WEBVTT - Surveillance: Fed’s Kaplan Explains Dissent 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jailey. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.240 Bloomberg dot Com, and of course, on the Bloomberg Without Question. 0:00:28.840 --> 0:00:31.880 This is our interview of the day. Are Michael McKee 0:00:32.080 --> 0:00:36.240 with the great dissenter Robert Caplan. Michael, Thank you, Tom, 0:00:36.320 --> 0:00:39.560 and good morning to you President Caplan, Dallas Fed. President 0:00:39.600 --> 0:00:42.400 Caplan one of two dissenters. Last week, as the FAN 0:00:42.479 --> 0:00:47.120 adopted new forward guidance that incorporates average inflation targeting. You 0:00:47.240 --> 0:00:51.760 endorsed the old forward guidance and dissented on the new because, 0:00:51.840 --> 0:00:54.960 according to this statement, you prefer the committee retained greater 0:00:55.040 --> 0:01:00.840 policy flexibility beyond that point. What does that mean? Uh? 0:01:01.040 --> 0:01:05.360 What it means is UH, I believe strongly we should 0:01:05.440 --> 0:01:07.959 keep the current setting of the FED funds rate I 0:01:08.160 --> 0:01:12.200 at zero zero to basis points until we've weathered the 0:01:12.200 --> 0:01:16.199 pandemic and we're well on track to achieve full employment 0:01:16.360 --> 0:01:19.919 and price stability. UH. That, by the way, is probably 0:01:19.920 --> 0:01:23.360 gonna take at least two two and a half three years. 0:01:24.240 --> 0:01:27.920 The issue is beyond that point, once we've weathered the 0:01:27.959 --> 0:01:31.600 pandemic and we're on track to reach our goals, I 0:01:31.720 --> 0:01:35.280 probably think it's appropriate to remain accommodative, or maybe even 0:01:35.319 --> 0:01:39.200 highly accommodative. I'm not sure it's appropriate to decide right 0:01:39.200 --> 0:01:42.000 now that at that point we should leave rates at zero. 0:01:42.440 --> 0:01:47.760 I would rather leave those judgments to future committees, because 0:01:47.800 --> 0:01:49.640 I think the world is going to look very different 0:01:50.120 --> 0:01:53.320 post pandemic than it does now, and I'd rather leave 0:01:53.440 --> 0:01:56.640 the judgment to future committees who can assess all the 0:01:56.680 --> 0:01:59.920 factors that are relevant in order to make that decision. Well, 0:02:00.000 --> 0:02:01.760 does that suggests you think that we could come out 0:02:01.760 --> 0:02:07.160 of this with faster growth than most people are anticipating. Uh? 0:02:07.440 --> 0:02:10.040 Or I'll put it a different way. Uh. In my 0:02:10.120 --> 0:02:13.239 own forecast, I think we're gonna have solid growth in 0:02:13.280 --> 0:02:17.799 the third quarter, annualize a strong fourth quarter, above trend 0:02:17.840 --> 0:02:21.600 growth in one and in my own forecast by the 0:02:21.720 --> 0:02:26.440 year three, and I know that's going out a long ways. Uh, 0:02:26.520 --> 0:02:30.520 we could we could start to approach an unemployment rate 0:02:30.880 --> 0:02:33.320 certainly below four percent, say three and a half to 0:02:33.360 --> 0:02:37.000 four percent, And so I believe that is possible. Obviously, 0:02:37.400 --> 0:02:39.120 we'll have to see, and a lot of that is 0:02:39.120 --> 0:02:42.160 going to depend on how will we manage this virus, 0:02:42.639 --> 0:02:46.400 fiscal policy, and the whole range of other decisions. But 0:02:46.520 --> 0:02:50.360 when we get to that point, the question before the 0:02:50.360 --> 0:02:52.760 House is do you want to do you want to 0:02:52.760 --> 0:02:55.520 still be accommodative and a light of our new framework 0:02:55.800 --> 0:02:58.760 in order to meet our inflation goal? Uh? In order 0:02:58.760 --> 0:03:00.960 to remain accommodative, does that mean we need to leave 0:03:01.040 --> 0:03:03.919 rates at zero? And I'm not sure, but that's the point. 0:03:04.680 --> 0:03:06.639 I think it's hard to know right now that far 0:03:06.680 --> 0:03:09.560 in advance, and I want to make those judgments at 0:03:09.600 --> 0:03:14.240 the time. Is that enough to dissent on important enough 0:03:15.880 --> 0:03:18.760 for me? It? For me it was, And the reason 0:03:18.840 --> 0:03:23.280 it is is by making this commitment now, First of all, 0:03:23.360 --> 0:03:25.480 there are a few reasons why I descended what I 0:03:25.560 --> 0:03:28.520 just went through. And then my own view is I'd 0:03:28.600 --> 0:03:31.440 rather use forward guidance where we got more positive benefit. 0:03:31.520 --> 0:03:35.040 Going into the meeting, the world already thought that rates 0:03:35.040 --> 0:03:37.280 were gonna stay extremely low for the next two or 0:03:37.320 --> 0:03:40.440 three years, and so my concern was by making this 0:03:40.480 --> 0:03:43.240 commitment now, I wasn't sure how much additional benefit we're 0:03:43.280 --> 0:03:46.400 going to be. But on the negative side, it means 0:03:46.480 --> 0:03:49.600 if you're in the in the asset markets, if you're 0:03:49.640 --> 0:03:52.360 a saver, if you're a pension fund, if you're an 0:03:52.360 --> 0:03:56.120 insurance company, if you're a market participant, it basically gives 0:03:56.120 --> 0:03:59.000 you a signal that you're not gonna be You're gonna 0:03:59.000 --> 0:04:02.240 need to take more risk. And my concern is about 0:04:02.560 --> 0:04:06.960 building up excess risk taking, which can create fragilities and 0:04:07.000 --> 0:04:10.120 other excesses in the system which are hard to see 0:04:10.280 --> 0:04:13.120 in real time and easier to seeing in hindsight. That 0:04:13.520 --> 0:04:16.520 could create issues for us to meet our goals. And 0:04:16.560 --> 0:04:20.160 so that was the reason I felt that the costs 0:04:20.200 --> 0:04:23.360 were not worth the benefits. Well, in his news kind 0:04:23.360 --> 0:04:25.599 of French Chairman Powell was it pains to say over 0:04:25.640 --> 0:04:28.440 and over again the new guidance is strong and powerful, 0:04:28.480 --> 0:04:30.800 but there seems to be a lot of skepticism on 0:04:30.839 --> 0:04:35.920 Wall Street about that. Well, and I wouldn't overread the 0:04:35.960 --> 0:04:38.159 market reaction. It's been a few days, and I think 0:04:38.200 --> 0:04:43.400 these decisions usually are not are not. The reaction is 0:04:43.440 --> 0:04:47.040 not measured in three or four trading days. It's measured 0:04:47.080 --> 0:04:50.640 in the full fullness of time. I think making a 0:04:50.680 --> 0:04:54.640 statement that people should expect even beyond the pandemic, that 0:04:54.800 --> 0:04:57.040 rates are going to stay at zero until we reach 0:04:57.120 --> 0:05:00.120 two percent and are on track to moderate leaks. See 0:05:00.240 --> 0:05:02.479 two percent for some time, I think is the months 0:05:02.560 --> 0:05:05.479 and the years go by, I think people will will 0:05:05.560 --> 0:05:09.840 increasingly realize the power of that commitment, and and so 0:05:10.160 --> 0:05:12.680 I think it's more significant than the markets may be 0:05:12.760 --> 0:05:16.360 initially realizing. Well, Washington is consumed now by a fight 0:05:16.400 --> 0:05:19.280 over the Supreme Court, which many analysts say pretty much 0:05:19.440 --> 0:05:22.560 ends chances of getting any kind of additional stimulus, at 0:05:22.640 --> 0:05:26.160 least before the election and possibly afterwards. What does that 0:05:26.200 --> 0:05:31.159 mean for the economy. Well, I think in my forecast 0:05:31.240 --> 0:05:35.760 for this year, UM, I think some additional fiscal stimulus 0:05:36.240 --> 0:05:39.040 is UH is part of that. And one of the 0:05:39.120 --> 0:05:43.360 unusual features of this downturn has been UH consumer spending 0:05:43.400 --> 0:05:46.560 has been very strong despite the elevated unemployment rate. That 0:05:46.640 --> 0:05:50.400 usually doesn't happen in a downturn, and it's happening because 0:05:50.480 --> 0:05:54.719 of strong fiscal support. And so I think some extension 0:05:54.760 --> 0:05:58.240 of unemployment benefits is critical. And I also the second 0:05:58.240 --> 0:06:00.520 thing I mentioned is a to state and local governments 0:06:00.560 --> 0:06:03.200 I think is also important. They all they have big 0:06:03.240 --> 0:06:06.760 fiscal holes they are they are needing to cut back 0:06:07.320 --> 0:06:09.680 because of that right now at a time where we're 0:06:09.720 --> 0:06:14.080 asking the shoulder more responsibilities and fighting the pandemic and 0:06:14.080 --> 0:06:18.080 getting kids back to school and a number of other responsibilities. 0:06:18.080 --> 0:06:21.560 And so I think fiscal uh, some fiscal support. I'm 0:06:21.560 --> 0:06:24.400 still hopeful for it, and I think it's important to 0:06:24.480 --> 0:06:29.120 this recovery. The markets are at this point not just 0:06:29.279 --> 0:06:32.080 discounting what you did last week, but concerns over the 0:06:32.080 --> 0:06:35.599 Supreme Court and a round of uh pandemics. We've been 0:06:35.640 --> 0:06:38.760 asking for months about whether markets were too high and 0:06:38.880 --> 0:06:41.960 might fall, dragging down the economy. What's your read on 0:06:42.040 --> 0:06:46.159 what's going now? Uh? Well, I won't go too far 0:06:46.200 --> 0:06:49.440 in this job commented on the markets other than to say, uh, 0:06:50.960 --> 0:06:54.400 market cap to g d P is currently at historic 0:06:54.520 --> 0:06:57.760 high uh and at historic eise. There's some there's some 0:06:57.839 --> 0:07:01.159 understandable reasons for that, but normally when you've had this 0:07:01.279 --> 0:07:04.440 kind of run, some kind of correction could actually be healthy. 0:07:04.839 --> 0:07:07.600 And so UH. The thing I watch when I see 0:07:07.600 --> 0:07:10.880 a market sell off is our credit spreads widening, and 0:07:10.920 --> 0:07:14.000 I don't see them widening, which tells me right now 0:07:14.200 --> 0:07:17.720 this is more of a correction, maybe not a fundamental change. 0:07:17.760 --> 0:07:20.960 If I saw credit spreads widening along with the sell off, 0:07:21.000 --> 0:07:23.320 that would tell me something different, but I'm not seeing that. 0:07:23.720 --> 0:07:27.280 We'll type, credit spreads and low interest rates suggest the 0:07:27.280 --> 0:07:30.120 FED policy is working at the moment. But if we 0:07:30.160 --> 0:07:33.400 do have a need for additional stimulus and we don't 0:07:33.440 --> 0:07:35.720 get it, is there anything the FED can do or 0:07:35.760 --> 0:07:37.560 are you sort of out of the game done what 0:07:37.600 --> 0:07:42.760 you can do. I think monetary policy has done a lot. 0:07:42.880 --> 0:07:47.720 We still have more things we could do. Uh and 0:07:47.880 --> 0:07:50.640 certainly with either asset purchases, I think we could do 0:07:50.720 --> 0:07:53.720 more to help small mid sized businesses. But I think 0:07:53.720 --> 0:07:57.200 the path of the pandemic, the incidents of the virus, 0:07:57.280 --> 0:07:59.880 is still going to be the number one determinant of 0:08:00.040 --> 0:08:02.600 how fast we recover. And I think some amount of 0:08:02.600 --> 0:08:06.640 fiscal policy secondarily is important. But but I think monetary 0:08:06.680 --> 0:08:10.120 policy will do its part. It's not, though, the primary 0:08:10.240 --> 0:08:14.480 driver of this recovery right now. I think it's still 0:08:14.520 --> 0:08:18.520 how well we manage the virus. The other issue you 0:08:18.640 --> 0:08:21.240 just mentioned the main street lending program, and you also 0:08:21.240 --> 0:08:25.360 talked about the municipal lending facility. UH. German Pole goes 0:08:25.400 --> 0:08:27.040 up to Capitol Hill and they're gonna be asking the 0:08:27.080 --> 0:08:29.760 question why aren't those working. There's been almost no take 0:08:29.800 --> 0:08:32.800 up one loan for the municipal facility, and only two 0:08:32.880 --> 0:08:34.839 tenths of one percent of the money for main Street 0:08:34.880 --> 0:08:38.520 has been lent. What's wrong with the FED programs? Well, 0:08:38.760 --> 0:08:41.560 so let me just segment these. I think it's a 0:08:41.600 --> 0:08:44.520 mistake to judge the effectiveness of most of these programs 0:08:44.559 --> 0:08:46.839 by the take up. The main Street program. Let me 0:08:46.880 --> 0:08:49.319 put off to the side that that's a little bit different. 0:08:49.520 --> 0:08:52.000 But on the municipal finance program is a good example. 0:08:52.240 --> 0:08:57.280 We have backstopped issuance in the municipal finance market with 0:08:57.320 --> 0:09:00.600 a capacity of six billion dollars. As soon as we 0:09:00.640 --> 0:09:05.680 announced that program, uh the municipal finance market rallied money 0:09:05.720 --> 0:09:08.280 flowed into those market. That market. That's true with the 0:09:08.320 --> 0:09:10.880 corporate bond market, it's true with other markets that we've 0:09:10.920 --> 0:09:14.559 done this for. So I actually think that the measure 0:09:14.920 --> 0:09:18.880 of how effective those programs are is is are people 0:09:18.960 --> 0:09:21.880 able to issue in the private market. The fact there 0:09:21.880 --> 0:09:24.560 haven't been there hasn't been much take up. We're intended 0:09:24.600 --> 0:09:27.320 to be backstop pricing. So I think those programs have 0:09:27.320 --> 0:09:31.120 actually been very, very successful. The one program we've scrutinized 0:09:31.160 --> 0:09:33.880 more though, is the main Street program on that program 0:09:34.080 --> 0:09:37.120 take up is a good measure of how effective it's 0:09:37.120 --> 0:09:41.040 been and has has been a lot of discussion. Uh, 0:09:41.080 --> 0:09:46.720 there's still stringent credit requirements for that program. Um the 0:09:46.760 --> 0:09:49.760 banks have to agreed to lend as part of that program, 0:09:50.160 --> 0:09:52.880 and and so we are looking at ways and there's 0:09:52.920 --> 0:09:55.959 been discussion can more be done to make that program 0:09:55.960 --> 0:09:59.800 more attractive? But again, the FED is a lender, not 0:10:00.000 --> 0:10:02.880 a spender, and in order to ease the requirements of 0:10:02.920 --> 0:10:05.400 main Street, you'd have to be willing to tolerate more 0:10:05.440 --> 0:10:08.240 credit losses. And that's not a FED decision, that's a 0:10:08.320 --> 0:10:12.000 decision for Congress in the Treasury. Robert Kaplan, President of 0:10:12.040 --> 0:10:13.960 the Dallas Federal Reserve, thank you for joining us this 0:10:14.000 --> 0:10:21.800 morning on Bloomberg Radio and television worldwide. She has the 0:10:21.840 --> 0:10:26.160 toughest admitted academics, which is women's lacrosse at Stanford. Everybody 0:10:26.200 --> 0:10:29.880 knows that's the toughest thing to do at the undergraduate level. 0:10:29.880 --> 0:10:33.280 And she went on off the lex field to clerk 0:10:33.520 --> 0:10:37.400 for one Ruth Bader Ginsberg, and she joins us now 0:10:37.559 --> 0:10:41.920 this morning. There's so much talked about Lisa we're you know, 0:10:42.360 --> 0:10:45.880 the the the the notoriety of it in the RBG 0:10:46.120 --> 0:10:48.720 thing and all that. I want you to take us 0:10:48.840 --> 0:10:52.920 back to the grind of the day, as David Weston said, 0:10:53.400 --> 0:10:56.560 the grind of clerking at the court. What was the 0:10:56.640 --> 0:11:04.880 Ginsburg grind like? Well? Um, first of all, uh, you know, 0:11:05.080 --> 0:11:09.120 it was my great good fortune to be able to 0:11:09.160 --> 0:11:13.559 clerk with her. Um. She had been a hero of 0:11:13.640 --> 0:11:17.000 mine for many years, having worked at the SLU before 0:11:17.200 --> 0:11:21.880 going to Stanford. Um. You know that the walking into chambers, 0:11:21.880 --> 0:11:24.800 it was a serious place. It was a everybody worked 0:11:24.840 --> 0:11:32.920 extremely hard. She um. She lived for justice, she lived 0:11:33.040 --> 0:11:39.600 for the law. She um, you know, she ran terrific chambers. Um. 0:11:39.960 --> 0:11:44.040 Right at Lisa. The summary of this in Linda Greenhouse's 0:11:44.080 --> 0:11:46.840 effort in The New York Times, I thought really captured it. 0:11:46.840 --> 0:11:50.480 It was a series of steps which culminated with the 0:11:50.600 --> 0:11:55.520 Virginia Military Institute case, the v m I case. You 0:11:55.559 --> 0:11:59.120 were with her then, Was she aware when vm I 0:11:59.200 --> 0:12:04.000 occurred how momentous it would be. Oh, of course, I 0:12:04.040 --> 0:12:08.760 mean the justice having really been responsible for establishing, you know, 0:12:08.840 --> 0:12:12.680 gender equality before the law. As an advocate, Um was 0:12:12.720 --> 0:12:17.440 acutely aware of the importance of that case. And in fact, 0:12:17.520 --> 0:12:22.199 two cases had come up that term. That was both 0:12:22.200 --> 0:12:24.480 the Citadel and v. M I came up at the 0:12:24.520 --> 0:12:27.600 same time. Um. You know, the v. M I case 0:12:27.920 --> 0:12:31.520 was the better case for the Court to take, UM, 0:12:31.840 --> 0:12:36.160 and it was a very important case to her. Um. 0:12:36.200 --> 0:12:40.680 You know, she was honored to be able to draft 0:12:40.679 --> 0:12:42.960 to the opinion, for to write the opinion, to offer 0:12:43.000 --> 0:12:47.240 the opinion for the court. UM, and she cared tremendously 0:12:47.440 --> 0:12:51.720 about everybody's views on that court and holding the the 0:12:52.720 --> 0:12:55.959 big majority that she did in that case that was 0:12:56.000 --> 0:13:01.320 a seven to one case. Justice Thomas Um was refused 0:13:01.360 --> 0:13:04.640 because his son attended b. M I and the loan dissenter. 0:13:04.679 --> 0:13:10.280 There was just it was Justice Scalia, her friend, UM. 0:13:10.480 --> 0:13:12.800 But it was an important case. She thought a great 0:13:12.840 --> 0:13:17.000 deal about it, and she articulated, with reference to Justice 0:13:17.000 --> 0:13:23.000 O'Connor's case before that, she articulated the standard that states 0:13:23.120 --> 0:13:28.760 had to meet when excluding were um, the exceedingly persuasive 0:13:28.840 --> 0:13:32.360 justification standard, which is quite a high hurdle. What would 0:13:32.400 --> 0:13:36.080 you expect from Chief Justice Roberts is he tackles the 0:13:36.120 --> 0:13:39.880 future court whatever the outcome. Maybe what can Chief Justice 0:13:40.000 --> 0:13:44.560 Roberts learn from your tenure. There the the the idea 0:13:44.559 --> 0:13:48.880 of Scalia and Ginsburg is close friends. Can that goodwill 0:13:49.120 --> 0:13:55.960 still maintain on the Roberts Court? I think so. I 0:13:56.000 --> 0:13:59.000 think that the court is an extremely cordial place. There's 0:13:59.000 --> 0:14:04.400 a number of things that they do to maintain that collegiality. 0:14:04.440 --> 0:14:07.800 They shake hands before each oral argument with each other. 0:14:08.400 --> 0:14:13.679 They are good natured and friendly. Um. That is not 0:14:13.800 --> 0:14:18.319 to say that they don't disagree, um, quite vehemently with 0:14:18.400 --> 0:14:22.360 each other. UM. But I do think that with respect 0:14:22.360 --> 0:14:27.160 to the spirit on the court, it's a very cordial place. UM. 0:14:27.200 --> 0:14:30.960 I think you know, it was it was sad to 0:14:31.040 --> 0:14:35.720 see that that middle, that moderate group uh leaves at 0:14:35.920 --> 0:14:41.440 Justice Kennedy, Justice O'Connor, Justice Suitor, and the court become, um, 0:14:41.480 --> 0:14:43.840 you know, a bit more like the country, a bit 0:14:43.880 --> 0:14:49.200 more polarized. UM. But I do think that, you know, 0:14:49.240 --> 0:14:53.960 the justices care about the law, about the interpretation of 0:14:53.960 --> 0:14:58.520 the court. There's tremendous respect for each other on that court, um. 0:14:58.560 --> 0:15:00.520 And I do think there are things to learned from 0:15:00.520 --> 0:15:03.840 her tremendous friendship with Justice Scaliah Lisa. For people who 0:15:03.880 --> 0:15:05.920 are not familiar with the Supreme Court, can you give 0:15:06.000 --> 0:15:09.320 us a sense of the proportion of cases that actually 0:15:09.360 --> 0:15:12.720 do come to a party line vote or a very 0:15:12.800 --> 0:15:15.520 heavily split vote. I mean, can you give us a 0:15:15.520 --> 0:15:18.920 sense of how much unanimity there is actually in the 0:15:18.960 --> 0:15:22.360 vast majority of cases. The majority of the cases are 0:15:23.000 --> 0:15:26.120 decided I believe on unanimous grounds. I mean, it differs 0:15:26.200 --> 0:15:29.480 year to year, but it's really just the big, more 0:15:29.560 --> 0:15:33.400 political cases that tend to come down um in a 0:15:33.480 --> 0:15:37.680 divided in a divided court. And you know those cases 0:15:37.840 --> 0:15:41.280 are usually there's a lot of back and forth during 0:15:41.320 --> 0:15:44.360 the drafting of those opinions and the descents, and those 0:15:44.360 --> 0:15:46.960 cases cases, excuse me, tend to come down at the 0:15:47.040 --> 0:15:51.280 very end of the court's term, the end of June UM. 0:15:51.440 --> 0:15:54.760 But the vast majority of the cases are unanimous decisions 0:15:54.800 --> 0:15:59.400 because the law is relatively clear. Lisa writes, to catch 0:15:59.480 --> 0:16:01.440 up with you this morning, and thank for your time. 0:16:01.560 --> 0:16:03.320 And I's been an upsetting weekends, so thank you very 0:16:03.400 --> 0:16:05.520 much for joining us, Lisa Beattie, Frenning HIGs and that 0:16:05.560 --> 0:16:12.240 they full of collects justice Ruth Bettikinsbeck. Well, we've tried 0:16:12.240 --> 0:16:15.480 to do this morning with work from Lisa fran Heisen, 0:16:16.000 --> 0:16:19.160 David Our, David Weston is get your people with real, 0:16:19.520 --> 0:16:23.280 real tangible experience in this uproar. One of those is 0:16:23.360 --> 0:16:26.920 Russell Wheeler out of the University of Chicago. He's former 0:16:26.960 --> 0:16:31.000 deputy director of the Federal Judicial Center and at Brooking's 0:16:31.040 --> 0:16:33.720 as well, and we are thrilled that Dr Wheeler could 0:16:33.760 --> 0:16:35.800 join us this morning. Dr Wheeler, I want to go 0:16:35.840 --> 0:16:39.960 back to nineteen fifty six and Dwight David Eisenhower, who 0:16:40.000 --> 0:16:43.960 needed the Catholic vote badly. Cardinal Spellman was given it 0:16:44.000 --> 0:16:47.040 to him. You need to hire a Catholic and they 0:16:47.120 --> 0:16:49.400 literally went out and got a guy they thought was 0:16:49.480 --> 0:16:53.440 somewhat conservative and Mr Brennan. Well, that you know changed 0:16:53.480 --> 0:16:57.160 over the years. But we have many many times, back 0:16:57.200 --> 0:17:00.520 to the Middle Supreme Court of the eighteen eighties, we 0:17:00.600 --> 0:17:04.800 have many many times gone through this, haven't we, well, 0:17:04.960 --> 0:17:07.160 many many times gone through what if it's gone through 0:17:07.280 --> 0:17:11.760 election year of vacancies? Not really, there have been eight 0:17:11.840 --> 0:17:16.520 by my account. One of them was the Brennan vacancy 0:17:16.560 --> 0:17:21.480 created by Sherman Minton, whose health failed him. Eisenhower recessed 0:17:21.480 --> 0:17:25.840 appoint to Justice Brandon. Then the Senate handily confirmed him 0:17:25.840 --> 0:17:30.120 in early nineteen fifty seven. That was not controversial, but 0:17:30.720 --> 0:17:32.760 you know, we've come a long way since those days. 0:17:33.400 --> 0:17:35.960 Those days back in the nineteen twenties and justices were 0:17:35.960 --> 0:17:38.960 confirmed basically on the day they were nominated. It's a 0:17:38.960 --> 0:17:41.840 different world. It's a different world today, and what world 0:17:41.880 --> 0:17:45.040 would you expect to see her as a president? Moments ago, 0:17:45.240 --> 0:17:48.720 says he's taking the line of conservative Republicans, let's go, 0:17:49.160 --> 0:17:53.920 let's get this done by the election. Can they accomplish that? Well, 0:17:54.000 --> 0:17:56.719 I they have enough time. I mean, they'd have to 0:17:56.880 --> 0:17:58.879 rush it through. But the Democrats, so they have a 0:17:58.880 --> 0:18:02.040 few monkey ranches. They can slow things down, but not 0:18:02.200 --> 0:18:05.800 much really. So they get there fifty votes plus pence, 0:18:05.840 --> 0:18:08.560 they'll they'll be able to confirm a justice pretty much 0:18:08.560 --> 0:18:12.200 any time before the election or after the election. It 0:18:12.280 --> 0:18:16.080 all hinges, I think on on whether or not how 0:18:16.080 --> 0:18:21.440 many Republican senators decide that it's too hypocritical to vote 0:18:21.440 --> 0:18:26.320 to confirms Trump appointee at this point? How many at 0:18:26.320 --> 0:18:29.320 this point given what happened to Merrick Garland, for you know, 0:18:29.359 --> 0:18:32.040 back in two thousand sixteen, there's been some discussion by 0:18:32.040 --> 0:18:36.159 some Democrats that if Republicans push a nomination, nomination and 0:18:36.240 --> 0:18:39.920 confirmation through, they would possibly talk about packing the court 0:18:40.320 --> 0:18:43.560 if Joe Biden does win the presidency. How realistic is 0:18:43.640 --> 0:18:46.520 that threat? Well, I think it's a lot more realistic 0:18:46.520 --> 0:18:49.080 than it was a couple of days ago. I was 0:18:49.160 --> 0:18:52.680 quite skeptical of that, figuring that you know, you don't 0:18:52.720 --> 0:18:57.119 tamper with institutions that lightly. But I must admit I 0:18:57.160 --> 0:18:59.600 think there's gonna be a lot of pressure to counteract 0:18:59.680 --> 0:19:04.280 a a midnight appointment as what this is? What this 0:19:04.320 --> 0:19:08.040 would be late in the late in the election season 0:19:08.080 --> 0:19:10.800 by a president who you have to say, it looks 0:19:10.800 --> 0:19:12.720 like he's not going to get re elected, so it's 0:19:13.480 --> 0:19:16.280 it's um, it's not a pretty picture. And I think 0:19:16.280 --> 0:19:18.399 the Democrats will come back if they have the Senate 0:19:18.400 --> 0:19:20.280 of the House and the White House, they're going to 0:19:20.359 --> 0:19:23.240 seriously consider doing something to off set it. So what 0:19:23.280 --> 0:19:25.119 would that look like? I mean, this was tried by 0:19:25.200 --> 0:19:27.440 FDR back in the day, But what would a court 0:19:27.440 --> 0:19:33.399 packing kind of measure proceed as as likely? Well, Roosevelt's 0:19:33.400 --> 0:19:36.520 was a little more duplicit. As Roosevelt said, I want 0:19:36.520 --> 0:19:40.960 the authority appoint another judge for any any appellate judge 0:19:41.000 --> 0:19:44.240 over the age of seventy. Um. This is quite direct. 0:19:44.320 --> 0:19:46.359 It just says the Court has been at ninth since 0:19:46.400 --> 0:19:51.560 eighteen sixty eighteen sixty seven traced the size to eleven. Well, 0:19:51.600 --> 0:19:53.639 that's that just there's a lot of work to the 0:19:53.640 --> 0:19:56.680 Supreme Court carpentery shop. But that's all they about. That's 0:19:56.680 --> 0:20:00.680 about all this entail. This is critical. This is just 0:20:00.680 --> 0:20:03.800 just critical. Though the act, the Supreme Court Act of 0:20:03.920 --> 0:20:08.400 eighteen sixty nine, got us to nine members. Is that 0:20:08.640 --> 0:20:12.840 sacral saying? Is that just something that's untouchable. Well, you know, 0:20:12.880 --> 0:20:15.640 the reason it's nine is because at that point there 0:20:15.640 --> 0:20:18.720 were nine circuits and the justice's job back then was 0:20:18.800 --> 0:20:21.359 largely just serve as trial judge on what used to 0:20:21.359 --> 0:20:25.359 be called the circuit courts trial courts, nine circuits, nine justices. 0:20:25.440 --> 0:20:27.800 That's the reason that went up and down when the 0:20:27.800 --> 0:20:30.119 Court locked it in at nine. There's nothing magic about 0:20:30.160 --> 0:20:33.320 that number. It's come, it's come to be regarded that way, 0:20:34.119 --> 0:20:37.280 and most supreme most state supreme courts are nine or less. 0:20:37.440 --> 0:20:40.879 Most world common law courts are are nine or less. 0:20:40.880 --> 0:20:44.920 But you know, in eleven court member member court confunction obviously. 0:20:45.280 --> 0:20:47.520 So this is one final question, and this is just 0:20:47.560 --> 0:20:52.960 so important. You're not uncomfortable forgetting about conservative liberal with 0:20:53.040 --> 0:20:57.080 the idea of an eleven member court. I am uncomfortable 0:20:57.119 --> 0:20:59.359 with it, but I think there's a lot of justification 0:21:00.000 --> 0:21:03.280 if the Republicans ran through this light in a an 0:21:03.280 --> 0:21:06.840 election by a president who's clearly has no he has 0:21:06.840 --> 0:21:10.840 no popular mandate whatsoever to impose a very conservative federal 0:21:10.920 --> 0:21:14.560 judiciary on the country. He ran on that and he 0:21:14.600 --> 0:21:17.760 lost the popular vote massively. So I think the course 0:21:17.840 --> 0:21:20.280 legitimacy is already going to be in tatters if he 0:21:20.760 --> 0:21:25.480 gets another appointment, and it's it's just one more ratcheting 0:21:25.520 --> 0:21:29.159 down of the of the institution. This has been hugely 0:21:29.200 --> 0:21:32.120 beneficial Russell Wheeler, Thank you so much. Dr Wheeler. Of course, 0:21:32.119 --> 0:21:34.959 with Brookings of the former deputy director of the Federal 0:21:35.000 --> 0:21:42.920 Judicial right now, a four hour conversation with Timothy O. 0:21:43.040 --> 0:21:45.680 Barn You can do that with his knowledge of our 0:21:45.800 --> 0:21:48.400 economic politics. Were thrilled that he could join us today 0:21:48.440 --> 0:21:52.160 from Bloomberg Opinion. Tim mcbrian, you and your team after 0:21:52.280 --> 0:21:57.600 right next, I want you to write about the Senate 0:21:57.680 --> 0:21:59.960 decisions that need to be made. I want you to 0:22:00.080 --> 0:22:03.080 do that right now. Collins has spoken, Murkowski has spoken 0:22:03.680 --> 0:22:07.359 of Alaska, Collins of Maine. There's many others. Let's start 0:22:07.400 --> 0:22:11.200 with the former presidential candidate Romney of Utah. Is it 0:22:11.320 --> 0:22:15.800 just a given that he won't support the president on this? Um, 0:22:15.840 --> 0:22:17.680 I don't know that's a given, Tom. I think it's 0:22:17.680 --> 0:22:22.520 a really hard call. I would think that Romney would 0:22:22.640 --> 0:22:25.480 have the same perspective on this is Murkowsky and Collins, 0:22:25.520 --> 0:22:29.760 But I don't know. And imagine there's some horse trading 0:22:29.800 --> 0:22:31.960 going on as well. We spoke to Russell Wheeler of 0:22:32.000 --> 0:22:35.119 Brookings today and he mentioned eight times this is a 0:22:35.240 --> 0:22:40.440 curseince eighty, etcetera. How did the Democrats respond besides raise 0:22:40.480 --> 0:22:42.359 a lot of outrage and raise a lot of money. 0:22:42.400 --> 0:22:47.480 What is their plan? Well, I mean they're powerless right 0:22:47.520 --> 0:22:53.040 now until the election, uh happens because the Republicans stroll 0:22:53.080 --> 0:22:55.520 the Senate and and and the President is going to 0:22:55.600 --> 0:22:57.080 name somebody by the end of the week, and then 0:22:57.080 --> 0:23:01.280 there's going to be thirty nine days to election. To UM, 0:23:01.320 --> 0:23:04.040 I think all Democrats can do at this point is 0:23:04.080 --> 0:23:08.560 rely between now an election day on the integrity and 0:23:09.400 --> 0:23:15.240 courage of Republicans who want the process to remain above board. UM. 0:23:15.280 --> 0:23:17.879 After election day, the real wild cards will then be 0:23:17.920 --> 0:23:23.320 at the Senate, change his hands and if it does, hum, 0:23:24.320 --> 0:23:25.880 you know, then there's I think gonna be some real 0:23:26.880 --> 0:23:32.000 real mud wrestling around this. If McConnell goes ahead and 0:23:32.040 --> 0:23:34.119 Trump goes ahead, and they push this through during a 0:23:34.200 --> 0:23:42.400 lame duck period before next January, and um uh that's 0:23:42.400 --> 0:23:44.480 how it plays out, then I think the issue for 0:23:44.520 --> 0:23:48.480 Democrats will be do they seek retribution come January? Do 0:23:48.520 --> 0:23:51.320 they decide to expand the size of the court and 0:23:51.440 --> 0:23:55.199 make DC in Puerto Rico states? And that's that's going 0:23:55.240 --> 0:23:56.920 to be level three of all this. There's gonna be 0:23:56.960 --> 0:24:00.640 a whole cascading series of events around this. Tim what's 0:24:00.680 --> 0:24:06.200 the downside to President Trump for trying to push this through? Um? 0:24:06.240 --> 0:24:10.480 You know, I think uh, I think for from where 0:24:10.520 --> 0:24:14.720 he sits, nothing because his his strategic view, well doesn't 0:24:14.720 --> 0:24:17.800 have a strategic view. He all he has been about 0:24:17.960 --> 0:24:22.960 is courting his base and and I think putting up 0:24:23.000 --> 0:24:27.320 a conservatives with good bona fides is going to appeal 0:24:27.359 --> 0:24:30.080 to his base. But I think this could be really 0:24:30.119 --> 0:24:36.159 problematic for Republican senators in swing states who are going 0:24:36.200 --> 0:24:39.960