Ezra Klein On the Legacy of Bidenomics

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1:16Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, it's almost here. We're almost to the November Fed decision. OK, we are recording this on October 30th. Do you think by this time next week we'll 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. Oh, I'm sorry. That's OK. We're all fried for obvious reasons. Also, isn't it payrolls data on Friday? Yes. By the time this episode comes out, payrolls will have been out. But yes, there is a lot going on right now.

1:52But 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 2022 2021 others might call it a sort of post-neoliberal turn right this sort of industrial policy of industrial policy yeah 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.

2:51We 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? It was this effort to expand the care economy, child care that sort of fizzled, but there's 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.

3:25That'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 are 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.

3:56And 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 one-block days. Jokes that are really about how boring we are. It's a beautiful form. The most important thing still in 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 who 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.

4:33And 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 Chips Act, et cetera, 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?

5:15She's a lawyer, a former DA and AG. 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 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. He'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.

5:54And 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 pail 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 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.

6:26Now, 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. You could really target and 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.

6:58Wait, 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 Bidenomics 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 percent 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.

7:40There 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-inequality 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.

8:19Right. 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. You know, even as they're dealing with the pandemic, they are going to make sure that they don't undershoot on stimulus.

8:50Right. 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.

9:33But 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 is the element of the fact that Bidenomics existed because Biden won and maybe this is how he views the economy.

10:06But it's a little bit of an incomplete story because so even though I lumped the Chips Act 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 his 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.

10:45I think this is a great question and an important way to think about all these figures. So you can ask what the principal, 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?

11:16If 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 Gerstle. He wrote a great book called The Rise and Fall of the Neoliberal Order.

11:52Before 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, when FDR comes in in 32, to the 1970s when it sort of dies under stagflation and the Vietnam more. But the New Deal order is very importantly concretized when Dwight Eisenhower takes control of the Republican Party, not Robert Taft.

12:30And Eisenhower brings a New Deal in as something Republicans now support, too, in order to fend off the Soviet Union. They need this sort of neoliberal order. You know, we think of Ronald Reagan and then later Bill Clinton with the era 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.

13:00But we don't know which party will control it or exactly what its structure will 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 its 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.

13:33He 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 Americans compete with China in terms of infrastructure and scientific development and semiconductor manufacturing. And of course, the IRA has a lot of buy American and onshoring 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?

14:17Right. 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 helped 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.

15:11your best restaurant location gets five-star reviews how do you make every location like your best location your best paper mill has been operating at peak productivity How do you make every mill like your best mill? Your best data center has optimized every drop of water. How do you make every data center like your best data center? The answer is Ecolab. Better performance, better outcomes, better impact. Ecolab. Now every location is your best location. For enterprise organizations, managing all your food needs is a tall order. But with Easy Cater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform, all while consolidating your corporate food spend so you can control costs, streamline billing and payment, and simplify reporting.

16:07Easy Cater, your business tool for food. To learn more, visit easycater.com slash 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.

16:48Because it isn't just the external enemy. I mean, turn 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 vitocracy 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 they're, great their infrastructure is. Like, look how effectively they're building their manufacturing capabilities.

17:24Look how competent their government seems. We don't talk about it in exactly those terms, but I have come to believe, and, you know, I was on the show before to talk about abundance and the 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?

17:56Not 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.

18:29There'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 they like to call it, on my show.

19:11And 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. Yeah. To wield governing power in his administration is immense. I just had Vivek Ramaswamy on the show. And I was so struck by, you know, him really trying to push Trump in what I call more traditionally conservative direction, right? You know, don't try to take over the administrative state.

19:51Try to, you know, get rid of it. Shutter these agencies. And he really sees Elon Musk as an ally in that effort. So you can call it this 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 ear. And maybe what they want is something a little bit more in between. In 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.

20:20Trump'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.

20:54And 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.

21:24And 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. Ezra, can we talk about the branding of Bidenomics? 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.

22:01It 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 biodynamics 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.

22:38But what happens over the course of that campaign, when unemployment is quite high, by the way, I mean, it's above 8 percent 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.

23:24Obviously, Biden ends up stepping aside. The party unites around 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. She talks about what she is going to do to lower prices. She talks about how much oil and gas that 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.

24:02And we are just at the beginning. And how much of Bidenomics invested in innovation and how we are trying to have these industries of the future here. like Bidenomics. I mean, if 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 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.

24:31But 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 as something new because people are not very happy with the Biden record and she is not herself Joe Biden.