Bingo! (Presidential debate edition)

0:00Support for NPR and the following message come from Freshworks, who believes complexity is the enemy of efficiency. Stop wrestling with bloated, expensive software. Uncomplicate with Fresh Service for IT and Fresh Desk for customer support. Learn more at Freshworks.com. This is Planet Money from NPR. So, we have an election coming up. And there is some serious economic policy being lobbed about. Yeah, for the wonks, this has actually been an exciting few weeks because we are starting to see hints, at least, of economic policies from both candidates. Some of them are clear, but most of them are shrouded in jargon or hidden behind campaign slogans.

0:48Opportunity economy. Deindustrialized third world nation. A homeowner bill of rights. Energy dominance. A middle class tax cut. To a net zero policy. What does that mean? I have no idea. Yes, what does any of that mean? Right, but these are all things you are likely to hear out on the campaign trail or at next week's debate. And you know what? We were thinking. These next few months are going to be a jargony slog. So, what if, hear us out, we turn that slog into a game? That's right. We're doing bingo.

1:30Nope. Stop it. Hold on. Halt. That's not bingo music. Let's go for something a little more chill. That is bingo music. Really? Yeah. Hello and welcome to Planet Money's economic wonk collection lingo bingo extravaganza. I'm Erica Barris. And I am Nick Fountain, not a huge bingo guy, which is a big contrast apparently to you, Erica. That's right. I'm not going to brag here or anything, but I know my way around the bingo hall. Awesome. Well, we're going to lean into your expertise when it comes to bingo today. And we're going to look for wonky economics terms to fill our bingo card with. That's right.

2:17Our bingo card is going to be chock full of econ lingo. So roll up your sleeves, turn up your TVs, get those daubers ready. Daubers? You know, the stamp you use every time you get a bingo square? Of course.

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3:19Tiger Woods brings it to the course. Insperity brings it to your business. Want to be the best? Work with the best. Insperity. How you HR matters. Learn more at insperity.com slash tiger. All right. So what we're going to do today is make a bingo card, mostly for our own entertainment. so the Play to Buddy staff could compete during the next debate. But we figure if we're going through all the work, we might as well make a real proper bingo card too. And you, dear listener, will be able to find that at npr.org slash bingo. And you can print it out and play along with us. Erica, you are our guide to all things bingo.

4:00What do we need to know about the game? Okay, so your standard bingo card has 25 squares. And what we're going to do today is fill in each square with a different econ or econ adjacent term. The first Planet Money staffer to get five in a row wins some like yet to be determined prize, probably something from the office supply closet. And bragging rights. And bragging rights. The middle square is usually the free square. Everyone gets that. And I've been thinking about this a lot. I think our middle square should just pretty obviously be the middle class. Because even though the share of people in the middle class has been shrinking for decades, sure seems like politicians' references to it have been steadily growing.

4:48Middle class in the middle. Love it. No politician can avoid saying that term ad nauseum. But that leaves 24 squares left to fill. So let's get moving. Yeah. So one term that I'm pretty sure is going to show up is one that I've heard economists talk about quite a bit over the past month. Price controls. Literally every economist I've called lately has wanted to rail against price controls. Erica, you've been looking into this. Tell me, why are we talking about this? So last month, Kamala Harris made this big policy announcement about something we're all feeling right now. The high price of groceries.

5:26As president, I will take on the high costs that matter most to most Americans, like the cost of food. And what people heard when she made this speech was, I want the federal government to set or control the price of food. And economists hate price controls. Totally, because market prices are a signal to producers on how much of any given good to make. And when that signal is broken, it breaks the market. Every economist has a favorite cautionary tale about price controls. Yeah, one of them, the 1970s. Good evening. We had high-ish inflation, and President Nixon put in price controls. I am ordering a freeze on prices.

6:15The results were a disaster, like farmers stopped sending their goods to market. They're holding out for higher prices. Consumers cleaned out the shelves. The cattle simply are not being brought to market. It just very famously did not work. But what I have gathered is that Kamala Harris was not actually advocating for price controls. Is that right? No, she was actually talking about a totally different thing. Banning price gouging. Yes, but there seems to be considerable debate over what that actually means. What have you found? So price gouging is hiking up the price of a good. But it isn't just that.

6:54There are other criteria that are used to actually determine when something is price gouging as opposed to just a regular price increase. Like, are sellers taking advantage of an emergency situation, a hurricane or a wildfire? Are these essential goods? And are they excessively overpriced? Some state laws that ban this practice say price hikes of 10 to 25 percent are excessive. Sure, but like, come on. During a crisis, it's just more expensive to make stuff. It's really hard to get stuff to a disaster area, for example. Right, right. And this is an important part of this. For it to be considered price gouging, those increased costs have to be taken into account.

7:37Huh. And so this is what Harris is proposing is something similar to those state laws? The details are a little light, but most likely her policy will look much more like those laws than any price controls. All right. Along with price gouging and price controls and I guess supply and demand, we have filled in three more squares. Erica, I was wondering, do you think we should throw in the fancy term that economists use where they want to say crisis but want to seem pretty cool? Exogenous shock? No, I don't think so. It's a little too obscure. I'm actually trying to win this bingo game. Oh, come on.

8:15Yeah. Fair, fair. No dice.

8:22All right. Erica has gone off in search of more terms for our bingo cart. She's presumably watching stump speeches on four screens at once at double speed. In the meantime, let us take a detour into the world of monetary policy for a second. In any normal presidential campaign cycle, the candidates are not actually talking about monetary policy and the Federal Reserve very much, for a very important reason. Normally, the president doesn't meddle with the Federal Reserve's work of maintaining low unemployment and low inflation, because the Fed is supposed to be independent. But this campaign, that very idea is being questioned.

9:05For more on that, we are joined by Darian Woods from across the hall at The Indicator. Hey, hey. Hey, Nick. All right. So why right now are we talking about Fed independence? Well, because the candidates are. Here's former President Donald Trump just a few weeks ago talking about the Fed. I feel the president should have at least say in there. Yeah, I feel that strongly. I think that in my case, I made a lot of money. I was very successful. And I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman. And here's Vice President Kamala Harris with pretty much the opposite take.

9:41The Fed is an independent entity. And as president, I would never interfere in the decisions that the Fed makes. All right. So different takes on how much and whether the president should influence monetary policy. Why does this matter, Darian? Well, think about the current situation we're in. We had very high inflation not too long ago, and the Federal Reserve has mostly gotten it down to a place that they're more comfortable with. But could they have done that had the president been meddling? Raising interest rates is a challenging lever to pull. It brings down prices by slowing the economy down.

10:19It makes new mortgages more expensive. It can put people temporarily out of work. And whereas a president might not want to pull that challenging lever because it's politically unpopular, an independent Fed is more likely to do it. Yeah, it's not a popular line of action for any politician. Now, the Fed is not totally independent, though. The president appoints members of the Fed board and Congress has oversight over the Fed. We love to see Jerome Powell being grilled by members of Congress. Yeah, well, I'm not sure if he loves it, but yes, he does regularly get his feet held to the fire. And it's worth saying that the idea that the Fed gets to do the hard work free from meddling by the executive branch is this longstanding tradition that goes back to the 1950s.

11:05Okay, but that could change very soon, it seems like. Yes. However, and this is a big however, we should note that Donald Trump has recently walked back that comment about Fed independence. Those of us who remember his presidency will remember that this is not exactly new territory for him. I remember a lot of angry tweets about Jerome Powell. So many. And listen, one final point about this is that it's not just a theory that central bank independence tends to mean lower inflation. The evidence points to it, too. Countries with more independent central banks have lower levels of inflation, though it is a correlation, not necessarily causation.

11:47All right, Darian, I appreciate you schooling us on this subject. Thank you for coming in. Yep, anytime. And if you want to call me again, maybe even for this very episode to chat about something else election-related, just let me know. I will take that under advisement. Thank you, sir.

12:09Erica, you're back. How was it? I've been watching those thumbsmeets. What economic lingo have you picked up from them? What should we be adding to our card? I have picked up housing shortage. Trump likes to talk about the Great Depression. Also a favorite topic of economists. And the national debt. Big topic. Terrific. And Darian hooked us up with a few as well. Fed independence. Let's throw in inflation and unemployment. Interest rates. Maybe even Fed Chair Jerome Powell. Erica, you are the official keeper of the official bingo card. Yes, I am. How are we doing? How many squares have we filled in so far?

12:5212 out of 25, which means we got to keep them coming. Right. And for the next subject area we thought we could mine for lingo bingo, we thought we would turn to taxes. Okay, so both candidates are probably going to talk about the rate that corporations pay on their taxes, also known as the corporate tax rate. Trump wants to reduce it. Harris wants to raise it. So we should add it to the card, corporate tax rate. And of course, parts of the Trump tax bill from back in 2017 are set to expire next year. And so maybe we're going to get real wonky about the tax code. Maybe the candidates are going to start talking about the standard deduction and the SALT deduction.

13:30What do you think? Should we add those to the list? The state and local tax deduction, the one that residents of high-tax states like to use to lower their federal tax bills? I highly doubt the candidates are going to say it. it doesn't play that well in most swing states, but one can dream. Add him to the card. Yeah, this would be a good game if we didn't throw some real hard balls in there, right? Yeah, yeah. We don't want anyone getting a coverall, which is, you know, when you get every square on the bingo card. Now that I know what that means, I know that I especially don't want Kenny to get one.

14:03And there are some other hotly debated tax credits that are being bandied about by the candidates. Here, I'm just going to let Kamala Harris speak about them. Under my plan, more than 100 million Americans will get a tax cut. And we will do this by restoring two tax cuts designed to help middle class and working Americans. The earned income tax credit.

14:34And the child tax credit. Okay, now there are two policies in there. Expanding the child tax credit that is supported not just by Harris, but also by Trump. That one is kind of self-explanatory. It gives money to people with kids. So we're going to just add that to the card. Put it on the card! Put it on the card. But Nick, you cannot shut up about that other thing that Harris mentioned, the earned income tax credit. Yeah, the earned income tax credit is like the undisputed heavyweight champ of public policy. I wanted to geek out about it, so I called up Diane Schanzenbach, an economist at Northwestern.

15:13Is this economist's favorite policy?

15:20It might be. um it's let's go with it it's certainly my favorite policy that's right yeah that was the longest pause i've ever heard okay so maybe not every economist favorite policy but certainly diane's so tell me about it yeah so first off it comes from this rather unusual place the og of conservative economics milton friedman and this idea that he helped popularize it's called the negative income tax. The proposal for a negative income tax is a proposal to help poor people by giving them money, which is what they need. Milton Friedman, not exactly who you think of when you think of a policy that a Democratic candidate would be into.

16:09Yeah, well, this idea is really popular across the board. Economists who usually disagree about a lot of things agree on how brilliant this policy is. And the basic idea behind the negative income tax is that at low levels of income, rather than tax people for every dollar they earn, you do the opposite. You give them a little extra. Like a bonus? Yeah, yeah, sure. That is a good way to think about it. And that is how the earned income tax credit, which was introduced in the 70s and then expanded in the 80s and 90s, works. If you make no money, you get no bonus. But then if you earn a little bit of money, the government doesn't tax you.

16:49They supercharge your earnings, says Diane, by giving you more money than you earned. And so that makes working more attractive. And the way that then this is set up is it's going to draw more people into working for the first time that haven't been working before. So whereas, like, if there was just an income tax and not this policy, every hour I work, the government's going to take away a little bit of that in taxes. Now, every hour that I work, the government's going to add? That's right. That's right. You're only up to a certain point. After that point, a certain income threshold, the credit slowly fades away until the earner enters the world of regular income taxes where the government just takes money out of our checks.

17:37Okay, so this is like a way to draw people into the workforce by supercharging their earnings. Yes, and? And? Now, I do want to say, just before we forget it, this policy is a huge deal. It lifts more children out of poverty than any other policy that we have. It's the second biggest anti-poverty policy that we have behind Social Security. and, you know, many, many people are no longer in poverty because of this program. Okay. And so what Harris is proposing is expanding the earned income tax credit. Is she going to sweeten the deal even more? Kinda. Right now, the policy is sweetest for people who have children.

18:23And Harris's proposal is to expand the number of childless workers who it reaches and also make it more generous for those people. All right. Thank you, Nick, for your tribute to the earned income tax credit. I'm just thrilled that it's going to be on our bingo card, getting the respect it deserves. However, not in full form. We're going to use the abbreviation EITC. Real ones, no.

18:50All right. Now from a topic that I personally love to one of your favorite topics, Erica, trade. I do love a good trade story. And there is no better place for a bunch of trade lingo than a presidential campaign economic bingo card. Because as opposed to a lot of other things, presidents actually do influence trade policy quite a bit. Trump, of course, did a whole lot on trade. He pulled out of and renegotiated trade deals. He was extremely hostile towards the big international trade organization, the WTO. But his administration will be remembered first and foremost for the trade wars. Yes. And the economics term that Trump may be popularized the most and which we should definitely add to the card is, of course, tariffs.

19:40Of course. No president in our lifetime has slapped so many tariffs on imports. And this time around, he is proposing even more. A 60 percent tariff increase on goods from China and a 10 to 20 percent across the board tariff increase on goods from all other countries. So quite a lot. And, Erica, the thing I wanted to ask you about is a trade related thing that came up in a Trump speech that I was watching the other day. It was not an economics term per se, but as a student of economic history, my ears really perked up. Our greatest company by far was United States Steel Corporation. That was the big deal.

20:20And now we have Japan buying it. They shouldn't be allowed to buy it. We have to make it work. We have to make it work. You don't want to sell U.S. steel. Erica, I heard that and I was like, where have very recently I heard about U.S. steel from? And then I realized... Me, right here, me. It was you. And it is not just that you're Planet Buddies Western Pennsylvania correspondent. it. You are also Planet Money's resident trade wonk. And you did this show earlier this year about the rise and fall of American-made steel. But this, this U.S. steel stuff was new to me. So catch us up. What is going on here?

20:56Okay. So late last year, the company U.S. Steel announced it was going to be sold to Nippon Steel, a Japanese company. And this caused an uproar. Since then, both Trump and Biden have been talking about blocking the sale. And on Labor Day, Kamala Harris said U.S. Steel should remain American-owned and American-operated. And I think the response to the proposed sale says so much about where our economy is at the moment. So first, I'm going to give you this tiny little backstory on U.S. Steel. Hit me. It was started by Andrew Carnegie, Henry Clay Frick, Charles Schwab, J.P. Morgan, like the original supergroup of business barons.

21:36The Backstreet Boys of 19th century capitalism? Yeah, more like boy genius, but sure. And they created the biggest company in the world. Okay, I am sensing a but. But? But that is, of course, not the case anymore. U.S. Steel is not the biggest company in the world. It isn't even the biggest steel company in the U.S. anymore. Obviously, manufacturing in the U.S. has been in decline for a long time. And selling this iconic company to a foreign entity feels like the final nail in that coffin. And blocking it, or at least signaling that you might, is just good politics. We should also note that both parties are using that other protectionist tool when it comes to steel, tariffs.

22:27Right. The Biden-Harris administration is trying to put additional tariffs on steel. Even though research shows that those tariffs actually led to a decrease of tens of thousands of manufacturing jobs in the U.S. And yet they are still very popular. Yeah. And I think it's that nostalgia thing. But just look at the numbers. 15 ,000 people in the U.S. work at U.S. Steel. Compare that to another great American builder, Chipotle. It employs 120 ,000 people. That is not where I thought you were going with that one. But yes, point taken. We have a service sector oriented economy. I'm going to add that to our bingo card service sector, along with manufacturing and U.S.

23:17steel.

23:22Coming up after the break, we're going to finalize this bingo card. Send it off to the printers after we add one more term. It's something people, probably yourself included, have a lot of opinions about.

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24:28With Zoom, ideas happen faster, projects move forward, and your workday finally works for you. Zoom is more than meetings. It's a unified platform powering how people get work done. Learn more at zoom.com slash podcast and zoom ahead. All right. Economic lingo bingo continues. Last but not least, there is one policy this year that is all the rage, and it has to do with everyone's favorite part of buying a bag of coffee at the coffee shop these days being coerced into tipping 20 % at the register. It's called no tax on tips. No tax on tips. That's Trump there, but he's not alone. Here is Harris with a very similar line.