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Speaker 1: On this episode of News World, Gallup's Economic Confidence Index

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Speaker 1: registered negative thirty four in May, reflecting further deterioration and

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Speaker 1: how Americans assess the economy's current statement. And according to

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Speaker 1: the Pew Research Center, the number one issue in their

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Speaker 1: recent June Pole is inflation, with the cost of groceries

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Speaker 1: and gas a top concern for many Americans. In a

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Speaker 1: recent serve by bear Redfin, ninety one percent of eighteen

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Speaker 1: to twenty seven year olds also known as gen Z,

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Speaker 1: consider housing affordability a crucial factor in choosing the next president.

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Speaker 1: Only twenty six percent of gen Z owned homes because

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Speaker 1: housing prices have surged forty percent since the pandemic. And

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Speaker 1: in job News, the US labor market added two hundred

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Speaker 1: and seventy two thousand jobs in May, marking an acceleration

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Speaker 1: in the face of hiring. Here to talk about the

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Speaker 1: current state of the economy, I'm really pleased to welcome

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Speaker 1: my guest, doctor Vance again. He is the former chief

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Speaker 1: economist for the Office of Management Budget Omb, the founder

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Speaker 1: and president of Gain Economic Consulting, and the host of

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Speaker 1: Let People Prosper podcast. That's welcome and thank you for

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Speaker 1: joining me on this world.

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Speaker 2: Well speaker. It's really a pleasure to be with you today.

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Speaker 3: I've been a fan of your work and your podcast

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Speaker 3: now for many years, and so it's really a pleasure

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Speaker 3: to be with you today.

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Speaker 1: Thank you. Well, you know, it's an interesting time. Why

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Speaker 1: don't we start with because you're a professional and you

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Speaker 1: looked at this a good will, how do you assess

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Speaker 1: the current state of inflation in America?

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Speaker 3: Well, as you highlighted there, with some of the surveys

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Speaker 3: that are going on and just the economic data, I

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Speaker 3: think that we have high inflation, elevated inflation, and this

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Speaker 3: is a weak economy. You know, we see a lot

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Speaker 3: of the headlines show that this is a strong economy.

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Speaker 3: The Biden administration's coming out saying this is such a

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Speaker 3: strong economy, But when you ask normal people, Americans, everyday Americans,

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Speaker 3: that's not what they're showing. In fact, a recent poll

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Speaker 3: showed forty eight percent of Americans think we're in a recession.

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Speaker 3: And that's not indicative of declining consecutive quarters of real

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Speaker 3: GDP or anything like that, but it tells you where

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Speaker 3: people are at. And I think a lot of this

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Speaker 3: is driven by the inflation. The latest CPI inflation numbers

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Speaker 3: show three point three percent increase year over year if

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Speaker 3: you exclude food and energy, which of course we all buy,

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Speaker 3: but they're more volatile, so they all like to exclude it.

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Speaker 3: In the core CPI that was up three point four percent,

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Speaker 3: so those have moderated, you know, speaker, but from nine

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Speaker 3: percent a.

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Speaker 2: Couple of years ago.

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Speaker 3: But it's still up three and a half percent, which

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Speaker 3: is well above the two percent target that the Federal

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Speaker 3: Reserve would like for it to have. And whenever inflation

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Speaker 3: has been soaring over the last couple of years, people's wages,

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Speaker 3: their earnings just haven't been able to keep up. In fact,

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Speaker 3: average weekly earnings are down adjusted for inflation, by four

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Speaker 3: percent since January of twenty twenty one, when Biden took office.

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Speaker 3: So that is the real reason why I think some

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Speaker 3: of people fill underwater, is because they just can't keep

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Speaker 3: up with its high inflation from the excessive government spending

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Speaker 3: by Congress, the overregulation by Biden, and too much money.

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Speaker 2: Printing by the FAD. This is just a bad scenario.

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Speaker 1: It reminds me of Jimmy Carter, who actually had worst inflation,

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Speaker 1: and at one point the joke was that I didn't

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Speaker 1: realize that by the time I became a millionaire that

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Speaker 1: would buy one big Mac. People say to me, they're

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Speaker 1: working hard, but they're not getting ahead. A friend of

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Speaker 1: mine said that they knew a couple with four children,

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Speaker 1: both parents work, and they recently had shifted from Jiffy

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Speaker 1: peanut butter to the store labeled peanut butter because it

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Speaker 1: just couldn't afford the name brands anymore. To have noticed

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Speaker 1: when we go shopping the number of places, particularly say Cereal,

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Speaker 1: where you either now get a smaller box for the

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Speaker 1: same price or the original box at a lot higher price.

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Speaker 1: But you just see the impact. And I've been telling

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Speaker 1: people that the great challenge for Biden is that every

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Speaker 1: time people go to the grocery store, it undoes aholl

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Speaker 1: of his advertising. Yeah, it's the real world. One of

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Speaker 1: the things which is emerging which I think is interesting

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Speaker 1: is a strain in the housing market and a transition

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Speaker 1: towards a lot more apartment dwelling. What's your take on that.

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Speaker 2: It's quite fascinating.

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Speaker 3: I think it goes to this housing affordability issue that

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Speaker 3: we're talking about here with inflation and higher interest rates.

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Speaker 3: And one thing I didn't want to mention about going

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Speaker 3: back to Jimmy Carter, is that Larry Summers more progressive,

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Speaker 3: but you know, he's been more saying from the left

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Speaker 3: than a lot of other economists.

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Speaker 2: That are out there recently.

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Speaker 3: He did some numbers recently that said, if you include

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Speaker 3: interest rates in the inflationary picture, we should, and we

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Speaker 3: used to back in the seventies and eighties, the inflation

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Speaker 3: rate would be closer to ten or eleven percent. Because

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Speaker 3: interest rates have soared so fast over the last few years,

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Speaker 3: so we're not getting a good picture of what's going

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Speaker 3: with inflation, and that's hurting the housing market.

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Speaker 2: You know, people can't keep up with inflation. But also in.

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Speaker 3: Interest rates went from three percent where I locked in

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Speaker 3: a couple of years ago, actually two point eight percent,

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Speaker 3: and now you're having to get a mortgage rate for

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Speaker 3: seven percent, speaker, I may not be able to.

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Speaker 2: Afford my house today given how much.

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Speaker 1: I have to pay, and you start telling them at

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Speaker 1: a seven percent rate on a thirty year mortgage, that

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Speaker 1: really adds up to a remarkable difference in your total payments.

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Speaker 3: Exactly, your monthly payments would essentially double from what you're

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Speaker 3: paying today, and so that's pushing people a lot more

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Speaker 3: into the rental market when they can't afford those higher

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Speaker 3: price homes, higher interest rate, and the inflation that's all

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Speaker 3: around them, and so that's pushing them more into the

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Speaker 3: rental market.

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Speaker 1: It's in that some of the regulations have also raised

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Speaker 1: the cost of everything. In fact, trucking are things that

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Speaker 1: affect producing lumber, lot of in which government has made

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Speaker 1: housing a more difficult market.

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Speaker 3: That's also a lot of local regulations a lot sizes.

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Speaker 3: They'll limit a lot size and they'll make it pretty high,

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Speaker 3: and then that reduces the amount of housing that can

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Speaker 3: go on, how much you can build up. For example,

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Speaker 3: I live in Round Rock, Texas, which is just north

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Speaker 3: of Austin, Texas, and there's a lot of sprawl that's

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Speaker 3: going on, and people are leaving Austin because it's so expensive.

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Speaker 3: Plus a lot of progressive we call it the People's

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Speaker 3: Republic of Austin, but it's very expensive in Austin and

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Speaker 3: a lot of that has to do with local zoning regulations.

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Speaker 3: And so that's also contributing to higher prices that we've

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Speaker 3: got to do something about as well.

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Speaker 1: And we had experience in nineteen ninety six. I'd been

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Speaker 1: doing a lot of work with Habitat for Humanity, and

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Speaker 1: when the Republican Convention was in San Diego, we thought, well,

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Speaker 1: why don't we build a house for a poor family

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Speaker 1: and bring the Habitat tradition. The fees to be allowed

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Speaker 1: to build a house, we're larger than the total cost

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Speaker 1: of that house in Georgia. It was a startling example

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Speaker 1: of how local regulations and local fees can create housing

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Speaker 1: crises without regard to the FEDS. The other area that

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Speaker 1: I spent a lot of time on is healthcare, and

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Speaker 1: it seems like there's almost an endless engine of raising

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Speaker 1: costs in the health area. Partly, the baby boomers are

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Speaker 1: getting older, they're using more medical things. Partly we have

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Speaker 1: a problem of obesity that's almost entirely self induced. But

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Speaker 1: the net effect is health costs keep going up and

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Speaker 1: it's already almost a fifth of the economy. What is

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Speaker 1: your take on what has to be done to get

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Speaker 1: to a more affordable and more effective health system.

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Speaker 3: There's a lot of moving parts of this, as you

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Speaker 3: just mentioned, on the demand side and the supply side.

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Speaker 3: And I'm an economist, so I love talking about supply

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Speaker 3: and demand. But whenever you have for the restraints on

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Speaker 3: the supply side with doctors and nurse practitioners, and there's

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Speaker 3: a lot of occupacial licensing that goes on that restricts

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Speaker 3: the number of them. And you also have the rest

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Speaker 3: frictions on the number of new hospitals that can be

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Speaker 3: built from zoning some of the things we just mentioned.

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Speaker 3: And then on the demand side, you have all these subsidies,

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Speaker 3: whether it be Medicare, Medicaid. There's local programs as well,

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Speaker 3: and some of those may need to exist for a

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Speaker 3: certain group of the population. But I just think it's

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Speaker 3: overly saturated with subsidies and so therefore you don't have

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Speaker 3: a well functioning market system.

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Speaker 2: We don't have market prices. We have government set prices.

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Speaker 3: We have reimbursement rates that are determined well before we

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Speaker 3: go to the doctor of how much those amounts are.

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Speaker 3: For example, you might pay your copay of twenty dollars,

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Speaker 3: but the fee on the backside may have been one thousand.

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Speaker 2: Dollars that we don't see. And so that doesn't allow

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Speaker 2: us to.

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Speaker 3: Efficiently allocate the resources in economic terms, but be able

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Speaker 3: to go where it's going to be the best quality

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Speaker 3: at the cheapest price. In the healthcare sector, and I

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Speaker 3: think we need to get back to patients paying directly

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Speaker 3: the doctor so we can have a better connection there.

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Speaker 3: There's a lot of this going on with direct primary

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Speaker 3: care across much of the country, which I think is

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Speaker 3: a good step in the right direction for a better

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Speaker 3: market system. The healthcare system is not just going to

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Speaker 3: go away, because as you mentioned, baby boomers are retiring,

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Speaker 3: they're getting older, They're going to have more doctor visits

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Speaker 3: and everything else. And at the same time, we have

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Speaker 3: a fewer number of people that are being born. The

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Speaker 3: fertility rate is not as high as what it once was,

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Speaker 3: and so we have fewer people paying into the system,

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Speaker 3: and that's also contributing to problems for Medicare and Social

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Speaker 3: Security and even Medicaid.

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Speaker 2: You know.

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Speaker 3: I think going back to some key reforms as you

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Speaker 3: were part of in nineteen ninety six, and thinking about

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Speaker 3: what happened with the states, with Utah some other states

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Speaker 3: that are really showing a lot of reforms across this

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Speaker 3: And I'm a big fan as you are at federalism.

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Speaker 3: I work with a lot of stakes across the country.

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Speaker 3: I think going back to block grants and getting off

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Speaker 3: of the federal dependency and have fewer ties and red

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Speaker 3: tape will be so important to bring down the cost

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Speaker 3: of healthcare and the cost of taxpayers across the country.

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Speaker 1: I would say two things. One, the more we can

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Speaker 1: allow the states to innovate with things like Medicaid, the

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Speaker 1: better health outcomes and the better cost outcomes. And two,

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Speaker 1: one of the biggest things we did in addition to

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Speaker 1: balancing the budget for four straight years is we created

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Speaker 1: Medicare advantage, which has turned out to be wildly popular.

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Speaker 1: We actually passed a major Medicare reform during the nineteen

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Speaker 1: ninety six presidential campaign, and we did it so carefully

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Speaker 1: that AARP sided with us against the Clemton White House.

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Speaker 1: Because Medicare advantage gave better care at lower cost, it

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Speaker 1: was one of the keys to being able to move

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Speaker 1: towards a balance budget. But Leney jumped to the big

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Speaker 1: issue when I was younger, and you thought inflation. Then

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Speaker 1: you looked at the federal reserve. And this federal reserve,

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Speaker 1: I think has had a whole bunch of problems. They

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Speaker 1: inherited first from Trump and then compounded dramatically by Biden.

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Speaker 1: A huge amount of spending, which was in part designed

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Speaker 1: to offset the cost of the COVID pandemic. It seems

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Speaker 1: to me that the demand side model, which says we're

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Speaker 1: going to slow down the economy to a point where

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Speaker 1: by reducing demand for goods and services, we will shrink

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Speaker 1: the inflation rate just because it will be fewer people

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Speaker 1: doing fewer things, and they won't keep the pressure on

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Speaker 1: the problem with that demand side approach is if you're

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Speaker 1: the Federal Reserve, it essentially by raising interest rates is

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Speaker 1: aimed at business and individuals. But if the government is

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Speaker 1: increasing spending by a trillion dollars or more a year,

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Speaker 1: then the government's providing all the liquidity that the Fed's

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Speaker 1: trying to take out, and you actually increase the bias

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Speaker 1: towards government and against the private sector by that kind

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Speaker 1: of a model. I mean, am I missing something here?

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Speaker 2: No, I don't think you're missing something.

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Speaker 3: I think the way that I like to explain it,

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Speaker 3: I love to get your thoughts on this maybe is

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Speaker 3: Congress overspends. They run these massive deficits. We're running trillion

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Speaker 3: plus deficits now. Net interest on the debt is a

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Speaker 3: trillion dollars, which is more than we're spending on national

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Speaker 3: defense of about eight hundred and sixty billion.

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Speaker 2: You know, speaker back whenever.

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Speaker 3: I was the chief economist Forrow and B and worked

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Speaker 3: at the russ Vote and others there at OMB and

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Speaker 3: the President's last budget, President Trump's last budget, we found

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Speaker 3: four point six trillion dollars in savings over a decade

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Speaker 3: by just.

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Speaker 2: Small tweaks here and there.

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Speaker 3: Because of the massive budget as you know that we

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Speaker 3: have the federal level. And of course then COVID hit

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Speaker 3: and all that got thrown out the window. But there

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Speaker 3: was a push to really start to restrain government spending.

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Speaker 3: I'm hopeful that that will be the case if there

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Speaker 3: is or when there is a second Trump term, that

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Speaker 3: spending will be an issue. That's my big thing is

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Speaker 3: sustainable budgeting. We haven't had that for a long time.

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Speaker 3: And so this contributes to increases in deficits and debt,

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Speaker 3: which the Fed then uses as ammunition to increase their

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Speaker 3: balance sheet. They buy treasure securities off of the private market.

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Speaker 3: That increases their balance sheet, puts more money into the economy,

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Speaker 3: and now you have a situation of too much money

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Speaker 3: chasing too few goods, the classic definition of inflation. And

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Speaker 3: so to me, it's not that Congress creates inflation, it's

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Speaker 3: the Fed. But Congress gives the Fed the ammunition to

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Speaker 3: create that inflation by printing more money and putting into

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Speaker 3: the economy at the same time. Because that other part

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Speaker 3: of that saying too much money chasing too few goods,

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Speaker 3: too few goods, is contributed to by the excess government spending,

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Speaker 3: the handouts that were given to where people didn't want

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Speaker 3: to work, so labor supply decrease. We're down now to

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Speaker 3: sixty two point five percent in the labor force participation rate,

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Speaker 3: which is contributing to more inflationary pressure out there. And

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Speaker 3: then Biden coming in and overregulating the economy. You know,

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Speaker 3: at this point through Trump's term there was actually a

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Speaker 3: cut and the final cost of rules under regulations under Biden,

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Speaker 3: we're looking at about one point six trillion dollars and

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Speaker 3: increases a debt according to the American Action Forum of

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Speaker 3: Douglass wholes Econ over there.

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Speaker 2: And this is a massive cost that is.

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Speaker 3: Not reflective of the taxes that have been increased, but

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Speaker 3: they're essentially taxes that are restraining the supply at the

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Speaker 3: same time demand and the money supply is increasing, and

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Speaker 3: that's why we've had persistent inflation. I was not one

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Speaker 3: of those who said this was going to be transitory inflation.

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Speaker 3: I really saw this early on that there was too

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Speaker 3: much spending in twenty twenty and we had lockdowns, and

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Speaker 3: then that was put on steroids by Biden and the FED.

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Speaker 3: And I think the FED is well behind the curve.

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Speaker 3: Their balance sheet speaker is still seven point two trillion

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Speaker 3: dollars when it was four trillion before the pandemic. So

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Speaker 3: it's coming down from the nine trillion it was before.

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Speaker 3: And this is a Fed's balance sheet, but it's still

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Speaker 3: way too high. And so I think that we're going

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Speaker 3: to see more inflation, especially whenever the Fed's going to

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Speaker 3: have a tough time cutting interest rates, whenever Congress is

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Speaker 3: running such massive deficits.

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Speaker 1: The Fed, in that sense, is in a tremendous box.

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Speaker 1: This is exactly what happened all through the sixty and seventies,

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Speaker 1: is the Fed would raise interest rates, the economy would

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Speaker 1: go into a recession, the FED would lower interest rates

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Speaker 1: to get the economy growing again. Then you'd have inflation.

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Speaker 1: So the FED would raise interest rates and it was

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Speaker 1: a mess. But at the same time, I have been

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Speaker 1: surprised at the continuing ability of the economy to grow

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Speaker 1: and to have employment. You would have thought with the

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Speaker 1: effort of the FED that you'd have had a much

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Speaker 1: bigger drop in employment. And I don't know how much

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Speaker 1: of that's been because federal spending has offset the impact

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Speaker 1: of interest rates. When you look at the main job

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Speaker 1: report and you look what's happening in the economy, how

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Speaker 1: do you interpret it?

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Speaker 3: You know, you look at some of the headlines, they

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Speaker 3: look good. Two hundred and seventy two thousand jobs were added.

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Speaker 3: Two undred thirty thousand jobs were in the private sector,

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Speaker 3: which means about forty thousand jobs were at in the

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Speaker 3: government sector. And that's one thing that's been concerning to me,

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Speaker 3: and you highlighted this in the opening remarks, that government

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Speaker 3: jobs have increased by nearly three percent year over year,

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Speaker 3: whereas private sector jobs are up only one point six percent.

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Speaker 3: I want to let people prosper, so I want people

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Speaker 3: to have jobs. But we got to remember that the

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Speaker 3: government doesn't have any money. Every one of those jobs

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Speaker 3: has to be paid for by someone in the private sector.

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Speaker 3: So if government employment is growing twice as fast as

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Speaker 3: the private sector employment, we've got a problem, even more

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Speaker 3: so than we had before, because that's less money that's

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Speaker 3: going to productive activity throughout the economy. You look at

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Speaker 3: the unplumber rate, it shows four percent, well four percent

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Speaker 3: has increased from three point four percent just a few

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Speaker 3: months ago, and that's sort of an increase one point

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Speaker 3: six percentage points. The research shows that when you have

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Speaker 3: a half percentage point increase in the unplumber rate, you're

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Speaker 3: typically at a recession. The unplumber rate in the labor

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Speaker 3: market is always a lagging indicator of what's happening in

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Speaker 3: the overall economy. And when you look at the household employment,

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Speaker 3: So there's two surveys, right the Establishment survey that's done

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Speaker 3: for non farm employment. That's the one that shows two

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Speaker 3: hundred and seventy two thousand jobs, and there were revised

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Speaker 3: downwards of fifteen thousand, which we've seen that a lot

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Speaker 3: over the last couple of years. But there was revised

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Speaker 3: down for the last two months by fifteen thousand. But

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Speaker 3: if you look at the household survey that's done by households,

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Speaker 3: that one is only increased by three hundred thousand jobs

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Speaker 3: over the last year compared to the two point three

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Speaker 3: million jobs reported by the Establishment survey. And we've seen

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Speaker 3: this divergence now for two years and I think what's

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Speaker 3: going on here is that we have jobs that are

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Speaker 3: being added and reported by establishments meaning firms and the

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Speaker 3: nonfarm Job report, But when you look at the household employment,

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Speaker 3: people just say they have one job, it's because they're

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Speaker 3: working multiple jobs to keep up with the inflation.

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Speaker 2: Part Time employment is up about six hundred thousand.

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Speaker 3: Full time employment is down two hundred thousand over the

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Speaker 3: last year, so we have fewer full time people working.

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Speaker 2: So this is not indicative of.

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Speaker 3: A vibrant or a strong labor market, even though some

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Speaker 3: of these numbers on the top line look good. And

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Speaker 3: the other key thing that I look at here, speaker,

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Speaker 3: is the average weekly earnings or average out of the earnings.

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Speaker 3: You adjust those for inflation, and average weekly earnings are

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Speaker 3: down three point nine percent since January of twenty twenty one.

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Speaker 3: They've been coming up here a little bit more recently,

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Speaker 3: but they're still down and this is a compounding effect

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Speaker 3: that's really hurting Americans across the country.

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Speaker 2: So, yes, I see some streets on.

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Speaker 3: The top, but if you dig underneath the hood, there's

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Speaker 3: still a lot of weakness going on in the labor market.

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Speaker 1: When you read or watch sexually the Treasury yelling, do

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Speaker 1: you think she's in touch with the real world. No,

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Speaker 1: it's weird to watch her. It's kind of hard to

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Speaker 1: believe that she's been as important as she has been

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Speaker 1: and had some positions which are quite impressive. But maybe

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Speaker 1: she's a little bit like Biden and she's missing a

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Speaker 1: step or something. I don't know.

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Speaker 3: Yeah, maybe so Janta Yellen's got to talk things up.

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Speaker 3: I mean, they're going into an election year, or we're

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Speaker 3: an election year, the election's coming up quickly. They've got

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Speaker 3: to talk up this economy anyway they can, because the

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Speaker 3: polls are not showing what I think they want them to,

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Speaker 3: or of course they want them to write. They want

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Speaker 3: these polls to show much more improvement from people's perception

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Speaker 3: of this economy, and they're just not getting it.

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Speaker 2: They're throwing all this money.

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Speaker 3: They're all this industrial policy, all the green energy agenda.

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Speaker 3: I mean, they're crowding out the private market with all

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Speaker 3: this nonsense, and it's creating economic strife for millions of

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Speaker 3: people across the country. And this is another reason why

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Speaker 3: I just don't think that industrial policy works, especially the

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Speaker 3: way they're going at it. I would rather see us

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Speaker 3: be cutting taxes, cutting government spending, cutting regulation. To me,

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Speaker 3: that's industrial policy because you're unleashing the economic potential of

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Speaker 3: the entrepreneur throughout the economy instead of trying to put

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Speaker 3: your thumb being government putting the thumb on the scale

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Speaker 3: of which direction we should go green energy is a farce.

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Speaker 3: I wanted all of the above approach for green energy.

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Speaker 3: Don't get me wrong. I think we need a lot

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Speaker 3: more nuclear to be honest with you, but we don't

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Speaker 3: need government picking winners and losers throughout the marketplace because

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Speaker 3: we're going to see bad outcomes, just like we do

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Speaker 3: in China and Russia.

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Speaker 1: I think the election results in Europe last weektion of

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Speaker 1: people repudiating very very expensive fantasies that were propagated by

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Speaker 1: the Greens who suffered real losses in the election. You've

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Speaker 1: made a significant case about reforming the Federal Deposit Insurance Corporation.

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Speaker 1: What drew you into this and why do you think

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Speaker 1: it's necessary to reform FDIC.

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Speaker 3: Yeah, it's something that's drove more of my attension here

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Speaker 3: for a while, and a lot of it actually grew

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Speaker 3: during the Biden administration because of all the woke nonsense

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Speaker 3: that they've got going on at these institutions, whether it

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Speaker 3: be the FDIC or FOMC, at the FED. You know,

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Speaker 3: they're looking at all these different things. They're using a

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Speaker 3: lot of ESG kind of nonsense to go into investing

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Speaker 3: and forcing businesses to have some sort of ESG investment

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Speaker 3: strategy when those returns on those investments have not been

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Speaker 3: the same as even the S and P five hundreds

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Speaker 3: to general broad market indices. And so they're pushing more

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Speaker 3: of this throughout the economy through their financial regulations, particularly

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Speaker 3: at the FDIC another place, and the chair Martin Gruenberg

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Speaker 3: recently they found a toxic culture, sexual misconduct going on there,

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Speaker 3: a lot of other things that are happening at the

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Speaker 3: FDIC that I think are reflective of not only their

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Speaker 3: toxic culture which they need to clean house, but the

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Speaker 3: over financial regulations across the economy. And so going back

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Speaker 3: to housing earlier, it's difficult for a lot of people

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Speaker 3: nowadays with low income, low credit scores to get access

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Speaker 3: to credit because of these bad government policies by the

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Speaker 3: FDIC and others, and so whenever you're thinking about the

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Speaker 3: elver regulation of the economy, a lot of this is

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Speaker 3: in the financial sector, which of course trickles down, if

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Speaker 3: you will, throughout the rest of the economy and makes

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Speaker 3: it very costly for us to continue to have investment

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Speaker 3: savings grow the economy as a whole. And so I

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Speaker 3: really think we need some key reforms that starts to

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Speaker 3: rain back the regulations that are done by the FDIC

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Speaker 3: and these other alphabet soup of financial regulators, and also

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Speaker 3: clean house of this ESG nonsense and the toxic culture

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Speaker 3: that's going on.

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Speaker 1: I was with President Trump when he spoke with the

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Speaker 1: Business Roundtable at about seventy five of the leading CEOs

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Speaker 1: in the country representing corporations that are billions and billions

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Speaker 1: of dollars in assets. They seemed to feel that regulations

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Speaker 1: were actually a bigger threat than taxes, that the regulatory

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Speaker 1: state crippled them more, made it harder to do business,

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Speaker 1: made it harder to adapt, and that they really were

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Speaker 1: very responsive to what Trump had tried to do in

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Speaker 1: rolling back regulations, and they really were looking for that

438
00:22:37,200 --> 00:22:39,840
Speaker 1: kind of commitment for twenty twenty five. I just found

439
00:22:39,840 --> 00:22:43,080
Speaker 1: it fascinating. I think it may require us to do

440
00:22:43,119 --> 00:22:47,480
Speaker 1: a combined analysis of taxes and regulations rather than do

441
00:22:47,520 --> 00:22:48,960
Speaker 1: either one in isolation.

442
00:22:49,560 --> 00:22:52,040
Speaker 3: Some people say that the Tax Cuts of Jobs Act

443
00:22:52,160 --> 00:22:55,119
Speaker 3: didn't pay for itself, and there's some discussion about that

444
00:22:55,240 --> 00:22:58,520
Speaker 3: going on. But whenever I was at OMB chief economist there,

445
00:22:58,560 --> 00:23:00,960
Speaker 3: I had ten TPPHD economy that we had these macro

446
00:23:01,000 --> 00:23:03,280
Speaker 3: models and everything that we would do, and we were

447
00:23:03,280 --> 00:23:05,600
Speaker 3: looking into that. What's happened over the first couple of

448
00:23:05,680 --> 00:23:07,560
Speaker 3: years because I was there from June twenty nineteen to

449
00:23:07,560 --> 00:23:09,440
Speaker 3: May of twenty twenty where I needed to go back

450
00:23:09,440 --> 00:23:12,040
Speaker 3: to my family during COVID and some health issues with

451
00:23:12,080 --> 00:23:13,600
Speaker 3: some of my family members and everything.

452
00:23:13,800 --> 00:23:15,600
Speaker 2: But whatever, we looked at this analysis.

453
00:23:15,920 --> 00:23:18,120
Speaker 3: Do you know, the tax cuts, You'll have some reduction

454
00:23:18,320 --> 00:23:21,520
Speaker 3: temporarily in the tax revenue. You're cutting taxes, okay, but

455
00:23:21,600 --> 00:23:24,840
Speaker 3: it incentivizes more economic activity, and so that brought in

456
00:23:24,880 --> 00:23:29,680
Speaker 3: more revenue over time. But the deregulation, the combination of those,

457
00:23:29,720 --> 00:23:32,360
Speaker 3: which you just rightly pointed out, also brought in more

458
00:23:32,359 --> 00:23:35,240
Speaker 3: revenue because you had more economic growth. And so we

459
00:23:35,320 --> 00:23:37,880
Speaker 3: showed that within the first two years the tax cuts

460
00:23:37,880 --> 00:23:40,680
Speaker 3: and jobs that cut had paid for itself.

461
00:23:40,280 --> 00:23:40,800
Speaker 2: If you will.

462
00:23:41,000 --> 00:23:45,720
Speaker 3: From the Trump administration's policies of tax cuts and deregulation

463
00:23:46,200 --> 00:23:48,359
Speaker 3: that really brought in more growth and we're continuing to

464
00:23:48,359 --> 00:23:51,560
Speaker 3: see record revenues. Today, we have a revenue problem. We

465
00:23:51,600 --> 00:23:53,960
Speaker 3: have a spending problem, and just like then and just

466
00:23:54,040 --> 00:23:56,560
Speaker 3: like today. So I think you're exactly right. We've got

467
00:23:56,560 --> 00:23:59,200
Speaker 3: to look at the deregulation side. And one thing too

468
00:23:59,200 --> 00:24:02,040
Speaker 3: that we Misspeaker in our analysis that I started bringing

469
00:24:02,080 --> 00:24:05,760
Speaker 3: forth at OMB was whenever you cut taxes and cut regulations,

470
00:24:06,119 --> 00:24:07,879
Speaker 3: you also reduce the number of people who are on

471
00:24:07,960 --> 00:24:11,719
Speaker 3: government programs, so it also reduces spending. We don't need

472
00:24:11,760 --> 00:24:13,600
Speaker 3: to continue to increase spinning. The only reason why we

473
00:24:13,680 --> 00:24:16,399
Speaker 3: ran deficits was because Congress couldn't con control spending, and

474
00:24:16,440 --> 00:24:17,600
Speaker 3: Trump could have done a better job.

475
00:24:17,640 --> 00:24:18,920
Speaker 2: I get some of that too, but.

476
00:24:18,920 --> 00:24:21,680
Speaker 3: It was overspending that happened because when you start having

477
00:24:21,680 --> 00:24:23,679
Speaker 3: more economic growth, you don't have as many people on

478
00:24:23,720 --> 00:24:26,680
Speaker 3: all these government programs, which you saw during the nineties.

479
00:24:27,200 --> 00:24:28,479
Speaker 3: That was the way that we were able to raig

480
00:24:28,520 --> 00:24:30,760
Speaker 3: in government spending then. So we could do this again

481
00:24:31,080 --> 00:24:33,960
Speaker 3: by having a holistic approach. And I think he also

482
00:24:34,040 --> 00:24:36,160
Speaker 3: was right to talk he being President Trump, to talk

483
00:24:36,160 --> 00:24:39,080
Speaker 3: about cutting the corporate income tax to fifteen percent. That

484
00:24:39,200 --> 00:24:41,760
Speaker 3: was initially what the Trump administration wanted to do. But

485
00:24:41,800 --> 00:24:43,240
Speaker 3: in order to get the votes, it went up to

486
00:24:43,240 --> 00:24:45,919
Speaker 3: twenty one percent. I think that's another big approach. My

487
00:24:46,040 --> 00:24:49,520
Speaker 3: ideal corporate tax rate is zero because businesses don't pay taxes.

488
00:24:49,560 --> 00:24:52,280
Speaker 3: We do the form of higher prices, lower wages, lower

489
00:24:52,560 --> 00:24:55,479
Speaker 3: shareholder value, and things of that nature. So cutting that

490
00:24:55,520 --> 00:24:57,480
Speaker 3: more and more will allow us to be more competitive

491
00:24:57,760 --> 00:24:59,880
Speaker 3: with many other countries across the globe.

492
00:25:00,240 --> 00:25:03,960
Speaker 1: How do you think the state of the economy will

493
00:25:04,080 --> 00:25:06,240
Speaker 1: factor into the election.

494
00:25:06,800 --> 00:25:07,960
Speaker 2: I think it's the number one thing.

495
00:25:08,440 --> 00:25:10,600
Speaker 3: No matter how much that the Biden administration will try

496
00:25:10,680 --> 00:25:13,160
Speaker 3: to downplay it and bring up how it's the best

497
00:25:13,200 --> 00:25:15,399
Speaker 3: economy in the world or whatever they want to say,

498
00:25:15,720 --> 00:25:17,679
Speaker 3: it's going to play on the minds of voters, and

499
00:25:17,760 --> 00:25:19,920
Speaker 3: it already is. It's the number one thing on their mind.

500
00:25:20,400 --> 00:25:23,480
Speaker 3: I think also next year, twenty twenty five is also

501
00:25:23,520 --> 00:25:25,720
Speaker 3: a very big year in the sense of a fiscal

502
00:25:25,720 --> 00:25:27,520
Speaker 3: cliffs that are coming up. We have a lot of

503
00:25:27,560 --> 00:25:30,720
Speaker 3: the Trump tax cuts, the individual marginal tax rates are

504
00:25:30,760 --> 00:25:31,720
Speaker 3: set to expire.

505
00:25:31,840 --> 00:25:33,800
Speaker 2: Those cuts are set to expire, so they're all.

506
00:25:33,640 --> 00:25:36,640
Speaker 3: Going to go up, which also goes against his statement

507
00:25:36,760 --> 00:25:39,920
Speaker 3: of not allowing for tax hikes to come on those

508
00:25:39,960 --> 00:25:41,320
Speaker 3: earning less than four hundred thousand.

509
00:25:41,359 --> 00:25:42,480
Speaker 2: It reminds me of George H. W.

510
00:25:42,640 --> 00:25:45,720
Speaker 3: Bush read my lips no new taxes, is that he

511
00:25:46,040 --> 00:25:49,120
Speaker 3: is raising taxes on those people. This is a big

512
00:25:49,160 --> 00:25:51,119
Speaker 3: issue that I think Trump is going to be rightly

513
00:25:51,240 --> 00:25:53,040
Speaker 3: on board with and say, look, we've got to extend

514
00:25:53,040 --> 00:25:55,600
Speaker 3: these Trump tax cuts yesterday. We need some reforms here

515
00:25:55,640 --> 00:25:58,080
Speaker 3: and there on certain things, but they can't expire or

516
00:25:58,119 --> 00:26:00,840
Speaker 3: we're going to have even worse economic situation. And so

517
00:26:00,920 --> 00:26:02,720
Speaker 3: I think that maybe is part of this discussion about

518
00:26:02,760 --> 00:26:04,560
Speaker 3: what do you do with tips and everything else, and

519
00:26:05,000 --> 00:26:11,560
Speaker 3: just the progressive philosophy of regulating the economy, taxing the economy,

520
00:26:11,640 --> 00:26:15,080
Speaker 3: redistribution is failing right now, not only in America but

521
00:26:15,119 --> 00:26:17,760
Speaker 3: across the globe like it always does. But we're seeing

522
00:26:17,760 --> 00:26:20,520
Speaker 3: this on steroids right now, and we need a different

523
00:26:20,600 --> 00:26:25,119
Speaker 3: approach that starts to tout free market capitalism and getting

524
00:26:25,160 --> 00:26:27,520
Speaker 3: back to how that is the best path of prosperity.

525
00:26:27,560 --> 00:26:29,679
Speaker 3: It oftentimes gets a bad rap. People wants to talk

526
00:26:29,680 --> 00:26:32,159
Speaker 3: about income and equality and everything. But for me and

527
00:26:32,240 --> 00:26:35,000
Speaker 3: my research is that the things that cause income inequality

528
00:26:35,040 --> 00:26:38,200
Speaker 3: are more government because it holds down those at the

529
00:26:38,240 --> 00:26:42,840
Speaker 3: bottom through higher minimum wages, occupacial licenses, higher taxes, and

530
00:26:42,920 --> 00:26:46,199
Speaker 3: it forces more money at the top through increases in

531
00:26:46,240 --> 00:26:46,959
Speaker 3: the money supply.

532
00:26:47,520 --> 00:26:48,879
Speaker 2: And where does that money go First.

533
00:26:48,920 --> 00:26:50,600
Speaker 3: It goes to those with a lot of credit and

534
00:26:50,640 --> 00:26:53,199
Speaker 3: a lot of income and assets go up first, housing

535
00:26:53,240 --> 00:26:55,320
Speaker 3: prices go up, They gain a lot more in wealth,

536
00:26:55,440 --> 00:26:57,359
Speaker 3: and the ones at the bottom don't benefit from that.

537
00:26:57,720 --> 00:26:59,520
Speaker 3: And so I think we need to turn the whole

538
00:26:59,560 --> 00:27:03,359
Speaker 3: tide on saying, look, progressive policies are failing. We need

539
00:27:03,400 --> 00:27:05,840
Speaker 3: more of our conservative policies moving forward.

540
00:27:06,840 --> 00:27:08,960
Speaker 1: I think you've got it exactly right. And I think

541
00:27:09,440 --> 00:27:12,320
Speaker 1: if you focus on economic growth and you focus on

542
00:27:12,760 --> 00:27:17,320
Speaker 1: people having a bigger pie, then it's remarkable what you

543
00:27:17,400 --> 00:27:20,680
Speaker 1: can get done. And it's remarkable how well it can

544
00:27:20,720 --> 00:27:23,040
Speaker 1: work for everybody. And I think in that sense, the

545
00:27:23,080 --> 00:27:26,399
Speaker 1: work you're doing is really really important. It's fascinating to

546
00:27:26,440 --> 00:27:30,639
Speaker 1: me how this whole process has been operating and how

547
00:27:30,720 --> 00:27:33,160
Speaker 1: much Biden is almost a test case. If you take

548
00:27:33,200 --> 00:27:37,119
Speaker 1: Biden and Carter, they are test cases for how politicians

549
00:27:37,160 --> 00:27:39,640
Speaker 1: who don't know what they're doing can screw up everything.

550
00:27:40,160 --> 00:27:42,439
Speaker 1: It's just amazing, Linz. I want to thank you for

551
00:27:42,520 --> 00:27:45,879
Speaker 1: joining me. This has been really informative. I want to

552
00:27:45,920 --> 00:27:49,200
Speaker 1: mention that you do have a podcast called Let People Prosper,

553
00:27:49,520 --> 00:27:53,840
Speaker 1: which our listeners can find Advancegain dot com or on

554
00:27:53,920 --> 00:27:56,720
Speaker 1: Apple Podcasts. But it's been great having you well.

555
00:27:56,560 --> 00:27:58,480
Speaker 3: Thank you so much, speaker. It's been a pleasure talking

556
00:27:58,480 --> 00:28:00,240
Speaker 3: with you today. I'm going to keep fighting for a

557
00:28:00,280 --> 00:28:01,840
Speaker 3: lot of things that you have fought for for for

558
00:28:01,920 --> 00:28:04,440
Speaker 3: many years, and I really appreciate what you did during

559
00:28:04,480 --> 00:28:06,520
Speaker 3: the nineties and we need more of that again, So

560
00:28:06,600 --> 00:28:11,920
Speaker 3: thank you again for having me on the program.

561
00:28:12,480 --> 00:28:15,439
Speaker 1: Thank you to my guest, doctor Vance Gain. You can

562
00:28:15,440 --> 00:28:19,200
Speaker 1: get a link to his podcast, Let People Prosper on

563
00:28:19,240 --> 00:28:22,560
Speaker 1: our show page at newtsworld dot com. News World is

564
00:28:22,560 --> 00:28:27,080
Speaker 1: produced by Gangwid three sixty and iHeartMedia. Our executive producer

565
00:28:27,200 --> 00:28:32,080
Speaker 1: is Guernsey Sloan. Our researcher is Rachel Peterson. The artwork

566
00:28:32,119 --> 00:28:35,959
Speaker 1: for the show was created by Steve Penley. Special thanks

567
00:28:36,200 --> 00:28:38,640
Speaker 1: to the team at Gingwid three sixty. If you've been

568
00:28:38,680 --> 00:28:41,560
Speaker 1: enjoying newts World, I hope you'll go to Apple podcast

569
00:28:41,920 --> 00:28:44,560
Speaker 1: and both rate us with five stars and give us

570
00:28:44,600 --> 00:28:47,520
Speaker 1: a review so others can learn what it's all about.

571
00:28:47,960 --> 00:28:50,520
Speaker 1: Right now, listeners of neut World can sign up for

572
00:28:50,680 --> 00:28:54,360
Speaker 1: my three free weekly columns at gingwids three sixty dot

573
00:28:54,360 --> 00:29:02,920
Speaker 1: com slash newsletter. I'm nut gingrich. This is neutrald