Speaker 1: This is Bloomberg Wall Street Week. What's the state of
Speaker 1: corporate governance? The deficent is a real issue. The US
Speaker 1: economy continues to send mixed signals, the financial stories that
Speaker 1: keep our world fed, action to con concerns over dollar liquidity,
Speaker 1: and encouraging China data. The five hundred wealthiest people in
Speaker 1: the world. Through the eyes of the most influential voices
Speaker 1: Larry Summers, the former Treasury Secretary, star Ward, CEO, Kevin
Speaker 1: Johnson sec Chairman j Clayton. Bloomberg wool Street Week with
Speaker 1: David Weston from Bloomberg Radio. The check is in the
Speaker 1: mail for schools, for states, for restaurants, and oh yes,
Speaker 1: for of American households. This is a special Stimulus edition
Speaker 1: of Bloomberg Wall Street Week. I'm David Weston. President Biden
Speaker 1: pledged to get the virus under control and get Americans vaccinated,
Speaker 1: a priority that is reflected in the stimulus package. Everything
Speaker 1: in the American Rescue Plan addresses a real need, including
Speaker 1: investments to fund our entire vaccination effort, more vaccines, more
Speaker 1: vaccinate tours, and more vaccination sites. About seven percent of
Speaker 1: the one point nine trillion dollars will go towards the
Speaker 1: country's pandemic response, including testing, contact tracing, and vaccine distribution.
Speaker 1: The government is not alone in its efforts to get
Speaker 1: people vaccinated. In North Carolina, Honeywell has been partnering with Atrium,
Speaker 1: one of the largest health care systems in the country.
Speaker 1: We have CEO Eugene Woods. How the campaign to get
Speaker 1: shots in arms is going. Yeah, the challenge has been
Speaker 1: from the beginning is getting enough vaccines. I think you
Speaker 1: see things ramping up and so we're excited about that now.
Speaker 1: Really it's just a distribution issue. I do have concerns
Speaker 1: that we need to to take a state like North Carolina.
Speaker 1: We're about ten million people in North Carolina. If you
Speaker 1: take out the two million that or sixteen and under
Speaker 1: we've got to vaccinate about, you know, to get her
Speaker 1: her immunity. So that's eight millions. That's about seven million
Speaker 1: or so that we need to get vaccinated. And we've
Speaker 1: gotten one point five shots and arms one point five
Speaker 1: million shots and I'm so far, so we still got
Speaker 1: a ways to go. That's aid. We went from about
Speaker 1: the bottom fifteen in terms of states to number one,
Speaker 1: uh last week in terms of over sixty five getting
Speaker 1: shots and arms. So we're gonna continue this path, and
Speaker 1: as as supply becomes more plentiful, I think we're gonna
Speaker 1: be able to continue to use mass mass vaccination sites
Speaker 1: to get shots. Before this this variant comes into play,
Speaker 1: which is what concerns me. Are you getting any resistance
Speaker 1: at all? Because we hear some descriptions that could be
Speaker 1: of the population that just isn't really interested in getting vaccinated. Yeah,
Speaker 1: that's the challenge, right, So if you think about her community,
Speaker 1: depending on what scientists you talked about, we need to
Speaker 1: get about the population vaccinated. Right now, there's about hesitancy
Speaker 1: about about thirty percent that I'm hearing the latest statistics,
Speaker 1: So to get we have to eat into that about right,
Speaker 1: And so that's the work that we're doing right now.
Speaker 1: There are some glimmers of hope um African Americans, for example,
Speaker 1: who have had for all very good reasons and mistrust
Speaker 1: of the health care system. Back in the number said
Speaker 1: they we're going to get the vaccine vaccine. The most
Speaker 1: recent numbers I saw us at six. So we're beginning
Speaker 1: to make some progress, but they're still work to be done.
Speaker 1: So address that question very specifically, because I know in
Speaker 1: New York, for example, that there's a disproportionate number of
Speaker 1: African Americans and Latin X individuals who are more at risk,
Speaker 1: disproportion number who haven't gotten the vaccine yet there they
Speaker 1: are under indexing. Is that true in North Carolina at
Speaker 1: this point? It's true all over the country unfortunately. And
Speaker 1: that's why you've got to be really really intentional about
Speaker 1: your strategies to reach those communities of color. So, for example,
Speaker 1: we have roving bands that we're working with this coalition
Speaker 1: of churches, about sixty churches. They're African American and Latin X.
Speaker 1: And so we're going through the parking lots and and
Speaker 1: we're really saying tell us where we need to go,
Speaker 1: and in the roving bands and think about a physician
Speaker 1: office basically on wheels, and we go to where where
Speaker 1: we're needed sev of the people that were vaccinating or
Speaker 1: people of color. And then when we've done the mass
Speaker 1: vaccination events at Bank of America Stadium, we preferentially opened
Speaker 1: the schedule to those churches another other vulnerable community. So
Speaker 1: you've got to be really intentional about the strategy. The
Speaker 1: one thing that I'm proud working together with Honeywell, the
Speaker 1: Panthers and Motor Speedway. We put together a playbook. Andy Slavitt,
Speaker 1: who's on the President Biden's Corner Virus task for US,
Speaker 1: asked for sort of what have the key lessons learned,
Speaker 1: and so we shared that a couple of weeks ago.
Speaker 1: He shared that with the governors and we're hoping that
Speaker 1: that there's some insights there that could help the country
Speaker 1: do this well. So, Jeanne, if you would take it
Speaker 1: a half step back here from the specifics of the
Speaker 1: vaccination and talking about healthcare provision more generally in this
Speaker 1: time of the pandemic and beyond. We now have a
Speaker 1: new stimulus bill one point nine trillion dollars has a
Speaker 1: fair amounty money in there actually subsidize some uh the exchanges.
Speaker 1: So the people in Ford Healthcare, do you see a
Speaker 1: shift going on because of the stimulus bill in your business? Yeah,
Speaker 1: I mean, I think we're really excited that the stimulus
Speaker 1: bill has a number of important provisions, including, you know,
Speaker 1: additional dollars for for for distribution of the vaccine, and
Speaker 1: there's some other uh part of that that includes helping
Speaker 1: some of these community based centers that are really been
Speaker 1: struggling and also rural care. So we're we're excited about
Speaker 1: that that what we didn't see in that is additional
Speaker 1: relief for providers. Uh and to the extent that we
Speaker 1: would hope. We've been on the front line of this
Speaker 1: health systems and so we're still not out of the woods.
Speaker 1: So we're we're hoping to work with the administration to
Speaker 1: have other opportunities for providing additional support to the health
Speaker 1: systems like ours, because we're still very much in the battle.
Speaker 1: What about the cost of healthcare? We hear from some
Speaker 1: people that with the move to telehealth, which seems to
Speaker 1: have really ramped up during the pandemic, that we may
Speaker 1: actually finally be able to bend that cost curve a
Speaker 1: little bit. Are you finding that in North Carolina? Yeah?
Speaker 1: I mean, I think we could spend the next hour
Speaker 1: talking about the cost of health care and affordability. We
Speaker 1: we do know that it's a multi factorial issue that
Speaker 1: includes pharma, that includes insurance companies, providers, We all own
Speaker 1: a piece of that. But I think that what we
Speaker 1: learned in the pandemic is that we can provide care
Speaker 1: in vastly different ways. For example, we started UM when
Speaker 1: we when we had some challenges with occupancy bed occupancy.
Speaker 1: We started this hospital come program. We've seen fifty thousand
Speaker 1: patients in their home during this COVID UH and that's
Speaker 1: just a different sort of way to deliver care. So
Speaker 1: we really think the learnings that we've had through this
Speaker 1: through this past year will carry forward and among other things,
Speaker 1: will will help with affordability of healthcare. That was Atrium
Speaker 1: Health CEO Eugene Woods coming up. What the stimulus package
Speaker 1: would mean for the states and what the three hundred
Speaker 1: and sixty billion dollars they get will pay for from
Speaker 1: Ned Lamont, governor of the state of Connecticut. That's next
Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Wall
Speaker 1: Street Week with David Weston from Bloomberg Radio. One of
Speaker 1: the most controversial parts of the one point nine trillion
Speaker 1: dollar packages the aid for state and local governments, with
Speaker 1: Democrats insisting it's badly needed to make up for lost
Speaker 1: revenues and for increased costs they've incurred because of the
Speaker 1: pandemic that has led to more than a million state
Speaker 1: and municipal employees losing their jobs. About one fifth of
Speaker 1: the one point nine trillion dollars stimulus package will go
Speaker 1: to states and local governments. The Care's Act, signed into
Speaker 1: law a year ago, included one hundred and fifty billion
Speaker 1: dollars in aid to states and localities. This time they're
Speaker 1: getting three hundred fifty billion dollars and an additional ten
Speaker 1: billion dollars to put toward critical infrastructure projects. Here's New
Speaker 1: Jersey Governor Phil Murphy. We need a big chuck of
Speaker 1: state local aid. And we're not alone. This is every
Speaker 1: American state. That sounds abstract, but what that means is
Speaker 1: keeping the frontline workers, police, fire educators, healthcare workers employed
Speaker 1: in their position, delivering the services that our residents so
Speaker 1: desperately need. But Republicans take a very different view, saying
Speaker 1: the state assistance amounts to a bailout of states that
Speaker 1: have run up their bills under Democratic leadership. Those at
Speaker 1: a focused bill of targeted bill. We need to help
Speaker 1: the people have lost their jobs. We need to help
Speaker 1: our small business. No, it was a payback to New
Speaker 1: York and California. I mean, think about what they've done
Speaker 1: with the state bailoffs that Senator Rick Scott of Florida,
Speaker 1: and it does appear that at least when it comes
Speaker 1: to revenue losses, different states have had very different experiences.
Speaker 1: Here's Jamie Diamond from JP Morgan Chase. Half the states
Speaker 1: revenues went up, they didn't go down. Do they need help?
Speaker 1: So they should be cautious about overdoing it. Get us
Speaker 1: through the problem. Keept the country growing, but you know,
Speaker 1: don't try not to overdo it too much. According to
Speaker 1: the Committee for a Responsible Federal Budget, states and localities
Speaker 1: have received three hundred sixty billion dollars from the federal
Speaker 1: government since the beginning of the pandemic, but states say
Speaker 1: they need more assistance because much of the funding provided
Speaker 1: to them has been limited to specific programs like Medicaid. Again,
Speaker 1: Senator Rick Scott, our state revenues are equal to what
Speaker 1: they year the year before, and they gave more to
Speaker 1: states like New York and California than state. It's like
Speaker 1: my home state of Florida. But I mean, it makes
Speaker 1: no sense how unfair this is to the American public.
Speaker 1: Whatever the merits. In the end, about one fifth of
Speaker 1: the one point nine trillion dollar stimulus package will go
Speaker 1: to states and local governments. We asked Connecticut Governor Ned
Speaker 1: Lamont why his state needed the money. Look, we know
Speaker 1: that we've got our budget set for the next couple
Speaker 1: of years. We know that we don't have to raise
Speaker 1: any taxes. We know that there won't be any broad layoffs,
Speaker 1: and that's all thanks to the state and local aid.
Speaker 1: But more importantly, I love what we're doing on education.
Speaker 1: We have our schools have been open su September, but
Speaker 1: we still have our kids who haven't been in the
Speaker 1: classroom for um nine months. We've got a lot of
Speaker 1: catching up to do, and it's a chance to make
Speaker 1: sure that wasn't a last year. We can build off
Speaker 1: of it. So what are you gonna do with the
Speaker 1: money that you get? I mean, as a practica money.
Speaker 1: You just mentioned employment issues, your budget and taxes, but
Speaker 1: where's the money really gonna go. We're gonna spend it. Well,
Speaker 1: first of all, on education. I can tell you the
Speaker 1: school year doesn't end on June. It restarts again on
Speaker 1: you know, July six, and we're going to have a
Speaker 1: lot of activities in and around camps and learning experiential
Speaker 1: a lot of kids who really haven't been with their
Speaker 1: peers in a long time. Do I everything you can
Speaker 1: to help them catch up. Maybe bring some college kids
Speaker 1: in as apprentice teachers to help them learn and have
Speaker 1: role models there and then come to fall, we'd have
Speaker 1: after school activities, social workers and help these kids hit
Speaker 1: the ground running. Is there any consideration at all of
Speaker 1: extending the school year? Absolutely, I mean whether I legally
Speaker 1: extend the school year or just say, starting July tenth,
Speaker 1: we're going to have a two months of summer programs.
Speaker 1: We'll figure out how to phrase that. So if it's
Speaker 1: in facts the case that the schools are open but
Speaker 1: you don't have all the students back in the classroom,
Speaker 1: what is the barrier? Why aren't they back in the classroom.
Speaker 1: It's it's sort of tragic, Davi. But I mean in
Speaker 1: our suburban towns are more rural towns, predominantly white towns,
Speaker 1: of the kids are back. But a lot of the
Speaker 1: kids in our urban centers, small as they may be,
Speaker 1: were likely to be a children of color. They were
Speaker 1: hit particularly harder, their families were by COVID, and they've
Speaker 1: been a lot more reluctant to get back. But now
Speaker 1: we got our teachers vaccinated, our healthcare um frontline, and
Speaker 1: the schools are vaccinated. They're calling up the kids saying
Speaker 1: come back for the final two months. It's worth it.
Speaker 1: Are all your teachers back are essentially all your teachers back.
Speaker 1: Essentially they're all back. And what other effects we have.
Speaker 1: I'm talking about employment because we saw in the last
Speaker 1: employment numbers for the country the place where we really
Speaker 1: lost a lot was actually in state and local employees.
Speaker 1: What's happened in employment situation in Connecticut? Where are you
Speaker 1: compared to a year ago? Where are you going in
Speaker 1: terms of you know, actual state employees. That number has
Speaker 1: been trending down for quite some time, and frankly, I
Speaker 1: don't see us ramping up a lot. It's not COVID related,
Speaker 1: but we're making more investments in a computer technology so
Speaker 1: we can be a lot more efficient and less cost
Speaker 1: I'll tell you the other thing I'm really excited about,
Speaker 1: David as uh the money for daycare and childcare. We
Speaker 1: lost a lot of employees and the service industry, overwhelmingly women,
Speaker 1: often women of color. And the fact that we're going
Speaker 1: to have heavily subsidize are even free daycare and childcare, uh,
Speaker 1: you know, for the rest of this year, can make
Speaker 1: a big difference in helping them get back into the workforce. Governor,
Speaker 1: what about infrastructure, Because one of the things we've heard
Speaker 1: about is not only a promise perhaps infrastructure coming down
Speaker 1: the pike, but also that some of the money going
Speaker 1: to state and local government could be used for infrastructure.
Speaker 1: Is that true in Connecticut? Uh? That is it's it's
Speaker 1: not big dollars for infrastructure. We need that infrastructure bill
Speaker 1: going through. And we've got old infrastructure here in the Northeast.
Speaker 1: As you know, this stuff was all built, uh you know,
Speaker 1: sixty eight years ago. So what I've got our Department
Speaker 1: of Transportation doing right now is doing the design, build, engineering,
Speaker 1: ready to go. So when the federal government says, here's
Speaker 1: our infrastructure plan, will be funded, Connecticut and get in
Speaker 1: the front of the line and get some of that,
Speaker 1: give us an update. If you could governor on where
Speaker 1: COVID is in the state, it can etiquette. I've been
Speaker 1: sort of watching the positivity rates and they've been coming down.
Speaker 1: For you. Where are you in terms of the extended
Speaker 1: the disease in the state and restrictions. So when it
Speaker 1: comes to um you know, infection rate like the rest
Speaker 1: of the country, we've come down. It's not down to
Speaker 1: you know, one percent, it's hovering around three percent. But
Speaker 1: the good news, David, which people want to pay more
Speaker 1: attention to is Uh, they tend to be younger people
Speaker 1: who are a little more likely to be the ones
Speaker 1: who are infected. Now, Folks fifty five and over overwhelmingly
Speaker 1: vaccinated or will be in the next ten days or so.
Speaker 1: So we have a lot less infection, a lot less
Speaker 1: complications with the most at risk group. So I think
Speaker 1: even though we have sort of a three percent two
Speaker 1: to three percent infection rate, um, it's not really impacting
Speaker 1: our hospitals, emergency rooms. I see us fatalities that those
Speaker 1: numbers continue to get better. Where are you on the
Speaker 1: restrictions Texas? Of course, in Mississippi have just taking them
Speaker 1: all off. It's only voluntary. Where is Connecticut? I think
Speaker 1: I heard on the radio that you're going back to
Speaker 1: a hundred sent in the restaurants. Is that right? Yeah,
Speaker 1: that is true. We're doing uh, you know, restaurants retail
Speaker 1: houses of worship at a hundred percent occupancy. But we're
Speaker 1: maintaining the mask requirement and we're maintaining the six foot
Speaker 1: of distancing. That was Democratic Governor Ned Lamont of Connecticut
Speaker 1: coming up. Everyone agrees that it's important to get children
Speaker 1: back to school, but what does it take to do
Speaker 1: that safely? Randy Weingarten, president of the American Federation of Teachers,
Speaker 1: says the Sinner's Package is the lifeline the education system needed.
Speaker 1: That's next on Wall Street Week on Bloomberg. This is
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 1: Education in the time of the pandemic has been hard
Speaker 1: on teachers and students. Schools across the country would try
Speaker 1: to reopen, only to be forced to close again when
Speaker 1: COVID nineteen cases spiked. Here. Senator Ben Cardon of Maryland,
Speaker 1: are schools need to open safely and be able to
Speaker 1: remain on open safely. The American Rescue Plans sets aside
Speaker 1: about one billion dollars to help K through twelve schools
Speaker 1: reopened by funding improvements the ventilation systems and buying personal
Speaker 1: protective equipment. There's a lot of resources and energy focused
Speaker 1: on making sure that we contain the pandemic and importantly
Speaker 1: that schools can open safely so that all of those
Speaker 1: parents can get back to work knowing that their children
Speaker 1: are are learning what they need to learn in school.
Speaker 1: That's Heather Bouchet, member of the White House Council of
Speaker 1: Economic Advisors. While parents are eager to get children back
Speaker 1: to school. Some teachers unions have resisted a return to
Speaker 1: in person classes for fear of new waves of COVID cases.
Speaker 1: Here's Wall Street Week special contributor Larry Summers entrenched. I'll
Speaker 1: say it, uh, teacher union interests that have resisted going
Speaker 1: back to school have really been putting their own material
Speaker 1: benefit I had of uh, the interests of their kids,
Speaker 1: and that is not the best tradition of the teaching profession.
Speaker 1: Teachers were forced to shift their lesson plans online abruptly
Speaker 1: when lockdowns were imposed last year. According to the Economic
Speaker 1: Policy Institute, a third of surveyed educators felt that the
Speaker 1: training they received for online learning was not useful. We
Speaker 1: can understand and help our teachers use technology in in
Speaker 1: more fulsome ways and more effective ways, and we can
Speaker 1: take leadership at the federal level around broadband and device ubiquity.
Speaker 1: That's former Education Secretary Margaret Spellings. Access to devices and
Speaker 1: consistent internet also deepened longstanding racial and economic disparities in students.
Speaker 1: Here's Robin Hood Foundation CEO Westmore. You know when when
Speaker 1: when schools closed? And in New York City alone, you
Speaker 1: know three hundred thou school children lacked access to devices.
Speaker 1: Under the one point nine trillion dollar stiments, planned colleges
Speaker 1: and higher education institutions would get almost forty billion dollars
Speaker 1: towards financial aid grants for students. Again, Margaret Spellings, we
Speaker 1: have just wide variety from gigantic little cities in our
Speaker 1: flagship universities to you know, very customized learning at smaller
Speaker 1: liberal arts colleges or hbc U S or m s
Speaker 1: I S, etcetera. And so yes, they're all under strain,
Speaker 1: they're all under financial challenge. Randy Weingarten has become the
Speaker 1: face of teachers unions in the United States, having served
Speaker 1: as president of the American Federation of Teachers for over
Speaker 1: twenty years. So we asked her straight up, is it
Speaker 1: the unions who are keeping our school children out of classrooms?
Speaker 1: You know, we did a poll in February early February
Speaker 1: UM and asked our members if we got what the
Speaker 1: a f T had been proposing for a long time
Speaker 1: and then layered on with with vaccines, meaning if we
Speaker 1: were able to have the mitigation strategies that CDC says
Speaker 1: is important. That is also important in all of these
Speaker 1: new studies that show that kids can go back, if
Speaker 1: we had the testing like the NFL had, so that
Speaker 1: you can not only reopen, but stay open because you
Speaker 1: were managing and seeing a symptomatic spread, which is what
Speaker 1: is most of the spread here. And if we have
Speaker 1: vaccine access, so mitigation testing and vaccines. A d eight
Speaker 1: percent of my members said that they were willing to
Speaker 1: be in school with a plan like that because they
Speaker 1: know how important it is for kids to be in
Speaker 1: school and do in school learning. So it's always been
Speaker 1: not an either or for us. It's always a both,
Speaker 1: and how do we make school shore that in school
Speaker 1: learning is safe so that we can make it safe
Speaker 1: for everyone. It's a lot safer than it was, though,
Speaker 1: isn't it. I mean, for example, in Cleveland, there's a
Speaker 1: priority given to vaccinations for teachers as it moved a
Speaker 1: long way the direction you get too, because those parents
Speaker 1: are saying, when do we get our kids back into
Speaker 1: the classroom. Yes, it's moved. I mean, I think what
Speaker 1: you've seen is we've learned a lot last September and October.
Speaker 1: I mean, the difficulty, David, was that Trump refused to
Speaker 1: do any of the things that we asked him to do.
Speaker 1: That the doctors and the experts told us we needed.
Speaker 1: You know, I tease a lot that I'm so studies
Speaker 1: teacher and a lawyer. I don't even play a scientist
Speaker 1: on TV. I have to listen to the scientists in
Speaker 1: terms of what they tell us we need. And what
Speaker 1: happened was we asked Trump and Divorce, would you get
Speaker 1: us data, would you get us the guidance in a
Speaker 1: in a real and transparent way, and would you get
Speaker 1: us the resources. They basically said no to all of
Speaker 1: it and just created the polarization. But you had districts
Speaker 1: and you now have some of the CDC reports that
Speaker 1: kept on trying different things in the fall. We learned
Speaker 1: a lot from them. Biden, the new president is getting
Speaker 1: us the things we need. This, that the mitigation strategies,
Speaker 1: that resources for them, and that's why you're seeing so
Speaker 1: many districts now reopening, and we now have less than
Speaker 1: less than of districts that are still all virtual. So
Speaker 1: there's been a sea change in the last I would
Speaker 1: say two or three months, led by New York City
Speaker 1: now Chicago pretty soon l A and and lots of
Speaker 1: small cities in between. That was Randy Weingarten, President of
Speaker 1: the American Federation of Teachers. Coming up, we take a
Speaker 1: look at just how historic this stimulus package really is,
Speaker 1: with special contributor Larry Summers at Harvard and Neil Ferguson
Speaker 1: of the Hoover Institution. That's next on Wall Street Week
Speaker 1: on Bloomberg. This is Bloomberg Wall Street Week with David
Speaker 1: Weston from Bloomberg Radio. The idea that it's prosperity that
Speaker 1: causes inflation may not have any factual support in history,
Speaker 1: But since when did fact every interfere with Washington policy making?
Speaker 1: That was Lewis Ruckeiser back in January of two thousand one.
Speaker 1: Twenty years later, that debate over what causes inflation is
Speaker 1: dividing economists and policymakers once again in a time of
Speaker 1: easy money and at one point nine trillion dollar infusion
Speaker 1: of support into the economy. We asked economists in Wall
Speaker 1: Street Week special contributor Larry Summers and historian Hoover Institutions
Speaker 1: Neil Ferguson about what we can learn from the history
Speaker 1: of inflation. Well, I think it's pass of a continuum
Speaker 1: of uh acts by democratic administrations that have expanded the
Speaker 1: role of government in alleviating poverty and economic hardships. So
Speaker 1: you can trace a continuous line if you want, from
Speaker 1: the New Deal through Lyndon Johnson's Great Society to this.
Speaker 1: But there's a difference. This is a very very large
Speaker 1: amounts of money relative to the US economy, and it
Speaker 1: implies very large deficits by the standards of of peacetime.
Speaker 1: Remember the CBO pot last year's deficit close to of
Speaker 1: g d P, and its latest projection for this year's
Speaker 1: is around ten percent. These are very large deficits in
Speaker 1: peace time, and they come at a time when the
Speaker 1: federal debt has reached its highest level since the end
Speaker 1: of World War Two. So I think there is a
Speaker 1: kind of key question here which really has to do
Speaker 1: with the macroeconomic implications of pouring quite a lot of
Speaker 1: fiscal fuel on the fire of an economy that is
Speaker 1: already coming back rapidly from the pandemic thanks to vaccination
Speaker 1: and our our rapid approach of herd immunity. Now I'm
Speaker 1: treading into Larry's mind field of of macro here, so
Speaker 1: I'm going to step back and let him comment. But
Speaker 1: I do think that the historical significance is is really
Speaker 1: in terms of scale and the timing of such a
Speaker 1: large fiscal stimulus to the economy. So so, Larry, we've
Speaker 1: heard something similar from you in the past. Now that
Speaker 1: we have the bill I really enacted into law, what's
Speaker 1: the best thing that can happen because of this and
Speaker 1: the worst? From an economics point of view, let me
Speaker 1: just say, on the Democratic tradition, there's a thing here.
Speaker 1: The refundable child Credit, which is less than five percent
Speaker 1: of the total stimulus that we're providing this year, will
Speaker 1: almost certainly be continued, and we'll make an immense contribution
Speaker 1: to reducing child poverty in America. And it's a very
Speaker 1: very positive thing and a huge historic achievement. But it's
Speaker 1: five or less of the total stimulus this year, and
Speaker 1: it's something that will continue. I think the decision to
Speaker 1: put one point nine trillion dollars of stimulus on top
Speaker 1: of nine hundred and fifty billion dollars of stimulus will
Speaker 1: set the economy on fire, with growth at seven or
Speaker 1: more UH this year, assuming we progress against COVID, and
Speaker 1: I think is playing with fire. A simple view would
Speaker 1: be that I think there's a one third chance that
Speaker 1: the Fed will stay behind UH. The curve, inflation expectations
Speaker 1: will ratchet upwards and will become a inflationary country for
Speaker 1: at least a time above the two UH target. UM.
Speaker 1: A second risk is that the Fed will respond. They've
Speaker 1: given all the things they've been saying, their sharp response
Speaker 1: will be unexpected by markets, and as has been the
Speaker 1: case in the past when the Fed has had to
Speaker 1: step in to stop an incipient inflation or incipient bubble,
Speaker 1: it will be a chaotic process with very substantial instability
Speaker 1: and possible recession. And I think there's a one third
Speaker 1: chance that somehow the needle will be threaded and that
Speaker 1: we will UM enjoy a period of very rapid growth
Speaker 1: and there will be a smooth exit back to reasonably rapid,
Speaker 1: reasonable okay UH growth. But I think that we are
Speaker 1: taking very substantial risks, both on the inflation side and
Speaker 1: on the fiscal monetary collision side. That's why, if things
Speaker 1: continue on trend, the interest rate in the first quarter
Speaker 1: of this year will have gone up faster than in
Speaker 1: any year in the last century except for UH nineteen eight.
Speaker 1: That's why you see increasing numbers of indicators pointing UH
Speaker 1: to more rapid inflation, pointing to the development of possible
Speaker 1: UH labor labor shortage. Uh so, I think there are
Speaker 1: very substantial risks on the path that we are on. Neil,
Speaker 1: you wrote a piece, a terrific piece for Bluebird Opinion
Speaker 1: actually on the subject of the history of inflation, going
Speaker 1: back to Milton Friedman, what happened the sixties and the seventies.
Speaker 1: I must say, I have youngsters in the newsroom who
Speaker 1: come up to me and say, I wasn't around for
Speaker 1: inflation last time. How does it work? Are we in danger?
Speaker 1: What do you say to those people? Is this in
Speaker 1: any way parallel to what we saw in the sixties
Speaker 1: and the seventies. Well, I think it's worth looking at
Speaker 1: the nine sixties because I suspect younger people have a
Speaker 1: pretty hazy idea of what happened with inflation before they
Speaker 1: were born, and the bit coal view in my experiences, well,
Speaker 1: that was something that happened in the nineteen seventies because
Speaker 1: of the oil shock. That's not quite right, actually, because
Speaker 1: what happened in the sixties was in the first half
Speaker 1: of the decade inflation was low, stayed well below two percent,
Speaker 1: and then in the mid sixties it took two big jumps,
Speaker 1: first up to three percent, then up to six percent.
Speaker 1: And that that was the moment that inflation expectations became unanchored,
Speaker 1: as we would now say. And I think the key
Speaker 1: here is what can we learn from that experience. So
Speaker 1: that was an increase in inflation that predated the seventy
Speaker 1: three events that caused the oil shock, and it's often
Speaker 1: blamed on the stakes by the Federal Reserve. That was
Speaker 1: the view of the late Alan Meltzer in his history
Speaker 1: of the period, and indeed people at the FED at
Speaker 1: the time acknowledged by ninety eight that they got it wrong. Now,
Speaker 1: the monitor's view was that monetary aggregates had been growing
Speaker 1: too fast and that was the reason things went wrong.
Speaker 1: My view as an historian is that that's kind of
Speaker 1: a simplistic view. It's almost tautological to say that inflation
Speaker 1: is always and everywhere a monetary phenomenon, which was Freedman's view.
Speaker 1: It's partly a fiscal phenomenon. And this is of course
Speaker 1: what Larry has been arguing in his recent commentary that
Speaker 1: if you do really large fiscal deficits that has potentially
Speaker 1: inflationary consequences. But the key is expectations. The FED today
Speaker 1: seems to have a theory that inflation expectations will not
Speaker 1: be affected if there is a temporary bumping inflation in
Speaker 1: the second half of this year or the beginning of
Speaker 1: next year. I don't think that's historically very well founded.
Speaker 1: The lesson of the sixties is that if you do
Speaker 1: the great society, if you do butter, and then you
Speaker 1: do guns as well, which was Vietnam, then you can
Speaker 1: get inflation expectations unanchored. And I tried to make the
Speaker 1: point in this piece because I don't want to be
Speaker 1: called in inflation is to a second time. I plead
Speaker 1: guilty to having been more worried than I should have
Speaker 1: been a bad inflation back in twenty I think what
Speaker 1: made the sixties different is that they were using a
Speaker 1: war in Vietnam, and we're really not in any comparable
Speaker 1: military engagement, you know, Afghanistan. Yeah, we're still there, but
Speaker 1: the presence is is tiny. I think what would change
Speaker 1: the game today, and I want to emphasize this point,
Speaker 1: would be if the U. S. And China suddenly got
Speaker 1: into a serious foreign policy crisis over say Taiwan or
Speaker 1: the South China Sea. That historically is the kind of
Speaker 1: thing that time and again has caused inflation expectations to jump,
Speaker 1: and I have a chart in the piece which goes
Speaker 1: all the way back to for the UK trying that
Speaker 1: nearly every time inflation expectations in the UK surged it
Speaker 1: was because of a war, and usually a war that
Speaker 1: was going wrong. Sorry, as I recall your one third
Speaker 1: one third one third, you had two thirds with inflation
Speaker 1: that something needed to be done about, whether it was
Speaker 1: or not. The first one was it gets out of control.
Speaker 1: The second one was the FED has to act too sharply.
Speaker 1: Is there a way? What is the proper way for
Speaker 1: the FED to manage that? Right now? To avoid those
Speaker 1: two alternatives, I think they need to become much more
Speaker 1: attentive in their rhetoric to the risks of UH inflation
Speaker 1: and the need for action. The FED traditionally makes clear
Speaker 1: that it's going to be preemptive with respect to assuring
Speaker 1: price stability limited inflation. Now the FED is mostly concerned
Speaker 1: with preempting the possibility that it would have to raise
Speaker 1: rates by explaining how if there is inflation, it will
Speaker 1: just be transient UH and so forth, by directing attention
Speaker 1: not just to employment goals, but to employment goals for
Speaker 1: specific UH demographic groups. Thanks to former Treasury secretary in
Speaker 1: Wall Street Week special contributor Larry Summers and Hoover Institution
Speaker 1: senior fellow Neil Ferguson Finally, one more thought, what difference
Speaker 1: does the day make here or there? On Wednesday, White
Speaker 1: House Press Secretary Jen Saki insisted that it was the
Speaker 1: forty nine day of the Biden presidency that conveniently made
Speaker 1: the president's prime time address the next day fall exactly
Speaker 1: halfway into his first one hundred days, a time that
Speaker 1: he said as a milestone for getting a lot done,
Speaker 1: including getting one hundred million Americans vaccinated. Axios actually has
Speaker 1: picked up on it. They noted that whether it was
Speaker 1: really forty nine or fifty days, depending on whether you
Speaker 1: counted his inauguration day as his first day in office,
Speaker 1: a dimly echoed that early dispute, remember it, between the
Speaker 1: Trump White House and the Press Corps over how many
Speaker 1: people really attended President Trump's two thousand sixteen inauguration. But
Speaker 1: whether it was forty nine or fifty or even fifty
Speaker 1: one days, no one can deny that the Biden administration
Speaker 1: has done something bigger and faster than just about anybody
Speaker 1: could have predicted. Something on the order of President Obama's
Speaker 1: stimulus plan to pull us out of the Great Financial Crisis,
Speaker 1: or even even President Roosevelt's New Deal package to pull
Speaker 1: us out of the Great Depression. History will judge the consequences,
Speaker 1: but will likely forget the exact timeline, just as it's
Speaker 1: a long forgotten that FDR's first one hundred days radio address,
Speaker 1: well it actually happened on day one forty three of
Speaker 1: his administration. That does it for this episode of Wall
Speaker 1: Street Week, I'm David Weston. This is Bloomberg. See you
Speaker 1: next week.