Odd Lots - Ezra Klein On the Legacy of Bidenomics

Episode Date: November 4, 2024

The Biden administration has overseen a revival of so-called industrial policy in a way that we haven't seen in years. Major efforts are underway to revive or reinvigorate US production of semiconductors, batteries, and other key technologies. But it's not clear if these efforts will have any legs and sustain a new trajectory of US policymaking. Was it just a blip? Or does this represent a new era in terms of how we think about the relationship between the government and the economy? On this episode, we speak with Ezra Klein, host of The Ezra Klein Show, about the legacy of this era. We talk about different possible paths under both a Harris and Trump administration, as well as what other policy areas may come into vague in the years ahead. Read More:Bidenomics Leaves a Blue State Industrial Heartland BehindTrump Threat to Biden’s Industrial Policy Hangs Over Asian FirmsBecome a Bloomberg.com subscriber using our special intro offer at bloomberg.com/podcastoffer. You’ll get episodes of this podcast ad-free and exclusive access to our daily Odd Lots newsletter. Already a subscriber? Connect your account on the Bloomberg channel page in Apple Podcasts to listen ad-free.See omnystudio.com/listener for privacy information.

Thanks for listening to Odd Lots. Follow the show on Amazon Music for more future episodes or just ask, Alexa, play the Odd Lots podcast on Amazon Music. Bloomberg Audio Studios. Podcasts Radio News. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthaw. And I'm Tracy Allaway. Tracy, it's almost here. We're almost to the November Fed decision. Okay, we are recording this on October 30th. Do you think by this, by this, time next week will actually know who's won on the Wednesday, the day after? You didn't continue my joke about how next week is the Fed decision. You just went straight to the obvious thing. That's okay. We're all fried for obvious reasons. Also, isn't it payrolls data on

Friday? Yes. Yeah. So by the time this episode comes out, payrolls will have been out. But yes, there is a lot going on right now. But one thing that's happening is the election. I can't keep track anymore. There's too much. When people are listening to this, we're going to get this out before the election. But yes, we may know very soon who the next president of the United States is. But whatever happens, whatever happens next week with the Fed or with the election, it's clear that Biden is no longer going to be president, right? And I think it's like a real moment. We should talk about that because I think to your point, you said it exactly, we may get a Democratic presidency under Harris. We may get a Trump presidency. But we've done so many episodes

in the last four years, particularly around 20. 2022, 2021, others might call it a sort of post-neo-liberal turn, right? This sort of industrial policy. Return of industrial policy. The new supply-side economics. New supply-side economics. And I don't know, like, first of all, I don't know what the legacy of any of these programs will be yet.

It's too soon to say, are we going to be, like, great at making chips and batteries and solar panels and all that stuff? We also don't know if anyone will talk about this stuff at all in the next administration. Was it just like a one or two year thing where people got excited about what I would say policy adventurism? There was this effort to expand the care economy, child care that's sort of fizzled, but they're still maybe interest in that. But I don't know, like regardless of who the next president is, whether we'll see more continuation of these ideas or whether we'll go back to something that just sort of looks more like, I don't know, something people would call normal. I kind of like the idea that we went through like a teenage experimental policy phase. That's a funny way of looking at it.

But you're absolutely right. I think we should talk about what could happen to all of this in the next four years and beyond. Totally. Well, I'm really excited to say because coming to this big moment, we have the perfect guest. We're going to be speaking with Ezra Klein. He is the host of the Ezra Klein show at the New York Times, columnist, famous journalist, done extraordinary things. Everyone knows his name, so no need to add too much of an introduction. But Ezra, thank you so much for coming back on Odd Lots.

Thank you for having me back on one of my favorite shows. And I do want to say that I liked your joke at the beginning, Joe. I thought that was funny. You caught it. I appreciate it. No, it's okay. It brought me back to the self-conscious nerdery of the long block days. Jokes that are really about how boring we are.

It's a beautiful form. The most important thing is still the Fed decision and the jobs report. Look, if I'm going to be honest, first of all, I sort of admire political journalists or people will really pay attention to this stuff because a lot of it hurts my brain. So like the fact to like go in and every day talk about it and pay attention is something that and to take it seriously is something I often find myself not having the stomach to do. And so I'm probably like a little bit less informed on the election than I should be. But some of this stuff, what we call Bidenomics, IRA, the Chipsack, etc. Is this important to Kamala Harris?

Is this part of something that she talks about and sort of conveys on the trail? It's a good question. Any candidate, any politician, has the policy areas that really move them, the things that they think about and talk to people about when they're not on the clock, so to speak. And Harris has a bunch of those. She is amazing and committed and passionate about abortion rights. She's in general very interested in rights speaking broadly, right? She's a lawyer, a former DA and NAG. economics, and I've done a fair amount of reporting on this, is just not the thing that she has been highly attracted to across her career.

So in a way that is a little bit unusual, if you, you know, have been involved in Democratic Party politics for a long time, she is coming in without being highly associated with one or the other schools of thought. She's obviously been in the Biden administration, but whereas Biden had incredibly clear economic lanes and ideas in the Obama administration, It's worth remembering that he brought on Jared Bernstein as his chief economist, which was an unusual move. And Bernstein, who is, of course, now on the Council of Economic Advisors, but he was understood then as a quite heterodox economist, somebody who is holding, like, the left flank of that against, you know, Larry Summers and Jason Furman and Peter Orszag. And so Biden was sort of associated with this more trade, skeptical, you know, lunch pale economics. And Harris isn't really. She's not associated with, like, the theories of the Inflation Reduction Act, although there's no reason to think. think she doesn't support them, not highly associated with like the Chips and Science Act.

The sense of what moves her is not that well known. Now, one thing she has brought to the ticket, which we had not heard before, is a real central focus, at least rhetorically, on housing supply, which makes sense. She's a San Francisco politician. The sort of YIMBY movement in the Democratic Party has gotten a lot bigger, the sense that housing is the price, right, at a time when the inflation rate has come down, that you could really target and that it's at the center of a lot of, policy pathology in the country. I think that's real. So she's bringing that. But yeah, the sense of, she's not running as like the inheritor of the industrial policy legacy here. Wait, she does talk a lot about the opportunity economy and doing stuff to reduce inequality and things like that. Is that just a rebranding of binomics or do you get the sense that it's

actually a departure? The opportunity economy has both never felt to me like it's Bidenomics, although I do want to say I don't think the Biden administration has done a great job explaining or selling what Bidenomics is either. And it's never been 100% clear to me how much that's like the idea from her team that she liked versus how committed she is to it. So when Harris was in the Senate, her big economic proposal was a significantly expanded child tax credit, which she co-sponsored along with Senator Michael Bennett, Senator Cory Booker. There were others on that bill as well. And I think that some of her economic thinking reflects sort of where Democrats were then, right? The opportunity economy is, I think, closer in the way it gets talked about

to the sort of anti-inquality push, the sense that we should have bigger cash transfers to young families, right? She's talked about having a $6,000 credit in the first year of a child's life. But I don't find the opportunity economy. I've read her speeches. I've read her 80-page policy book. It's something I can get my arms around. Every politician says they support opportunity. So it doesn't quite tell you what she doesn't support, right? The key question with all these people is which fights are you willing to pick? So when Biden comes in in 2021, his team is telling me, they're saying publicly, we are going to be the full employment presidency, right?

This is Jared Bernstein. I'd co-written a book with Dean Baker about full employment. They're going to run the economy hot. They're going to spend. They're going to make sure that the wage gains we've been seeing for some years reach the workers who they need to reach. That's true, even as they're dealing with the pandemic. They are going to make sure that they don't undershoot on stimulus, right? This is a team very much forged by the Obama era, to some degree, the Trump era, in which the problem was too little demand.

And the problem was that even growth was not lasting for long enough to reach more marginalized workers who weren't seeing, you know, low-income wage gains, wage gains for black and Hispanic workers. So they come in very clear on which mistakes they are not going to make. They are willing to run the economy hot with the risks that that might entail, which end up coming true, in order to not see the kind of weak recovery that we've seen before. I would like to know that answer for Harris and her team, Harris and her advisors, not to say that we have to know it this second, because it is a really unusual thing to have to create a national presidential campaign from a standing start. But the opportunity economy thing, it doesn't answer that question for me.

Who is Harris not going to be? Which factions is she not aligning with in the way that the Biden folks were not aligning with like the Larry Summers faction of the Democratic Party. That question is open. So it occurred to me, you know, if we're talking about Bidenomics, and you mentioned, you know, Biden has long been advised by Jared Bernstein, who may be a little bit more sympathetic to some of the heterodox thinking in macro. So there's the element of the fact that Bidenomics existed because Biden won and maybe this is how he views the economy.

But it's a little bit of an incomplete story because so even though I lumped the Chipsack into it, that was a bipartisan. thing and there was interest in doing something on semiconductors before Biden even came into office, I believe. And then, you know, you mentioned the Trump era, which if we're talking about some sort of turn or rethink on trade, I mean, it clearly started more under Trump than Biden. Why now? Like, how much of it was like, this is what Biden is into, this is what Biden and this advisors are into versus there is some moment happening in the U.S. economy or U.S. society that created this political impulse to push in new ways?

I think this is a great question, and an important way to think about all these figures. So you can ask what the principle, in this case the president or the presidential candidate thinks. Then there's a question of what their coalition thinks, right? If it's Kamala Harris and a Democratic House and a Democratic Senate, then what the Democratic House and Democratic Senate want to do, what is happening at the center of the coalition we think of as a Democratic Party

becomes really, really important. Then there's a question also of what kind of institutional power structure they're going to face, right? If it's Kamala Harris and a Republican House and a Republican Senate, well, where the center of the Democratic Party is then matters actually less than what, if anything, is in the Venn diagram between Kamala Harris and Mike Johnson. And all of those are very just different conditions, which we should talk about and think about differently. But I do agree strongly with something you're getting at Joe, which is there is a shift in the tectonic plates of economic policy, of policy broadly. So I'm very influenced by this historian named Gary Girstle. He wrote a great book called The Rise and Fall of the Neoliberal Order. Before that, he was known for working on the rise and fall of the New Deal order.

And he's got this whole idea about orders, orders being these structuring agreements between the two parties that shape what is taken for granted. in American politics and policy and what is not. So he sort of describes this New Deal order, which is not just the New Deal as we think about it under FDR, but it lasts from like 1930-ish, you know, when FDR comes in in 32, to the 1970s, when it sort of dies under stagflation and the Vietnam War. But the New Deal order is very importantly concretized

when Dwight Eisenhower takes control of the Republican Party, not Robert Taft, and Eisenhower brings a new deal into something Republicans now support too, in order to fend off the Soviet Union. They need the sort of neoliberal order. You know, we think of Ronald Reagan and then later Bill Clinton with the era of big government is over. There's a lot of deregulation, a lot of support of free trade, a lot of talk about governmental

inefficiency, moving to markets, moving towards outsourcing, much more focus on the individual. And that order sort of dies amidst the financial crisis. And I do think Trump is a disruptive force who creates some of the shape of an order that is emerging, but we don't know which party will control it or exactly what its structure be, but it clearly feels very differently about manufacturing and production. I think in the way that those two orders were both related, first to the power of the Soviet Union in the New Deal Order, and then it's weakening in its fall in the neoliberal order. I think China is the great pressure on our politics and has been for some time. Trump talks about that very explicitly,

but it is surprising then that Biden comes in and doesn't revert to where Barack Obama was on China. Biden goes further than Donald Trump. He goes further than Donald Trump on gating technologies. He adds on more tariffs. He keeps the Trump tariffs. And he uses China as a spur to pass things like the bipartisan infrastructure bill, the Chips and Science Act, which are both very explicitly framed as bills to help American compete with China in terms of infrastructure and scientific development and semiconductor manufacturing. And, of course, the IRA has a lot of bi-American and onshoreing provisions. So I think China is a big part of this. I think that there is a growing sense that there are critical technologies.

like we just simply need to make here or at least have our friends make. I think inflation and the broader affordability crisis have really created a sense that whatever was going on before, we were good at making the price of consumer goods cheap, but actually not good at making the fundamentals of a life cheap, right, health care and education and home, elder care, things like that. And so there's something happening, right? It's Trump, it's Biden, it's Harris, it's both coalitions, you know, they're fighting over it. They don't have the same view of it.

But it's just a wild thing to me to watch, you know, Donald Trump running saying he, you know, help save the Affordable Care Act, right? Like the locuses of polarization are different now. They're, we are polarized over the system itself, right? Elections, democracy, the freedom of the press kind of thing. But there's actually a huge amount of ferment and confusion and uncertainty about the policy consensus and, like, what is in and outside of the things members of Congress might agree on or negotiate over. The news doesn't stop on the weekends. context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gura. Join us every Saturday and Sunday for the new Bloomberg this weekend.

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podcast. Since you brought up China, it is kind of fascinating to me that like so much policy on both sides of the aisle is framed in terms of very intense competition with China or a looming threat from China. Do you think the policy evolution of, you know, the past eight years now would have been possible without an external enemy to sort of catalyze action? I don't. And I think this is a normal thing for politics. I think we actually really underestimate. how important the external antagonist or comparator is to us. Because it isn't just the external enemy. I mean, it turned towards China as a real antagonist under Trump.

That's been very, very important. But if you go back a few years before that, you can just find members of Congress and members of the political elite talking constantly about how our system is gridlocked and it's a vittocracy and we don't get anything done and we can't build anything and look at our shitty airports. Well, over there in China,

look how fast they're moving, look how much they're doing, look how big their great their infrastructure is. Like, look how effectively they're building their manufacturing capabilities. Look how competent their government seems. We don't talk about it in exactly those terms, but I have come to believe,

and I was on the show before to talk about abundance and this sort of move towards ideas about building in American politics. I think I'm part of this, too, that I think that there's been a real pressure on people in American politics to think about what does it mean that America's gotten so bad at building at building public infrastructure, at building homes, at building mass transit, at, you know,

manufacturing critical things. And that comes from the pressure of Chinese competition, right? Not just Chinese sort of where it's moved to the slightly darker form of competition, but even before that, this sense that we seem to be able to innovate but not build. And they seem to be able to build, I think John Arnold put it this way, but not necessarily innovate. and you actually need both. This is actually a good pivot because, right, we talked in the beginning about what might be the different emphasis during a Harris administration. Obviously, there's a very good chance that we get a Trump administration.

There's been noises, obviously, about gutting the Inflation Reduction Act in some ways, but I think it's ambiguous. There's a lot of jobs in Trump areas, red areas that would be gone, I think, without Inflation Reduction Act money. So I think, imagine that complicates the politics of that. And then furthermore, there is what I would call maybe like a conservative or Republican or right-wing industrial strategy. There's obviously the China antagonism, maybe much more explicitly about defense tech, et cetera. But how would you characterize how some of these things morph during a Trump administration?

I genuinely don't think anybody knows at all. And I've been thinking about this a lot over the past couple of months as I've been having a number of people on the American First Movement as a like to call it on my show. And one thing I've noticed is that the universal sense that Donald Trump in his 78th year of life running for his second term as president still doesn't really know what he believes or you cannot know what he believes on any number of subjects creates an immense sense that he can be moved and shaped. Right. The competition going on behind him to wield governing power in his administration is immense. I just had vivid. Vivek Ramoswamy on the show.

And I was so struck by, you know, him really trying to push Trump and why I call more traditionally conservative direction, right? You know, don't try to take over the administrative state, try to, you know, get rid of it, shudder these agencies. And he really sees Elon Musk as an ally in that effort. So you can call it there's like this J.D. Vance wing that is more national populist. And then all of a sudden, here's like Elon Musk and these like right wing billionaires. And they have Trump's here.

And maybe what they want is something a little bit more in between and many ways it looks more like what other Republicans were doing with a much more nationalistic edge. You know, whenever I talk to people about Trump's tariffs, they say his proposed, you know, universal tariff, they're like, oh, he's not going to do that. Trump's a negotiator, right? He's just saying that to get maximal leverage in order to run a really good negotiation. I mean, maybe, maybe not. You know, Project 2025 is an internally contradictory document, and then there are other documents floating around like it that are contradictory to that. You know, Mike Johnson's just said he would repeal Obamacare. I think that's probably unlikely, but the idea that they might pull money out of the

IRA, it doesn't seem unlikely to me. There's going to be a huge tax cliff everybody's going to have to deal with in 2025 as, you know, trillions of dollars of Trump tax cuts come ready to expire. And particularly if Democrats have any amount of power, there's going to have to be a lot of negotiation with them about what you do about that. It feels to me like at this point, we should be able to say better what Donald Trump will do. And I tend to just take the guy at his word on his policies and talk about the tariffs and what their effect on the economy would be. But I will say that if you're taking his movement on its own terms, that is not how it is spoken about or treated. It is spoken about like almost like it's a parliamentary system, right? Like Trump will have to form a government. And inside the government will be

different coalitional partners and they will vie for influence. And then eventually we will see what the king does. And like that almost more maybe it's not parliamentary, maybe it's a monarchy model, is much more how everybody over there is acting. It would be pretty funny if like the Senate or the House started throwing paper and like insulting each other the way they do in UK Parliament. I would watch that on C-SPAN. Esther, can we talk about the branding of Bidonomics? And you touched on this earlier. But it does feel like the administration to some extent has had difficulty messaging the

success of the program. And I think maybe in retrospect, the bet on full employment wasn't the best one. It turns out that Americans really care about inflation more than whether or not their neighbors have jobs. Can you talk to us about that? Like, why isn't it resonating more? It's hard for me to know the counterfactual here, right? What if Joe Biden were 65 years old, possessed of the explanatory and communicative power that Joe Biden had when he was 65 years old? Would he have been able to sell Bidenomics in a different way, practically given the focusing event of a second presidential campaign, right? When the 2012 campaign is happening, Barack Obama, for

part of that campaign is trailing Mitt Romney. But what happens over the course of that campaign, when unemployment is quite high, by the way, I mean, it's above 8% for much of that period. What happens in that campaign is that Obama and his team and Bill Clinton at the DNC convention are able to sell the Obama economic record. Tell a story about it that even though the economy wasn't looking that good yet was a story of recovery, a story of all that we did and averted, and that storytelling worked. Biden just was not able to storytell. I mean, not during his presidency, I would say, and very much not during his campaign. And so the question of what would have happened if someone had really tried to make the case for Bidenomics, really tried

to use the artillery of a presidential campaign, the money, the surrogates, the convention to make that case is hard to know. Obviously, Biden ends up stepping aside, the party unites from Kamala Harris. And Harris, I think, in a way that is wise, but is the lower risk path. Also does not try to sell Bidenomics, right, does not come in and try to turn around where people are on this, right? She talks about what she is going to do to lower prices. She talks about how much oil and gas it has been produced. But she doesn't try to make a giant argument about how Bidenomics has set the structure for not an infrastructure week, but an infrastructure decade or multi-decade project and how we are going

to be building factories at this wild pace in America on and on and on. And we are just at the beginning and how much a Bidenomics investment. in innovation and how we are trying to have these industries of the future here. Like Bidenomics, I mean, somebody's writing a book that's very much about the need for liberalism built around building and invention. Bidenomics is very much built around building and invention. I have my places where I wish it had gone further or where I don't think it's doing enough to confront what actually makes it so hard to build and invent in America, you know, permitting reform and procurement reform and, you know, paperwork and bureaucracy and so on. But at its core, it is really, like,

we are going to make things in the real world. And then the things we need that we don't yet have, like green hydrogen, we're going to pump a bunch of money into inventing them. And that's going to be the basis of the next generation of economic prosperity. That is not a story Harris has tried to tell. Harris has tried to run much more the way a sort of generic Democrat would. She has not wanted, and I think, again, there's probably a lot of political wisdom in this. But she's not wanted to try to run as the defender of the Biden record. She's wanted to, to the extent she can without seeming disloyal, run is something new because people are not very happy with the Biden record.

And she is not herself, Joe Biden. So she's not actually yoked to it in the way he is. This might be actually just another version of the same question that Tracy asked. And maybe the answer again is that the counterfactual would be different if Biden were 65 years old. But he appeared at the picket line for GM. And, you know, you mentioned lunch pail economics, which. which we associate with people taking their lunch pail to work in a factory specifically. There are a lot of factories going up.

And yet it does not seem that Biden is particularly popular, even among union members, maybe some, maybe in the counterfactual, whatever, certainly not. You know, this is that big crisis of the Democratic Party, the white working class, etc. Is the theory of the case wrong? Is the theory that if Biden stands on the picket lines and does a bunch of stuff to build factories, Like, that that will improve the Democrat standing among the white working class? Was that never the theory?

Is that just something that was never actually part of the political calculus? Is it just about politics? Like, what do you see is going on there? I think it is hard to say because, again, I can't run the counterfactual of like the 65-year-old Joe Biden. But I think you have to look at it and say the theory doesn't look very good. It's not just being on the picket line didn't do that much for him. They bailed out the teamsters and they didn't even get the teamster endorsement. They have directly bailed out the teamsters, right?

So forget what you have to communicate. This you should just be able to communicate to the union, right? We did the thing you wanted us to do, like gave your pension plans a big help in hand, and the teamsters didn't endorse him. Part of the loss of the working class for Democrats, I think Democrats always want the loss of the working class, the white working class, to be about economic materialism. The answer Democrats want to hear on that because it is the answer they would most like to respond to, is that you're losing these voters because you have strayed too far from a more progressive

fire and brimstone class war economics. And I'm not telling you that's not part of it. It very well may be. But it doesn't fit the story as we're seeing it very well. I mean, Biden, by the way, is way to the left of Bill Clinton, who did way better with the white working class than Joe Biden is. Biden is way to left of Michael Dukakis, who also did better among the white working class than Joe Biden has. And, you know, the class realignment or dealignment in the country, it has a lot to do with culture. It has a lot to do with senses of who belongs and who doesn't, with views people have on immigration, views that they have on religion. You know, identity is very complex and we are at sort of all levels still a much more post-materialist

society than the left often wishes, at least our politics was. Because honestly, if the politics could just be reduced down to who is going to do better for the working class in terms of, you know, who's going to get the tax credits and the tax rebates and who's going to get health health care and, you know, who's going to stand up to big corporations, the Democrats have a really, really, really good argument, right? I mean, people can always say they should move further left, but, man, they are really quite a bit further left than they were a couple years ago and quite a bit further left than the Republicans are. But if you look around, it just doesn't actually seem to track that. So maybe you should do all those things because they are good things to do, right?

You should walk the picket line because walking the picket line is a good thing to do. You should raise the minimum wage because raising the minimum wage is a good thing to do. But the sense that you're going to kick off this policy feedback loop where by being more popular in your economics, you change who is voting for you in a dramatic sense. We're just not seeing it. And I think at this point the burden is on supporters of his theory to explain why we're not seeing it if indeed it works. I'm Francine Lacqua, an award-winning journalist, and I've got a new podcast, leaders with Francine Lacqua from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious,

who are these people as leaders? I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacroix wherever you get your podcasts. What separates good leaders from transformational ones? I'm Jessica Chen and in season two of leading by example, we'll sit down with executives like Grace Chen of Bertie Gray to find out. It's important to understand where you spike, but also really acknowledge where you don't and find people who can fill those gaps. Listen to leading by example, executives making an impact on the IHeart radio app, Apple podcast, or wherever you get your podcasts. We've obviously

been focused on domestic issues in this conversation, but of course the U.S. is the world's biggest economy and it does not exist in a vacuum. And one thing I'm curious about is your take on, I guess, the international legacy of Bidenomics. Because to some extent, you know, the emphasis on building things in America, building out strategically important industries and things like that, it has generated tensions with some allies like in Europe. You know, this is a place where I think it's hard to say until things play out for longer. I don't know that I think there's a huge international legacy to Bidenomics at this exact moment, right? Countries during this period have been going through a lot of inflation.

There's been Russia's invasion of Ukraine. There's the war that Israel's currently waging in Gaza, now in southern Lebanon. There's so much going on in the world that the question of how the Biden administration is doing their green subsidies just doesn't strike me as something that like the history books are going to be super attentive to. Not everyone is as focused on industrial policy as we are. Yeah, that's fair. And then particularly if Donald Trump comes back in. I think that the main thing people will think about with Joe Biden that has been true is the amount of attention and intention Biden put into nurturing alliances, to being aligned with our partners, to trying to work these disputes out, but also to standing together where America can and would want to on against Russian aggression, on climate, right? There's a million things where they've been putting like endless work into the alliances.

I just don't buy that the industrial policy is just that big of a story of Biden administration foreign policy. policy. Now, the China stuff, I think, is the China side of things, to me, is I don't want to call the, it's obviously not an uncovered story, but if you ask me what has surprised me most about the Biden administration, it has been how hawkish and competitive with China they've been, how they went further than Donald Trump. They did things he did not do, things he really, in many ways, didn't even imagine doing when you listen to speeches of people like Jake Sullivan have given, right? There's a real sense that the old model failed and that this all needed to be rethought and that they are out there rethinking it, right?

I mean, and they've been willing to do this even when it does, I think, have real conflict with other goals in their agenda. On the one hand, they want to have a rapid transition to electric vehicles. You can't hit our climate goals if you don't. On the other hand, they've put a, what is it, 100% tariff on Chinese electric vehicles, even though they're cheaper and they're, you know, good cars and you could bring them in and accelerate the pace of the EV transition. So that's a place where they have found the competition with China trumps something they have often. and spoken of as a very, very high priority, which is the decarbonization and clean energy transition. So what they've done on China to me and the way that they have taken what Trump began almost intuitively and made it into a structured policy that has a sign off not just of the Republican

party under Donald Trump, but the Democratic Party under Joe Biden, that feels like a very big shift that will have very far-reaching consequences. So we've been talking a lot about industrial policy and the Inflation Reduction Act and so forth. But before the Inflation Reduction Act existed, there was a package called Build Back Better. And Build Back Better had hundreds of billions of dollars allocated towards the care economy, child care and pre-kindergarten and paid family leave and all of these things. And that's ultimately the big chunk that didn't make it into the Inflation Reduction Act. And we know these things, paid family leave, universal child care of some sort, they're big deals, particularly, well, for a lot of people, but also for a lot of influential people in the Democratic Party, specifically.

What was the constraint? I mean, I've seen things that, like, oh, there are all these different groups involved and they couldn't coordinate. Some people say it was just like the legislation was sort of bad and unworkable. Maybe it was just the money. Why didn't the care economy part make it in, in your view? and is that something that would, do you think, likely to come up next the next time the political stars align in D.C.? I have a very simple answer to this, and it rhymes with Schmoe-Manchin. Is it really that simple?

It is that simple. Look, there are a lot of problems in the care economy side of the bill. There's a great piece by Rachel Cohen in Box about the kind of crazy interest group politics around it. I think a lot of bits of the care economy side of the bill were not that well designed, right? You can handpick this to death. it didn't pass because they didn't have the votes. And they didn't know the votes because they had a 50-50 Senate split. And very importantly, Joe Manchin was not on board, right?

And that was not his priority. And in a way, in the end, I think it wasn't exactly theirs, at least compared to climate, right? In terms of what the Democratic coalition ranked higher, the climate investments were more pressing to them than the care economy side. Now, if Joe Manchin said yes, could they have gotten Christian cinema, maybe, right? I mean, you could maybe name like one or two or three members. of the Senate who would have at least shaved that down. But I think they could have gotten something out of the care economy package if Joe Manchin had been more open to it, right? Maybe not everything, but something. So they didn't have the juice in the Senate to pass that. I mean, I actually think it's really as simple as that. Now, if Manchin had said, I'm open to this, but this bill, and this was a period of the negotiations were like this, and I'd have to go back and look at what made it into this version of it. But I don't remember how big the original billback better was, but there's a period where it looked like Manchin might do $1.8 trillion. or maybe it was 1.2 trillion, right? There were different.

There was a lot of different things floated. And it was like how much of the climate investments could you keep in? How much of the care economy work could you keep in? And a lot of different menus were offered. And depending on what the constraint from the Senate had been, you could imagine different menus having been proposed. And then the question of how you choose and like how you like have the deal with the disappointment of some of the groups inside that coalition, that would have become very

salient. But in the end, Mansion was a no on the care economy and that's what killed it. Do you have a sense of continuity or lack of it in the next four years? And what I mean by that is we've started all these big projects with like multi-decade timelines, right? And some of them aren't going to be finished for years and years and years and years. And whether, you know, Harris comes in or Trump comes in, it seems like there's there's a question mark over how these programs are going to run. I guess to sum it up, my question is like how much of this is locked in? I think that if Trump comes in, it's not clear to me how much is locked in. I mean, some of it is. I don't think they can get rid of everything in the IRA or the bipartisan infrastructure bill. They're definitely not getting rid of Chips and Science Act.

But I think it is not implausible they would get rid of quite a bit of the IRA, right? That that money might go towards tax cuts or something else. If it's Harris, I think it is locked in. And I think you should expect that a Harris administration will be stocked with many of the same people in the Biden administration. I think that if you imagine who might have been appointed in a Biden second-time term, I don't think those appointments will look very different that the ones Harris will make. She has not shown, as far as I can tell, any actual clear signal that she thinks that the

appointments or the ideological direction on this set of issues should be radically different than where it's been in the Biden-Harris administration. You know, she's known to have a very good relationship with Janet Yellen. If you look at who's been coming in to sort of help create her economic policy, it's people like Brian Deese and Mike Pyle, who are key members of the Biden team. If you look at the sort of people who seem to be advising her, it's all the same people. If you look at the sort of signal she's sending about what she wants to do, it's very largely similar things. Biden is a very coalitional politician.

He had his own views, but he was also governing from the center of the Democratic coalition. Harris is also a very coalitional politician. I think one of the things we don't know about her and the different people, I think, are jockeying to try to define about her, is what her relationship will be with some of the more left groups and figures who wielded more. more power in the Biden administration than people expected them to. Which is one reason, by the way, that when there was all this pressure on Biden to step aside, he was backed up and reinforced by Bernie Sanders, by AOC and members of the squad. Like, that was very surprising that that was who is rallying for Biden. But in a way, it wasn't, because they'd actually been enormously favored in terms of the Biden administration, right?

And in terms of the kinds of people he appointed were very much in the sort of Elizabeth Warren wing of the party. Biden had a very friendly relationship with the left, and he gave them a lot of power. It's at the coalitional government he actually, on economic policy, ran. Nobody quite knows where Harris will be on that. On the one hand, when she ran in 2020, she was terrible at saying no to the groups, and she ended up taking all kinds of positions that she's had to back off from in this campaign. On the other hand, in this campaign, she's backed off from positions like banning fracking or defunding the police with absolutely no ill effects in terms of her political coalition, as far as anybody can tell.

And so the sense that, you know, and she seems to be friendlier, maybe to the business community than Biden was, to me it's very hard to know how all that will net out. She's actually going to have to make these decisions, which right now I think the entire Democratic Party is giving her a pretty big pass on positioning in order to beat Donald Trump.

But, you know, you could see her either being a little bit more kind of pro-business and a little bit less like in this relationship with, say, the Bernie Sanders wing of the party than Biden was, you could see her governing in the exact same way. And you could also imagine really that it's like what Chuck Schumer thinks to be the center of economic policy and the Democratic Party is ultimately what matters here. Those all seem like very plausible outcomes to me.

Ezra Klein, that was so great. Thank you so much for coming back on Oddlots, the perfect guest at the perfect time ahead of the election. And I really appreciate you taking the time. Thank you all. A pleasure, always. You got to come back on when you're on your podcast book tour. When's your book coming out? I will definitely let you know and I will come back on and we will abundance the hell out of it.

We'll want it to hell of it. Thanks, Ezra. Thank you. Thank you. Tracy, I really like that conversation. Just a very good, I guess, scene setter. You know, we don't do a lot of like electoral politics on the show. But it is also true that we've gotten dozens and dozens of episodes in the last few years directly downstream from politics and from political changes.

So it's like we can't like just pretend to exist in a vacuum where that doesn't exist. As much as I'd like to. No, of course not. One thing I hadn't like considered that much. or hadn't focused on is the coalitional aspects that he brought up, like, not just for Trump, who, you know, we know he has a lot of advisors and depending on who's talking to him, you know, he kind of seems to change his mind, but also on the Harris side. I haven't realized that. No, it's true. I mean, there's a lot there. First of all, Ezra sort of alluded to this,

but one of the challenges of trying to figure out what will Trump do under his administration is figuring out who actually speaks for Trump because there are a lot of various organizations. The Heritage Institute put out Project 2025. Then Trump disavowed it. There are a lot of organizations that would like to be the mouthpiece for whatever Trumpist economics are. And I think it's still highly TBD who actually gets that. And so, you know, that's sort of.

You know, it's funny. Just on this point, there's a Goldman Sachs note that like literally just hit my inbox while we were recording this. and they're talking about tariffs under Trump. And, you know, Trump has said 60% on Chinese imports. But Goldman is going ahead and they're like, actually, we think it's going to be tiered across product categories and it's going to look like this. Well, at least they're sticking their neck out there. Yeah.

I don't know. Like, there's always a temptation to try to, like, formulate Trump's policies because many of them are so unclear or, you know, to some people, unbelievable. Yeah. Yeah. The other thing I think that was interesting, too, in that conversation was I liked hearing Ezra's take sort of on the rise and fall of different ideological regions that are bipartisan. So the idea that New Dealism, to some extent, was a bipartisan project after FDR. Neoliberalism, you know, people call it that was a Reagan and Bush and Clinton thing, et cetera. And so the idea that like from Trump starting in 2016 through Biden through 2024, you know, we can talk about Biden. But there was also some other shift happening right now that makes sort of electoral analysis a little bit unclean in terms of, oh, there's going to be a pivot every four years.

Yeah. The bipartisan Infrastructure Act is a good example of that. Yeah. And the Chips Act. Yeah. And the Chips Act. That was like a big thing for him, Republican. So all these things are a little more muddied.

Yeah. Well, this time next week will be interesting, certainly. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Jill Wisenthall. You can follow me at the stalwart. Follow our guest, Ezra Klein. He's at Ezra Klein. And check out the Ezra Klein show, obviously.

Follow our producers, Carmen Rodriguez, at Carmen Erman, Dashel Bennett at Dashbot, and Kale Brooks at Kailbrooks. Thank you to our producer, Moses Andam. For more Oddlots content, go to Bloomberg.com slash oddlots, where we have transcripts, a blog, and a newsletter. And you can chat about all of these topics 24-7 in our Discord. Discord.g.g. slash oddlots. And if you enjoy Oddlots, if you like it when we kind of touch on politics, but also try not to, please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can get all of our episodes absolutely

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