Transcript: New Government: The First 100 Days with Jared Bernstein

MR. IGNATIUS: Good morning and welcome to Washington Post Live. I’m David Ignatius, a columnist for The Post.

Our guest this morning is Jared Bernstein, member of the Council of Economic Advisers, and one of the key people who is trying to help President Biden in this first 100 days tackle the problem of our economy and get it growing faster.

Jared Bernstein, welcome to Washington Post Live.

MR. BERNSTEIN: Thanks so much for inviting me, David.

MR. IGNATIUS: So, I want to start with a question that's very much in the news, and that is where the negotiations stand on a COVID relief and stimulus bill.

The headline in The Washington Post this morning says, "Relief Bill Poised to Pass with or without GOP." The headline online in The New York Times this morning is, "Democrats Press Ahead on Stimulus as Biden Signals Openness to Changes."

So, let me ask you, which is it? Are you heading on a reconciliation, Democrats standing with themselves, or is this still a negotiation?

MR. BERNSTEIN: Well, I was just thinking that, as beleaguered as they are, now the American people have to read about budget process, reconciliation. That's a very tough ask.

I would put it this way, David: President Biden's top legislative priority is passing the American Rescue Plan. This is a plan that is calibrated to do two things, to do them quickly, to do them effectively and efficiently, more so than has occurred thus far. And those two things are: to finally gain control of the virus and distribute and produce the vaccine; and to launch a robust, inclusive, racially equitable expansion economic recovery that reaches everyone, not just the top leg of the K, folks who never missed a paycheck, who might be clipping coupons and doing well in the stock market; but those on the bottom leg of the K, who have been disproportionately hit by this pandemic and its economic hardships, as well. And I've got lots of evidence of that that I'm sure I'll be sharing with you. So, that is the president's top priority.

Now, Joe Biden--I know that you followed his career for years--is congenitally interested in reaching across the aisle, cooperating, acting in a bipartisan manner. And for that reason, he has been talking, and we have been talking for weeks to folks from the other side, and, in fact, if you listen to Republicans coming out of that meeting earlier this week, you'll hear the same sense of urgency, I think, from many of them that the president has been espousing. The difference is that the magnitude of the plan that Biden has put forth is, again, key to meeting the crisis, and that is a top priority for him.

MR. IGNATIUS: So, let me ask you about some particulars. You said after the meeting the meeting that the president had with some top GOP senators that you believe the Republicans are debating in good faith. And I want to ask you specifically what signs have you seen of that, of a willingness on the GOP side to compromise.

MR. BERNSTEIN: There are numerous areas where we are in a very similar place in terms of who needs help and in terms of the urgency, particularly of controlling the virus and distributing the vaccine.

We certainly differ in terms of the magnitude of the approach. I think our mantra--and by the way, and I'm happy to get into this--this is rooted in very solid economics, is that the danger is not going too big; it's going too little. So, this is a go big or go home, put this virus behind us finally, and launch this recovery in a robust and reliable way.

But if you look at virus control, vaccine distribution, if you look at helping businesses, if you look at getting checks to families and helping folks who are struggling, there are similarities in terms of the urgency of those issues, but there's also differences in the magnitude, and we believe our magnitudes are set to meet the challenge.

Some areas where we disagree, by the way, is that the Republicans have left out state and local relief, and as I'm sure many of our viewers know, because The Washington Post gets into stuff like this, states have to balance their budgets. The federal government, in case you haven't noticed, does not. And that means that states are actively laying off educators, firefighters, cops, public health workers. That is completely antithetical to getting our arms around this dual crisis. And so, the president is committed to that.

The GOP leave out the child tax credit. This is a refundable credit that is very targeted, very well-targeted to low-income people. It will cut the child poverty rate in half. This is, of course, hugely important to the president and vice president. That's left out of the Republican side, and that's important to us.

MR. IGNATIUS: So, I think the American people are looking for areas where there is some compromise. Certainly, we in the news media have been. One area where there seems to have been some is the formula for stimulus payments. The latest version that we've been reporting would send the $1,400 payments that you want to individuals with a lower income cap, individuals earning 50,000; 2,800 to couples earning under 100,000. Those numbers are lower than they were. Is that accurate, that you've actually been willing to adjust those numbers as part of a negotiation.

MR. BERNSTEIN: I think the way Jen Psaki put it yesterday is exactly correct. She said something to the effect of--representing the president's priorities here, further targeting, which is what we're talking about, more narrowly targeting who gets the checks, it doesn't mean reducing the size of the check. And we're at 1,400 and the president has consistently stood by that number. It means potentially adjustments to the thresholds that you talked about, where the checks kick in, and how quickly they phase out. And that's something that has been under discussion. There has not been a conclusion, but the president has shown clearly that he's open to having that discussion.

MR. IGNATIUS: You stressed in this conversation and in other comments over the last week the matter of urgency. And so, I need to ask you, with the impeachment trial of the Senate scheduled to get started in about a week, do you think there's any chance of getting this relief package through the House and Senate in time to get it done before you--the Senate takes up impeachment?

MR. BERNSTEIN: You know, that kind of legislative train schedule is not the kind of thing I pay attention to, but my gut response is yes. And the reason I say that is because whenever I've talked to the president about this, he focuses intensely on the cost of inaction.

So, David, consider the following: Almost 11 million workers are still unemployed. Four million of them have been unemployed for at least half-a-year or longer. Here's a number that's, you know, very concerning to me--I mean, that one is, too, but this one is less familiar: More than two million women have left the labor force, many because they've been dealing with school closures and childcare, and these job losses have been concentrated among lower-paid workers. Tens of millions of Americans are struggling with food insecurity, with eviction, with foreclosure, all of this occurring as, you know, I said earlier, the stock market continues to boom and so many people haven't missed a paycheck.

If we delay, more than four million people--there could be more than four million fewer jobs this year, according to analysis by Moodys.com. That is, they looked at the path of employment growth with or without the plan, and the difference is four million jobs this year. It could take an extra year to get back to full employment. Kids who are out of school could have permanent damage to their lifetime earnings. The costs of inaction are the reason for our urgency.

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MR. IGNATIUS: You and members of the administration have been focused on issues of racial equity. President Biden announced an executive order last week in which he promised to advance equity for all throughout our federal policies and institutions.

And I want to ask you, as you craft this huge 1.9 trillion proposal, may come out less than that, what specifically are you doing to make sure it advances this goal of racial equity?

MR. BERNSTEIN: Yeah, there are some good points in there, and I will get to them.

Let me just say, though, because you mentioned the executive order, to me, one of the key aspects of that order was to go right at the deep and systemic problem of exclusionary zoning. This has been one of the most profound legacies of systemic racism, and the president is acutely aware of that, as is the vice president. So, that's going--you know, I think in housing, that's going to be an area where we're particularly focused.

In the plan, one of the key things that candidate Biden used to talk to us about when we were on the phone with him way back when, it seems like ten years ago, was that if you look at who's getting relief in the business relief plans, the PPP, the paycheck act, it tended to go to businesses, to entrepreneurs who could essentially pick up the phone and call a very well-endowed bank, and many entrepreneurs of color were left out. I mean, this is a clearly documented fact. And this is something that the president has continually pushed on. So, any business relief in this plan is going to focus on making sure the relief gets to folks who need it most.

There are eviction and foreclosure moratoria that are extended in this bill. They disproportionately help persons of color. By making sure that unemployment are enhanced to the tune of $400 per week, that disproportionately goes to those, again, on the bottom leg of the K, those who've been disproportionately hurt, and persons of color and communities of color are overrepresented in that space. So, we certainly do help on the racial equity goal, here. But remember, this is a temporary kind of relief package. It is not the long-term, building back better agenda. And in that agenda, that's where we need to go after the structural factors that underlie systemic racism.

MR. IGNATIUS: Come to the longer-term issues in just a moment. But before we leave the stimulus package, I want to ask the kind of gut question that Republicans and I think many Democrats are posing, which is how are we going to pay for spending at this level, 1.9 trillion, added on to trillions that we've already committed since this terrible pandemic began?

Are you concerned that at some point there begins to be a significant debt overhang problem that would be a problem for the larger economy that you would worry about as a member of the Council of Economic Advisers?

MR. BERNSTEIN: Yeah, that's a really important question. And before I was in this job, and I actually had time to do lots of economic research, this was one of my key areas of research, fiscal policy. I was an economist at the Center on Budget and Policy Priorities, which, as I'm sure you know, gets very deep into these issues.

So, you're talking about the cost of the plan, completely legitimate thing to raise--in fact, important, as I said. I already went through the cost of inaction, and those costs are incredibly steep, they're incredibly lasting. Long-term unemployment can have permanent damage to people's careers. I talked about the damage to lifetime earnings of kids who miss a year of school. So, I just don't want to lose that we have to balance cost of the plan against the cost of inaction.

But there's another point here that's a bit more technical but germane, and one that the president mentions in almost every speech on this: We are in an environment with very low interest rates. That means that it's not just the cost of the plan that you have to look at, or even the magnitude of debt, the whole stock of government debt. You have to look not just at the stock but at the flow, and the flow in this case is the cost of servicing our debt. The cost of servicing our debt is uniquely low and, in fact, it's been falling.

So, if you're talking about borrowing in order to implement a relief package that meets the cost of inaction as quickly, as deeply, as thoroughly as this plan does, you have to weigh those benefits against that cost. And these investments will more than pay for themselves. That is, we will do more damage to the governance's fiscal accounts if we do not act than if we do, given this interest rate environment.

Now, I don't want to dismiss your concern at all, because I share that same concern. The issue we have to be mindful of here is not doing too much in a situation like now, where relief is so essential; it's failing to achieve a sustainable budget path when the economy is strong.

So, here's where you have to look back on the last expansion precrisis. In this case, we had an economy that was closing in on full employment, and yet our debt was worsening. That, to me, is very misguided fiscal policy. That is, you want your fiscal accounts, your debt and your deficit, to be moving in a--to be consolidating, to be diminishing, in a period when the economy is really strengthening, when it's closing in on full employment; the opposite was occurring. Now, why was the opposite occurring? It's because of the Trump tax cuts broke the linkage between economic growth and revenue flows to the Treasury.

Okay, this is essential: If you look at revenue flows to the Treasury at the end of the last expansion when the unemployment rate was 3.5 percent, they were numerous percentage points, at least 2 percentage points, which in today's dollars is about $400 billion, 2 percentage points below where they should have been. So, by breaking the linkage between economic growth and revenue inflow in strong economies, those tax cuts really undermined our fiscal outlook.

MR. IGNATIUS: So, I need to ask you, when we're past this moment of emergency crisis relief and recovery spending, we can expect from the administration some proposals on tax and fiscal policy that would alter what you described as a misalignment of resources; in other words, would mean some tax increases for wealthier Americans; correct?

MR. BERNSTEIN: Yes, the way the president puts this, and I think it's a really very concise--he's more concise than me--a very concise way of getting at the point is that temporary measures like the one we're talking about in the American Rescue Plan, especially in a low interest rate environment, can be deficit finances and you can actually do more for your fiscal outlook than less; that is, by avoiding the damage to GDP by making these investments, our debt outlook will be improved.

But the president has said permanent measures should be paid for, and that gets more to the recovery act and things that are coming. I'm not going to get into those policies right now in terms of, you know, the tax agenda. But the president, as you correctly pointed out, has consistently said that any tax changes would be on the wealthy and folks who've done the best, while many have been left behind.

MR. IGNATIUS: Let me ask you about another longer-term issue. Prominent--the business leaders, Jamie Dimon, one of our leading bankers, Ray Dalio, hedge fund billionaire, many others have said that something needs to be done about the fundamental fairness of the U.S. economy and the way it distributes rewards.

You've been writing about that issue for many years. I want to ask you about the administration's ideas about making this a fairer economy. Again, we're in the middle of a crisis, now, but are you spending some time thinking about ways to go at the basics so working-class, middle class Americans feel that they're getting a better deal?

MR. BERNSTEIN: I'm really glad you asked that because the answer is a hard yes. And it's not just me, but so many colleagues on our team--my colleague on the Council of Economic Advisers, Heather Boushey, has made a lifetime career of thinking about these issues, particularly in the space of gender equality. So, the answer is very much yes.

And the way I would put this--you know, I go back pretty far with President Biden, and the very first time I talked to him we sat down--not when he was a senator, but when he was--when he was the incoming vice president, I went out to Delaware and I sat down and talk--the very first thing he said to me is he had seen something I've written that looked at the trend growth rate in productivity, which is sort of like the economic--kind of like how fast is the economic pie growing compared to the median earnings, the earnings of the typical worker. And you saw essentially that the pie was getting bigger while people in the middle were getting smaller slices. And you know, he pointed at that graph, which I had made, and essentially said, you know, "I want you to be my chief economist to help me work on this."

And then, if--he and President Obama ran twice on dealing with those issues, and they actually did a lot to help repair the kind of policy architecture that's broken down in terms of connecting people to growth. So, that's key to his agenda, and to Vice President Harris', as well.

How do you do that? Well, one of the most important ways is you help people get reattached to the job market. Right now, and I went through these numbers before, we have about 11 million people who are unemployed. We have a Black unemployment rate that's almost 10 percent. This relief package is not only about providing people the fiscal relief that they need; it's about getting to the other side of the crisis. The economy will not get back on track until we control the virus and effectively distribute the vaccine. Then, we can be into a more robust, lasting expansion, but that's not enough.

Simply getting back to where we were is too low a bar for the Biden administration. We have to make sure that workers in the manufacturing have a fair shake in globalization and in trade competition. We have to make sure that those who've been victims of discrimination, of exclusionary zoning, have a chance to get them and their families into the neighborhoods where they want to live, to be able to access the education that's going to provide the opportunity to help close that gap.

Raising the minimum wage, okay, this is a key policy to chip away at income equality. Standing up a childcare sector, which has never really existed in this country, an affordable childcare sector. So, women who are obviously disproportionately caretakers can pursue their economic goals and realize their potential. All of these are parts of this glue to reconnect overall economic growth and much more broadly shared racially equitable prosperity.

MR. IGNATIUS: Jared Bernstein, we promised you we'd keep our conversation to 20 minutes so you can get back to work fixing the economy. We want to thank you for coming and talking about both the short-term issues of recovery and the longer-term issues of fairness and how to structure economic growth. So, Jared, thank you very much for joining us.

MR. BERNSTEIN: My pleasure, David.

MR. IGNATIUS: So, stay tuned, because at 10:00 this morning my colleague, Karen Tumulty, will interview Virginia Governor Ralph Northam; and Rubicon CEO, Jake Wood, on vaccine distribution and other issues. So, please stay with Washington Post Live. Thanks for joining us this morning.

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