 Speaker 1: been exceptionally important to us and giving fiscal perspective linked 506 00:30:47,840 --> 00:30:50,560 Speaker 1: in to overall economics. He's of course with the American 507 00:30:50,640 --> 00:30:53,960 Speaker 1: action for him, Dr Holtec And let me cut to 508 00:30:54,000 --> 00:30:57,360 Speaker 1: the chase. What action do you need from President Trump 509 00:30:57,520 --> 00:31:00,200 Speaker 1: right now. I think he needs to come out and 510 00:31:00,320 --> 00:31:06,120 Speaker 1: forcefully endorsed tax reform and get the Congress moving legislatively 511 00:31:06,160 --> 00:31:09,440 Speaker 1: on that agenda. There is no single policy that would 512 00:31:09,480 --> 00:31:12,520 Speaker 1: have a quicker impact and a more lasting impact than 513 00:31:12,560 --> 00:31:15,280 Speaker 1: a good pro growth tax reform. And the key your 514 00:31:15,400 --> 00:31:19,520 Speaker 1: CBO Alice Rivland, CBO, Elmendorf CBO. I've been looking at 515 00:31:19,520 --> 00:31:22,760 Speaker 1: a lot of CBO articles recently. In your head, how 516 00:31:22,800 --> 00:31:29,720 Speaker 1: do you match up revenues and increased Trumpians spending? You know, 517 00:31:29,760 --> 00:31:32,880 Speaker 1: within the rhetoric of the discourse that you hear right now, 518 00:31:32,960 --> 00:31:35,280 Speaker 1: are we gonna be okay? Are we heading back to 519 00:31:36,120 --> 00:31:40,040 Speaker 1: twin deficit? Things? They don't add up? So let's don't. 520 00:31:40,240 --> 00:31:43,280 Speaker 1: Let's not be too obsessed with that. I think the 521 00:31:43,360 --> 00:31:47,480 Speaker 1: key here is that you know, President Trump inherited a 522 00:31:47,560 --> 00:31:51,600 Speaker 1: fiscal outlook that's unsustainable. That's that's a numerical reality that 523 00:31:51,680 --> 00:31:54,520 Speaker 1: the CBO has displayed every time and putside a report, 524 00:31:55,120 --> 00:31:58,880 Speaker 1: and the President has a policy agenda that doesn't make 525 00:31:58,920 --> 00:32:01,120 Speaker 1: that better, it makes it worse. So at some point 526 00:32:01,320 --> 00:32:03,120 Speaker 1: a year down the line, two years down the line, 527 00:32:03,120 --> 00:32:06,200 Speaker 1: I don't know exactly when that reality will begin to 528 00:32:06,240 --> 00:32:09,280 Speaker 1: constrain the things that he can do as opposed to 529 00:32:09,280 --> 00:32:11,640 Speaker 1: what he wants to do, and that's going to be 530 00:32:11,680 --> 00:32:14,280 Speaker 1: an important moment. Is it gonna take that long? I mean, 531 00:32:14,280 --> 00:32:17,200 Speaker 1: I've I've seen the enthusiasm for this this fiscal package 532 00:32:17,480 --> 00:32:19,240 Speaker 1: diminished amongst some of the guests that we've talked to 533 00:32:19,280 --> 00:32:20,760 Speaker 1: on on the show. I mean, I think there was 534 00:32:20,800 --> 00:32:22,720 Speaker 1: some immediate enthusiasm after the election that we're going to 535 00:32:22,800 --> 00:32:25,040 Speaker 1: see a big fiscal stimulus and now maybe the deficit 536 00:32:25,080 --> 00:32:27,239 Speaker 1: hawks who's starting to to circle. Is it gonna take 537 00:32:27,240 --> 00:32:28,720 Speaker 1: a year? Is it gonna take two years to people 538 00:32:28,720 --> 00:32:31,080 Speaker 1: to really reckon with what's gonna happen. Well, I think 539 00:32:31,240 --> 00:32:33,440 Speaker 1: a president gets a year. I mean, you know, typically 540 00:32:33,480 --> 00:32:36,560 Speaker 1: you get a hundred days and one big campaign promise 541 00:32:37,040 --> 00:32:40,040 Speaker 1: for sure, and then after the first year, the momentum 542 00:32:40,040 --> 00:32:42,239 Speaker 1: starts to slow and you get into intoral elections and 543 00:32:42,280 --> 00:32:44,360 Speaker 1: things get bogged down. So I still think there's a 544 00:32:44,480 --> 00:32:47,640 Speaker 1: it's a year away. I for the record, never saw 545 00:32:47,680 --> 00:32:52,400 Speaker 1: the big fiscal stimulus, and I thought markets over priced that. Um, 546 00:32:52,440 --> 00:32:54,160 Speaker 1: there was never going to be in my view, a 547 00:32:54,240 --> 00:32:57,160 Speaker 1: big infrastructure spending bill that that had a lot of 548 00:32:57,240 --> 00:33:00,760 Speaker 1: cash flowing out of the federal treasury quickly. There's a 549 00:33:00,800 --> 00:33:05,240 Speaker 1: place for good infrastructure investments. They need to be identified, 550 00:33:05,440 --> 00:33:08,040 Speaker 1: they need to be funded, and they need to be executed. 551 00:33:08,440 --> 00:33:11,600 Speaker 1: That's a years long thing. Uh. I didn't think that 552 00:33:11,680 --> 00:33:13,800 Speaker 1: a big tax cut was in the cards. The kinds 553 00:33:13,840 --> 00:33:17,400 Speaker 1: of numbers he promised on the campaign trail were completely unrealistic, 554 00:33:17,440 --> 00:33:19,280 Speaker 1: And the whole time he was saying that we had 555 00:33:19,560 --> 00:33:22,240 Speaker 1: a speaker Ryan and Chairman Brady talking about revenue neutral 556 00:33:22,280 --> 00:33:25,000 Speaker 1: tax reform. So I didn't think they're really going to 557 00:33:25,080 --> 00:33:28,520 Speaker 1: go there either. So outside of raising the defense spending cap, 558 00:33:28,560 --> 00:33:30,560 Speaker 1: there isn't much in my view that was going to 559 00:33:30,600 --> 00:33:33,520 Speaker 1: go on quickly. And so a big fiscal stimulus of 560 00:33:33,560 --> 00:33:36,200 Speaker 1: the traditional knste type I never thought was in the cards. 561 00:33:36,280 --> 00:33:38,400 Speaker 1: You speak of the need for a pro growth tax 562 00:33:38,440 --> 00:33:40,920 Speaker 1: reform package, do you have a sense of who's driving that. 563 00:33:40,960 --> 00:33:42,320 Speaker 1: We heard from the President there was going to be 564 00:33:42,360 --> 00:33:45,880 Speaker 1: a tremendous or fantastic or some sort of superlative tax 565 00:33:45,880 --> 00:33:47,880 Speaker 1: plan and revealed by the White House in these next 566 00:33:47,880 --> 00:33:50,000 Speaker 1: few weeks, and that Gary Cohene, the head of the NBC, 567 00:33:50,080 --> 00:33:51,800 Speaker 1: is going to be the person coming up with that. Meanwhile, 568 00:33:51,800 --> 00:33:53,720 Speaker 1: on the Hill we hear from Kevin Brady and others 569 00:33:53,720 --> 00:33:56,720 Speaker 1: that they're working on one themselves. Is there much unanimity 570 00:33:56,760 --> 00:33:58,880 Speaker 1: between the Republican Congress and the White House on the 571 00:33:58,920 --> 00:34:02,760 Speaker 1: issue of tax reform. I'd say they're really three distinct camps. 572 00:34:02,760 --> 00:34:04,360 Speaker 1: There's the House, the Senate, in the White House, and 573 00:34:04,640 --> 00:34:06,440 Speaker 1: they are not even closed on the same page. At 574 00:34:06,440 --> 00:34:08,920 Speaker 1: the moment. The House has been driving this because the 575 00:34:08,920 --> 00:34:12,439 Speaker 1: House actually has its blueprint for for a better way 576 00:34:12,480 --> 00:34:15,520 Speaker 1: to tacks, and that's been the subject of most of 577 00:34:15,520 --> 00:34:19,399 Speaker 1: the conversation. That's at odds with political mechanics. You need 578 00:34:19,440 --> 00:34:21,360 Speaker 1: to get it done. You need White House leadership, the 579 00:34:21,400 --> 00:34:23,840 Speaker 1: Douglas souls you can from our ninety nine one studios 580 00:34:23,840 --> 00:34:27,560 Speaker 1: here in Washington. A gorgeous day, David and Washington. The 581 00:34:27,640 --> 00:34:30,160 Speaker 1: Vomers down here, David, I'm trying to get Capital's tickets. 582 00:34:30,880 --> 00:34:33,600 Speaker 1: Where we stand in the doctor old he can have 583 00:34:33,640 --> 00:34:37,120 Speaker 1: no tickets. Help. The question is help? Well good, He's 584 00:34:37,160 --> 00:34:40,280 Speaker 1: gone to see him. Help me here with George Magnus 585 00:34:40,280 --> 00:34:42,560 Speaker 1: in London this morning, I'm gonna ask you the same question. 586 00:34:43,239 --> 00:34:48,480 Speaker 1: Austerity is an American psyche. We we enjoy, we bathe 587 00:34:48,680 --> 00:34:53,240 Speaker 1: in our austerity. Of those three Republican camps and voices 588 00:34:53,480 --> 00:34:58,000 Speaker 1: in ethos, is one of them a real austerity? And 589 00:34:58,080 --> 00:35:01,880 Speaker 1: can it be a good austerity? Uh? There is a 590 00:35:02,040 --> 00:35:05,279 Speaker 1: serious austerity caucus in the House of Representatives. It's not 591 00:35:05,520 --> 00:35:08,400 Speaker 1: evident in the Senator of the White House at the moment. Uh. 592 00:35:08,440 --> 00:35:10,920 Speaker 1: There are good and bad flavors in the House. There's 593 00:35:11,040 --> 00:35:15,040 Speaker 1: one which recognizes that we have entitled and spending programs 594 00:35:15,080 --> 00:35:17,640 Speaker 1: that are outpacing our capacity to fund them, and that 595 00:35:17,680 --> 00:35:21,359 Speaker 1: those programs actually aren't really great programs. Medicare doesn't deliver 596 00:35:21,400 --> 00:35:26,160 Speaker 1: the quality of healthcare it should. Medicaid has constructive austerity. Yeah, 597 00:35:26,239 --> 00:35:29,400 Speaker 1: that those programs need reformed because we deserve better programs. 598 00:35:29,440 --> 00:35:33,000 Speaker 1: What is destructive austerity? Explain that to our audience. That's 599 00:35:33,200 --> 00:35:37,120 Speaker 1: um spending caps on the annual discretionary spending, the national security, 600 00:35:37,120 --> 00:35:41,040 Speaker 1: basic research, infrastructure, education, all the things our founders saw 601 00:35:41,080 --> 00:35:42,920 Speaker 1: as the role of government and the place where the 602 00:35:42,920 --> 00:35:46,440 Speaker 1: federal government genuinely invest in the future. Putting caps on 603 00:35:46,480 --> 00:35:48,320 Speaker 1: that to make the budget look good and not figuring 604 00:35:48,320 --> 00:35:51,360 Speaker 1: out the policy that that supports it. That's bad austerity. 605 00:35:51,440 --> 00:35:54,040 Speaker 1: That's just starving the wrong part of the budget. Can 606 00:35:54,080 --> 00:35:57,439 Speaker 1: President Trump push you gets at and I keep using 607 00:35:57,480 --> 00:36:01,000 Speaker 1: this phrase like a Rockefeller Republic look at or is 608 00:36:01,040 --> 00:36:02,719 Speaker 1: he just naive that he's not going to get what 609 00:36:02,760 --> 00:36:04,799 Speaker 1: he wants? What he says, do this, do this? Do 610 00:36:04,920 --> 00:36:08,960 Speaker 1: that he can? Uh, you know, president is very powerful. 611 00:36:09,280 --> 00:36:11,759 Speaker 1: He can reach across party lines and and and make 612 00:36:11,800 --> 00:36:14,239 Speaker 1: things stick. So he is the key figure in this. 613 00:36:14,600 --> 00:36:16,640 Speaker 1: He has said he wants to raise the cap on 614 00:36:16,680 --> 00:36:19,399 Speaker 1: defense spending. I haven't heard him say anything about non 615 00:36:19,400 --> 00:36:22,879 Speaker 1: defense discretionary spending. And that's part of the recipe we'll 616 00:36:22,880 --> 00:36:27,120 Speaker 1: see when you look at the budget process, we're seeing 617 00:36:27,120 --> 00:36:29,440 Speaker 1: a return it seems to regular order in Washington, d C. 618 00:36:29,600 --> 00:36:32,000 Speaker 1: How big a deal is that that we have a 619 00:36:32,040 --> 00:36:34,400 Speaker 1: budget process that's not going to be decided by a 620 00:36:34,440 --> 00:36:35,880 Speaker 1: couple of months. Here in a couple of months, they 621 00:36:35,880 --> 00:36:38,680 Speaker 1: were getting back to what's been traditionally the process. What 622 00:36:38,680 --> 00:36:41,319 Speaker 1: does that mean for budgeting and Washington? I think we're 623 00:36:41,360 --> 00:36:44,560 Speaker 1: seeing something that's nothing short of extraordinary. Uh. For a 624 00:36:44,640 --> 00:36:47,560 Speaker 1: Congress that rarely passes a budget in the House, passes 625 00:36:47,560 --> 00:36:49,239 Speaker 1: a budget in the Senate, and then agrees on it, 626 00:36:49,600 --> 00:36:51,400 Speaker 1: they're probably seem to do two of those in the 627 00:36:51,440 --> 00:36:54,759 Speaker 1: space of four months. That's unbelievable. And and if they 628 00:36:54,800 --> 00:36:58,200 Speaker 1: actually execute on that, they will for the first time 629 00:36:58,280 --> 00:37:00,799 Speaker 1: have a genuine set of playing ends that the House 630 00:37:00,840 --> 00:37:05,279 Speaker 1: and Senate agree on. One hopes that through the the 631 00:37:05,280 --> 00:37:08,360 Speaker 1: back channels the White Houses on board as well. And 632 00:37:08,960 --> 00:37:11,520 Speaker 1: we rarely see that kind of cohesion. We haven't seen 633 00:37:11,560 --> 00:37:14,200 Speaker 1: it in eight years where Republicans fought everything in Democrats 634 00:37:14,239 --> 00:37:16,880 Speaker 1: were trying to do. Uh. But that would really change 635 00:37:16,960 --> 00:37:21,080 Speaker 1: the capacity to have both the policies that they want 636 00:37:21,200 --> 00:37:24,359 Speaker 1: and the budgetary room to execute them. Who's leading that 637 00:37:24,360 --> 00:37:27,840 Speaker 1: that effort on on Capitol Hill is? Is there? Is there? Somebody? Is? 638 00:37:27,840 --> 00:37:29,560 Speaker 1: Is it? Paul Ryan is at the House Speaker who's 639 00:37:29,800 --> 00:37:33,799 Speaker 1: pushing that forward? He's instrumental, There's no question he You know, 640 00:37:33,840 --> 00:37:35,960 Speaker 1: he was the chairman of the House Budget Comittee for 641 00:37:36,000 --> 00:37:39,400 Speaker 1: a long time, so he understands how that process works. 642 00:37:39,800 --> 00:37:41,600 Speaker 1: Over on the Senate side, I think you have to 643 00:37:41,640 --> 00:37:45,320 Speaker 1: give a lot of credit to Mitch McConnell. He's really 644 00:37:45,480 --> 00:37:49,000 Speaker 1: got uh, those Republican senators who have the capacity to 645 00:37:49,000 --> 00:37:52,200 Speaker 1: be very independent, pretty unified, and he held them together 646 00:37:52,520 --> 00:37:54,000 Speaker 1: when they were in the minority and now they're in 647 00:37:54,000 --> 00:37:56,640 Speaker 1: the majority. So I think, you know, the leadership is 648 00:37:56,640 --> 00:37:58,520 Speaker 1: the key and it's it's president, both the House and 649 00:37:58,560 --> 00:38:00,560 Speaker 1: the Senate. When you when you look at what might 650 00:38:00,600 --> 00:38:02,680 Speaker 1: be in that budget, is there a cognizance of deficit 651 00:38:02,719 --> 00:38:05,080 Speaker 1: issues in what you're seeing on the hill exclusive of 652 00:38:05,080 --> 00:38:06,640 Speaker 1: the fiscal package we were talking about a few a 653 00:38:06,640 --> 00:38:08,560 Speaker 1: few moments ago. Do you think that there's more awareness 654 00:38:08,600 --> 00:38:10,279 Speaker 1: of the deficit in the budget that's being crafted on 655 00:38:10,320 --> 00:38:14,319 Speaker 1: the Hill? I think there is. Republicans have for a 656 00:38:14,440 --> 00:38:17,239 Speaker 1: number of years put together budgets where they're there. Their 657 00:38:17,360 --> 00:38:19,680 Speaker 1: goal was to come to balance in ten years. Personally, 658 00:38:19,719 --> 00:38:22,879 Speaker 1: I think that's too quick and unrealistic, but the aspirational 659 00:38:22,920 --> 00:38:25,000 Speaker 1: goal is the important thing that's not gonna go away. 660 00:38:25,200 --> 00:38:28,440 Speaker 1: They're always worried about the size of the debt. Uh, 661 00:38:28,480 --> 00:38:30,479 Speaker 1: there's a debt limiting increase that has to happen this spring. 662 00:38:30,480 --> 00:38:32,360 Speaker 1: That's gonna be a very tough moment and a place 663 00:38:32,400 --> 00:38:35,080 Speaker 1: where I think you're gonna see those who are concerned 664 00:38:35,080 --> 00:38:37,600 Speaker 1: about the fiscal out look extract a price for it. 665 00:38:37,880 --> 00:38:42,479 Speaker 1: David Gurry in New York, Bloomberg eleven THREEO, New York, 666 00:38:42,520 --> 00:38:45,440 Speaker 1: and of course our New York headquarters. I'm in Washington 667 00:38:46,800 --> 00:38:50,319 Speaker 1: FM Studios and with us Douglas hole Teacon truly one 668 00:38:50,360 --> 00:38:53,879 Speaker 1: of our most interesting economists with tangible fiscal experience at 669 00:38:53,920 --> 00:38:58,959 Speaker 1: CBO and also just looking at her overarching macro economics. 670 00:38:59,520 --> 00:39:04,560 Speaker 1: Couldn't the Federal Reserve dictate the tone of our fiscal economics? 671 00:39:04,680 --> 00:39:07,520 Speaker 1: Is there a point where they can jaw bone or 672 00:39:07,800 --> 00:39:13,000 Speaker 1: nudge legislators to spend money duck on average? Now, I 673 00:39:13,000 --> 00:39:16,160 Speaker 1: think they've begged the Congress for a number of years 674 00:39:16,160 --> 00:39:19,120 Speaker 1: to have a more aggressive fiscal policy. I think you know, 675 00:39:19,280 --> 00:39:21,680 Speaker 1: Jenny Ellen has been on Capitol Hill Ben Bernankey before 676 00:39:21,680 --> 00:39:24,440 Speaker 1: her saying, you know, monetary policy will do what it can, 677 00:39:24,480 --> 00:39:27,000 Speaker 1: but we we would be really hopeful if we had 678 00:39:27,000 --> 00:39:31,359 Speaker 1: a more expansionary fiscal policy. Never happened. The moment that 679 00:39:31,360 --> 00:39:32,960 Speaker 1: this that is the exception to that rule, is the 680 00:39:33,000 --> 00:39:36,360 Speaker 1: appointment of a new chair, And in the testimony and 681 00:39:36,360 --> 00:39:39,200 Speaker 1: the confirmation process, I think the new chair could lay 682 00:39:39,200 --> 00:39:41,319 Speaker 1: down the law and say, look, you know, we've done 683 00:39:41,320 --> 00:39:43,640 Speaker 1: what we can do. If you want me to take 684 00:39:43,680 --> 00:39:45,960 Speaker 1: this job, you have to do something. And and that's 685 00:39:46,000 --> 00:39:48,200 Speaker 1: the moment where maybe they could have some influence. When 686 00:39:48,239 --> 00:39:50,680 Speaker 1: we talk about the new Fed who's going to fill 687 00:39:50,719 --> 00:39:52,399 Speaker 1: these rules? Do we have a good sense of who 688 00:39:52,440 --> 00:39:54,920 Speaker 1: these people will be. Do we have personalities? Do we do? You? 689 00:39:55,200 --> 00:39:57,080 Speaker 1: Do you have names you think will be appointed to 690 00:39:57,120 --> 00:39:59,919 Speaker 1: the board. I don't have a long list, to be honest. 691 00:40:00,080 --> 00:40:03,960 Speaker 1: Think it's been interesting to watch the appointments process because 692 00:40:04,320 --> 00:40:07,400 Speaker 1: I think for most of the cabinet positions there's been 693 00:40:07,400 --> 00:40:11,600 Speaker 1: a lot of surprises, things that people didn't see coming. Um. So, 694 00:40:11,960 --> 00:40:14,319 Speaker 1: you know, no one I think thought we'd see Rick 695 00:40:14,320 --> 00:40:16,160 Speaker 1: Perry over at the Department of Energy. That was a 696 00:40:16,200 --> 00:40:19,840 Speaker 1: bit of a surprise. And Ben Carson at hud so. Um, 697 00:40:19,640 --> 00:40:22,000 Speaker 1: I'm I'm waiting to see what sort of hints they 698 00:40:22,000 --> 00:40:24,480 Speaker 1: have about FED appointees. And I know the markets are 699 00:40:24,520 --> 00:40:26,520 Speaker 1: as well. What did you hear from Jett Yell this 700 00:40:26,640 --> 00:40:29,440 Speaker 1: week about the balance sheet? This multi billion dollar balance 701 00:40:29,480 --> 00:40:32,280 Speaker 1: sheet that FED has now she was pressured by certainly 702 00:40:32,320 --> 00:40:34,640 Speaker 1: senators on on Tuesday to talk about how she would 703 00:40:34,680 --> 00:40:37,120 Speaker 1: would draw that down. What's the what's the path forward 704 00:40:37,120 --> 00:40:40,920 Speaker 1: for the balance sheet? I think they've basically handled the 705 00:40:40,960 --> 00:40:43,520 Speaker 1: balance sheet issue in terms of the communications with the 706 00:40:43,600 --> 00:40:45,960 Speaker 1: Congress and the and the markets about the same as 707 00:40:45,960 --> 00:40:49,000 Speaker 1: they've handled the rate hikes. A commitment to have them, 708 00:40:49,120 --> 00:40:51,520 Speaker 1: a commitment for them to be done in a measured 709 00:40:51,560 --> 00:40:55,920 Speaker 1: fashion and no particulars on the timetable, a data dependent approach, 710 00:40:56,040 --> 00:40:58,879 Speaker 1: and I think that's probably appropriate. And I don't see 711 00:40:58,920 --> 00:41:01,080 Speaker 1: anything happening in the balance this year. I think it's 712 00:41:01,080 --> 00:41:05,359 Speaker 1: a two thousand eighteen issue at the earliest. You've you've 713 00:41:05,400 --> 00:41:07,840 Speaker 1: been watching for a while. I wonder how participatory this 714 00:41:08,239 --> 00:41:10,279 Speaker 1: Congress and this administration seems to We were talking about 715 00:41:10,320 --> 00:41:12,719 Speaker 1: tax or form and all of the three parties working 716 00:41:12,760 --> 00:41:15,640 Speaker 1: on it. Uh, is it possible to make your voice heard? Is? 717 00:41:15,680 --> 00:41:18,239 Speaker 1: Are are people able to participate in these processes of 718 00:41:18,480 --> 00:41:22,640 Speaker 1: writing tax from writing financial regulation reform, for instance. I 719 00:41:22,719 --> 00:41:25,880 Speaker 1: think the answer to that is yes. Um. The Congress 720 00:41:25,960 --> 00:41:30,600 Speaker 1: has a phenomenal agenda. I mean, it's the most ambitious 721 00:41:30,600 --> 00:41:33,400 Speaker 1: thing I've ever seen. You know, two budget resolutions funding 722 00:41:33,440 --> 00:41:37,120 Speaker 1: the government for fiscal seventeen and eighteen, tax reform, repealing, 723 00:41:37,200 --> 00:41:41,520 Speaker 1: replacing Obamacare, raising the defense cap, repealing all these regulations, 724 00:41:41,520 --> 00:41:46,240 Speaker 1: and doing regulatory reform, increasing defense spending, raising the death ceiling, 725 00:41:46,719 --> 00:41:50,000 Speaker 1: confirming the Supreme Court justice, confirming the nominees. That's, if 726 00:41:50,040 --> 00:41:52,760 Speaker 1: you think about it, that's an enormous amount. They can't 727 00:41:52,760 --> 00:41:55,439 Speaker 1: do that in a silo, so they begged for help, Doug, 728 00:41:55,480 --> 00:41:58,080 Speaker 1: I want to go able Bernankey on you the textbook 729 00:41:58,120 --> 00:42:02,640 Speaker 1: of Benjamin Nankee. David blanche Flower up at Dartmouth is 730 00:42:02,719 --> 00:42:06,480 Speaker 1: quite upset about the assumption by FED officials, including the 731 00:42:06,480 --> 00:42:10,680 Speaker 1: good Vice Chairman, that we're reaching full employment. David blanche 732 00:42:10,760 --> 00:42:12,800 Speaker 1: Vers says, just a lot of Americans out there that 733 00:42:12,800 --> 00:42:17,000 Speaker 1: wouldn't agree with that statement. Can of FED work within 734 00:42:17,040 --> 00:42:21,279 Speaker 1: a bimodal America of employed and not employed? Or do 735 00:42:21,360 --> 00:42:25,760 Speaker 1: they just have to discard the unemployed and just focus 736 00:42:25,800 --> 00:42:30,800 Speaker 1: on the tensions within a fully employed, technologically proficient America. 737 00:42:31,360 --> 00:42:33,960 Speaker 1: The FED has limited tools and as a result, I 738 00:42:34,000 --> 00:42:37,360 Speaker 1: think they are begging for the Congress and the administration 739 00:42:37,400 --> 00:42:40,320 Speaker 1: to come up with some policies to help the targeted 740 00:42:40,480 --> 00:42:43,120 Speaker 1: unemployed who have you know, primates, mails, who seem to 741 00:42:43,120 --> 00:42:46,319 Speaker 1: have left the labor force entirely. Um, those kinds of 742 00:42:47,000 --> 00:42:50,200 Speaker 1: really difficult issues. They can't reach that with entrey policy. 743 00:42:50,200 --> 00:42:52,680 Speaker 1: The setting interest rates doesn't help. I think the Fed's 744 00:42:52,680 --> 00:42:56,000 Speaker 1: gonna look at, more than anything else, what appeared to 745 00:42:56,000 --> 00:42:58,960 Speaker 1: be indicators of labor market slack or absence, and if 746 00:42:59,000 --> 00:43:02,480 Speaker 1: we start seeing rapid waging creases things like that, they're 747 00:43:02,480 --> 00:43:07,040 Speaker 1: they're clear. Even after the inflation pop of yesterday hasius 748 00:43:07,080 --> 00:43:10,040 Speaker 1: at golden SAX goes to a tilt towards a march 749 00:43:10,160 --> 00:43:12,920 Speaker 1: rate increase. I get the parlor game. But we're still 750 00:43:12,960 --> 00:43:17,480 Speaker 1: waiting to Mike right, we're still waiting to see wage growth. 751 00:43:18,360 --> 00:43:22,120 Speaker 1: That causes concerned to prose like you. Yeah, we don't 752 00:43:22,120 --> 00:43:26,000 Speaker 1: see anything, nothing, no, not yet. And the corollary to that, 753 00:43:26,080 --> 00:43:29,480 Speaker 1: and the deeper concern is we have very poor productivity growth. 754 00:43:29,480 --> 00:43:33,200 Speaker 1: And that's the issue. And I want to make this clear, folks, 755 00:43:33,200 --> 00:43:35,680 Speaker 1: it's so important. Is the cef Our speech of November. 756 00:43:35,920 --> 00:43:39,680 Speaker 1: He used the word halved. We've cut in half our 757 00:43:39,680 --> 00:43:43,240 Speaker 1: productivity growth. What's your quickly, what's your why on that? Doctor? 758 00:43:44,400 --> 00:43:46,439 Speaker 1: I don't think there's any single thing I think we've done, 759 00:43:46,640 --> 00:43:48,200 Speaker 1: you know, too much. On the regulatory front, we have 760 00:43:48,200 --> 00:43:51,120 Speaker 1: a bad tax code. You know, we've got big deficits 761 00:43:51,120 --> 00:43:53,880 Speaker 1: that are that are impinging the interest in people investing 762 00:43:53,880 --> 00:43:57,360 Speaker 1: in this economy. So we need to button things up. 763 00:43:59,600 --> 00:44:02,440 Speaker 1: Can use report and lb J like investment tax credit 764 00:44:02,920 --> 00:44:06,160 Speaker 1: that is directly used to create jobs, including money coming 765 00:44:06,200 --> 00:44:09,640 Speaker 1: back from abroad. I think a better approach is what 766 00:44:09,800 --> 00:44:12,080 Speaker 1: they've got in the in the House bill, which is 767 00:44:12,320 --> 00:44:15,880 Speaker 1: expensing of all a tangible and intangible investments. Fantastic, Almost 768 00:44:15,880 --> 00:44:19,040 Speaker 1: the same idea. It's almost the same idea. Not transitory. 769 00:44:19,480 --> 00:44:21,520 Speaker 1: Translating that from the whole secret means you take it 770 00:44:21,520 --> 00:44:24,520 Speaker 1: in the first year. Right, Yes, everything's up fun. Oh 771 00:44:24,760 --> 00:44:27,120 Speaker 1: never enough time, dougas Holtz, he can thank you so much. 772 00:44:27,600 --> 00:44:43,120 Speaker 1: Uh really quite helping with the American action for him. 773 00:44:43,120 --> 00:44:45,719 Speaker 1: Does Steven Rattter Joyces now chairman of Willard Advisor. He said, 774 00:44:45,719 --> 00:44:47,399 Speaker 1: great to see as always, Steve. I'm looking at your 775 00:44:47,920 --> 00:44:50,640 Speaker 1: Twitter page here at Steve Rattner and uh, I see 776 00:44:50,640 --> 00:44:53,280 Speaker 1: you tweeted here about Andy PUDs Or, the former nominee 777 00:44:53,280 --> 00:44:55,319 Speaker 1: to b a labory secretary, saying he may have been 778 00:44:55,320 --> 00:44:58,240 Speaker 1: the worst labory secretary, nominee of post minimum wage hikes, 779 00:44:58,480 --> 00:45:01,240 Speaker 1: overtime pay and paid sickly, favors, a c A repeal, 780 00:45:01,280 --> 00:45:04,359 Speaker 1: favorite machines over people. What was it that sank him 781 00:45:04,400 --> 00:45:07,080 Speaker 1: ultimately one of those many things or or something else 782 00:45:07,200 --> 00:45:10,280 Speaker 1: entirely Well, no, I think what actually sank him ultimately 783 00:45:10,400 --> 00:45:14,800 Speaker 1: was his personal issues of having an undocumented immigrant, for 784 00:45:14,880 --> 00:45:18,879 Speaker 1: which he didn't pay taxes for many years, as well 785 00:45:18,920 --> 00:45:21,440 Speaker 1: as some issues with a former wife and and just 786 00:45:21,480 --> 00:45:24,280 Speaker 1: a lot of personal stuff that Democrats have been trying 787 00:45:24,280 --> 00:45:28,080 Speaker 1: to get a scalp since this administration arrived, and and 788 00:45:28,120 --> 00:45:30,200 Speaker 1: they finally got one with a lot of help from 789 00:45:30,280 --> 00:45:33,600 Speaker 1: Mr Puzzer himself based on his own conduct. What does 790 00:45:33,640 --> 00:45:35,960 Speaker 1: this say to folks who have been in business, say, 791 00:45:36,600 --> 00:45:40,160 Speaker 1: who may be thinking about joining government. Uh, surely if 792 00:45:40,360 --> 00:45:43,520 Speaker 1: their circumstances may be different than Mr Pudgery's, But uh, 793 00:45:43,760 --> 00:45:45,400 Speaker 1: there's a lot of pain and problems that comes with 794 00:45:45,480 --> 00:45:48,680 Speaker 1: confirmation hearings that they might they might rather just avoid. Well, 795 00:45:48,719 --> 00:45:51,480 Speaker 1: that's true, but this pain was completely self inflicted, and 796 00:45:51,520 --> 00:45:53,839 Speaker 1: I don't think the average business person has this set 797 00:45:53,880 --> 00:45:56,840 Speaker 1: of issues. In fact, I would say in this administration 798 00:45:56,920 --> 00:46:01,279 Speaker 1: with the Republican Congress, they have waved through people with 799 00:46:01,719 --> 00:46:05,400 Speaker 1: financial situations that raised a lot more questions than in 800 00:46:05,480 --> 00:46:07,799 Speaker 1: previous administrations. And what I'm trying to say is, if 801 00:46:07,800 --> 00:46:09,719 Speaker 1: you're a business guy right now, it is a lot 802 00:46:09,719 --> 00:46:12,359 Speaker 1: easier to get confirmed than it was four years ago, 803 00:46:12,440 --> 00:46:15,399 Speaker 1: or eight years ago or twelve years ago. What's going 804 00:46:15,400 --> 00:46:18,000 Speaker 1: to let me get your perspective on on governance? We see, 805 00:46:18,440 --> 00:46:20,759 Speaker 1: we see the disarray looking at the new cover of 806 00:46:20,760 --> 00:46:22,880 Speaker 1: Time magazine. It is Donald Trump in the in the 807 00:46:22,920 --> 00:46:26,200 Speaker 1: middle of a hurricane, with the headline nothing to see here. 808 00:46:26,480 --> 00:46:29,520 Speaker 1: What's happening from a governance perspective with this administration? Well, 809 00:46:29,560 --> 00:46:31,000 Speaker 1: first of all, Donald Trump loves to be on the 810 00:46:31,000 --> 00:46:33,000 Speaker 1: cover of Time magazine, so even in the eye in 811 00:46:33,040 --> 00:46:37,040 Speaker 1: a hurricane, is probably happy. By all accounts, what's happening 812 00:46:37,239 --> 00:46:39,560 Speaker 1: is almost the worst of all worlds. You have a 813 00:46:39,600 --> 00:46:42,200 Speaker 1: president with no experience, who has hired a team with 814 00:46:42,239 --> 00:46:46,279 Speaker 1: no experience, with no defined organizational structure in the White House, 815 00:46:46,480 --> 00:46:49,279 Speaker 1: multiple people functioning effectively as a kind of a chief 816 00:46:49,320 --> 00:46:52,360 Speaker 1: of staff, and then they have their own little power centers, 817 00:46:52,800 --> 00:46:56,120 Speaker 1: and it is the most chaotic, the most disorganized, and 818 00:46:56,120 --> 00:46:59,080 Speaker 1: and I guess your earlier question, it doesn't really reflect 819 00:46:59,120 --> 00:47:00,920 Speaker 1: well that a business, a man who's supposed to be 820 00:47:00,920 --> 00:47:03,160 Speaker 1: able to run things can come in and be running 821 00:47:03,200 --> 00:47:07,080 Speaker 1: something as badly as I think, by anybody's estimation, he's 822 00:47:07,120 --> 00:47:11,319 Speaker 1: running it. Are you going to be the intelligence are? Well? 823 00:47:12,239 --> 00:47:14,560 Speaker 1: You know, I love Steve Finberg. I've worked with them 824 00:47:14,560 --> 00:47:16,880 Speaker 1: on Chrysler. He's a great guy, he's a great investor. 825 00:47:16,960 --> 00:47:20,520 Speaker 1: But if he's qualified to we organized the intelligence services, well, 826 00:47:20,560 --> 00:47:22,800 Speaker 1: I am too. I've actually spent more time in Washington 827 00:47:22,880 --> 00:47:26,600 Speaker 1: than Steve Finberg has, so it's it's another one of 828 00:47:26,640 --> 00:47:30,520 Speaker 1: these really, really odd appointments. He makes Steve Finberg Secretary 829 00:47:30,520 --> 00:47:32,680 Speaker 1: of Commerce in Secretary of the Treasure. You could kind 830 00:47:32,680 --> 00:47:36,040 Speaker 1: of understand that, but the intelligence services. You know, the 831 00:47:36,280 --> 00:47:38,960 Speaker 1: third David you heard this morning was me falling out 832 00:47:38,960 --> 00:47:43,360 Speaker 1: of the Grand Yan Hotel. What I've heard this, Steve, 833 00:47:43,400 --> 00:47:46,080 Speaker 1: you know, I'm gonna go back to Gideon Rose of 834 00:47:46,120 --> 00:47:48,920 Speaker 1: Foreign Affairs magazine lecture to sign a few days ago. 835 00:47:49,000 --> 00:47:51,920 Speaker 1: This is Tom Nichols, folks out of the Navy War College, 836 00:47:52,200 --> 00:47:54,239 Speaker 1: and Steve, it really goes to to what you've been 837 00:47:54,280 --> 00:47:56,920 Speaker 1: so good at over the years, the death of experts. 838 00:47:57,040 --> 00:48:01,320 Speaker 1: I mean, whatever anybody's politics, this is for the most 839 00:48:01,360 --> 00:48:07,240 Speaker 1: part in administration really struggling with finding experts like Douglas 840 00:48:07,280 --> 00:48:10,239 Speaker 1: Holtz Egan to help move forward. I mean, they're just 841 00:48:10,280 --> 00:48:11,960 Speaker 1: not doing that, are they. Well, when you say they're 842 00:48:11,960 --> 00:48:15,360 Speaker 1: struggling that they're not struggling, they're not even trying to 843 00:48:15,440 --> 00:48:17,879 Speaker 1: find experts. It's not like they aren't out there, They've 844 00:48:17,920 --> 00:48:20,600 Speaker 1: just chosen not to hire them. Look, I would say 845 00:48:20,600 --> 00:48:24,479 Speaker 1: that I do understand the best available athletes school of thought. 846 00:48:24,600 --> 00:48:26,520 Speaker 1: I think if you look at the British system where 847 00:48:26,520 --> 00:48:29,399 Speaker 1: they move ministers around from department to department, even where 848 00:48:29,400 --> 00:48:31,600 Speaker 1: they don't have experience, I think there's a lot to 849 00:48:31,680 --> 00:48:34,960 Speaker 1: be said for fresh ideas people who aren't embedded in 850 00:48:34,960 --> 00:48:36,920 Speaker 1: this system and so on, But you have to balance 851 00:48:36,960 --> 00:48:39,000 Speaker 1: that with people who do have experience. If they wanted 852 00:48:39,040 --> 00:48:41,560 Speaker 1: to bring in a couple of business guys next to 853 00:48:41,600 --> 00:48:44,319 Speaker 1: some people who actually had real Washington experience, I think 854 00:48:44,320 --> 00:48:47,200 Speaker 1: we'd all cheer. But they've just gone off the rails. 855 00:48:47,560 --> 00:48:49,839 Speaker 1: What's your sense that? Lastly, here of where things are 856 00:48:49,840 --> 00:48:52,040 Speaker 1: going with the Affordable Care Act? Mark Bertolini, the CEO 857 00:48:52,040 --> 00:48:55,200 Speaker 1: of EDNA, saying yesterday that we are in a death spiral. Uh. 858 00:48:55,280 --> 00:48:57,120 Speaker 1: Donald Trump picking up on that and tweeting out that 859 00:48:57,239 --> 00:49:00,399 Speaker 1: remarka Bloomberg story with that remark included in it. What's 860 00:49:00,400 --> 00:49:02,400 Speaker 1: gonna happen with that law? Who's gonna be defending this 861 00:49:02,480 --> 00:49:04,799 Speaker 1: law going forward? Well, first of all, Mark, I think 862 00:49:04,800 --> 00:49:07,799 Speaker 1: Berlini is correct that on present course and direction, we're 863 00:49:07,800 --> 00:49:10,560 Speaker 1: in the death spiral because the administration has stopped and 864 00:49:10,600 --> 00:49:13,600 Speaker 1: effects supporting it. They stopped the advertising. You've got the 865 00:49:13,640 --> 00:49:17,759 Speaker 1: exchanges starting to fail. You've got the problems of the 866 00:49:17,880 --> 00:49:19,440 Speaker 1: profile of the sign ups, so you've got all that, 867 00:49:19,960 --> 00:49:22,680 Speaker 1: and then on the replaced, repeal and replaced re people 868 00:49:22,680 --> 00:49:24,920 Speaker 1: and repair, whatever you want to call it side. The 869 00:49:24,960 --> 00:49:27,200 Speaker 1: problem is there's I I am not aware of a 870 00:49:27,280 --> 00:49:31,320 Speaker 1: single plan out there that would keep these twenty million 871 00:49:31,360 --> 00:49:35,560 Speaker 1: people insured and somehow meet some set of Republican objectives. 872 00:49:36,080 --> 00:49:39,879 Speaker 1: And therefore I am I think this thing could die 873 00:49:39,920 --> 00:49:42,839 Speaker 1: of its own of those two factors, in which would 874 00:49:42,840 --> 00:49:44,600 Speaker 1: be really bad for the country, of course, but it 875 00:49:44,600 --> 00:49:47,960 Speaker 1: would also be really bad for Trump politically. Not that 876 00:49:48,040 --> 00:49:50,640 Speaker 1: you're doing the macroeconomic well, we're gonna run out a time. 877 00:49:50,640 --> 00:49:53,120 Speaker 1: You're Steve gonna do the macro economic l a. But 878 00:49:53,200 --> 00:49:55,520 Speaker 1: we'll see. We'll get Steve Radner back in for to 879 00:49:55,520 --> 00:49:59,680 Speaker 1: talk about. Now all of these discussions actually impinge on 880 00:50:00,000 --> 00:50:02,960 Speaker 1: economic growth. That may be a topic for April or 881 00:50:03,080 --> 00:50:05,440 Speaker 1: May as well. Stephen Ratner thinks so so much with 882 00:50:05,480 --> 00:50:16,640 Speaker 1: will it Advisers. Thanks for listening to the Bloomberg Surveillance podcast. 883 00:50:17,000 --> 00:50:22,120 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 884 00:50:22,239 --> 00:50:26,320 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom 885 00:50:26,400 --> 00:50:30,319 Speaker 1: Keene David Gura is at David Gura. Before the podcast, 886 00:50:30,480 --> 00:50:46,680 Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio, brought 887 00:50:46,760 --> 00:50:50,400 Speaker 1: you by Bank of America. Mary Lynch. Dedicated to bringing 888 00:50:50,400 --> 00:50:54,120 Speaker 1: our clients insights and solutions to meet the challenges of 889 00:50:54,160 --> 00:50:59,120 Speaker 1: a transforming world. That's the power of global connections. Mary Lynch, Pierce, 890 00:50:59,239 --> 00:51:03,080 Speaker 1: Fenner and Smith Incorporated, Member s I p C