America's Talking - Episode 64: Clinton & Obama Economist Says U.S. ‘Has a Serious Inflation Problem'

Episode Date: September 16, 2022

Join The Center Square's Executive Editor Dan McCaleb & D.C. Bureau Chief Casey Harper as they discuss: Truckers, small businesses, train industry warn of ‘dire consequences’ if rail strike occurs. Producer price index rises 8.7% in past year. Inflation report: Food prices continue sharp rise as gas costs drop. Clinton, Obama economist says U.S. 'has a serious inflation problem'. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hello, everyone, and welcome to the America In Focus podcast, powered by the Center Square. American Focus is a production of America's Talking Network. I'm Dan McAulb, executive of editor of the Senator Square Newswire Service. Our mission is to fund high-quality public interest journalism that promotes accountability and fiscal responsibility and government. To support great podcasts like this one, please donate by clicking the link in the show description. Joining me again today is Casey Harper, the Center Square's Washington, D.C. Bureau chief. Casey, how are you? We're doing good, Dan.

I think I'm doing better than you, though. I'm sorry. I'm sure that, well, I'm, I fear that your annual two-week vacation to Martha's Vineyard may be a little more complicated than years past. I'm not going to be heading to Martha's Vineyard, although, as we'll talk about in a moment, there are several people have traveled to Martha's Vineyard this week. Casey, we're recording this on Friday, September 16th. Lots of news to talk about, as usual. We seem to have averted what many said would be an economic calamity with thousands of freight rail workers set to go on strike this morning. But a tentative contract agreement was reached in the early hours Thursday.

But let's start with all the news this week on the southern border and the huge surge in illegal immigration since President Biden first took – office. Several more Texas counties declared an invasion this week at the southern border with Mexico, bringing the total to 29. Texas Governor Greg Abbott continues his busing of migrants to so-called sanctuary cities, including Chicago, where Governor J.B. Pritchker this week declared an emergency disaster because of the 500 immigrants bused to the state. Florida Governor Ron DeSantis flew 50 immigrants to the wealthy island of, you named it earlier, Martha's Vineyard and Massachusetts. Democrats say the Republican governors are using these migrants as pawns in a political scheme. But the Republican governors fire back saying Democrats have been ignoring the humanitarian

crisis in states like Texas and Arizona. Casey, where do we start? What do you say? Well, I mean, I guess you don't want to start with your vacation. That's fine. I mean, you could, you might be able to make a, you know, head down to Florida and then get a free flight up to Martha's vineyard or I know you're in the Chicago area. It sounds like you can take a free bus ride up, back up, just buy a one-way ticket south. And then there's a lot of trains and buses heading back up. You can get on for free. You're making light of a very serious. Oh my goodness. Yeah, things we never do on this podcast. But yeah, yeah, you're right. This is the big story of the week. I am making kind of light of it joking about it. But this is the thing that everyone's

talking about. And I think what we're really seeing is. is something that's been bubbling under the surface for years and years and years, finally come up to the surface and come to the top of the new cycle because, you know, for whatever reason, some of these Republican governors on the border have gotten more, you can call it a backbone. You can call it, you know, some people call it cruel. Some say, hey, you're finally getting a backbone and doing what needs to be done. But they're bringing attention to an issue that so many other states can conveniently ignore

And so, you know, there's a lot of different angles to tackle this. I think we've seen, as you referenced so many, like, you know, we're coming up on dozens of counties in Texas declaring that there's an actual invasion. The number of illegal immigrants who are coming across the border monthly has hit, you know, new highs. It's far higher than it was even a few years ago. And we're talking about millions of people a year at this point coming across illegally. And so, you know, I think I do understand. some of the criticism about, you know, is this really fair to the migrants to bust them around?

But on the other hand, I understand people who say, hey, it's funny. It's like, it's really rich to hear so many Democrats complain about 50 migrants in Martha's Vineyard when there are, you know, thousands coming across every day in these much, you know, poor border towns that are having to deal with it. Yeah, and that's sort of the baffling thing about it. This has been going on since, since January of 20th. 21. President Biden has been pro any kind of immigration legal or otherwise, it seems, changed U.S. immigration law without congressional approval. Not only are illegal immigrants flooding into the country,

the Department of Homeland Security, and the Border Patrol, they've run out of space to house these so they're essentially releasing them into Texas and Arizona and New Mexico communities. Pritzker in April, or excuse me, Governor Abbott of Texas in April, started busing many of them to Washington, D.C., and then this summer added New York to his route list, and then at the end of August, added Chicago. So far, about 500 of these illicit. immigrants from Texas have arrived in Chicago, and that was enough. 500 was enough for Illinois Governor J.B. Pritchker this week to issue an emergency disaster proclamation, denouncing Abbott's what he calls busing scheme. Yet Texas counties, beginning in the spring of last year, 2021, started

declaring emergency proclamations because of the thousands. of illegal immigrants that were flooding their communities. And Democrats seemed to ignore the issue then. But now, as you mentioned, this is making national headlines finally because of Governor Abbott's and now Governor DeSantis of Flores' actions. But they're largely being criticized. Why wasn't the media talking about this border crisis last year? Yeah, I mean, you know, the media talks about it occasionally, but in a way, the border crisis, I think, is a boring issue for the media because nothing ever happens on it. I mean, if you live in a border state, it's very much in your face. But there has been very little movement on the border in any significant way. It's a totally deadlocked issue, um, issue split down the middle where you can't really get much traction. It was kind of like the way the abortion issue was for for so long before Roevie, before the Supreme Court stepped in and made the movement. But if Supreme. If Supreme.

court stepped in, there would have been no movement on the abortion issue likely. I think it's the same with the border. I mean, there's a lot of impacts, a lot of American circle, but politically, there just doesn't seem a path forward. Even, you know, former President Donald Trump really made that one of his main issues. And relatively, he didn't accomplish much. He had, he put up some more security. He did, you know, he did put up some wall. But the big sweeping, you know, immigration changes he promised didn't really come about. I mean, he did a lot more to keep illegal immigrants out of the country through, you know, Title 42 and different things. Then, of course, Biden is doing. But he didn't really fix the problem. And so I think it's

in ways it feels unfixable to people. And so it makes it less interesting. But, you know, I think you Riley pointed out, I do want to say, you know, I've made light of it earlier. But if you look at these buses and these, you know, planes, no, first off, just to play a little bit of defense for some of these governors. No one is being forced on these buses or planes, right? This is totally voluntary. Both Abbott and DeSantis have said that they get written consent from the migrants before they'll put them on the bus. Right. And then when you watch who comes off, I mean, there's videos. And it's almost exclusively men in their 20s and 30s. Right. So I think if people are picturing like a mother with like five young children, a single mom with five young children,

just spilling onto the streets of Chicago, no idea where she is. That's really like, that's not an accurate picture. And that it's a bad assumption. It's, it is a bunch of young men who came here legally, who consented to be bust up north, you know? And so, you know, wrong, right, is that maybe I think it's important to have an accurate picture of what's actually happening. And as you pointed out, it's only a few hundred people compared to the actual million per year now that are coming into states like Texas and Florida. Biden's been in office a little over a year and a half. And by Border Patrol's own data, more than four million,

they've encountered more than four million immigrants at the southern border. Some have been deported back to their home countries. Some have been released into the United States. Where many of these folks are, we don't know. And this does include more than 50 people on the terrorist watch list. At Fox News yesterday, interviewed, I think it was a young Venezuelan man who was bused to Martha's Vineyard in Massachusetts. And they asked him, you know, how did he come about crossing the border and coming to the country? And he told them straight out that the border is open.

Everybody knows the border is open. They can get a better life in a mess. So why not illegally cross the border and come to America? This is after, this is after Vice President Kamala Harris on Sunday twice said that the border is secure. Yeah, I mean, and then Kareen, Jean-Pierre, the White House press secretary, said that the Democrats are doing more than Republicans to secure the border, which that sparked a lot of controversy too. But, and you pointed out this, you know, this number from Border Patrol, that's the people that they know they missed. That doesn't count the people who get by unnoticed, which we have no way of knowing, but can only assume is a very large number. I mean, if Border Patrol, I just say, hey, we caught this many people, and it's like several millions trying to come across the border, then how many hundreds of thousands or more are coming across and not being caught?

And, you know, when they are giving court dates to come back, they don't almost, none of them come back for their court dates. And so they are just released into the country. And so it is kind of a publicity stunt what's happening with these buses. But it's just, I think, I think that it's giving a lot of northern cities a taste of, you know, my home state, Texas, the kind of issues that have to be grappled with every day. How do we take care of these people? What do we do with them? What about IDs and education and their children and the huge administrative?

You know, we always try to take a taxpayer angle on this. And it's a huge, it is a huge financial burden. for local governments to deal with these large populations and processing and all kinds of things like that. So it definitely is a weight on taxpayers. On that front, I mean, Texas Governor Greg Abbott last year launched Operation Lone Star because he says the federal government is ignoring the crisis at the border. So Texas has had to deal with it himself. Texas has spent more than $4 billion in a year and a half just on these border issues. I'm sorry, I interrupt you. Go ahead.

No, that's fine. You made the point. And I think that is, that tells you just the scope of the, it's just such a, we're seeing a really interesting moment of politics player where the scope of the outrage for these buses is so magnified for, you know, a few hundred people and small communities having to spend a few thousand dollars when the daily reality of border cities is hundreds of millions of dollars and millions of people. And it's just been ignored. And so,

I'm really, you know, I don't think in our political, you know, looking ahead, like, what does this mean? What's going to happen? I don't think we really have a political climate in the House or the Senate to really see anything substantive happen right now. But it may be that in a few years, we look back at what's happening now and say this was the beginning of some actual real movement on this, say, you know, in the next, after the midterms or 2024, if there's a new president, new majorities or if Republicans are able to, you muster up enough seats. They might actually be able to do something more subsidized on this, and we'll look back and say this was the beginning. But one more topic I just want to briefly touch on on the border crisis before we move on,

is the fentanyl that is being produced in Mexico and smuggled across the southern U.S. border by drug cartels that control large portions of the border on the Mexican side. 18 state attorney generals this week demanded that Biden classify illicit fentanyl, a very deadly potent drug as a weapon of mass destruction because of what it's doing to American citizens. So in addition to the people that's flooding across the border, this fentanyl and other narcotics, illegal narcotics, are also being smuggled into the country and distributed, not just in the border states, but distributed throughout the country. And that's a huge problem.

It is a huge problem. And I think people don't fully understand it because they think, well, I mean, come on, don't do fentanyl if you don't want to overdose. But fentanyl is now being, like, laced into all kinds of drugs and making – Opioids and others. Yes, all kinds of drugs and making them basically potentially fatal. And people don't know they're using fentanyl because fentanyl is being put into everything. And so I think that's something important to remember.

people may be used to taking the same kind of drug or the same dosage, and then one day they take the same dose they normally used to taking, but it has fentanyl in it and it leads to an overdose because fentanyl is so dangerous. Let's talk about this averted freight rail strike briefly here, Casey. This week, there were concerns nationally that if freight, more than 10,000 freight rail workers went on strike. It was scheduled to begin this morning, early this morning, that it would have dramatic impacts on the economy, cost more than $2 billion a day, extend the supply chain crisis that we experienced last year. Things have gotten better, but that it would make the

supply chain that much worse because these freight trains, transport goods across the country. But workers and the railways reached an agreement overnight, Thursday night. Tell us more about this one. Yeah, this is really interesting and had so much of the nation's business leaders really sitting on edge because this would have been from all the leaders that research I did and people I talked to, this was a potentially catastrophic economically, catastrophic event. Because such a large percentage of our supply chain still relies on freight and trains. And they may come as a surprise to people who just are used to things being dropped off to via an Amazon truck. But

so many things like ethanol, grain, you know, big raw goods are transferred around the country using freight. And so, you know, everyone was raising the alarm. Truckers, the truckers groups, for instance, were saying, hey, we cannot. pick up the slack if the trains go down over the weekend. It's not like we can just assemble out of nowhere, this army of truck drivers who are going to drive. There's only a truck driver shortage. Right, exactly. The only is hurting from a lack of drivers. Go ahead. That's right. No, you're absolutely right. And we've barely recovered from COVID and all the supply chain issues there. I mean, this is a quote from the American Truckers Association President Chris Speer. He said, idling all 7,000 long distance daily freight trains in the U.S. And that's how many it would be 7,000 every day. day would require more than 460,000 additional long-haul trucks every day, another 460,000 trucks on the highway. He said, which is not possible based on equipment availability and an existing

shortage of 80,000 drivers. So as you pointed out, we're 80,000 drivers short. And they want to, you know, this would have required another 460,000, not to mention a truck from those guys. I mean, you know, and you might find it hard to produce 460,000 trucks when the freight trains aren't trains aren't running. So this, you know, that's one example. This, the American Railroad Association estimated this would cost $2 billion per day. So 7,000 trains would cost the economy to $2 billion per day. So this was like a economic nuclear event on the horizon. It was a lot of pressure. And, you know, to his credit, without getting into all the details of the, you know, the pay raises which are discussed. And there was talk about time off and sick leave, things like that. Biden was able to broker a deal between these two and prevent,

which would have been just catastrophic economic event. Yeah, well, crisis averted. Hopefully it's a tentative agreement. Union workers still have to vote to ratify the tentative agreement. I think everybody's hopeful that they do. It was, I should say it was a pretty generous offer, significant pay raises and other things. So anyway, We'll see what happens there. Moving on, though, more news on inflation this week, Casey. It costs continue to be significantly higher than last year. What is the news on inflation this week?

Yeah, we had two major federal markers of inflation come out this week. And I would say this is a great moment where it pays to read theCenterSquare.com. as you know, Dan, patting ourselves on the back is a long history on this podcast and this radio show. But you speak to that. Yes, well, as always. But the media coverage on this was, you know, varied some because we're in this weird last two months on inflation data where you have to kind of look between the lines to see, read between the lines to see what's happening. So overall, top line inflation numbers on consumer prices and producer prices have pretty,

much held steady in the last two months. If you look at the past 12 months, we still see that there's been a major increase, nearly 9% producer price increase, for example, whereas, you know, wages haven't even tried to keep up with that. I mean, that's a very high inflation numbers. But the last two months, it's been about even. It hasn't increased significantly. So. But isn't that because in large part, Of course, we saw the record high gas prices in June. The average price of a gallon of gasoline in June topped $5 a gallon for the first time in history. And gas prices have been steadily declining since then. But even though gas prices have been steadily declining, you would think that would mean, okay, inflation is going to start coming down again. But it hasn't. It's been stagnant, as you said, the last two months. So that means other costs, particularly food costs have continued to rise. Yeah, you're absolutely right. And that is that is kind of the sort of the point I'm making here, which is that so much of

the price increase that we're seeing in other goods like grocery prices, which have just absolutely soared. I mean, over 13% grocery price increase in the last 12 months. And for our listeners who go to the grocery store every day, that'll come as no surprise to them. but these ongoing price increases across several categories have been offset by a major, I mean, very unusual decrease in gas prices. We saw this big peak over summer, $5, and it's just plummeted, you know, really plummeted since then.

Now it still is higher than it was when Biden took office. But that decrease, which is unusual, has offset so many of the price increases. And so it'll be really interesting to see what happens in the next few months on inflation data because we can't maintain this decrease in gas prices forever. I mean, it can't become free. Gas is only there is a bottom to how low gas can go. And so once gas prices remained constant, I think you're going to see, unless something big changes, these inflation numbers go back up.

And another thing I'll point out is that a lot of critics and experts, especially actually the former Obama administration and Bill Clinton administration experts pointed out that the percentage of inflation that has been caused by the pandemic is going down. So while this latest, you know, August data said, you know, inflation hasn't risen much much, it showed that almost none of the inflation now is being caused by the pandemic or by, you know, automobile prices. And so Biden has always said, well, inflation is because of the pandemic. It's because of Russia. And it's because of automobiles. have become much more expensive because of a supply chip shortage, which has been partially true.

But now we're seeing the impact of both the pandemic and the chip shortage has really diminished. And so you can't blame these price likes anymore nearly as much on either pandemic or chip shortage, which is a really interesting development, which leaves only other factors like federal spending, like supply chain issues, like the really out-of-control money printing we've seen recently. And there's a lot that goes into higher prices. But it'll be interesting to watch the next couple months. I think we will see those prices go back up as soon as gas prices stop declining. You mentioned final two months of the federal fiscal year we're into now.

So we'll see at the end of the fiscal year where that's at. You also wrote this week, Casey, about the Clinton and Obama administrations, economists from those two Democratic administrations, saying that inflation is a serious. problem of the Biden administration has not tried to downplay it, pointing more to the job situation, which is still pretty good in the country. But what do these economists tell you? Or what do they say? That's right. This is really interesting because it came against the backdrop of President Biden having an event at the White House this week where he touted the Inflation Reduction Act and the Gains there and all the benefit of that. But that same week, we saw these two inflation markers come

out. And then we saw, for instance, Lawrence Summers, who was the Treasury Secretary for President Bill Clinton. He also directed the National Economic Council for President Barack Obama. So, you know, he has no, apparently, you know, no political acts to grind against a Democratic president. And he clearly has the experience. And he said the U.S. quote, has a serious inflation problem. And I'll just read this quote here. Core inflation is higher this month for the first, for the quarter, higher this quarter than last quarter, higher this half of the year than the previous one, and higher last year than the previous one. Summer said, median inflation used to be a favorite indicator for team transitory this month. It was at its highest ever reading. So what he's saying

is, you know, people who try to downplay inflation used to point to, oh, look at the core, look at core inflation. But now core inflation is one of the most troubling statistics, right? And I referenced earlier this point, but this data point about. about other outside factors contributing to inflation. But Harvard professor and former chair of President Barack Obama's Council of Economic Advisors, his name is Jason Furman. He made a similar point, and he made that point about how new and used automobiles and pandemic affected, basically the pandemic, their percentage of increase in inflation

is, you know, really is there. but even other factors. It's just not, it's not making as big a deal. So you have to look, other factors besides the pandemic and the chip shortage are what's causing inflation now. If you look at previous quarters, the pandemic and chip shortages had a much bigger impact. If you look, especially in 2021, the chip shortage for cars was a very significant impact in rising crisis. But now it's almost nothing. So Furman made that point. So you have Obama and Clinton advisors saying, hey, this inflation, it's not just to be blamed on the pandemic. It's worse than maybe people are saying.

And the last thing that experts are saying is just that it's going to be harder to get out of this than maybe people realize and that the Fed is going to have to take more drastic steps and raising interest rates to deal with this inflation, which means higher unemployment. I saw numbers as high as, you know, maybe six and a half percent unemployment to get this down. And of course, when the Fed raises interest rates, that just means negative. economic consequences all around. Well, thank you for your insight. As always, Casey, inflation will be a topic that we talk about more in the weeks and

months to come, probably illegal immigration and the surge at the border as well. Hopefully the freight train strike is something we won't have to talk about again in the future. But for this week, that's all the time we have. A reminder to our listeners, you can find all of the Center Squares podcast at America's Talking.com. Take a look. Please subscribe. there is no cost.

This has been the America In Focus podcast for Casey Harper. I'm Dan Mc Caleb. We'll talk to you next week.