Jared Bernstein on Taxes, Spending, and Why President Biden Wants to 'Pay for It'

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, I'm very excited about today's episode, obviously. You know, we talk a lot about economic theory on the show. We talk a lot about how, like, changes in economic thinking have changed from, you know, now and pre-crisis and so forth. We talk about the sort of condition of the macro economy quite a bit.

But, you know, not as much on the actual, I guess, specific policymaking side.

Tracy Alloway (0:45)

Yeah, well, today is a chance for us to put theory into practice, I guess. And we've been talking basically a year now about this idea of the handoff to fiscal policy, this movement from monetary policy to fiscal stimulus being more important for economies post-COVID.

And now's our chance to actually dig into how fiscal policy is enacted and how people in power are thinking about it.

Joe Weisenthal (1:13)

Yeah, exactly right. So like that is of course a huge theme, a huge discussion, the sort of the post, I guess I would say, you know, the lesson of the last year is that fiscal power, firepower has been incredibly effective at reviving the economy.

And there's certainly an increased openness, it feels like politically and also intellectually to really take a more expansive view of what government spending and taxation power is capable of in terms of building a new economy and sort of not leaving so much of the decision-making to the central bank.

Tracy Alloway (1:50)

Yeah, I think that's exactly right. And we are seeing even, you know, if you think back a couple of years, even the idea of massive fiscal spending, things like direct payments to Americans, were kind of on the fringe, but now not only have we seen that happen, but people are talking about other things for future crises, such as automatic stabilizers, things like that.

Joe Weisenthal (2:15)

Yeah, exactly right. It feels like it's a time of openness to new ideas, which often is the case after a big crisis. Anyway, I want to jump right into our discussion today because we have the perfect guest with the perfect perspective to talk about all this. We're going to be speaking with Jared Bernstein. He is a member of the White House's Council of Economic Advisors right now, advising the president on economic policy. And he was the, previously, he was the chief economist and economic advisor to then Vice President Joe Biden coming out of the great financial crisis.

So he's truly an extraordinary perch, extraordinary position, great perspective to talk about today and the past and everything that's going on. Jared, thank you so much for joining Odd Lots.

Jared Bernstein (3:03)

Well, thanks so much for inviting me. I think the right way to start is to say long time listener, first time caller, as they say.

Joe Weisenthal (3:11)

That's great. I love hearing that.

Jared Bernstein (3:12)

I've taken many a jog accompanied by the two of you, which has both helped burn calories and learn something while I'm running.

Tracy Alloway (3:23)

Well, we're all about physical fitness.

Joe Weisenthal (3:27)

You're the second person recently to actually cite our podcast in contributing to burn calories, which is, it's nice to be listened to by influential people and stuff, but we really want to help people lose weight. So that really means a lot.

But I want to start actually with something kind of specific. So we're in this, I think, pretty extraordinary moment. Economic growth is much faster than I think a lot of people would have guessed. The willingness of the government over the last year, both under the last administration and this one, to you engage in aggressive fiscal expansion is truly historical.

But there is this other bill or possibly set of bills that the White House is aiming to pass later this year. And I want to get into those. But right now, everyone's talking about inflation, lumber prices, gas prices, and so forth. We know that the Fed is planning on basically really looking through that, understanding its transitory. But from a political perspective and thinking about the task ahead of you this summer and sort of building support for more aggressive fiscal firepower infrastructure, is that a political challenge, this sort of thinking about, okay, we need to convince members of Congress and the Senate to spend a lot more money at the same time the news is filled with stories about rising prices?

Jared Bernstein (4:46)

Well, I think anything you undertake in Washington, given the legislative environment is a political challenge, but you're very much correct to think about this, at least from my perspective and that of our economic team, from the perspective of political economy or the intersection of politics and the kind of economics concerns embedded in your question.