Veep-onomics

0:07This message comes from ADP. You get to vote in Congress, but only when the vote really matters. It's kind of like being president, but way, way less pressure. And because of that, normally, we do not care that much about what any given vice president thinks. But this is not a normal year. There's a vice president running for president. And I don't think I'm going out on a limb here. In this very close race, it just seems like the VP picks, they really matter. Because their place on the ticket says something about where each party is headed. Hello and welcome to Planet Money. I'm Nick Fountain.

1:06Today on the show, we're going to dig deep into the economic thinking of both campaign's vice presidential picks, J.D. Vance and Tim Walsh. Where did they come from economically? Where do they stick to party orthodoxy? And, more interestingly, where do they buck the trend? This message comes from Vanguard. Capturing value in the bond market is not easy. That's why Vanguard offers a suite of over 80 institutional quality bond funds, actively managed by a 200-person global team of sector specialists, analysts, and traders. They're designed for financial advisors looking to give their clients consistent results year in and year out.

1:49See the record at Vanguard.com slash audio. That's Vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation distributor. This message comes from Capital One with the Capital One Saver Card. Earn unlimited 3 % cash back on dining and entertainment. Capital One, what's in your wallet? Terms apply. Details at CapitalOne.com. All right, so our mission today, should we choose to accept it, is to figure out the economic principles of the two potential vice presidents. For that mission, we have tapped Greg Rosalski, who writes our newsletter. Hi, Greg. You ready? Nicholas Fountaine.

2:31Not how you say my name. Whatever. Greg, we're going to talk to you today about some of the reporting that you've been doing for the Planet Money newsletter about these two vice presidential candidates, about J.D. Vance and Tim Walsh, and about how they think about economics. Where do you want to start? You want to start with Vance or Walsh? Yeah, let's do J.D. Vance. Why not? Advance with Vance. All right. How do we know what J.D. Vance's economic thinking is? Where did you even begin to look to try to figure that out? You know, J.D. Vance doesn't have the biggest paper trail when it comes to what he's actually done in government or in politics.

3:09He's pretty young. He just turned 40 years old and he hasn't served in the Senate that long, only about a year and a half, maybe a little bit longer. He was sworn in in January 2023. And he's had this kind of well-documented, self-acknowledged political transformation over the last decade. So a lot of what we know about his economic positions is kind of what he said and what he's done in the Senate. Perfect. So today we're going to focus on three policy areas that he has taken a stance on that are a bit unconventional and kind of telling ways. So industrial policy, a.k.a. jumpstarting American manufacturing, also antitrust, also unions.

3:49Which of those you want to tackle first? Let's start with industrial policy because I think it is illustrative of his kind of break from sort of traditional Reagan-style conservatives. In fact, when Donald Trump was thinking of selecting him, there were a number of notable kind of old school mainstream conservatives who were actively lobbying against his selection. So describe that position. What is traditional mainstream conservatives views when it comes to using a heavy hand to boost strategic industries? Yeah, so traditional conservatives like Milton Friedman or Ronald Reagan, they kind of were distrustful for the most part of the government playing too active a role in the economy.

4:36They opposed picking winners and losers. They supported free trade. They wanted to lower taxes on corporations. Not Vance, though. He's supported higher taxes on corporations, at least before he was selected as VP candidate. eight. He's been a strong advocate of using federal power to sort of revitalize strategic industries, in particular manufacturing. He argued that the government should intervene to boost and protect domestic industries with policies like tariffs to rebuild America's industrial base and create more good jobs for American workers. So yeah, in short, Vance believes in a more sort of muscular role for the government in reshaping the economy than conventional Republicans.

5:19So Vance is a little unorthodox when it comes to industrial policy. How about on this topic that you were talking to me about earlier today, antitrust, which is when the government comes in and says, this company is too big. It's a monopoly. It is bad for consumers. This is another area where he represents sort of a break from not only just traditional conservatives, but also like conservatives in Congress right now. So, you know, a lot of conservatives, they really dislike Lena Kahn. So Lena Kahn is the head of the Federal Trade Commission, a Biden appointee. Yeah, we've talked to her on the show before.

5:54She's maybe the most aggressive antitrust cop we've had, I don't know, in a generation. She's been taking aim at the biggies, at Facebook and Amazon, which we should say is an NPR sponsor. Yeah. And a lot of Republicans dislike that. They're like, what the heck? Why is the government mucking around with the free market? But J.D. Vance, actually, he's kind of gone out of his way to sort of praise Lena Kahn. A few months before he was selected as a VP candidate, he actually spoke at this event. It was called Remedy Fest. It was put on by Bloomberg and Y Combinator. And Vance walks to the front room.

6:32He grabs the mic and he starts talking about Lena Kahn. A lot of my Republican colleagues look at Lena Kahn, who I think you either have heard from or will hear from at some point today. and they say, well, Lena Khan is sort of engaged in some sort of fundamentally evil thing. And I guess I look at Lena Khan as one of the few people in the Biden administration that I actually think is doing a pretty good job. And that sort of sets me apart from most of my Republican colleagues. That is a very unusual thing for a Republican to say right now. Also, it's kind of weird for someone who used to be a venture capitalist, right?

7:05Lena Khan is going after big tech. What's going on there? Yeah. So Vance does have some pretty strong connections and some benefactors in Silicon Valley. It's no secret. He's a big friend of Peter Thiel. Elon Musk apparently was one of the people lobbying on his behalf for Trump to pick him as a VP candidate. But yeah, he thinks that big tech has gotten out of control. He talks sometimes about like little tech versus big tech and how hard it is for kind of small startups to challenge the big guys and how a lot of these startups are operating in sort of a fundamentally non-competitive market and how this lack of competition in the tech industry it's empowering big companies to censor americans and it's hurting free speech he also talks about how it hurts workers so uh some people in the media have called him a conservative what does that mean khan if i don't know if people are conservative yeah um Vance, by the way, he didn't just praise Lena Kahn.

8:07He also seemed to indicate he was against what's sometimes known as the consumer welfare standard. This is the dominant approach that the federal courts and antitrust regulators have used for, I don't know, like decades now. And in that approach, when they're looking at whether a company is too big or whether a merger acquisition should be blocked, they really focus on price and how corporate decisions affect consumers. And Vance is saying, actually, there's a lot of other things that should matter. You know, like it's not just all about price, not all just about consumers. Like what about free speech of Americans?

8:44Like if Google gets too big, then maybe that's a problem for, you know, our rights as Americans. Or what about, you know, the welfare of workers? And he's saying like, wait a second, there's all these other things that we should be concerned about. And that really kind of puts him on the same page as some progressives like Lena Kahn, who believe that, you know, the government should be playing a more active role to ensure that we have a more competitive economy. Yeah. Amazingly, he has been an ally of Elizabeth Warren, of all senators. They've done some stuff together in Congress, right? Yeah, that's right.

9:18So one bill they worked on together was this effort to claw back executive pay for banks that failed. And then Politico actually dubbed them the new power couple taking on Wall Street. Of course, after he was selected as VP candidate, Warren kind of, I think they sent Warren out to make the media rounds, make it clear that she was not on the same page as J.D. Vance. But yeah, like he kind of went out of his way to form an alliance with progressives in Congress. He also, in an interview he gave with the New York Times, he said, quote, the people on the left, I would say whose politics I'm open to, it's the Bernie bros.

9:58All right. So a lot to unpack there. But it seems like Vance is pretty unorthodox when it comes to antitrust, when it comes to sort of taking on Wall Street as far as conservatism goes. Greg, our final stop on the J.D. Vance tour today is going to be about unions. So you've mentioned before he's from Ohio, which is a big union stronghold. I've seen him on the news. I've seen him walking the picket line back during those UAW strikes, I believe. But you have reported that his relationship with unions is pretty complicated. It is complicated because he certainly talks a lot about the need to help working class folks.

10:43But when it comes to his record in Congress, it's kind of a mixed bag. I mean, the AFL-CIO has given him a 0 % score for his voting record. When he was selected, Liz Shuler, the AFL-CIO president said, Senator J.D. Vance likes to play union supporter on the picket line, but his record proves that to be a sham. Is that true? What is his record on union stuff? So one of the big things that organized labor has been pushing for is this legislation called the PRO Act, the Protecting the Right to Organize Act. And this would have various provisions that would enhance the ability of workers to unionize.

11:20And Vance is actually opposed the PRO Act. So there's kind of this contradiction in many people's minds who like, why are you saying you're pro worker, but you're opposed to like one of the biggest legislative goals of organized labor? And pretty interestingly, he gave this interview to Politico earlier this year, where he sort of tried to square that circle. And one reason was basically, maybe I'll just quote him. I think it's dumb to hand over a lot of power to a union leadership that is aggressively anti-Republican. So there's kind of like the meat of potatoes, like, hey, if we empower unions, this is going to hurt us politically, which is maybe a little cynical.

12:00You be the judge. But he also provided a more sort of intellectual argument, which I thought was pretty interesting. basically that it would further ensconce the existing system of bargaining in this country, which happens at the establishment level as opposed to the sectoral level. Let's just explain what that means. What we have here in the U.S., unions have to work hard organizing individual workplaces, individual establishments. You got to go Starbucks by Starbucks or auto factory by auto factory. And there's this other thing, sectoral bargaining. That is what they have in many countries in Europe.

12:38And that's where there's this national union that comes together, meets with industry, and hammers out a deal that covers all baristas or all auto workers. Yeah, that's right. So actually, a year or so ago, I spoke with Suresh Nadeau, who's one of the foremost scholars of unions in America. And like Vance, actually, Nadeau expressed support for sectoral bargaining. He thinks it's like a better system. It makes more sense. And it removes incentives for firms to fight unions because all of a sudden, your competitor is subject to the same union rules that you are. And another thing, when a whole sector is unionized, it means even new companies that form in that sector are subject to the same union contract.

13:18In the system we have here in the United States, Suresh said, unions have to work just a lot harder to bring new employees into unions. So what I sort of talked about is just like this hamster wheel where to keep union density up, you need to be, you know, every time there's a new employer, you've got to be like there trying to organize it. just an incredibly slow and costly process to be engaged in. But, you know, interestingly, Suresh, while he thought that sectoral bargaining was a much better system than the one we have in America, he also supported the PRO Act. So he didn't see them as contradictory.

13:52And J.D. Vance supports sectoral bargaining, but not the PRO Act, even though sectoral bargaining isn't happening in the U.S. anytime soon. Probably not. I mean, who knows? Maybe. I don't know. Probably not, though. So tie it up for us, Greg. What is J.D. Vance's view on unions, on worker power? I would say it's a mixed bag. He's a bit of a wild card, Nick. He's talking a lot about supporting American workers. At the same time, he is not really on board with some of the big goals of organized labor. So this is something that's evolving. It will be interesting to see going forward if he were to win, how this would shake out.

14:34All right. So J.D. Vance, unorthodox views on how to revitalize American industry, on breaking up big corporations. And he says he is a fan of European style sectoral bargaining. Greg, you are a gentleman and a scholar for bringing us on this journey through the economic mind of J.D. Vance. Thank you for that. Well, Nick, it's been a pleasure. You know, oh, there's still one other VP candidate, isn't there? That's right. You're not able to forget. After the break, we're going to journey to the other side into the economic mind of Tim Walz. This message comes from Apollo Global Management, who believes the global industrial renaissance is transforming the world.

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16:41Terms and more at AppleCard.com. Greg, what do we need to know about the economic mind of Tim Walsh? And again, how do we know it? What's his track record? Well, he's older. He's about 20 years older than J.D. Vance. And he has a much longer record because he's served as governor of Minnesota. He was also a congressman for a long time. So he's got much more of a paper trail of things he's actually done than J.D. Vance. Walk us through what he's done as governor. So Walls did a lot of things. But if I were to single out, you know, one big thing, Nick, it would probably be his work to increase the economic security of kids.

17:25He did this through tax policy, through education policy, and through other types of legislation. One thing I do want to provide a little context for, because, you know, I reported on this in the Planet Money newsletter. If you were to compare the United States to almost 40 other countries in the OECD, only Turkey spends less per child as a percentage of their GDP. It's a significant reason why the United States has a much higher rate of childhood poverty than other rich nations and even higher rate of poverty than like some not so rich countries. And just a little bit more context. So we have this policy in the United States.

18:03It's a child tax credit. Right now it's about$2 ,000 a year. During the pandemic, though, thanks to the American Rescue Plan that was passed under President Biden, there was this expanded and enhanced child tax credit. And that expanded the child tax credit to much higher. And scholars have credited it for reducing child poverty by about 30 percent. Some say it reduced it by half. Then in 2021, this provision, it expired. Tim Wallace did not like that. And he passed his own version of the child tax credit at the state level instead of the federal level. And according to the Tax Policy Center, it was one of the largest in the country.

18:50So starting in the tax year 2023, every Minnesota taxpayer with kids can claim$1 ,750 per qualifying child with no limit on the number of kids they can claim. And because the credit is fully refundable, it means that even low-income Minnesotans who don't pay much or anything in state taxes are eligible for it. Another thing that Walls did was this universal meal program for K-12 students. So breakfast, lunch, you get it free at school, you know, everyone. I know about this school lunch thing because oddly enough, it's become controversial. Can you explain the controversy here? Well, there were a number of Republicans in Minnesota who were like, what the heck?

19:36You're giving free breakfasts and lunches to rich kids? Like, they don't need this. This is a waste of taxpayer money. And it kind of illustrates this tension for, you know, social welfare programs between making something means tested and making something universal. Means tested means you qualify usually based on income. Universal means everybody gets it. Exactly. So means tested, at least hypothetically, it's going to be cheaper because you're not giving the benefit to everyone. But at the same time, it means there's got to be a lot of bureaucracy involved. Parents all of a sudden, you know, got to fill out paperwork.

20:12They got to prove that they're at some income level. And Waltz actually specifically has talked about that as something he didn't really like. Something, you know, you should know about Waltz. He was a teacher for a long time and he says he actually used to monitor school lunchrooms. He gave an interview to Ezra Klein at the New York Times, and he talked about this issue. That lunchroom then became a very clear have and have nots. And in fact, until some schools maybe still do it, you had a different colored lunch ticket if you're on free and reduced lunch. Yeah, I remember this from my school.

20:42If you were on free or reduced lunch, you had to type in a little code at the cash register when you were getting your free lunch. And if you didn't, you weren't. And there was a sort of stigma around it. And so he's saying, let's get rid of that stigma. And he says, additionally, you know, beyond just the stigma that means tested programs have for poor kids who need assistance. He was also saying that, you know, by making it universal, it kind of takes a lot of labor off the plate of, you know, hardworking middle class families. The most feedback on this was families and it's especially mothers because of the unequal distribution of domestic labor is still falls heavily upon women.

21:22And these were women who said, look, we didn't qualify before. We do now. It's an absolute tax cut for us, but it's an absolute lifesaver for me that I don't have to get up in the morning and either make breakfast or send one to school for this. So it's a double benefit for us. I have less work. My kids eat. So it was actually middle class folks who were most jazzed about this. Jazzed. I love that's a very Midwestern dad word to use. Such a dad phrase. All right. A lot of economic policies to support families. What else did he do as governor? He also signed legislation that gave Minnesotan workers up to 20 weeks of paid family and medical leave.

22:02In addition, he also passed paid sick leave for Minnesotans. And as I've reported before in the Planet Money newsletter, the United States is the only rich country without a national paid leave program. So this was, you know, Walls showing his priorities again, sort of helping families, increasing the economic security of kids, that sort of stuff. And he also did a bunch of stuff on tax policy. Yeah, let's talk about that for a second. Tax policy is our wheelhouse. Tell us about the tax policies of Walls. So to set the scene a little bit, according to the Institute on Taxation and Economic Policy, most states in our country actually have somewhat regressive tax systems.

22:43They tax the rich at lower rates and therefore taxisms that aren't progressive at all. Waltz helped make Minnesota one of the few taxisms in the country that is progressive. And he did this through a series of tax cuts, rebates and credits for low and middle income Minnesotans and a series of moderate tax hikes on the rich. I feel like when we were talking about J.D. Vance, Greg, you kept being like, this is where Vance goes against the traditional conservative norms. But these walls things, helping out families, making tax systems more progressive, they seem like sort of standard Democratic fare.

23:21Where has he differed with his Democratic colleagues? Yeah. As a congressman, he actually represented this rural conservative district in Minnesota. And while he was there, he supported a bunch of stuff that kind of was against what most Democrats support. So he was a big supporter of gun rights. He actually had an A rating from the NRA. He supported the creation of the Keystone XL pipeline, which was broadly opposed by progressives and environmental groups. He also opposed the bailouts of the big banks and also the auto companies under both President Obama and President Bush. And he also opposed most free trade agreements that he had the opportunity to vote for, including ones that were being pushed by President Obama.

24:08Like he opposed free trade deals with Peru, Panama, Colombia. In one 2015 statement he made as a congressman, he said, trade can be a powerful tool for good. But as we've seen in the past with agreements like NAFTA, sometimes these agreements work against the American worker. So he's built this populist record over the course of his career that has opposed more centrist moderate Democrats. So like his competitor on the other side of the aisle and the other side of the debate stage pretty soon, he's a complicated character. Greg, you have spent hours and hours reading every statement you can by these guys.

24:49I guess my question for you is, what does it tell us about both of these campaigns that both of these sort of heterodox thinkers were chosen to be on their respective parties tickets? I mean, one thing I will say about the selection of both of these candidates, which I find really interesting, is it seems like neither of them were selected for some like, you know, narrow electoral strategy reasons, you know? That used to be why you picked your VP, because they would help you win over Florida or Pennsylvania or whatever. Yeah, even in Vance's case, like Ohio used to be a swing state. It doesn't seem to really be a swing state anymore.

25:23It seems like the Republicans got that on lock. In both cases, they seem to be more of a signal to working class folks that, hey, look, we got people on the ticket who are going to support you. And it's kind of like they're both white dudes from the middle of the country who have staked out these sort of heterodox positions that buck a bipartisan consensus that had taken over in this country for a long time. They're skeptical of free trade. They're saying a lot of things about helping American workers. And what I'm going to be looking at when I'm watching this debate that's coming up, it's almost like this populist showdown.

26:03That's how I guess I'm looking at it these days. I like that. So both an embrace of populism, which we've also seen at the top of the ticket, but also a rejection of whatever you want to call it, the dominant free market friendly approach to the economy that has become the norm. All right, Greg, thank you for doing this, for bringing your newsletter reporting over to the podcast. If someone were to make the wise choice of signing up for the newsletter right now at npr.org slash Planet Money Newsletter, what sort of stuff would they find? Well, in addition to, you know, deep dives on wonky econ subjects like the, you know, economic minds of Tim Walls and J.D.

26:45Vance, I've been covering, you know, more fun stuff like this downturn we're seeing in music festivals. I dubbed it the music festival recession. Check that out. I've been covering AI. I recently covered how it's important to pay attention to unit prices when you're grocery shopping. We give this thing away for free, y 'all. You can find it at npr.org slash planet money newsletter. Listen, I wouldn't call it a gift to humanity, but Nick, if you wanted to say that, that would, you know. Sure, it's a gift to humanity. All right. This episode was produced by James Sneed and Emma Peasley. It was edited by Meg Kramer.