Let's Find Common Ground - Jared Bernstein & Maya MacGuineas. Saving Lives and the Economy

Episode Date: May 8, 2020

The world is struggling with a devastating global health emergency, but pressure is building to end lockdowns and ease other restrictions. What are the best ways to restart the U.S. economy without risking public health? We discuss how to find common ground while navigating this challenge. Guests: Jared Bernstein, former economic advisor to Vice President Biden in the Obama Administration and Maya MacGuineas, President of the Committee for a Responsible Federal Budget. 

We're all in this huge crisis together. It's an opportunity for at least some form of consensus, but our divided dysfunctional politics get in the way of doing things better. Finding solutions. And that's why we're launching Let's Find Common Ground. I'm Ashley Naltite. And I'm Richard Davies. We're bringing together smart, passionate people from different points of view and different backgrounds to shed light, not heat, on the problems we face.

That doesn't necessarily mean agreeing, but being in the same room, having a conversation. Episode 1 Starting over, Saving lives and the economy. We're joined by Jared Bernstein and Ryan McGinnis, all four of us in our route studios working from home. Jared was chief economist to former Vice President Joe Biden. He was deeply involved in the White House response and stimulus bill after the last economic shock. The great recession that started in 2008. Today, he's a senior fellow at the Centre on Budget and Policy Priorities.

Maya McGinnis heads up the Committee for Responsible Federal Budget. Maya has studied the federal budget and mounting debt for years, and in normal times, she's more of a budget hawk than Jared. But these are not normal times. Jared and Maya, welcome to Let's Find Common Ground. Thank you. Let's start with you, Maya, saving the economy and protecting public health. What's most important right now? So the most important, the number one priority at this time is fighting the pandemic, getting as much testing, doing as much research in terms of medication, ultimately vaccinations, and figuring out how we can minimize

the effect of that, because without tackling the healthcare challenges and the obvious levels of confidence that are related to that, I don't think we'll be able to make nearly enough progress in getting the economy back on track. So, Jared, what about the tension between people's health and the economy? I think there's a false tension and a true tension. The false tension was well described by Maya, the idea that we either have to adequately test and trace, or we have an economy capable of recovery. In fact, if we don't do the former,

if we don't get our health act together, the economy won't be able to reopen because people won't feel safe engaging in commerce. I think the tension that hasn't been quite identified enough, we're starting to see it in some of these protests that are happening now, is the idea that there's one group of people who are very well insulated from what's going on. And if you're one of these people, and I'm one of them, who clicks into Zoom meetings

all day, is busy, is drawing a paycheck, you're in a very different group than a lot of other people who aren't. And there's a tension growing between elites on one side that maybe isn't the right word but it's the word that comes to mind, kind of lecturing people on the other side saying you don't understand the dynamics of the health emergency, so just shelter in place until it's done and we'll tell you when it's okay to come out. That tension is real as well in my opinion. So you have some sympathy with the protesters? I have some sympathy with the protesters, but there's kind of two groups of protesters.

There's people who are genuinely saying, we have to get back to work and we're willing to make a different trade-off than those of us who are doing very well right now. And then there's this other group that's very politically motivated and they're being, you know, kind of stirred up by a lot of sort of right-wing agitators and that's that's different. I don't have any sympathy for them. I think we have to be mindful of this potential gulf between those of us who are fine and those of us who can't afford to shelter in place too much longer.

For many people, having to shelter in place, meaning not being able to work, not having access to the funds the government is providing, and really having their economic security put in a jeopardy or their health security, this could end up being more dangerous for them than the actual virus. And that's from where you see this agitation, which I think is understandable. People saying, it might be good for the overall economy, but if I can't eat, if I can't get the

medicine I need, if I can't take care of my kids, or I can't juggle the job, and just to have my kids being at home, it's not working for me. We've had a fair amount of common ground over the need for quarantine, social distancing, and other measures to protect people from the health impact of the pandemic, but could that common ground fall apart over this debate on exactly how to restart the economy? Yeah, I mean, I think there are different tensions within the restarting debate and where you stand has a lot to do with where you sit.

Polling data has shown that people are actually pretty worried about getting back to life too quickly. People are risk averse generally generally speaking, that's just a psychological truth about humans, and when we can't see the enemy, and this gets back to the lack of testing, we're particularly risk averse. I just think that there's kind of three groups. There's those of us who are doing well and clicking into meetings all day and drawing a paycheck, and you know, oftentimes a pretty fat one. There's those of us who are on the opposite side of that line and are doing you know very badly. You know there's 40 million people out there who don't have paid leave. If they miss work

they don't get a paycheck and they typically have about zero in terms of savings. So they're extremely uninsulated from what's going on right now. And then there's this third group, which are the people who are still working. A lot of those folks in the health care field, some of them are at the very top of the income scale, surgeons and doctors and other orderlies are at the very low end. So I think for every one of these groups,

there's a different set of tensions and your question about whether how those different groups respond to this gradual reopening that you know has to happen. I think it's going to be different depending on their group membership. But all three of those groups depend on something that's not happening, which is adequate testing. And the fact that we've dropped the ball on that is just a massive on-goal kick. And Maya, what about that soccer analogy from Jared? My son's a goalie, so I hate thinking about on-goals. I always put the pit in my stomach every time I think about on-goals.

So I do think the issue that's been surfaced is one that I was thinking about from the very beginning of this is how much are we willing to sacrifice in our economy to save how many lives. And it's a very kind of brutal calculation that you sound very heartless for even bringing up. But I would say that is the kind of rigor to these policy discussions that we should always be willing to take. And sometimes I worry in the kind of rigor to these policy discussions that we should always be willing to take. And sometimes I worry in the world of policy making the politicians try to want up each other and how much money they spend just to show how big their hearts are. Is it possible we could end up spending too much money and then regret that we have this

massive pile of debt as a result? The American government spend too much money, that's impossible. I'm just kidding. I think that the likelihood at times like this in my experience, and I've been through the recession formally known as the Great Recession, which at this point isn't looking as horrible as it used to, and I was in the thick of it back then working for the Obama administration. I've been through a number of recessions. I worry that we'll do too little. The other thing I worry about that pushes the other way is not that we won't spend enough

money, but that we'll get too little bang for buck in the money that we do spend. So that will spend it in ways that are politically motivated but economically inefficient. Maya, you lead the group committee for a responsible federal budget. You're very concerned about spending and debt. How do you see this question? I think there are two big risks here. The first risk is that we will not plan enough or that we will stop putting in measure to stabilize the economy prematurely because of concerns about debt. And right now the debt is growing at an astronomical level as somebody who worries about the debt professionally. It gives me heartburn non-stop, but I need to be really clear. This is exactly

the moment that borrowing was made for. So I'm very worried that we will stop spending, we'll spend too little, but I am also worried, this is where Jared and I probably differ more. I am very worried that once we get through this, we will have a massive mountain of debt, and that's when the politicians will say, we can't do anything about it. It is easier to borrow money than to pay for things.

Politicians may seem like they're arguing, but when they end up just saying we're going to give lots of unpaid for tax cuts and spending increases and we've compromised, that's a compromise that just means we're borrowing trillions of dollars, where the compromises are really chuffed is when they have to bring the debt back down when the economy is healthy. The past expansion, which was a record long expansion, since the president's been in office, he's signed into law $4.7 trillion in new borrowing

during a very strong economic expansion. So I'm worried that we'll see on the other side of this as well so that we might borrow too little now because it's concerned about the debt, but that we won't do anything about the debt when the economy is strong again. The problem, and I'm agreeing with Maya here, the problem is not that we're doing too much now, it's that we did quote too much earlier.

When your economy is closing in on full employment, which was the case before this crisis, that's when you want your fiscal gap, meaning the difference between what you collect and what you spend to start closing. And that wasn't the case. In fact, it was opening wider, the gap between what we collect and what we spend. So we cut taxes to the tune of $2 trillion. That's the Trump tax cuts. Very much tilted towards the high end

and frankly those folks were doing really well already so they didn't need more goodies but we also put a bunch of spending on the deficit so before we got into this when the economy was booming historically booming economies have brought in tons of revenue this economy wasn't doing that and what just drove me nuts and continues to do so is people who voted for those tax cuts getting all wound up about the budget deficit, especially at a time where even Maya agrees and Maya has been, as she said, very hawkish on these issues,

that we should be doing what we need to do in terms of borrowing and spending right now to temporarily offset the contraction. It's not the temporary stuff that gets you into fiscal trouble. It's the permanent stuff. So Maya are both parties to blame? What we've seen in the past years was a huge unpaid for tax cut. It did a lot of damage followed by two huge unpaid for spending increases that It did a lot of damage followed by two huge unpaid

for spending increases, but also did a lot of damage. I'm an independent. I don't like that we look at the world with two sides. But we will always, if people want smaller government, you will always have people who want bigger government. We will have to compromise because this is a country filled with both. And the compromise shouldn't be, we just

won't pay for anything. So I disagree. We found something to disagree on. I think it's just like really unsubstantiated to say that there are people who want smaller government. There are lots of people walking around mouting their support for smaller government, but they continue to sign every single bill that you just criticize. The problem is that there's a bunch of rhetoric, perhaps on both sides. I hear it more on the right, but perhaps it's on both sides. There's a bunch of rhetoric about how I want small government, but it's the old St. Augustine

thing. Give me fiscal rectitude, but not yet, not today, not on this bill. One, it's not so much that I want small government. I can see arguments for both sides. I want pay for government. I don't want my kids to have to pay for my government. The way you get small government, if that's what you want, is not by cutting taxes.

It's by cutting spending. Because on the right, this pretending you get the reckoning taxes isn't true. But this left side oftentimes pretending you can pay for everything just by taxes on millionaires and billionaires also isn't sufficient for the kinds of big spending programs we're hearing so we need to be more honest about all of the policies that people are saying in their political talking points. Well I've written I've written extensive articles on all of the points you just made, including emphasizing that we can't achieve the progressive agenda simply on the top 1%, that taxes have to increase

more broadly on more groups of people. You're listening to Let's Find Common Ground. I'm Ashley. I'm Richard, more with Jared Bernstein and Maya McGinnis coming up. BELL RINGS Our podcast brought to you by Common Ground Committee. It's public events, inspire citizens and leaders

to make progress on issues through civil public discourse. Bringing light not heat to public discourse, that's our motto. We put forums together where we bring panelists from opposite sides of a tough issue. Please welcome Secretary Condoleezza Rice. Please welcome Secretary John Kerry. Chris Wallace. Maggie Paderman. Michael Steele. Donna Brazil. We have to get back to a place, I think, in society where we can foster civility in our conversation. We need a new vocabulary to talk about race. I agree 100% with Donna in terms of moving back into that space

where we have a civil conversation. But folks, it's got to start in a neighborhood. It's got to start in a community. It's got to start most especially in a home. Watch full events online at commongroundcommittee.org or on our Common Ground Committee YouTube channel. Now back to Jared Bernstein and Maya McGinnis. When we talk about a lot of this stuff, even though the numbers are huge, there's been this deficit for quite a while, it's really difficult for everyday people to get their

heads around. It's difficult for me to get my head around this, and I was a business reporter for a long time, because it's so abstract. So how do you and your kids are going to be, you know, some of them are graduating really soon. They're going to be coming into this world where we're trying to pay all this off, talk a little bit about who will be most affected by this and how we make this matter to them by making them understand exactly what is it stake. Well, just when you mentioned my kids, boy to my kids wish I would talk about something other than

the deficit. Boy, boy, would they like that. I wrote a quick story, but when my daughter was quite young, I think it was about five. My husband went to her class and explained what his job was. And then I said, oh, Ah, Ah, Anika, would you like me to come to school and talk about the deficit? And without me to be, my daughter goes, oh, sorry, no, it's illegal. So that's how much my kids care about this issue.

Trillions mean nothing. This is what I do about this issue. Trillions mean nothing. This is what I do for a living. Trillions mean nothing to me. Billions mean nothing to me. Millions barely mean anything to me. Like these numbers are way too abstract. And the deficit to quote great economists, Trollie Schultz is more like the termites in the basement in that the effect it has is in the way at the foundation of the economy. Not something you can see, like spiraling healthcare costs, or job loss, or saving for retirement, or student debt. The problem with the deficit is that it can have a negative effect either gradually by having slow gradual effects on our economy, on economic growth, on standard of living, on

our dependency on foreign countries. Again, we borrow 40% of the money to finance our deficit annually from other countries. And those are countries that we are not necessarily aligned with. So there's a lot of vulnerabilities that come with it. Or it could lead to a lot of spiky quick problems. We're leading them with very little flexibility

to chart their own course, because we've pre-committed so much in promises and in interest that we will owe on the debt. So I see that pretty differently. I think of this very much in terms of good debt and bad debt. And I worry just as much about leaving my children a disinvested economy where we fail to invest in the kind of public goods, meaning government-funded goods and services that will make this country far less functional, productive, welcoming to them as they grow up.

I've got a senior in high school who's going to miss her graduation because in part because I mean the virus is not Donald Trump's fault. But the delayed reaction to it, the lack of attention to the warnings that were here, the disinvestment in our healthcare community. This is a dysfunctional government lack of investment that's going to make the world a lot worse for my and everybody else's kids. Charlie Schultz is wrong. The deficit doesn't eat away at the economy like termites.

If it's being invested in things that are really important and useful for the future in providing people in neighborhoods that are fraught with poverty and inequality with the kinds of upward mobility and opportunity that they've always lacked in part because of racial discrimination. Those are really good smart investments that no private firm will ever make. So I don't really like this idea of saying there's this big chunk of money out there that's going to screw the future. When in fact, we're undermining the future by not adequately investing in it today.

Reopening the economy, and I don't know where both of you will find common ground or disagree. Are there certain sectors, Jared, that should open sooner rather than later? And are there others where perhaps they do need to be shut down for quite a long time? I don't know that there are obvious sectors, even the restaurants in the hotel sector, which are the most obvious, could potentially be gradually reopened. And in fact, some of that discussion is ongoing.

It won't look like the restaurants that you're used to and tables will be separated and you may have to have your temperature taken on the way in. And there's all kinds of wrinkles that to go on as we go. I like the way Andrew Cuomo says, if we're not gonna go from red to green, we're gonna go through yellows. We will probably have sporting events before you know it, but they'll just be on TV.

There won't be fans in the stands. I happen to have a college student home. She's a sophomore at college. I have a senior who's supposed to go to college, so I'm very focused on getting these kids back out of the house. I'm going to presume they're not going to listen to this. And I think colleges are an interesting case because I think again, they may be able to open, conditional on the kinds of testing and tracing we've talked about earlier,

they may be able to open, but not for everybody to come back, not for everybody to come back at once, people who live far away may have a tougher time coming back because they'd have to relocate very quickly. So I think there's this weird average of social distancing and commerce that we're going to be experienced and we've never done anything about this like before so it's a little hard to describe. Do you think there's greater urgency Maya in getting manufacturers back, people who make stuff? I mean I think if what you're talking about is supply change, one of the things that

we've, many people are concerned about and I put myself in this camp as realizing that the interconnectedness of a global economy has left us vulnerable in a lot of places when you are dependent on other countries who are also going through a pandemic for your masks, for your ventilators, or inputs into your medications. That's a vulnerability. I think we're going to rethink in a lot of ways. If you're talking about domestically where we have been hardest hit, I think construction

and manufacturing probably won't be the hardest hit of all the sectors. I think the real question will be some of the sectors that go through massive disruption and don't return to the way they were before. Such as? Well, I mean, something I've been thinking about today because I have a friend who runs a gym, but I don't know that small gyms are ever going back to where they were. And all the things that people are doing online

that they might like better, you don't think I'm flying across the country for three hour meetings the way I used to. And it turns out these video conferences are pretty effective. I am going to a restaurant, not like, because I really enjoy that. And I feel like I'll be much more comfortable doing that But I think there will be more thinking about technology and education

Like Jared I have kids at home. I have an eighth grade or a tenth grade or I'm watching them learn online Some things are working really well and some things are terrible and the social isolation is not Not healthy for them and it's not healthy for us Their parents, but I do think watching the scale that you can have of brilliant professors who can reach tens of thousands or hundreds of thousands of students. And we've always known this to be true, but we resisted those changes. Those things will be sped up. And so I guess I look at this moment as there are some industries that have benefited.

A lot of technology, for instance, because it's created a connectivity that we could not have gotten through this without and we've seen how useful it's been. Some that have been not very affected at all, some that have been harmed but will bounce back really quickly and some that will be changed forever. Jared, what about the impact on trade and whether the pandemic could lead to a setback for globalization and supply chains that rely on products made in different countries? I think any card carrying economist will argue in favor of increased trade flows because it increases the supply of goods and has favorable price effects. But there's been a real exposing of the downside risks of supply chains. And we saw that in Trump's trade war as well. I remain a great opponent of the trade war, but we have to recognize that when those chains are threatened, it is very tough for commerce.

So if we were to produce more here that we're currently importing from abroad, that would actually be favorable in lots of ways for American growth, but it would also be good for jobs because those blue collar jobs pay higher than average and I think that would be a plus. And what about the government and the huge role it plays in the economy? I hope the government is seriously changed and reformed after this, but I think that this crisis has exposed a set of really intense vulnerabilities in our federal sector in particular. And boy, if we don't learn what I believe are the right lessons and come out of this, trying to improve that functionality, trying to build the

insulation that we lack in key areas, then you know we're going to be back here sooner than we want, then it will be our own fault. By Jared just mentioned that the government will need reforming, that some government institutions have performed much better than others. What's your view on that? Well, I'm not sure if Jared and I would agree on what the solution should be, but we certainly agree that a lot of problems have been surfaced. And our group, the Committee for Responsible Federal Budget, has also launched a different

project called Fix Us in the past year because we've been really aware of how the division and dysfunction in government has stood in the way of making any progress on a hard policy issue, from our perspective, dealing with national debt, but I think that applies to many policy issues. Can we make this an opportunity for American reset? So instead of coming out of this more broken, could we come out more unified and more functioning? I think looking at leadership has been something

that we've all been thinking a lot about as we've looked at the president and the governors and then finding leadership and real security from the frontline people in our economy, from the doctors to the supermarket workers. I also think issues of federalism are gonna be rethought and rediscussed massively as we've seen how different states are handling this.

And a final thing is, I think about the resilience that government needs to promote and that there's certain things we now know you have to have set up from urgency and it's food supply and it's medical supply and it's housing and it's communication and it's security. And how we're going to strengthen all those institutions. We have lost trust in our leaders.

We've lost trust in our institutions. We've lost trust in each other due to a massive amount of polarization and failure in a lot of ways. And how we become strong enough to come together and work on those issues, I think will be the real sign of whether this country remains the remarkable, kind of in the remarkable position that's been as in the ancient going forward for the coming decades. I think it's a huge issue.

That's my amiguinness with Jared Bernstein on Let's Find Common Ground. These podcasts are a production of Common Ground Committee. Find out more about our work and our mission at commongroundcommittee.org. Subscribe to Let's Find Common Ground wherever you get your podcasts. And podcast reviews help listeners find us. Miranda Schaefer is the producer and editor of Let's Find Common Ground. We get production and research help from Eric Olson and Donna Vislaki of the Common Ground Committee.

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