1 00:00:00,040 --> 00:00:02,720 Speaker 1: As we assess some of these policy proposals we're still 2 00:00:02,759 --> 00:00:06,080 Speaker 1: getting from the candidates as they take their messages to 3 00:00:06,080 --> 00:00:08,720 Speaker 1: the swing states, with just a handful of days to 4 00:00:08,720 --> 00:00:10,280 Speaker 1: go at this point until the election. 5 00:00:10,080 --> 00:00:12,480 Speaker 2: Eighteen You act like it's late in the game for 6 00:00:12,520 --> 00:00:14,200 Speaker 2: this type of thing that be happening, Well, it got 7 00:00:14,240 --> 00:00:14,960 Speaker 2: eighteen days. 8 00:00:15,120 --> 00:00:17,360 Speaker 1: Just feel a little late in the game here, But 9 00:00:17,440 --> 00:00:19,520 Speaker 1: of course it's not too late to start putting together 10 00:00:19,600 --> 00:00:21,239 Speaker 1: some math on this, as we have seen a number 11 00:00:21,320 --> 00:00:23,840 Speaker 1: of nonpartisan groups do, and we want to get more 12 00:00:23,840 --> 00:00:26,720 Speaker 1: into the math and potential economic impact of some of 13 00:00:26,720 --> 00:00:29,280 Speaker 1: these policy proposals. And turn out to Ben Harris. He's 14 00:00:29,320 --> 00:00:32,680 Speaker 1: former Assistant Treasury Secretary during the Biden administration. He's now 15 00:00:33,040 --> 00:00:36,559 Speaker 1: Brookings Institution Vice President and director of Economic Studies. He 16 00:00:36,600 --> 00:00:38,839 Speaker 1: is here with us in our Washington, d C. Studio. 17 00:00:39,120 --> 00:00:41,400 Speaker 1: Welcome to Bloomberg TV and Radio. Ben, it's good to 18 00:00:41,440 --> 00:00:41,800 Speaker 1: have you. 19 00:00:41,840 --> 00:00:42,160 Speaker 3: Thanks. 20 00:00:43,280 --> 00:00:45,519 Speaker 1: If we could just begin with Donald Trump today suggesting 21 00:00:45,560 --> 00:00:49,200 Speaker 1: he would at least consider not taxing veterans and first 22 00:00:49,240 --> 00:00:52,160 Speaker 1: responders and members of the military some twenty million people. 23 00:00:52,240 --> 00:00:55,320 Speaker 1: Layered on top of all of the other tax proposals 24 00:00:55,320 --> 00:00:57,360 Speaker 1: he's put out there, things that would not get taxed. 25 00:00:57,600 --> 00:00:59,800 Speaker 1: What is the baseline of how much needs to be 26 00:00:59,880 --> 00:01:01,960 Speaker 1: tax to continue to fund the US government? 27 00:01:02,960 --> 00:01:04,640 Speaker 3: So more than he's proposing. 28 00:01:04,680 --> 00:01:06,080 Speaker 4: I mean, I don't have a magic number, but I 29 00:01:06,120 --> 00:01:08,360 Speaker 4: mean his his approach has been to start with the 30 00:01:08,400 --> 00:01:12,600 Speaker 4: TCJA extension, which costs five trillion dollars over ten years, 31 00:01:12,920 --> 00:01:15,240 Speaker 4: and then to add on all of these special tax 32 00:01:15,240 --> 00:01:17,959 Speaker 4: breaks that really don't have an economic justification. You know, 33 00:01:18,000 --> 00:01:21,360 Speaker 4: as you just mentioned, tax breaks for wages, sorry for tips, 34 00:01:21,720 --> 00:01:26,280 Speaker 4: tax breaks for particular occupations, tax breaks for people who 35 00:01:26,280 --> 00:01:29,080 Speaker 4: receive social scurity benefits, which by the way, would completely 36 00:01:29,160 --> 00:01:33,640 Speaker 4: undermine Social Security and Medicare finances, were already up probably 37 00:01:33,680 --> 00:01:36,240 Speaker 4: close around ten trillion dollars in counting. This isn't a 38 00:01:36,280 --> 00:01:39,440 Speaker 4: realistic set of proposals. They're just far too expensive to 39 00:01:39,520 --> 00:01:40,560 Speaker 4: ever make it through Congress. 40 00:01:40,560 --> 00:01:43,560 Speaker 2: You know, at one point, Ben, we had Republicans like 41 00:01:43,680 --> 00:01:46,959 Speaker 2: Kevin Brady, pretty old fashioned Republicans sitting here at the 42 00:01:46,959 --> 00:01:49,320 Speaker 2: table saying, Hey, there's going to be a real important 43 00:01:49,360 --> 00:01:49,800 Speaker 2: debate here. 44 00:01:49,840 --> 00:01:52,040 Speaker 5: We need to make the Trump tax cuts permanent. 45 00:01:52,400 --> 00:01:55,080 Speaker 2: That was six to nine months ago, before all the 46 00:01:55,120 --> 00:01:58,080 Speaker 2: other items and exemptions that we've mentioned since were rolled out. 47 00:01:58,560 --> 00:02:02,080 Speaker 2: What happens to the old school responsible Republicans who were 48 00:02:02,080 --> 00:02:04,600 Speaker 2: going to help usher this through on Capitol Hill. 49 00:02:04,680 --> 00:02:06,520 Speaker 5: Who wake up every day to another exemption. 50 00:02:07,280 --> 00:02:10,680 Speaker 4: I mean, there are fiscally responsible Republicans in Congress, but 51 00:02:10,720 --> 00:02:13,040 Speaker 4: they must be pre lonely right now. I mean, I 52 00:02:13,040 --> 00:02:15,200 Speaker 4: think the turning point was back in twenty seventeen when 53 00:02:15,200 --> 00:02:18,520 Speaker 4: Republicans passed a one point five trillion dollar tax cut 54 00:02:18,600 --> 00:02:20,160 Speaker 4: without paying for it, and that kind of opened the 55 00:02:20,200 --> 00:02:23,360 Speaker 4: door for this idea that look, for certain types of priorities, 56 00:02:23,400 --> 00:02:25,440 Speaker 4: it's okay to take on enormous amounts of debt. 57 00:02:26,240 --> 00:02:26,880 Speaker 3: And so that's what. 58 00:02:26,840 --> 00:02:29,360 Speaker 4: We saw, and that feels like where Donald Trump has 59 00:02:29,400 --> 00:02:32,040 Speaker 4: left the priority. Now, what's the priority now? I think 60 00:02:32,040 --> 00:02:34,240 Speaker 4: the party is winning the election, and then they'll see 61 00:02:34,280 --> 00:02:36,720 Speaker 4: the composition of Congress, and then they'll come back to 62 00:02:36,760 --> 00:02:39,120 Speaker 4: the drawing board. And if there's a Republican sweep, I 63 00:02:39,120 --> 00:02:41,639 Speaker 4: think you can expect a wholesale extension of the TCJA 64 00:02:42,520 --> 00:02:45,160 Speaker 4: with a few other Republican priorities mixed in, you know, 65 00:02:45,240 --> 00:02:47,600 Speaker 4: to be fair Republicans. Though they did pass the Limit 66 00:02:47,680 --> 00:02:50,959 Speaker 4: Safe Grow Act coming out of the House, which did 67 00:02:51,000 --> 00:02:55,800 Speaker 4: reduce the deficit, it was basically a combination of caps 68 00:02:55,800 --> 00:02:58,800 Speaker 4: on discretionary spending plus a couple of other pay fors. 69 00:02:58,800 --> 00:03:00,760 Speaker 4: So it's not as though there have been no Republican 70 00:03:00,880 --> 00:03:03,399 Speaker 4: priorities that have made it through a House of Congress. 71 00:03:03,800 --> 00:03:05,480 Speaker 4: It just feels like if Donald Trump's can be in 72 00:03:05,480 --> 00:03:07,760 Speaker 4: the White House, He's been pretty clear he's comfortable taking 73 00:03:07,760 --> 00:03:08,920 Speaker 4: on trillion dollars. 74 00:03:08,639 --> 00:03:09,079 Speaker 3: In new debt. 75 00:03:09,560 --> 00:03:12,000 Speaker 1: Ben reminding us that it's not just tax policy that 76 00:03:12,040 --> 00:03:14,000 Speaker 1: we're going to see a battle over in twenty twenty five, 77 00:03:14,040 --> 00:03:15,280 Speaker 1: but we're going to have to deal with the dead 78 00:03:15,320 --> 00:03:19,120 Speaker 1: sealing again, as you recall back to that deal. So 79 00:03:19,160 --> 00:03:22,000 Speaker 1: there's so much to look forward to. All that to say, 80 00:03:22,040 --> 00:03:26,040 Speaker 1: when we look at Kamala Harris's proposals, nonpartisan organizations have 81 00:03:26,160 --> 00:03:28,880 Speaker 1: two said it will add to the deficit. Perhaps less 82 00:03:29,080 --> 00:03:30,960 Speaker 1: three and a half trillion dollars is what the Committee 83 00:03:30,960 --> 00:03:33,720 Speaker 1: for Responsible but Federal Budget has had to say. But 84 00:03:33,760 --> 00:03:37,440 Speaker 1: Donald Trump would contend her policies will also be inflationary. 85 00:03:37,560 --> 00:03:39,920 Speaker 1: Is there not some truth in that that. 86 00:03:39,920 --> 00:03:41,200 Speaker 3: Her policies will be inflationary. 87 00:03:41,320 --> 00:03:44,040 Speaker 1: She's subsidizing housing, it could drive up housing costs, If 88 00:03:44,040 --> 00:03:46,840 Speaker 1: she's cutting taxes, all of these things could fuel inflation. 89 00:03:46,920 --> 00:03:48,600 Speaker 1: And make the deficit go higher all the same. 90 00:03:48,800 --> 00:03:50,680 Speaker 4: Yeah, So I think on the housing policy, it's great 91 00:03:50,680 --> 00:03:52,720 Speaker 4: that you brought that up, but the twenty five thousand 92 00:03:52,720 --> 00:03:54,760 Speaker 4: dollars first time Home by Our tax credit was far 93 00:03:54,800 --> 00:03:56,800 Speaker 4: from the only proposal that she put forward. Sorry, she 94 00:03:56,840 --> 00:03:59,320 Speaker 4: also wants to expand housing supply. I think that the 95 00:03:59,360 --> 00:04:01,480 Speaker 4: first time Home by Our tax credit really only makes 96 00:04:01,480 --> 00:04:03,840 Speaker 4: sense if it's done in conjunction with an expansion in 97 00:04:03,880 --> 00:04:07,800 Speaker 4: the housing supply. That's not really inflationary as far as 98 00:04:07,800 --> 00:04:09,800 Speaker 4: her other policies go, I mean, she is taking aim 99 00:04:10,040 --> 00:04:12,960 Speaker 4: at at costs across the board. So she wants to 100 00:04:13,280 --> 00:04:15,520 Speaker 4: make prescription drugs cheaper. I mean, I think that the 101 00:04:15,560 --> 00:04:18,080 Speaker 4: household costs have been kind of a centerpiece of her 102 00:04:18,880 --> 00:04:19,640 Speaker 4: of her policies. 103 00:04:19,880 --> 00:04:22,359 Speaker 1: Price gouging she wants to go after does not. 104 00:04:22,480 --> 00:04:23,599 Speaker 5: Work, so no. 105 00:04:23,720 --> 00:04:26,440 Speaker 4: I mean, most states have price gouging laws on the books, 106 00:04:26,440 --> 00:04:28,799 Speaker 4: and for most states they are non binding. Most Americans 107 00:04:28,800 --> 00:04:30,960 Speaker 4: live in a state that has price gouging laws, and 108 00:04:31,000 --> 00:04:33,599 Speaker 4: as far as I can tell, they're fairly inconsequential. So 109 00:04:33,839 --> 00:04:36,440 Speaker 4: I think that's, you know, pretty far down on the 110 00:04:36,480 --> 00:04:39,120 Speaker 4: list of policies that matter for the American people. But 111 00:04:39,200 --> 00:04:41,400 Speaker 4: she has made prices a centerpiece of her campaign. 112 00:04:41,480 --> 00:04:43,800 Speaker 2: Yeah, that's interesting because that was a that was a 113 00:04:43,800 --> 00:04:46,160 Speaker 2: big rollout at the time she made it, and it's 114 00:04:46,160 --> 00:04:48,400 Speaker 2: still on the backdrops and it's still on the stump speech. 115 00:04:48,760 --> 00:04:50,960 Speaker 2: It's just when you start waiting priorities. I think to 116 00:04:51,000 --> 00:04:53,800 Speaker 2: your point here, well, the next president of the United States, 117 00:04:53,960 --> 00:04:56,840 Speaker 2: Trump or Harris have to manage a recession in their 118 00:04:56,880 --> 00:04:57,360 Speaker 2: first year. 119 00:04:58,040 --> 00:04:58,840 Speaker 3: That's a great question. 120 00:04:58,839 --> 00:05:00,880 Speaker 4: I mean, what I can say now about the state 121 00:05:00,880 --> 00:05:03,200 Speaker 4: of the macroeconomy. This is like the definition of a 122 00:05:03,560 --> 00:05:05,880 Speaker 4: soft landing. I mean, it's when we go back twenty 123 00:05:05,960 --> 00:05:08,200 Speaker 4: years and reflect on what the Fed has done with 124 00:05:08,200 --> 00:05:09,760 Speaker 4: this current economy. I think will kind of be in 125 00:05:09,880 --> 00:05:12,080 Speaker 4: awe of how wealth things turned out. I mean, we've 126 00:05:12,120 --> 00:05:13,640 Speaker 4: got I mean I can just go list some of 127 00:05:13,640 --> 00:05:17,200 Speaker 4: the highlights. We've got a higher share of people working 128 00:05:17,520 --> 00:05:20,160 Speaker 4: primates people working that we've seen in over twenty years. 129 00:05:20,560 --> 00:05:24,400 Speaker 4: We've seen inflation come down to an a level where 130 00:05:24,400 --> 00:05:26,440 Speaker 4: the feed is perfectly comfortable with it. We've seen a 131 00:05:26,440 --> 00:05:29,560 Speaker 4: wealth explosion in this country, almost fifty trillion dollars in 132 00:05:29,600 --> 00:05:31,400 Speaker 4: wealth added over the course of the pandemic. 133 00:05:31,600 --> 00:05:32,760 Speaker 3: I mean, you can kind of go on and on 134 00:05:32,760 --> 00:05:33,080 Speaker 3: and on. 135 00:05:33,520 --> 00:05:36,880 Speaker 4: But we have a great economy, both relatives and prior recoveries, 136 00:05:36,920 --> 00:05:39,200 Speaker 4: and also relative to the rest of the developed world. 137 00:05:39,279 --> 00:05:42,520 Speaker 4: So right now, when I talk to forecasters, most of 138 00:05:42,560 --> 00:05:44,359 Speaker 4: them say we have about a ten to fifteen percent 139 00:05:44,400 --> 00:05:46,120 Speaker 4: chance for a session in the next year, which is 140 00:05:46,200 --> 00:05:49,440 Speaker 4: kind of the unconditional average in any that's not so bad. 141 00:05:49,480 --> 00:05:50,799 Speaker 3: I'll take that at this point. 142 00:05:50,960 --> 00:05:53,839 Speaker 1: Well, so, if all of that is how this economy 143 00:05:53,920 --> 00:05:55,520 Speaker 1: is shaping up right now, does this look like an 144 00:05:55,520 --> 00:05:58,080 Speaker 1: economy to you that needs easier policy or is it 145 00:05:58,080 --> 00:06:00,919 Speaker 1: simply an economy that doesn't need tighter policy anymore? 146 00:06:00,960 --> 00:06:03,200 Speaker 4: Are you talking about monetary policy? Yeah, well, I think 147 00:06:03,240 --> 00:06:06,159 Speaker 4: that with respect to monetary policy, the FEDS at is spot. 148 00:06:06,240 --> 00:06:08,039 Speaker 4: It's kind of an enviable spot right now, where it 149 00:06:08,080 --> 00:06:11,920 Speaker 4: knows we're not so close to the neutral rate. The 150 00:06:11,960 --> 00:06:15,720 Speaker 4: next fifty BIPs of cutting feel pretty easy, and then 151 00:06:15,760 --> 00:06:18,000 Speaker 4: you start getting into the hard decisions. So markets right 152 00:06:18,000 --> 00:06:20,120 Speaker 4: now I think are around a ninety percent chance of 153 00:06:20,160 --> 00:06:23,159 Speaker 4: a twenty five BIPs cut in the next meeting. I 154 00:06:23,160 --> 00:06:24,760 Speaker 4: would probably take the over on that as far as 155 00:06:24,760 --> 00:06:27,320 Speaker 4: probabilities go, and about a seventy five percent chance we'll 156 00:06:27,320 --> 00:06:31,440 Speaker 4: get two cuts between now and December. Those are easy 157 00:06:31,480 --> 00:06:34,880 Speaker 4: decisions though, inflation's way down, the labor market's weakening. I 158 00:06:34,880 --> 00:06:37,640 Speaker 4: think it's pretty easy to vote for a twenty five 159 00:06:37,640 --> 00:06:40,480 Speaker 4: BIPs cut. But after we get past the four and 160 00:06:40,520 --> 00:06:42,400 Speaker 4: a half percent for the Fed funds rate, we get 161 00:06:42,400 --> 00:06:44,640 Speaker 4: closer to four, that's when the hard decisions start coming. 162 00:06:44,680 --> 00:06:48,039 Speaker 2: Donald Trump was asked in the Univision town hall earlier 163 00:06:48,080 --> 00:06:53,120 Speaker 2: this week what would happen to agriculture, jobs and other 164 00:06:53,160 --> 00:06:56,640 Speaker 2: parts of the labor market if he followed through on 165 00:06:56,680 --> 00:07:00,360 Speaker 2: what he calls mass deportation. He didn't use that term 166 00:07:00,839 --> 00:07:03,760 Speaker 2: in this conversation, but he also didn't really answer the question. 167 00:07:03,839 --> 00:07:05,520 Speaker 2: Do you have a sense of what would happen to 168 00:07:05,560 --> 00:07:08,040 Speaker 2: the job market if you shut down the border and 169 00:07:08,080 --> 00:07:12,240 Speaker 2: conducted a mass deportation of millions of migrants in the country. 170 00:07:12,400 --> 00:07:14,320 Speaker 4: Yeah, So these are two different policies, So let's say 171 00:07:14,360 --> 00:07:17,320 Speaker 4: up them out. So both Kamala Harris and Donald Trump 172 00:07:17,400 --> 00:07:21,240 Speaker 4: want to shut down the border. Kamala Harris backs the 173 00:07:21,240 --> 00:07:24,720 Speaker 4: Biden Plan, which you know, essentially puts in place a 174 00:07:24,720 --> 00:07:25,480 Speaker 4: whole host. 175 00:07:25,360 --> 00:07:29,040 Speaker 3: Of different policies, the Senate compromen. Yeah, exactly, So what 176 00:07:29,040 --> 00:07:29,600 Speaker 3: we're really. 177 00:07:29,440 --> 00:07:32,440 Speaker 4: Talking about Now, the difference between the two candidates is 178 00:07:32,480 --> 00:07:36,160 Speaker 4: what would happen if we saw mass deportation on the 179 00:07:36,280 --> 00:07:38,200 Speaker 4: order of something we've never even come close to seeing 180 00:07:38,240 --> 00:07:38,720 Speaker 4: this country. 181 00:07:38,760 --> 00:07:40,520 Speaker 3: We're talking about potentially. 182 00:07:41,480 --> 00:07:44,720 Speaker 4: In immigration agents, going to schools, going to place the business, 183 00:07:45,040 --> 00:07:48,800 Speaker 4: potentially checkpoints. Is really unclear how you're going to find 184 00:07:49,040 --> 00:07:51,440 Speaker 4: ten million people to kick them out of the country. 185 00:07:51,880 --> 00:07:55,400 Speaker 4: From an economic perspective, economists don't love kicking workers out 186 00:07:55,400 --> 00:07:57,880 Speaker 4: at a time when you have worker shortages. So if 187 00:07:57,920 --> 00:07:59,640 Speaker 4: you look at some of the estimates coming out of 188 00:07:59,640 --> 00:08:01,880 Speaker 4: Golden if you look at estimates coming out of the 189 00:08:01,880 --> 00:08:05,240 Speaker 4: Brookings Institution, non partisan estimates, you do find a hit 190 00:08:05,320 --> 00:08:08,160 Speaker 4: on growth simply because we need workers and now is 191 00:08:08,200 --> 00:08:09,320 Speaker 4: not the best time to kick him out. 192 00:08:09,200 --> 00:08:11,040 Speaker 5: Of our So that could hasten the recession in the 193 00:08:11,040 --> 00:08:11,440 Speaker 5: first year. 194 00:08:11,560 --> 00:08:13,640 Speaker 4: Yeah, I think the probability of recession goes up if 195 00:08:13,680 --> 00:08:17,680 Speaker 4: you're talking about sixty percent tariffs on Chinese goods and 196 00:08:17,680 --> 00:08:19,480 Speaker 4: if you're kicking millions of people out of the country. 197 00:08:19,760 --> 00:08:22,760 Speaker 1: Yeah, So it becomes a demographic consideration, right, The US 198 00:08:22,760 --> 00:08:26,640 Speaker 1: needs immigration to maintain its workforce, definitely. All right, Ben, 199 00:08:26,720 --> 00:08:27,920 Speaker 1: thanks for joining USKS for having. 200 00:08:27,840 --> 00:08:29,400 Speaker 5: Me to Ben Harris back at the table. 201 00:08:29,400 --> 00:08:33,000 Speaker 2: Don't be a Stranger, Brookings Institution, former Assistant Treasury Secretary 202 00:08:33,200 --> 00:08:34,400 Speaker 2: in the Biden administration 203 00:08:34,960 --> 00:08:37,520 Speaker 5: With his experience in view today in Washington.