Second and third quarters of 2020. As an economist what does that mean to you . Guest this is a really serious moment we are in. We know the pandemic is serious and we know what people are going through and the overall economy is incredibly serious. These numbers are going to be huge declines in overall growth. Importantly, in employment, and the big question is, how quickly will be returned to normal . Something important to point out about the question. The pandemic was not something that was planned or anticipated in a moment where it came along. The recession is actually something that was basically part of a policy response. We had to say, in order to keep people from getting infected with a virus, we are basically going to shut down the economy, stop consumption in many ways, and that explains these massive numbers but it doesnt make it any less painful, and there is both real hardship that is going on on an individual level, and will questions about how we about how quickly we will get things up and running once it is safe to do so. It. Ugar coating this is a scary and painful moment not just for the country wouldve for the world. Host another number Something Else is if things dont change, the debt will be 3. 2 trillion dollars. I run the committee for responsible federal budget, and i spend my time worrying about the Fiscal Health of the country, and this is a tricky moment we are in. Let me lay out all of the feelnses, or how one might about the national deficit. Prior to this emergency, our about 1 trillion a year is about what we are going to hit. It was a policy mistake borrowing money because economy was strong, and it was a multiyear expansion. Exactly the period of time you will want to be fiscally responsible. Paying for your spending. If youre coming taxes, you want to offset that with other revenues. We did not do that. We borrowed for everything ding up to this emergency. We borrowed for everything leading up to this emergency. I think it left us in a dangerous position. Now, fastforward to where we are right now. National emergency. This is in fact the time you would want to borrow. We have huge eyepopping numbers. The deficit will grow like we have never seen before. For somebody who worries about the fiscal situation, that doesnt sit well with me, but it is the right moment to be borrowing because that is what we need to do to compensate for the fact that the economy has basically been shut down. But the third piece of all of are in borrowing when we a weak condition very important that once the economy recovers, and we dont know when, but we know it will at some point. It is very important we turn our attention back to getting the debt back under control. We did not do that after our last recession. We never got the debt back down. This time, we need to take that third step because we have three big challenges. Health care challenge, economic challenge and a debt challenge, and youre going to have to take all of them headon. Host that 3. 7 trillion deficit in 2020, is that attributed to an economy being restored, or restoring . Guest that is attributed to not many further problems. That is a reasonably optimistic situation. Assume there will be numerous additional packages to fight the downturn. We do ours the way numbers. We dont put in place assumptions about further policy actions. But it is certainly looking like there may have to be further packages. Those debt numbers, if anything, are likely to be optimistic because i think we dont know how quickly the economy will recover, but my guess is we will have to borrow more to keep it on track. Let me point out those huge deficit numbers reflect two things. Reflect all the borrowing we are doing to fight the recession, and they also reflect the fact that the revenues of this country are basically dropping out because nobody is bringing in the money they normally would from work. Taxes will be much, much lower. And spending will be higher because of a lot of programs that kick in when the economy is weak. Those are both automatic changes that happen in a downturn, and policy responses that we have enacted to help fight the downturn. Host this is our guest to talk about the spinning that is going on during the pandemic at the federal level. If you want to ask her questions, you can do and the eastern and central time zones at 202 7488000 card the mountain and pacific time zones is that 202 7488001. You can text us if you want to ask those questions. Spending byy of those on capitol hill, does that surprise you that this has been a bipartisan effort as far as the willingness to spend this kind of money . Guest know, as a political independent who spends a lot of time bemoaning how polymerized we are, it is welcome to see the two parties working so well together. And the fact that with the speed be got out these original stimulus bills and measures, i thought was critical, and i think they did a really good job. And there is no way that 2 trillion spending bill will be perfect. There will be wasted money that wasnt targeted well, but i think taking together really in the face of an emergency and did what needed to be done to get that money out quickly, and for the most part, structured it in a good manner, and i hope that we can build on that bipartisanship. Let me put two caveats though. It is often easier to be bipartisan when we are borrowing money than weve are paying for things. In the past years, we have seen bipartisan policymaking, for instance, when lawmakers busting through spending caps and added trillions to the debt. So, we have seen bipartisanship when the model is, i dont want to pay for it. I also dont want to pay for it. Moment, that is what we should have done. We should have not have paid for it and we should not be worried about paying for it in the short term. The bipartisanship was very welcome, but that is a lot easier than what youre going to seek going to see down the road and this is critical. We will need to see a bipartisan acknowledgment that, at some point, we will have to deal with the trillions and trillions of dollars we borrowed so it is not a huge wait a huge weight on the economy. And we have to deal with that and put out that atari we will and we have to deal with that at that point. We dont have to deal with that now, but we will have to look at it. We will have to look at all of our parts of the budget. Annual deficits will be huge and articulated debt will be recordbreaking, and we will need clickable spending programs and revenues to figure out how we close the gap once the economy is strong. Will that be able to be pipe artist and . I am not as confident, but you know, out of a massive challenge, it is an opportunity for lawmakers and citizens to stop focusing on all the divides that a been plaguing us as a country for the past years, and instead, focus on what this country does really well. If there is a huge challenge, let take it headon and lets find it. I am hoping for bipartisanship throughout this and i worry when i hear people talking about republican this, democratic that, instead of these of the policies we have to think of how to put in place to find some really huge challenges we are facing right now. Host if you speak that way, i am sure people will think, there is a discussion about cutting Social Security or medicaid, medicare or along those lines, but some of those programs that you talk about spending the most concerning. Guest when you talk about hangs on how to pay for things, you will have you talk about paying for things, they dont want to talk about Social Security or medicare, and they dont want to talk about raising taxes. That is just the truth. Social security, we just saw this last week, the trustees came out with the numbers about these programs. Social security and parts medicare have made promises that exceed the amount of money that will come into the trust fund, including what is owed to those trust funds. Therefore, we dont have a plan to pay for all of these benefits. What i really dont understand, and i think it is because our politicians and up make things so polarizing end up make things so polarizing, but there is not a way to acknowledge parts of medicare need fixes. We made promises. We dont have the money to pay for them. There are a lot of options. You can cut Social Security benefits. You can raise taxes. You can do the combination of the two. While i dont think there is any place for disagreement to address these programs because the longer we wait, the more painful the solutions will be, and the more they will hurt the people who depend on them, their is plenty of room their is plenty of room to disagree on how we do it. Maybe putting other revenues into it. We can raise the retirement age. Changing the benefit calculation. By combination of a bunch of those things with a special eye on protecting people who depend on programs, but we cannot pretend we dont have to. I could going to the same piece on taxes. For a moment, we have been cutting taxes and the past years while we have been growing weng an the past have been cutting taxes in the past years while we have been growing. Bigare not paying for the government you have. That is not in keeping what all conservatives might want. Basically, i think it boils down to less about the policy because these are programs we can figure out how to fix them and get our revenues the painting we can do it all in smart ways, but is about politics were it is a lot easier for our elected officials are talk about getting us things, but never about how we would pay for those things. That leads us to the situation you were in going into this emergency, where our debt was dangerously high, near record it has and not because been borrowed to expand the economy, or borrowed from massive emergencies, but it was borrowed because we didnt want to pay for the things we wanted to spend money on. That is not how you strengthen and economy. And it is not how you stay a Strong Economy, which is one of the things that drives our concern, which is you have to have a sound policy about borrowing money so you can borrow when you need to, like , because you have been all that borrowing. Our first call from peter in new york. You are on with our guest. Go ahead. Caller thank you. Good morning. My, i have been watching you on washington journal for years now, and there are two points i would like to make. Number one, i agree with you. I have read several books on the subject, and i think i know quite a bit about it, but the this hass that to be treated like climate change, where the media and academia and our politicians are all on board, educating the public on the dangers of borrowing, and until that happens, nothing is going to change. There is a lot of politicians and a lot of people in the media who seem to think the federal government is an endless pot of money. Also, im confused because it used to be, if the government printed too much money, it created inflation. Now, the Federal Reserve and ben bernanke said whatever Treasury Bonds they generate to give money to the federal government, they buy them, and they keep Interest Rates artificially low, and there are many economists who seem to think you could do this forever. Host let our guest responded that. Caller guest great points. I think you know the issues very well. Let me start at the beginning. This is a lot like climate and so many ways. Only do we need our in aical leaders nonscaremongering way, but to lay out the facts. This is not a grassroots issue. We have members who care about this issue, but it is never going to come from the bottom up because it is so hard for people to see how the National Debt affects their daily lives, even though it does throughout the economy. But this is an issue where we need our leaders to explain what the facts are. Thise need to start with idea that you could have the leaders talk to the public about the Fiscal Health of the country. That is a great idea. Layout those numbers, and then you need for them to tell the truth about what the options are for fixing it because we have people promising all kinds of of fairy kinds dust. It is a longterm problem. It is more of a mediumterm problem now, but there is no moment where suddenly, this explodes. There will not be a debt crisis because we borrow on our own currency. It is more of a chipping away of the foundation of the economy, or the foundation of the climate. So, every year, things get a little worse, and you dont know when the temping coin is, and there is nothing built in to force us to act. So, i think that is a huge challenge in an era were politicians would rather focus on easier things than harder things. There is nothing that makes them either educate the public or take active measures. I agree with that point completely. On your point about the fed. I am right there with you. Our macroenvironment has changed dramatically in the past years and decades in ways we would not of predicted, and two of those issues are Interest Rates have come steadily down, and they are much lower than anybody, be innly they would ever the face of huge deficits like we have. Part of that reason is because we have been able to borrow so much more from other countries, lots of them led to the u. S. When they are worried about mobile economy. Are worried about the global economy. And the Federal Reserve has employed new measures where it is buying a lot of the debt, and that is presumably helping to keep Interest Rates down. And there is this issue of inflation has not gone up despite all of that. And i dont believe that people understand everything that is going on yet you read a lot of different explanations, but the one thing i think is very dangerous is to assume, Interest Rates are low, they will never go up again. In many of us are people who have not, you know, and many of us are people who have not dealt with this. You have seen the incredible damage it does have high levels of inflation that eat away at peoples positively wealth. High Interest Rates mean your economy is going to slow down and you are much less able to control the economy during the ups and downs of the business cycle. And i am concerned on the others of this. I think the fed has done a very good job good i think we are in uncharted territory, and it is hard to explain all of those dynamics. I am glad youre reading books about the National Debt. And i agreed with your points. Host from michigan this is bob. Caller yes. Ijust wanted tell you that have been a 24 7 caregiver for my parents for seven years and three months. That is 370 weeks that i have been selfquarantined. When these people cry about having to stay in for four or five weeks, get over it. This has become the christmas virus. People making more money on unemployment than when they were working. I got two people in my family who are deceased that received 1200 checks. Called the Financial Advisor who said the checks did not have to be returned. Just curious on how many other millions of people deceased received these checks . This virus has exposed the people who mismanaged their money for years. You cannot spend more than you make. It is your fault that you cant pay your bills, not the governments. This is sick. The government should not give any person a dime over this. That is my comment. Have a good day. Host go ahead. Guest ok. Two main points. Impossible,early and you are giving examples that demonstrate this, to target a 2 trillion spending bill that is crafted and put together, and basically and put together in days out of necessity. Manages no way to mismanagement and you have given those examples, and there are many. We will continue to hear about them. I think it is important i think that it is important to try to not waste a single dollar taxpayer money. Just because were spending trillions doesnt mean any check is an important. We should do our best to figure out how you are able to design and provide benefits in the most efficient, fair, not open to fraud, kind of way. The second piece of this though i think is so many people, and there is tremendous hardship that is going on here, and i am so sorry for what you have been doing in terms of caring for your parents, and that is hard. There is a lot of hardship that was created through this economic downturn where people were doing everything they were supposed to be doing. They were going to their jobs, savings or money, bringing their kids to school, and suddenly, the word will stop what you were doing, go home, and stay there. For a lot of people who work, working as they were supposed to, saving the best they could, they are not going to have the rainy day funds to weather a shutdown economy. And it only makes sense the government would have to create a lot of bridges from the previous Strong Economy to once we get out of here. That is how i try to think about it. How do we create as many bridges ,o people can get through this and the economy is poised for strong recovery . We learn lessons from every crisis. We will from this. One is, how do you think about how do you respond to these different crises . Disasters, allal sorts of things of how you respond to them, and have plans ahead of time. One that has surfaced is how do you get money directly to people . Response. Ing to be a how do get money to people . There are some people who are not connected, and getting those checks to the mail, proved to take a very long time. Thinking about what kind of digital connectivity we will need for currency and for benefits will be one of the things we will contemplate as a move out of emergency crisis and into water lessons learned. Host a quick story from the wall street journal, when it comes to the money that went to the deceased, they should be returning that money, he told the wall street journal the department is tracking databases. Our next guest is on for maryland. Caller yes, first of all, let me thanks east and and your guest let me thank cease to in your guest let me thank your guest. The explanations she has been given our great. Fed is doing things they have never done before. They never paid back the 4 trillion from the last crisis 10 years ago. And you begin to wonder, the only thing they havent done, and i saw in the paper today, theyre planning to do even more, not make accountable people who are borrowing money. They are providing money to good i guess, basically, the feds expansive involvement beyond anything they have done before any one of the consequences of before and one of the consequences of that . At one point does the dollar began to lose its value, its dominance in the World Economy . Those of the two questions. I know they require pretty extensive answers, but i do think eventually, americans will have to pay for this. Thank you very much. Caller thank you for your kind words, and thank you for your really tough questions because those are at the center of all of this. We are entering the unknown on one hand, i agree the fed has had to take us toward an area measures. We are in a difficult situation. There is no playbook for this. One of the problems we have right now is we have so much National Debt that when the fed contemplates raising Interest Rates as it was before going into this before this crisis, our Interest Rates were quite low and there was a lot of discussion whether rate should be higher or not. One of the reasons as moby got hit with the next crisis, this one, we would have resources to manage the economy along with others ordinary measures. Debt is as large as ours is, raising interest uptick in a massive Interest Payments. Despite the fed doesnt focus on the budget deficit so much and is not trying to fix it, it is aware of it and is aware it is a real drag on the economy. In some ways when the failure of our policy makers to enact smart, fiscal policy has really added significant pressure onto the fed a Monetary Policy makers in terms of how they respond and deal with all of these competing parcel economy. Competing parts of the economy. The economy is like a balloon. If you put pressure on one place, it has rippling effects and other places. When you think about where this is heading, i just dont know. I just dont know if we will be able to extract ourselves from the situation with this much money on the feds Balance Sheets will at tilley painlessly, or if it will be difficult to do Balance Sheets painlessly, or if it will be difficult to do. May not remain a safe haven. Or the assets people want to purchase one economy turns down. There is a real risk we dont remain in that place forever, and probably for much longer because we are making enough policy mistakes. Other economies but like to other economies but like to be the premiere currency. Youwill seek questions will see pressures from other countries. Makeal point i wanted to is this issue of transparency and oversight is huge. Knowing how these dollars are spent, where they are spent, tracking them, is incredibly important because there has to be the understanding there will be as much accountability as possible. Checks to dead people. Never good policy. We need to figure out this mistake. Accountability and transparency are key to all of this. I will give a plus for a new product launched last week. No covid money tracker, which is on the website covid money tracker, which is on the website. We will be tracking all the congress, the white house, the Federal Reserve, and we will look at how much money is allocated, where it is going to, and we will keep track of that throughout the years. This will be a Multiyear Program so we have hopefully moved on and like its back to normal, it is important to understand how those dollars went out, what worked, how to do all of that again, and this is modeled after program we did in the last economic crisis that got a lot of attention that people found very useful. It is on our website now, but we are in the process of building an interactive database, so please look at it and come back in the next couple of weeks. Peoplehable database for can have a Central Place to go in track all of the data because accountability and oversight is critical particularly when you are throwing millions of dollars in the economy. Host the covid money tracker that our guest spoke about. A viewer of twitter, john saying, which is the greater, debt or mass of liability . Guest those are interrelated. The unfunded liabilities argued promises are spending programs down the road. That you dont put aside money to pay for. We have massive on liabilities and are programs. They are interrelated so the debt is how much we have borrowed and is very transparent. Unfunded liabilities often arent reported as transparently because they can be changed, so one can change the formulas that figure out how much is paid into Social Security, and that will switch the unfunded liability, where the debt is a legal claim that will be repaid. Unfunded liabilities reflect promises, but those are policy promises that can be altered through law. Those are not helpful explanations. The answer to the callers good question is i worry about the vote. I worry about the fact that in this country, there is a political asymmetry, apolitical pressure to give away without paying for them. And it is not about a reflection on government should be bigger or smaller. Everybody has different points of view on that. That is completely legitimate. The committee for responsible federal budget in our policy is concerned about the notion we are not using debt in a way that is good for the economy or good for the next generation. We are using it as a cheap way to delay payments for all of the things that are out there. Unfunded liabilities fall and the debt category completely. I have room to worry about both. I worry about both tremendously, and at the moment, i worry about how our economy is doing and how we will get back on track. Not debt at the moment, but but the debt how but how the debt complicates our issue at the moment. Askingrhode island is what is stopping the payroll debt the payroll taxes . Funds the payroll tax Social Security and medicare. It is a very good way to get money into peoples pockets if they are not paying the payroll tax, which is a huge tax on your wages. If you take a break from paying for it when there is a recession, it means that only people very quickly have more money in our pockets to spin a stimulate the economy. A couple of things. We are not looking for stimulus right now. Often times in a recession, you will hear people say, go out and spend money. Medaughter was explaining to , she said, i need to go spend money at the mall. Oft is what we do and a lot recessions. This one is different. In that this is actually a moment where we have told people to stop going out and spending, hunker down, and focus on staying safe, and i economy propped up from a loss of spending. But either way, whichever kind of downturn you have this is different from a normal downturn where you think about getting money into peoples pockets at the priority, but we still need money into peoples pockets to pay the bills. But it does not help the deficit when you have a payroll tax put any taxes. Makes the deficit much worse because it means the money to pay the governments bills, or what we are spending on, Social Security, defense, Interest Payments if we are not paying taxes, we are not paying for those costs. That is what makes the deficit larger. When it comes to payroll tax, if you cut it now, it means you have fewer revenues coming in, which will pave for the benefits we promised which will pay for the benefit we promised. Cuttinge notion that taxes will shrink the deficit is a fairytale. It would be great if it were true, but it is not. The way you shrink the deficit is have a Strong Economy. You put in enough revenue to pay for the spending, and so, you either bring your revenues up, youre spending down, or some of both. That is what we have to think about once we pivoted into dealing with a huge mountain of debt that is flying out there is a third challenge for us. Host this is don in new mexico. Go ahead. Caller good morning. Instead of attacking Social Security wit was the result of the great depression, i suggest you read the triumph of injustice, how the rich. Taxes and how to make them pay. If you read this, you will and thend that the rich ultrawealthy really pay 20 . The poor pay more in consumption taxes on the state of local level. Payoint to you is, amazon zero taxes. Let me say that again. Amazon pays zero taxes. Wealth a company of that on zero taxes, and you come this program and check Social Security . Caller let me say, other than describing what im doing is attacking Social Security, which i agree with your comment. Im not attacking the program. I am telling the numbers as the trustees tell them, which is we have made promises of Social Security benefits that we dont have sufficient revenues to pay for. It was going to be in the early 1930s that we werent paying for full benefits. If that happened, there would be cuts in Social Security benefits, which strikes me as the worst approach because so many people depend Social Security for their livelihood. Parted being a policymaker is knowing none of something part of being a policymaker is knowing how to close those gaps. Weis not a commentary of how should fix this. As i have said, there will be lots of different opinions, but what we should not do is delay in fixing it because we made promises. The revenue to pay for them is not going into the program. That is just a fact. To your other point, i completely agree. There is a huge problem in this country of how there is a tax gap, which means a lot of money that is owed in taxes doesnt get paid. The bulk of that is through Small Business is more than big businesses, but that is a significant amount of money, and there is both fraud and stakes that lead to it. Another problem is our tax code allows for huge multinational corporations to have this is because it is so complex and there are all sorts of exemptions and deductions. When we did the tax cut years ago which we could not afford, they did not take the opportunity to clean up the tax base, simplify it, and remedy the problems where there are either very wealthy or corporations were not paying the same tax rate as middleclass americans which strikes us as a bad tax system. Because ilisteners know it gets incredibly heated and there are accusations that come out about whacking benefits. That is not the case. The trustees have laid out the unfortunate fact we made promises that are bigger than our revenue and we need to fix it. The sooner we work on it the better. It is not a judgment about this Great Program which was built in 1935. Yous saying, Great Program, need to have a Strong Foundation so they can do what they need. For the hold on the tax system absolutely. We have over 1 trillion a year that is not paid. People love them because it means they can take a lot of tax breaks but the add complexity and put holes in the tax code. I would like to see an overhaul that looks at how to clean up that tax base so we do not have as many mistakes that the caller provided as examples of where things are not working. Host Maya Macguineas joining us. And you canresident check out her website. She is also the president of fix the debt campaign. Thank you for your time. Guest thank you. Host dr. Robert gallo is with the Maryland School of medicine. He is also the cofounder and International Advisor of the global virus network. Good morning to you. Guest good morning. Host could we start by talking about your background in discovering viruses and the things you learned . How did they apply to what youre seeing with covid19 . Guest i can give you some analogies but i want to emphasize that every virus is different. It is like another species and when you see something in the animal kingdom, you can get lessons to how you respond to certainhi