Austan Goolsbee - The Reality of a Trump Economy - Extended Interview

Extended - April 17, 2017 - Austan Goolsbee 04/17/2017 Views: 38,579

Former Obama administration economist Austan Goolsbee weighs in on how President Trump's budget affects the economy and talks about the U.S.'s changing workforce. (15:01)

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Please welcome Austan Goolsbee!

(cheers and applause)

-How are you?-Welcome. Welcome.

-Welcome to the show.-Thank you for having me.

Such a pleasure to have youhere, especially at this time.

-It is about time for taxes.-(laughing): Yes.

-And, uh... -They gave usthree extra days this year.

-Yeah, which is nice.-I still haven't filed mine,

so I'm gonna need...I'm gonna use it.

-Oh, nice.-Yeah.

So you're being presidential.I like that.


You were President Obama'seconomist.

Let's talk about the taxes.

And, I mean, there'sso many things to get into,

-but let's start offwith the taxes. -Okay.

Let's talk about the tax plans.

Let's talk about whatPresident Trump has proposed.

Looking at his planaround infrastructure,

the president has said,"I need certain cuts

to get the infrastructurespending that I want."

A lot of people saythat his cuts aren't realistic.

Do Donald Trump's tax plansmake sense to an economist?


-Not even remotely. Look,here's the thing. -(applause)

When you run for president,when people run for president,

normally, they outline in somedetail what they want to do.

-Yeah.-He didn't do that.

And if you run...

They asked him aboutthe health plan.

And they said,

"You have been criticizedfor not having specifics.

"What would be your specifics?

What would you replaceObamacare with?"

And his answer was,"Something fabulous."

-Yes. -(laughter)-That was his plan.

-That was the plan.-Yes.

If you run on"something fabulous,"

then when you get inand appoint business people,

people with no policy experienceto the cabinet jobs,

we thought what it meant is,

-he must just be delegating thedetails to Congress. -Uh-huh.

But then,when Congress produces details,

and he attacks those details,we've now bogged down,

and Congress is like,"Fine, you do it.

What's your idea?"

They don't have a plan.They don't have a tax plan.

They just wantto cut taxes for everyone,

and they can't affordto do that,

so we're going aroundand around in a circle.

So, someone was askingthe question,

"Why not cut taxesfor everyone?"

That sounds like a nice thing.

Well, why not cut them allto zero?

You know, that's basicallythe Trump...

-Yeah, now you're talking.I like this. -The Trump...

-(laughter, applause)-Yeah.

Okay. So...

So, the-the...

One of the only problemswith that is,

you've run out of money.

And so, when the government hasto do things

which actually matterfor the growth of the country,

-whether it's protect us throughnational defense... -Yup.

...or pay for the science,

pay for education fundingso people can go to college,

pay Social securityand Medicare,

and your grandma'sin a nursing home.

All those things, you'regonna run out of money doing.

But now the good news is

Trump is gonna cutall of those things.

-Exactly!-So other than military,

-Exactly. -Trump has saidhe's cutting science,

-Exactly. -and they'll workto cut education,

-kids don't need free lunches...-That's what they have to do,

because they're tryingto come up with $2 trillion

to pay for these tax cuts...that he promised.

And they won't be able to do it.

If we look at...if we look at Trump's plans

and we think about the tax cuts,

and we look at what he proposes,

you know, in termsof the cuts making sense,

when it comes to entitlements,

that's a conversation thatyou always hear in America--

people saying,oh, the government

shouldn't be payingfor these things,

the government shouldn'tbe paying for health care,

the government shouldn't bepaying for social security,

it's getting out of hand.

The numbers have gone up-- buthow out of hand has it gotten,

or has it gotten out of hand?

Look, I'm not disput...Everybody knows the population

is agingand health care costs are rising

-Yeah. -and that we have to dealwith the fiscal imbalance,

-let's call it, from the agingof the population. -Mm-hmm.

The... cutting taxesby $2 trillion

does not improve that,

it makes it dramatically worse.

And... as you look at the...

kind of the philosophybehind what...

what Trump's proposing,

it's not actually: Let's havea grown-up conversation

about entitlementsor about health care costs

or how we limit them.

It's... it's nonsense.

It's... "I promiseI'll raise the spending,

I'll never cut social security,Medicare or Medicaid," -Right.

he promised in the campaign.

"And I'll give you$2 trillion of tax cuts

"for high-income people,

and I'll abolish the debt."

He said we'll haveno deficit whatsoever.

And now they can't figure outhow to do it.

And so he's turningand pointing a finger

and saying,"It's the Democrats' fault.

They didn't vote for anythingthat I... that I put forward."

But the root of the problem is,that's nonsense.

It's just made up.

You know, like there-there...there is no plan.

And what I don't get is:how do you look...

We've gone through,over the last decade,

a lot of mess.

-Ordinary working folksin this country, -Yeah.

have had to deal with recession,financial crisis,

a series of squeezes on theirwages, all those things.

How do you look at the last 15years in this country and say,

"You know whatthe biggest problem was?

"We didn't cutbillionaires' taxes enough.

"If only we had cut them more,we wouldn't have these problems.

That's all we need to do."

I just don't get that.


It's, uh...

it's almost like Donald Trumpis a billionaire.

That's what it seems like.

If we... if we talkabout jobs in the country...

a lot of people saythey voted for Donald Trump

so that he would provide jobs.

What's been really interestingover the past few weeks

is a story that's been emergingin the U.S.

about the death of retail jobs,

and how retail jobsare disappearing in America,

and at a scalethat seems to dwarf

all the coal jobs that existin the country,

and, yet,it seems like coal jobs

hold more importance in the U.S.

I'm honestly confused by this.

Are retail jobs not importantto the U.S. economy?

No, they are.I mean, you're on to something

that's really quite deep

and really quite fundamentalin the economy.

And that is it's not about coal,

which is very small in size,

and is largely being displaced

by natural gas, you know.

So, as you, uh, to declareat the same time

we're gonna open up all fracking

and try to havecheap natural gas,

and we're gonna endthe war on coal,

those are actuallycontradictory.

If you look at retail,

there is millions of peoplewho work in retail.

And as our buying patternshave changed,

and as where we livehas changed,

and as we shop at big-box storesinstead of, you know,

walking up and down the mall

and going to B. Daltonand Spencer's,

and, you know, the placesthat we used to shop,

the implications of thatfor the job market

-are really quite fundamental.-Yeah.

And it's sad to me that we--

it's like we're not having

a realistic conversation abouthow are we going to make sure

that millions of peoplein our workforce

are properly trained,

or are moving intoindustries or jobs,

or getting on careers where theycan support their families.

We're instead arguing aboutcoal jobs in the 1950s,

and I think that's notnecessarily realistic.

Here's a questionsomeone might ask.

They might say, okay,but Trump has only been

for a few months.

-President Barack Obama...-Sidebar: Thank God.

-But, okay...-(cheers and applause)

Trump has only been in officefor a few months,

so many people would argue,they'd go like,

"Yeah, but then aren't these theeffects of President Obama?"

What would you have expectedTrump to do?

What could he realisticallyhave done in this time?

Look, that's perfectly fair,

that the 90-plus percentof what happens in the economy

actually doesn't have anythingto do with Washington.

And as I said, I was in theWhite House, I went all through,

been in the basement,all around.

I looked for the switch where--oh, here's the switch

we've forgettingto flip this switch.

And now the economywill be fixed.

Obviously, it doesn't worklike that.

I think if you're the president,

you probably shouldn't tryto take credit for--

the very first jobs numberwas a good jobs number

-that Donald Trump got.-Yes.

And when the jobs numberscome out--

there's no reasonyou would know this--

but there's a reference week,

which is the weekthey do the survey.

And the reference week

was before Donald Trumpwas in office in January.

And he was like,"Look at these great jobs!"

-Yes. -It was like,"That was before you got here."

-But the...-(laughter)

I-It's fair to saythat these trends

were under Obama,

and they were under Bush,and they were under Clinton.

-Uh-huh. -A lot of this stuffhas been going for decades,

so he-he couldn't have waveda magic wand and changed it.

So... So, then,would you say, then,

if we... if we lookat globalization

and we lookat some of the messages

-that Trump has espousedduring the campaign... -Yes.

There is no magic wand,but many people have argued

the part of the problemin the United States

has been the outsourcingof labor,

has been the fact thatAmerica is technically competing

against countries that are,in effect,

you know,dumping labor on the U.S.

So is there some meritto people saying,

"Shut down the borders,

-don't let people in"?-To his argument.

-Look, let's build a wall-And then... Yeah.

-and build up our own.-Yeah, let's build a wall

and keep everyone in.And secondly,

-Yeah. -let's alsonot send any companies

or let any companies operateoutside the United States.

I'm torn on this.I'm of two minds.

I think there are issueswith the tax code

that have encouraged companiesto move their profits,

move their things overseas,and we ought to change that.

We ought to make itas favorable as possible

for companies to investin the U.S.

That's differentfrom the argument,

"If we build walls

"and say, 'Nobody buy anythingfrom the outside world'

"and let's just tryto keep the people and the stuff

-out of here..."That's not a new idea. -Right.

That's been triedhundreds of times

all around the world,

and the reasonthat we don't do that now

is because that failed.

It's notthat we've never tried that.

We tried that. It doesn't work.

It doesn't make you richto build walls.

It makes you poor.

And if we had built those wallsin-- whatever-- 1982...

-Yeah. -And we were all drivingDelta 88s,

you know, from Oldsmobile,

and we were watching Charles in Charge on TV,

and we were drinking New Coke,and, you know, we had...

We were fixed in time,

we would not be better offtoday.

We would be way worse off.

What about... What aboutthe workers coming over, then?

How does thataffect the economy?

'Cause then people say,"Well, if it wasn't for that,

"wages would be higherin the U.S.,

and if it wasn't for immigrantscoming over into the country..."

I know some people say that,but, actually,

there are hundreds of economists

who have studied this question,

and the overwhelming evidenceis that, actually,

the immigrants have beenvery good for the economy.

There are some thingsthat you got to pay...

-If they have kids, you pay forpublic school -Yes, yes, yes.

of those kids,but a way disproportionate share

of our entrepreneursare immigrants.

We've hadmassive economic benefits

from immigration in the country,both the workforce,

-Mm-hmm. -expanding the numberof companies

that go outand hire other people.

And a bipartisan groupof economists,

just last week, 1,500,

including prominent Republicansand Democrats,

signed this letter that theysent to Donald Trump that said

immigration has not been badfor this country--

it's actually been a great boon.

And if you were to deportall the immigrants right now,

-you would send usinto a recession -Wow.

and shrink the GDP.

And I would just remindeverybody,

we started thinking aboutSocial Security and Medicare,

and the population'sgetting older--

we're gonna have to payfor that.

Every other advanced economyin the world--

through Europe,whether it's Japan, China--

they've gotshrinking populations

or are about to shrink,

and their demographicsare very problematic.

If you look atnative-born people in the U.S.,

our demographics look exactlylike Japan,

-exactly like China,exactly like Europe. -Right.

Without immigration,

we cannot even remotely affordto pay for that stuff.

So I-I think people,

you's totally understandable

that we would get in a mindset that says,

"Oh, the rest of the world feelslike they're... it's unfair

"and they're kicking our buttsand the thing we should do

-is build a wall and keep themout." -Yeah, yeah, yeah.

But the only thing that works,

I think, is--

and it screams out at youin the numbers--

are you have to investin your own people,

in your own workforce.

And if we don't do that,

you can try to make people driveDelta 88s forever,

but that won't work.

-You have to keep moving.-You really hate that car.

I really do not like that car.

You really hate that car.

This is not a good adfor the Delta 88.

Before I let you go,uh, question for you,

as an economist, if you had amagic wand that you could wave,

what would be the big thing thatyou would change about the taxes

in the U.S.?

I have an old...paper/suggestion,

which starts from the premise,

for something like halfor more of the country,

every single thing thatyou fill out on your tax return,

the IRS already has.

-Your employer already sentthe W-2 to them. -Yes.

Your bank already sent them.They know the interest.

The government,if I could wave a magic wand,

they would just takethe information

and, rather than making youthe IRS' lowest paid employee,

they would just send you a formthat says,

"Your employer told usyou make this,

your bank told usyou make this"--

it'd be totally optional--

"but if this is correct,

check this box and you're done."

And I call it the simple return,and I would do that!

-Automatic tax returns.-Yeah, automatic. -(cheering)

And it would be optional.

If you don't want to tr...If you're like, "No, no,

-I don't want to do it..."-This sounds like a great idea.

But I think they sh...they should definitely do that.

Well, but thenwhy wouldn't they do that?

Well, the accountants came overand said,

"No, no, that's gonna destroyour business,"

and Grover Norquist said,

"Do you trust the governmentto do your taxes?"

And, uh... So it bogged down.

Uh, but-but I still thinkit would be a good idea.

And it would betotally optional.

Me and you againstthe accountants. Let's go.

-We'll do it. We'll do it.-We'll take them on.

-I'm with you.-Thank you so much.

-Thank you, Trevor.-Austan Goolsbee, everybody.

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