Transcript

Smoking Polls · Politix

0:00
SPEAKER_01: Hi, it's me.
0:00
SPEAKER_01: I'm The Problem.
0:30
And it's hard to see anything on the horizon that you'd expect
0:34
to make Trump more popular.
0:37
SPEAKER_01: So we're going to talk about that today.
0:39
SPEAKER_01: Why did public opinion change?
0:41
It might seem a little obvious,
0:43
but it's actually more complicated than it looks.
0:46
SPEAKER_01: And I think it's pretty interesting.
0:48
SPEAKER_01: So we'll break it down.
0:48
SPEAKER_01: And if you want to hear the whole conversation,
0:50
SPEAKER_01: you can upgrade your subscription to paid at politics.fm.
0:58
SPEAKER_01: Hey, everyone.
0:59
SPEAKER_01: Welcome to the Politics Podcast.
1:00
SPEAKER_01: I'm Brian Boyler.
1:01
SPEAKER_00: I'm Matthew Iglesias.
1:02
We're celebrating this week because Donald Trump seems to have
1:06
flushed his
1:06
SPEAKER_01: honeymoon period down the toilet.
1:09
SPEAKER_01: So he's anticipating Matt's objections.
1:14
I'm not going to say he's underwater because if you look at
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tracking polls,
1:17
SPEAKER_01: he's not yet underwater.
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But if you look at the high end polls that have come out most recently,
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he is.
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SPEAKER_01: He's at the very least
1:23
SPEAKER_01: reverting in public opinion to the dynamic that governed his first term,
1:29
where many more people disapproved of him than approved of him
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and many more people
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SPEAKER_01: strongly disapproved of him than strongly approved.
1:37
SPEAKER_01: And if anything is different this time,
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it's actually even better news because he seems to have dragged
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economic opinion
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SPEAKER_01: with him.
1:46
SPEAKER_01: So we had a Washington Post and Reuters poll,
1:49
SPEAKER_01: both done by Ipsos,
1:50
SPEAKER_01: where he was down eight on his handling of the economy,
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SPEAKER_01: which I think even during COVID,
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SPEAKER_01: he never really went below 50%.
1:59
SPEAKER_01: People who didn't like him thought he was...
2:02
SPEAKER_01: knew his way around the economy, but seemingly no longer.
2:05
SPEAKER_01: And so we wanted to talk about what's happening under the hood.
2:09
SPEAKER_01: What do you think is happening under the hood?
2:11
SPEAKER_00: Uh, I mean, it's hard to say many different things are happening.
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SPEAKER_00: Yeah.
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SPEAKER_00: I mean, I think, I think just sort of set the table, right.
2:17
SPEAKER_00: Um,
2:18
SPEAKER_00: you know,
2:18
SPEAKER_00: uh,
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SPEAKER_00: public opinion about the economy,
2:20
SPEAKER_00: uh,
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SPEAKER_00: in the last year of Joe Biden's administration was improved a little bit,
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SPEAKER_00: um,
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SPEAKER_00: from sort of the low points,
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SPEAKER_00: but only a very small amount,
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SPEAKER_00: right.
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SPEAKER_00: Um, there was sort of, um,
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SPEAKER_00: you know,
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public opinion bitterness about the inflation that had occurred
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in the past with Republican,
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SPEAKER_00: you know,
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SPEAKER_00: economic sentiment,
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SPEAKER_00: sort of rock bottom and independent sentiment,
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SPEAKER_00: like fairly poor.
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SPEAKER_00: And I think a lot of people thought,
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SPEAKER_00: I think,
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SPEAKER_00: you know,
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SPEAKER_00: a good baseline expectation was that,
2:53
SPEAKER_00: well,
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SPEAKER_00: once Trump took over,
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SPEAKER_00: Republican sentiment would soar,
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SPEAKER_00: Democratic sentiment would go down,
3:00
SPEAKER_00: but it wouldn't crater.
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SPEAKER_00: Um,
3:04
SPEAKER_01: Hi, it's me.
3:04
SPEAKER_01: I'm the problem.
3:05
SPEAKER_01: I thought that too.
3:20
SPEAKER_00: the last 18 months of the Biden administration,
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SPEAKER_00: where they'd be like,
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SPEAKER_00: hey,
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SPEAKER_00: guys,
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SPEAKER_00: like inflation is low now,
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SPEAKER_00: like as a ongoing rate of increase.
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But people will be like,
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yeah,
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but I still remember like the old lower prices.
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SPEAKER_00: And so Trump was just sort of going to be on easy street, right?
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SPEAKER_00: He would get a kind of a free reset of the inflation button.
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SPEAKER_00: And then, you know, you have like.
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SPEAKER_00: Lots of lots of different sort of ingredients,
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SPEAKER_00: I think,
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SPEAKER_00: would go into that basic structural dynamic.
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SPEAKER_00: But that's not really what's happened.
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You've had a sort of a symmetrical inversion of Democratic and
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Republican feelings
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SPEAKER_00: about the economy,
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SPEAKER_00: and independence remain fairly downbeat about the state of things.
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SPEAKER_00: What's also interesting is that the stock market,
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SPEAKER_00: which is,
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SPEAKER_00: the stock market is like somewhere between,
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SPEAKER_00: I think,
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SPEAKER_00: a pure sentiment indicator and a reality,
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SPEAKER_00: you know,
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SPEAKER_00: and a piece of reality,
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SPEAKER_00: because,
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SPEAKER_00: you know,
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SPEAKER_01: It measures equity prices, which are in the market.
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SPEAKER_00: It's a real thing.
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SPEAKER_01: People get exuberant and buy when they think.
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SPEAKER_00: Right.
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SPEAKER_00: I mean,
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SPEAKER_00: it's measuring people's expectations,
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but you don't want to just bullshit in your stock purchases
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because you can lose a
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SPEAKER_00: lot of money.
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SPEAKER_00: The stock market popped quite a lot.
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SPEAKER_00: First, sort of in October, when it seemed like Trump would probably win.
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SPEAKER_00: And then again, when he did win.
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SPEAKER_00: But since his inauguration, the market is down slightly.
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SPEAKER_00: You know,
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SPEAKER_00: which I think tells you something,
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that what Trump has actually done has been somewhat surprising
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relative to what one
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SPEAKER_00: might have thought on the morning after Election Day.
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SPEAKER_00: And the surprise has not been positive, you know, like according to...
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SPEAKER_00: I don't know, like the kind of rich guys who buy and sell stock, right?
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Like the actual conduct of the administration has been to
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deliver less progress on
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SPEAKER_00: passing a major tax bill,
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SPEAKER_00: has been more enthusiastic about tariffs than business optimists thought.
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And there's been an incredible amount of attention paid to
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these kind of unsettling doge moves.
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SPEAKER_00: But like the money involved in the doge moves is just not that
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SPEAKER_00: large, right?
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SPEAKER_00: There's a reason.
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SPEAKER_00: I mean,
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there's a number of reasons why Republicans haven't done this
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in the past,
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but the bond market does not think that Donald Trump is
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fundamentally addressing
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SPEAKER_00: long-term budget concerns with this,
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whereas lots of normal people feel antagonized by service
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cutbacks and layoffs.
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SPEAKER_00: Well, I mean-
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Is it called Okun's Rule about how spending affects economic
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growth or lack thereof?
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SPEAKER_01: Is...
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SPEAKER_01: What Trump and Musk have done is throw a bunch of people out of work.
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SPEAKER_01: And as an increment of the federal budget, it's tiny.
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SPEAKER_01: But as an increment of spending in the economy,
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SPEAKER_01: when you fire someone and they stop spending,
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SPEAKER_01: or when you make them think they might lose their jobs,
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SPEAKER_01: they stop spending,
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SPEAKER_01: the impact on the macroeconomy can be...
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SPEAKER_01: Large relative to the actual fiscal impact of the firings.
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SPEAKER_01: But it's like it's so early that we actually can't see,
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SPEAKER_01: I don't think,
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what the state of the economy is as a result of the surprising
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moves you described.
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SPEAKER_01: So like for me, my model coming into the Trump presidency was –
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SPEAKER_01: As per usual, Republican sentiment would soar.
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SPEAKER_01: Democratic sentiment would fall,
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but not as much because there's a partisan asymmetry between
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how much Democratic
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SPEAKER_01: voters respond to pollsters in purely partisan ways.
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So that would put Trump significantly ahead of where Biden was
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on economic approval.
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SPEAKER_01: And then the sort of
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SPEAKER_01: The question is what Trump would do with that leeway, right?
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Would he wreck the economy with a bunch of tariffs and by
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kicking 15 million people
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SPEAKER_01: out of the country?
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SPEAKER_01: Or would he kind of respond like he did in his first term to –
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what was happening in the stock market and just like trying not
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to rock the boat
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SPEAKER_01: too much so that he could,
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he could like husband all this good regard about his economic
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stewardship and lay
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SPEAKER_01: off that stuff.
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SPEAKER_01: And then just go around being a corrupt piece of shit in the background.
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I did not have on my bingo card that he would just let Elon
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Musk loose in the
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SPEAKER_01: bureaucracy and just start firing people willy nilly.
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SPEAKER_01: And so, so now I'm like,
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trying to make sense of what is driving people to say to
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pollsters things that are
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SPEAKER_01: different than what I anticipated they would say.
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SPEAKER_01: And I can think of like three explanations that fit the facts.
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SPEAKER_01: The first would be that there's like,
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SPEAKER_01: there really is something politically potent,
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unusually politically potent about like the nominal price of
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things rather than
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SPEAKER_01: just straight up standard of living,
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SPEAKER_01: like how much can you afford to buy?
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SPEAKER_01: Um,
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SPEAKER_01: and,
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SPEAKER_01: and,
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SPEAKER_01: um,
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so then Trump revealed he doesn't give a shit about prices and
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Americans recognize
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SPEAKER_01: that eggs were still expensive.
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SPEAKER_01: And so they decided to the hell with this guy, right?
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SPEAKER_01: Like we,
8:40
SPEAKER_01: we misjudged,
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SPEAKER_01: um,
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SPEAKER_01: way over on the other end of the spectrum,
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SPEAKER_01: I guess is the possibility,
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SPEAKER_01: um,
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SPEAKER_01: which I don't want to rule out for the reasons I just said,
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SPEAKER_01: which is that Trump has actually bled the economy down.
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SPEAKER_01: macro economy really badly this month,
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and that public opinion has actually changed faster than
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monthly survey data can
9:01
SPEAKER_01: keep up.
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SPEAKER_01: And then option three, which I guess is sort of
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SPEAKER_01: compatible with both,
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is that vibes turned against Trump in general because he came
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into office and did a
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SPEAKER_01: bunch of things that he said he wasn't going to do,
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SPEAKER_01: acted like an asshole,
9:17
SPEAKER_01: made a bunch of things stop working,
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SPEAKER_01: broke a bunch of laws,
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SPEAKER_01: and really did real harm to people's neighbors,
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SPEAKER_01: right?
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SPEAKER_01: And that is why people were like, what the fuck?
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SPEAKER_01: And I, at this juncture, feel like I'm...
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SPEAKER_01: I'm guessing the truth is a combination of the second two things.
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I see people showing up at these Republican town halls in
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Georgia and rural Oregon
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SPEAKER_01: and stuff like that,
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SPEAKER_01: and they're not talking about prices.
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SPEAKER_01: They're talking about the
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SPEAKER_01: the wanton firings and the abuse and the criminality.
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SPEAKER_01: And,
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SPEAKER_01: and so I assume that that's driving things more than,
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SPEAKER_01: well,
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SPEAKER_00: I mean,
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SPEAKER_01: Jeffries and Chuck Schumer.
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SPEAKER_00: I'm not trying to say this in a,
10:00
SPEAKER_00: in a conspiratorial way,
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SPEAKER_00: but like,
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SPEAKER_00: it is important to,
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SPEAKER_00: I think,
10:04
SPEAKER_00: acknowledge that these town hall scenes are being,
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SPEAKER_01: they're indivisible.
10:08
SPEAKER_00: Yeah.
10:08
I mean,
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they're being,
10:09
they're being orchestrated by,
10:11
by indivisible and they have a,
10:13
SPEAKER_00: political strategy behind them.
10:16
SPEAKER_00: But I think it's, here's I guess what I would say, right?
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SPEAKER_00: If Doge hadn't happened,
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SPEAKER_00: if Trump had like faded into the background after the 2020 election,
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SPEAKER_00: and we just like regular Republicans were like back in charge,
10:30
SPEAKER_00: and somebody came to,
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SPEAKER_00: you know,
10:32
SPEAKER_00: conservative budget wonk HQ
10:35
SPEAKER_00: And they were like,
10:36
what we ought to do next time we win an election is have
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somebody come in and just
10:42
start immediately pulling whatever levers lawyers say like we
10:46
maybe kind of sort of
10:47
can do to just like cancel grants and fire people willy-nilly
10:51
as our strategy for
10:53
SPEAKER_00: cutting spending.
10:53
SPEAKER_00: You know, I think the conservative budget wonks would have said,
10:59
SPEAKER_00: Look,
10:59
what's going to happen if you do that is that the actual amount
11:03
of spending that we
11:04
SPEAKER_00: cut is going to be pretty low,
11:07
SPEAKER_00: right?
11:07
Like financial markets are not going to credit us with major
11:12
cost savings,
11:13
right?
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SPEAKER_00: But it's going to be very,
11:15
SPEAKER_00: very,
11:16
SPEAKER_00: very visible to people because,
11:19
SPEAKER_00: you know,
11:21
even though there's a lot of federal employees in the national
11:23
capital area,
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SPEAKER_00: there like actually are federal offices all around the country.
11:29
SPEAKER_00: And if you just start flipping switches in an untargeted way,
11:32
a lot of people are going to like hear news about cutbacks
11:38
that's going to be very
11:39
SPEAKER_00: disproportionate to the actual amount of cutting back that we do.
11:43
SPEAKER_00: Right.
11:45
SPEAKER_00: And I think that that's what's happened,
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SPEAKER_00: you know,
11:48
like laying off eight people who do off season trail
11:52
maintenance at Acadia National Park.
11:55
SPEAKER_00: is not a major fiscal savings.
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SPEAKER_00: If I'm a bond trader at Cantor Fitzgerald, I'm not like, we've licked it.
12:04
The long-term fiscal picture has been solved by laying those
12:07
eight people off.
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SPEAKER_00: One reason is that it doesn't save that much money.
12:11
SPEAKER_00: Another reason is that it's like,
12:12
SPEAKER_00: the odds are really good that sooner or later,
12:16
SPEAKER_00: those people are just going to get rehired.
12:19
They're probably going to end up working for some private
12:21
contractor getting paid more.
12:23
SPEAKER_00: Yeah, I mean, who knows?
12:24
SPEAKER_00: You know,
12:25
SPEAKER_00: I mean,
12:25
SPEAKER_00: there's a lot of different ways it can go,
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SPEAKER_00: but it doesn't seem like that sustainable to just lay them off.
12:30
SPEAKER_00: At the same time, you know, the Bangor Daily News...
12:34
SPEAKER_00: The Portland newspaper,
12:36
SPEAKER_00: whatever it is,
12:36
every local media outlet in Maine that I've tracked has had a
12:41
story about the
12:42
layoffs of these Acadia National Park off-season trail workers
12:46
because Susan
12:47
SPEAKER_00: Collins has done her ineffectual I'm concerned about a thing.
12:50
SPEAKER_00: Jared Golden,
12:52
SPEAKER_00: moderate Democrat who takes his moments to say nice things about Trump,
12:56
SPEAKER_00: has been like,
12:56
SPEAKER_00: this is bad.
12:58
And so it's like everybody who reads news at all has heard that
13:03
this is happening.
13:04
SPEAKER_00: Democrats find it very, very alarming, right?
13:07
SPEAKER_00: And so it's like you're not delivering that asymmetry.
13:11
SPEAKER_00: I keep hearing from Democrats
13:16
takes about the macroeconomic impact of all of this that I
13:19
think are pretty exaggerated.
13:22
SPEAKER_00: But because they're like alarmed on the merits,
13:24
SPEAKER_00: you know,
13:25
SPEAKER_00: like something like canceling PEPFAR,
13:27
SPEAKER_00: I think is like morally outrageous.
13:31
SPEAKER_00: And so people are right to be upset about it.
13:33
When people are upset,
13:34
it also puts them into like gloom and doom mode about
13:39
versus site-neutral payments for Medicare reimbursement would
13:46
save hundreds of
13:47
SPEAKER_00: billions of dollars over a 10-year time span.
13:52
SPEAKER_00: This is an idea that right now,
13:55
the exact same outpatient procedure is reimbursed at a higher
13:59
rate if it's done in
14:01
a hospital-affiliated surgical center rather than if it's done
14:04
in a regular
14:05
SPEAKER_00: doctor's office.
14:06
which has created a lot of incentives for hospitals to create
14:09
outpatient surgery
14:10
centers and for doctors to start spending half their time
14:14
working out of the
14:15
SPEAKER_00: hospital-affiliated center rather than out of their own office.
14:19
So this inflates healthcare expenditures by $450 billion a year,
14:26
and Medicare could change it.
14:28
This would be a tough fight in Congress because it's hard to
14:31
take on healthcare providers,
14:32
SPEAKER_00: on the other hand.
14:33
SPEAKER_00: There are Democrats who want to do this.
14:35
SPEAKER_00: There are Republicans who want to do it.
14:37
SPEAKER_00: You could get it done if you took it on, maybe.
14:41
You would save a lot of money,
14:42
and you would not get screaming headlines about whatever.
14:46
SPEAKER_00: Trump is a true master of
14:55
SPEAKER_00: the three ring circus, right?
14:57
And sometimes it will be like,
14:57
ah,
14:58
you know,
14:58
like this is a distraction from the other thing.
15:03
But I feel like firing National Park Service workers is like
15:06
the opposite of a
15:07
SPEAKER_00: clever distraction,
15:09
SPEAKER_00: right?
15:09
It's like you're calling a lot of attention to like actually
15:13
very minor budgetary
15:14
SPEAKER_00: move that antagonizes lots and lots of regular people for no real reason.
15:20
SPEAKER_00: And I've still not seen, I mean, people have started doing like,
15:24
SPEAKER_00: here's what's really going on with Doge kind of stuff.
15:27
SPEAKER_00: And like, I still have no idea what's really going on with
15:30
SPEAKER_00: laying off national parks workers.
15:33
SPEAKER_00: I reread the Project 2025 Interior Department chapter.
15:37
SPEAKER_00: It calls for a lot of radical changes to the Endangered Species Act,
15:41
SPEAKER_00: oil and gas drilling on non-park public lands,
15:45
SPEAKER_00: some kind of change to how the National Park Service deals with wolves.
15:48
SPEAKER_00: I mean,
15:48
SPEAKER_00: there's like a lot in that chapter,
15:51
and genuinely nowhere in it does it say you should just fire
15:54
probationary National
15:55
SPEAKER_00: Park Service employees.
15:56
SPEAKER_00: Like, this is not...
15:59
Elon Musk came up with this and they did it,
16:02
but I sincerely don't know why they did it.
16:05
SPEAKER_00: I don't think they thought it through.
16:07
One thing I appreciate about it is that there's so many layers
16:14
in American politics
16:15
and American political process that tend to mask the sources of
16:20
accountability for
16:21
SPEAKER_01: governing decisions.
16:24
SPEAKER_01: Republicans will filibuster something and
16:27
SPEAKER_01: The report will be that such and so couldn't pass in Congress.
16:31
And so you voters lose track of the fact that Republicans
16:35
killed popular thing or whatever.
16:37
SPEAKER_01: When you have Elon Musk going about just wantonly firing people,
16:42
SPEAKER_01: indiscriminately firing people,
16:43
not doing any kind of analysis about what work they do before
16:47
firing them.
16:49
SPEAKER_01: It,
16:49
SPEAKER_01: I think,
16:49
primes the public to understand that any disruption to status
16:54
quo normal stuff
16:55
where airplanes aren't crashing and you can get into the Grand
16:58
Canyon after waiting
16:59
SPEAKER_01: a brief amount of time in line in your car,
17:03
if suddenly planes are falling out of the sky and getting into
17:05
the park takes forever,
17:07
SPEAKER_01: people are going to be like,
17:08
SPEAKER_01: oh,
17:08
SPEAKER_01: it's because they're cutting jobs wantonly.
17:11
SPEAKER_01: So I think it's good.
17:14
SPEAKER_01: as an accountability metric.
17:18
SPEAKER_01: And that like Trump,
17:19
SPEAKER_01: you know,
17:19
SPEAKER_01: like Republican loyalists and propagandists are,
17:23
SPEAKER_01: are struggling with like,
17:25
SPEAKER_01: you know,
17:25
they're trying to be like every bad thing that happens as a
17:27
result of something
17:29
SPEAKER_01: Elon Musk did.
17:31
SPEAKER_01: You'll have like these,
17:33
SPEAKER_01: these people on Twitter or whatever being like,
17:34
SPEAKER_01: Oh,
17:35
SPEAKER_01: this is malicious compliance.
17:36
SPEAKER_01: And actually like, there was no reason for there to be any disruption.
17:39
SPEAKER_01: Like, you know, the, they're just lying.
17:42
SPEAKER_01: Yeah.
17:43
But the logical error they're making is just assuming that
17:50
nothing that anyone who
17:51
SPEAKER_01: works for the government does has any real impact.
17:54
And so if you eliminate their job,
17:56
the consequences must be fake in some way.
17:58
SPEAKER_01: And I think this is all good.
17:59
SPEAKER_01: I mean, it's bad, but it's good to see it laid bare in this way.
18:06
SPEAKER_01: I am confused about why youth are...
18:11
do you think that the democratic fixation on the macroeconomic
18:15
effects of all this
18:15
SPEAKER_01: might be overstated?
18:17
SPEAKER_01: Because I don't know what to think,
18:19
SPEAKER_01: but I think nobody has any real...
18:23
SPEAKER_01: When I went looking for how many jobs is Elon Musk cut,
18:26
SPEAKER_01: the range was huge.
18:28
So estimates vary just on the number of federal workers who
18:31
have been fired.
18:32
SPEAKER_01: But it's even murkier when you try to factor in...
18:37
SPEAKER_01: How many healthcare workers have lost their jobs?
18:39
SPEAKER_01: How many nonprofit workers have lost their jobs?
18:41
Because part of the effect of – like there's the firings and
18:45
then there's the
18:46
SPEAKER_01: indiscriminate spending cuts,
18:48
SPEAKER_01: which are illegal.
18:49
But if the organizations entitled to those dollars don't get them,
18:53
they start laying people off.
18:54
SPEAKER_01: And so the March and April jobs reports are going to show something.
18:59
SPEAKER_01: And like you seem to think that it probably won't be that bad,
19:01
SPEAKER_01: but I think it might be quite bad.
19:03
SPEAKER_00: Well,
19:04
SPEAKER_00: this is just,
19:05
SPEAKER_00: you know,
19:05
SPEAKER_00: I think that a lot of people roughly our age,
19:09
SPEAKER_00: you know,
19:10
SPEAKER_00: and younger sort of,
19:12
SPEAKER_00: you know,
19:12
learned their intuitive econ in the semi-weak labor market of
19:19
the George W.
19:20
SPEAKER_00: Bush years and the very weak labor market.
19:22
of the Barack Obama years and are always inclined to worry
19:26
about negative demand
19:27
SPEAKER_00: shocks and the recession around the corner.
19:30
But we are in an inflationary environment,
19:33
a high interest rates environment.
19:38
SPEAKER_00: The part of Doge that actually makes sense to me is that
19:43
Generating public sector layoffs is a thing that will cause the
19:48
Fed to cut interest
19:49
SPEAKER_00: rates and bring back house building,
19:52
SPEAKER_00: bring mortgage rates down,
19:54
SPEAKER_00: accomplish things.
19:56
And the fact that it kind of directly disemploys people is,
20:00
in a sense,
20:01
an economic problem.
20:02
SPEAKER_00: Right.
20:02
SPEAKER_00: Right.
20:03
SPEAKER_00: Right.
20:19
SPEAKER_00: which is clearly overstated.
20:24
SPEAKER_00: And I think it could be very long-term hazardous in particular.
20:27
Because what they would like to do is cut the federal workforce
20:32
and then rearrange
20:33
SPEAKER_00: everything so that there are no visible impacts.
20:36
SPEAKER_00: So that nobody reduces how many people can come to the Grand Canyon,
20:40
and all the cutbacks come from sort of long-term stuff that
20:44
will deteriorate the
20:45
SPEAKER_00: state over the course of like 5,
20:47
SPEAKER_00: 10,
20:53
15 years,
20:47
SPEAKER_00: which would be worse,
20:48
SPEAKER_00: and it's correct for middle managers to try not to do it that way.
20:53
SPEAKER_00: But,
20:54
SPEAKER_00: you know,
20:54
SPEAKER_00: for the short-term economy,
20:55
I just think like the biggest thing about Doge is that it's not
21:00
a big change.
21:02
You know,
21:02
like the interest rates,
21:05
they're down today,
21:07
but they were up last week.
21:09
SPEAKER_00: It's been very sort of
21:11
moderate in its impact versus tariffs have really been moving markets,
21:17
you know.
21:17
SPEAKER_00: And Scott Besant,
21:20
SPEAKER_00: before the election,
21:21
SPEAKER_00: Miran,
21:22
SPEAKER_00: the CEA chair,
21:24
SPEAKER_00: or maybe he's the NEC chair,
21:25
SPEAKER_00: like Trump allies on Wall Street kept telling everybody,
21:31
SPEAKER_00: like,
21:31
SPEAKER_00: you know,
21:32
SPEAKER_00: This is a powerful bargaining tool.
21:34
SPEAKER_00: You know, it's fine.
21:35
And we talked about the initial round of Canada-Mexico tariffs
21:39
that wound up not happening.
21:41
SPEAKER_00: But with every passing week that goes by,
21:43
SPEAKER_00: I mean,
21:44
SPEAKER_00: Trump does seem...
21:48
He's either actually going to go through with the tariffs or
21:51
else he's trying really,
21:52
really hard to make it seem like he's going to go through with
21:54
the tariffs in order
21:55
SPEAKER_00: to maximize his bargaining leverage.
21:57
SPEAKER_00: And every time he reiterates, like, tariffs are coming...
22:01
SPEAKER_00: That's a hit to economic activity.
22:05
SPEAKER_00: Stock markets go down, but also businesses are not sure what to do.
22:10
If you were considering investing in a project that is going to
22:15
use aluminum,
22:16
but the president of the United States keeps saying there's
22:18
going to be huge new
22:19
SPEAKER_00: taxes on aluminum- You just buy it all right now.
22:22
SPEAKER_01: Huge-
22:24
SPEAKER_00: No, it's like if you've already got it, right, you do try to stockpile.
22:28
And so you start seeing anticipatory inflation,
22:31
but also it retards your investment,
22:34
right?
22:35
SPEAKER_00: And Trump's ambiguity is a double whammy in that regard, right?
22:38
Because the upside to taxing imported aluminum is supposed to
22:42
be that it causes
22:45
SPEAKER_00: Americans to invest in creating new aluminum smelting facilities,
22:48
SPEAKER_00: right?
22:49
But Trump keeps saying at least two days out of every seven
22:53
that he's not actually
22:54
SPEAKER_00: going to do the tariffs.
22:56
You don't want to build a factory in response to aluminum
22:59
tariffs that are going to
22:59
SPEAKER_00: be in place for six months and then go away in exchange for a photo op.
23:04
But you also don't want to expand your airplane production
23:07
facility if there might
23:08
SPEAKER_00: be huge new taxes on aluminum.
23:10
Maybe you want to build the airplanes in Canada where you can
23:12
get the cheap aluminum.
23:13
SPEAKER_00: And it's just always been, I don't know how to put it,
23:18
SPEAKER_00: There's like a reason,
23:20
a lot of the times Trump will hit on something and people will
23:24
start asserting that
23:27
this unorthodox means of behavior is like some incredible
23:31
stroke of genius.
23:32
SPEAKER_00: And like,
23:32
I don't understand why no previous president has used broad
23:36
discretionary authority
23:37
SPEAKER_00: to bully American allies into making decisions.
23:40
SPEAKER_00: concessions.
23:42
And the reason why presidents haven't done that before is it's
23:45
very unsettling to
23:46
SPEAKER_00: everyone involved.
23:47
You keep telling literally everyone in the world that you're lying,
23:54
right?
23:55
And he's telling mutually inconsistent stories to everyone
23:58
about what exactly the
23:59
SPEAKER_00: nature of the lie is,
24:00
SPEAKER_00: about what the long-term strategy is.
24:03
SPEAKER_00: And nobody wants to make plans on that basis.
24:06
SPEAKER_00: It does get you, like Tim Cook,
24:08
had committed to some investment in a Texas factory when Biden
24:13
was president.
24:14
SPEAKER_00: And now that Trump is president,
24:15
SPEAKER_00: he put out a new press release saying the same stuff as the old one,
24:20
SPEAKER_00: except this time attributing it to Trump and the tariffs.
24:23
SPEAKER_00: So Trump gets a nice news cycle there,
24:26
SPEAKER_00: but actually nobody knows what to do with their businesses.
24:29
So here's why I'm a little less sanguine than you about the
24:33
shock of the cuts,
24:35
right?
24:35
SPEAKER_01: I mean,
24:36
I don't know where it's going to – I'm just – why I think it
24:39
could be worse than it looks.
24:41
SPEAKER_01: But it has nothing to do with like – obviously,
24:44
if another plane fell out of the sky and this time it was
24:49
directly traceable to
24:50
SPEAKER_01: some shortage at FAA that was Elon Musk's fault,
24:55
you could imagine a panic that ground air travel to a halt
25:00
causing major economic disruption,
25:02
SPEAKER_01: right?
25:02
SPEAKER_01: Uh-huh.
25:03
SPEAKER_01: Bracket all that,
25:04
like all the fifth risk stuff having to do with these cuts and
25:08
just look at the numbers.
25:09
SPEAKER_01: And we don't really know what they are.
25:12
But if in a decent month for job growth in basically a full
25:17
economy with some
25:19
SPEAKER_01: inflationary pressure,
25:20
SPEAKER_01: you want 150,
25:20
SPEAKER_01: maybe 200,000 net new jobs in a month.
25:21
SPEAKER_01: And-
25:28
you know,
25:28
that's against the backdrop of nobody firing federal employees
25:31
willy nilly.
25:32
Then if you fire a hundred thousand of them,
25:35
you're,
25:35
that's going to come off the top,
25:36
right?
25:37
SPEAKER_01: Yeah.
25:38
And if for every federal job you lose,
25:40
you lose four private or nonprofit sector jobs.
25:44
SPEAKER_01: Now you've lost within a month, half a million, maybe more.
25:49
And your job growth for a month or two is at least for a month
25:53
or two is going to be negative.
25:54
SPEAKER_01: Um,
25:55
SPEAKER_01: And is it really the case that that would just register as a blip?
26:01
Or is it...
26:03
Factor in the inflationary effects of Trump's tariff bullshit.
26:09
You have a bunch of people who aren't spending on goods that
26:12
are more expensive
26:13
SPEAKER_01: than they need to be because of Trump,
26:14
SPEAKER_01: and you get pulled in this stagflation direction.
26:17
SPEAKER_01: And I don't know whether to believe the country's...
26:23
SPEAKER_01: resilient enough to that kind of demand shock to not for that,
26:26
SPEAKER_01: not to like,
26:27
SPEAKER_01: um,
26:28
SPEAKER_01: trigger an actual recession.
26:29
SPEAKER_00: Yeah.
26:30
SPEAKER_01: I just mean, how do you know?
26:31
SPEAKER_01: How would you know?
26:32
SPEAKER_01: Like,
26:32
SPEAKER_01: like,
26:32
SPEAKER_01: and how would the people on wall street know if the,
26:35
SPEAKER_01: if,
26:35
SPEAKER_01: if the effect on demand in the macro economy was already,
26:40
SPEAKER_01: um,
26:43
SPEAKER_01: like without numbers, like they're not running surveys.
26:47
They're not going to Maine and asking what the hit to tourism
26:52
is or what,
26:52
you know.
26:53
SPEAKER_00: Well, they are.
26:53
SPEAKER_00: This is the beige book.
26:56
SPEAKER_00: No, but I mean, it's just like-
26:59
SPEAKER_00: Because I think you can't just bracket the fifth risk stuff, right?
27:02
SPEAKER_00: So it's- No, of course you shouldn't.
27:04
SPEAKER_00: But I just mean that let's pretend that there's no- Yeah, no, no, no, no.
27:07
SPEAKER_00: But I'm saying, I'm agreeing with you.
27:08
SPEAKER_00: I'm just saying like accepting that as a hypothetical, right?
27:12
That like you can do the layoffs and it's a kind of a pure
27:16
demand hit,
27:16
right?
27:17
That like firing FAA workers does not degrade the actual
27:21
performance of the airline industry.
27:23
then it's true that it's a negative shock to demand and you
27:26
might get two months
27:28
SPEAKER_00: straight of negative jobs reports.
27:31
SPEAKER_00: But the Fed can react to that kind of stuff.
27:35
We have right now,
27:36
unlike when Obama was president,
27:38
interest rates were at zero.
27:40
It's very easy to sort of push the button and like make the
27:43
private sector demand go back up.
27:47
SPEAKER_00: And, you know, so-
27:51
SPEAKER_00: There's just reason to be optimistic about that.
27:56
SPEAKER_00: There's a mitigation to the downside risk there.
27:58
SPEAKER_00: The problem for Muskonomics is that we're not actually seeing that.
28:04
SPEAKER_00: We're not seeing the upside to these kind of cuts.
28:12
SPEAKER_00: The bond market, the financial markets are not acting as if
28:16
this is going to be some genius rebalancing of the American
28:20
fiscal situation.
28:22
SPEAKER_00: All you're seeing in the politics is people's,
28:26
SPEAKER_00: you know,
28:26
SPEAKER_00: first order alarm at the cutbacks,
28:29
SPEAKER_00: right?
28:29
SPEAKER_00: So like I heard about a guy who
28:34
was supposed to be in a leadership training program that's
28:37
sponsored by the
28:39
SPEAKER_00: Department of Agriculture.
28:41
And it's a leadership training program for a guy who works for
28:44
the Veterans Administration,
28:45
and he's supposed to be stepping into a managerial role that
28:49
has to do with running
28:50
SPEAKER_00: veterans cemeteries.
28:53
And so it seems like this program got cut because it's true
28:58
that if you just kind
29:00
SPEAKER_00: of like start command effing through the agriculture department,
29:03
SPEAKER_00: you will find a line item there,
29:06
which is grants to provide leadership training to bureaucrats
29:10
who work for other
29:11
SPEAKER_00: government agencies.
29:13
And you might say to yourself,
29:14
what the fuck does that have to do with agriculture?
29:17
SPEAKER_00: And the truth is it has nothing to do with agriculture.
29:19
SPEAKER_00: So you might say, okay, delete.
29:21
SPEAKER_00: Now,
29:22
I could explain to you if you asked me what the historical
29:26
legacy is of why this
29:27
SPEAKER_00: particular function is housed at the US Department of Agriculture.
29:30
And I could agree with you that it doesn't really make sense
29:34
for it to be housed at
29:34
SPEAKER_00: the Department of Agriculture.
29:36
SPEAKER_00: But the fact is, it is housed at the Department of Agriculture.
29:39
SPEAKER_00: It's getting canceled.
29:41
So now somebody is not going to be prepared to step into a
29:46
managerial role running
29:49
SPEAKER_00: some network of veterans cemeteries somewhere.
29:51
SPEAKER_00: This is not like an economic crisis for the United States of America.
29:56
And I could even be persuaded to agree that from the standpoint
29:59
of the long-term
30:00
SPEAKER_00: future of humanity and our dreams of colonizing Mars,
30:04
it probably doesn't matter whether or not we treat veterans'
30:07
graves respectfully.
30:09
SPEAKER_00: By the same token,
30:10
just like political common sense is like one of the most
30:13
politically toxic things
30:14
you could possibly do is just decide that we're going to not
30:18
treat veteran
30:19
SPEAKER_00: cemeteries in a respectful manner,
30:21
SPEAKER_00: right?
30:22
Because like a autistic South African guy who does not
30:27
understand sentimentality or
30:29
SPEAKER_00: the United States of America,
30:31
SPEAKER_00: like doesn't give a shit.
30:33
SPEAKER_00: and like thinks it's a waste of money.
30:35
Cause really like every veteran cemetery in America could fall
30:37
into total disrepair
30:39
SPEAKER_00: and like the economy quote unquote would be fine.
30:42
SPEAKER_00: People just fucking hate that shit, you know?
30:45
SPEAKER_00: And this is like the same thing with like going after Medicaid,
30:49
SPEAKER_00: going after the national parks,
30:51
SPEAKER_00: right?
30:51
SPEAKER_00: Like these are,
30:52
SPEAKER_00: um,
30:53
SPEAKER_00: the application of common sense to conservative ideology would be to say,
30:59
SPEAKER_00: you know what,
30:59
SPEAKER_00: Elon,
31:00
SPEAKER_00: like,
31:01
SPEAKER_00: people just care about this stuff.
31:03
You just,
31:03
you gotta,
31:05
you gotta let them go on their hikes,
31:07
you know,
31:07
like stop fucking around.
31:10
SPEAKER_00: But he's like, he's going wild.
31:12
And I think it's just like,
31:13
you know,
31:13
it's,
31:13
it's bad politics and it's indifferent economics.
31:17
Do you think he's doing like command F to make sure that he
31:19
doesn't accidentally
31:21
SPEAKER_01: shut down the U S ketamine supply or like
31:25
SPEAKER_00: I mean, who knows?
31:27
They laid off some of the people at the FDA who are in the
31:33
office that regulates Neuralink.
31:36
And I'm sure he fucking hates those guys because they won't
31:39
just let him implant
31:40
SPEAKER_00: whatever in people's brains.
31:43
SPEAKER_00: But to the extent that the rule of law still applies,
31:46
SPEAKER_00: if you lay off the medical device regulators,
31:50
SPEAKER_00: that makes it harder to get new medical devices approved.
31:54
You can have a negative affect toward the medical device
31:59
regulators because you
32:00
SPEAKER_00: want to get your devices approved,
32:02
SPEAKER_00: and those are the guys who tell you no.
32:03
SPEAKER_00: But the way the approvals work is you have to file to get it approved,
32:08
SPEAKER_00: and then you've got to work with the regulators to get your approval.
32:11
SPEAKER_00: If you cut the
32:13
SPEAKER_00: number of people doing the approvals, you make it harder.
32:16
SPEAKER_00: That seems like common sense.
32:18
We need a new Lochner era where you just have freedom of
32:21
contract to allow a doctor
32:22
to implant a mystery device in your brain and you don't need
32:25
any regulators on this
32:26
SPEAKER_01: stuff at all.
32:27
SPEAKER_01: And then Elon Musk would get his way.
32:29
Then he'd be happy because he would have fired the people who
32:32
were telling him no on Neuralink
32:34
and giving,
32:34
I don't know,
32:36
people free reign to go into back alleys and get microchipped.
32:41
SPEAKER_00: And this is like the sub-subtext, right?
32:43
SPEAKER_00: So there's this congressman
32:46
SPEAKER_00: who beat up his mistress and,
32:49
SPEAKER_00: uh,
32:50
SPEAKER_00: you know,
32:50
SPEAKER_00: she called the cops and she was shrewd,
32:54
SPEAKER_00: uh,
32:54
SPEAKER_00: with her phone so that the,
32:57
SPEAKER_00: um,
32:58
SPEAKER_00: him instructing her to like downplay,
33:01
SPEAKER_00: uh,
33:02
SPEAKER_00: the injuries was like,
33:04
SPEAKER_00: um,
33:04
SPEAKER_00: the phone call recording.
33:05
SPEAKER_00: Uh,
33:06
SPEAKER_00: so the police investigated,
33:07
SPEAKER_00: uh,
33:07
they filed a warrant for his arrest and the acting U S attorney
33:12
for DC at Martin
33:14
SPEAKER_00: has just refused to
33:17
SPEAKER_00: So,
33:18
SPEAKER_00: you know,
33:18
there's some kind of MAGA theory that as long as you control
33:23
the commanding heights
33:24
SPEAKER_00: of law enforcement,
33:26
SPEAKER_00: basically no laws exist,
33:28
SPEAKER_00: right,
33:28
SPEAKER_00: other than the laws of Trump.
33:30
SPEAKER_00: And so, you know, with...
33:33
SPEAKER_00: The medical device regulators having been laid off,
33:35
it may be harder than ever to get a formal approval to put your
33:39
device out there.
33:40
SPEAKER_00: That being said,
33:42
if you're a made man in the Trump-Musk mafia and the rule is
33:47
just you're allowed to
33:48
SPEAKER_00: break the law with impunity,
33:50
SPEAKER_00: Like, maybe that's fine.
33:51
SPEAKER_00: Like, maybe you don't need to care if you can get regulatory approval.
33:56
SPEAKER_00: You know,
33:57
I think that's like a lot of like known unknowns about how far
34:00
we're going to go
34:01
SPEAKER_00: into crisis mode with any of this,
34:04
SPEAKER_00: right?
34:04
SPEAKER_00: Like the...
34:06
SPEAKER_00: appropriations bill negotiations are ongoing.
34:10
There was a very funny Politico article that said they were
34:14
really close to an
34:14
SPEAKER_00: agreement on spending levels,
34:16
but we're still at loggerheads over the question of whether
34:19
there was going to be
34:20
statutory language that they have to actually follow the
34:23
appropriations bill.
34:25
SPEAKER_01: So that to me sounds like they're quite far from an agreement.
34:28
SPEAKER_01: We should put this on the other side because like, A-
34:32
the question of why people have become upset with Trump about
34:35
the economy is
34:37
SPEAKER_01: important because it,
34:38
it conveys information or contains information for Democrats as
34:42
to like how they
34:43
SPEAKER_01: should go about opposing him.
34:46
And then also Republicans quite apart from like the
34:48
appropriations process or whatever,
34:51
SPEAKER_01: they're doing this recessionary stuff,
34:54
SPEAKER_01: firing people,
34:54
SPEAKER_01: but they're planning this big deficit increasing thing.
34:59
SPEAKER_01: tax cut, which would tend to offset that.
35:01
So let's talk about the democratic role and like what the macro
35:06
economy is going to
35:06
SPEAKER_01: look like in six months and on the other side of the paywall.
35:11
SPEAKER_01: If you want to hear that part of the conversation,
35:12
SPEAKER_01: go to politics.fm and upgrade your subscription.