Robert grey near. Charles r. Schwab, the david foundation, inc. The fair weather foundation. Craig newmark philanthropies. And by Corporate Funding is provided by stephens, inc. Maya macguineas, welcome to firing line. Secretary reich, welcome back to firing line. Thank you. Thanks so much. Robert reich, you served in three president ial administrations, including as labor secretary for president bill clinton. And maya, you are the president of the Nonpartisan Committee for a responsible federal budget. Id like to start first with a Television Advertisement from e 1980s warning in very stark terms about the consequences of the National Debt. Take a look. Morning. Shall we get down to business . Now that youve joined us, youll enjoy numerous rights and privileges, but you will share certain problems, as well. Specifically, you owe the United States government, in round numbers, 50,000. When that advertisement aired in 1984, the National Debt was just under 2 trillion. Right now, it is at 28 trillion, with nearly 8 trillion having increased under president trump. Why does the nationabt matter . Maya, you first. Sure. So, it is a dry issue thats kind of hard to make it personalized to peoples lives, but the National Debt is actually one of the things that underlies all of our economic strength, and, more recently, our geopolitical strength in many ways, as well. If youre running a debt that is too high and i would certainly argue that we are in general in this country not right now during the covid crisis, because thats exactly when you should be borrowing but the fact that we borrow so much when the economy is strong, you jeopardize your economy by having a debt that could be growing faster than the overall economy. Thats happening now. That means youre vulnerable to not having enough money to borrow when the next crisis comes, which is the time when you really do need to be able to borrow. And it means that youre weaker, kind of in a geopolitical sense. We know that right now competition with china is heating up, yet china owns 1 trillion of our debt and continues to lend money. That, it makes us more vulnerable, in ways that we really dont want to be. Whether youre the biggest conservative and you want tax cuts or the biggest progressive and you want big new spending, if your money is going to Interest Payments, you cant choose between either of those. So, it shrinks the pie. And the last thing i would say is, if youre borrowing for productive investments, thats one thing, but the history of the debt in this country is that, more oen than not, we are borrowing just because we dont want to pay the bills. And thats not the right reason to hand on a big mountain of debt to the next generation, which is what we are currently doing. Secretary reich, Herbert Hoover famously quipped in 1936 wait for it blessed are the young, for they shall inherit the National Debt. Tell me, do you disagree with the premise of that quip . I dont completely disagree with it. But, margaret, i was thinking, when you played that advertisement, of something that my father said to me when i was a very small boy in the early 1950s. My father, you have to understand, was a republican. And he said to me, bobby, you and your children and your childrens chiren will be paying down the National Debt created by franklin d. Roosevelt for your entire live and i was i was just i was just panicked. The fact of the matter is that youve always got to understand that its the debt, its the ratio of the debt to the economy overall. And i dont disagree with what maya was saying. If that ratio gets too out of whack that is, if your debt starts growing faster than your economy overall, and youre not using that money that youre borrowing for investments in future growth, then you could be in trouble. But the debt itself, just as a number, has no meaning whatsoever. At the end of 2020, the federal debt was 129 of g. D. P. , the likes of which we really havent seen since the end of world war ii. Secretary reich, is it your view that having the debt at over 100 of g. D. P. For an extended period of time is bad for the economy . Well, i wouldnt put a specific figure or a number or percentage on it. I think that if we are spending a lot of that for future investments in, for example, infrastructure, education, retraining, research and development, all of e things that grow the economy in the future, then i would say those kinds of Public Investments are appropriate. Im not going to worry that they may take 100 or 200 or 300 of the economy. Secretary reich, you were on firing line as a guest with wiiam f. Buckley, jr. , at least two times, by my count. Here is different firing line from 1992. William f. Buckley, jr. , welcomed the editor of the economist, clive crook, and the founder of the american prospect, robert kuttner, in a special firing line debate on reducing debt and reducing the debt and the deficit as a national priority. I mean, why would you want to reduce the deficit, ever, on your view . Oh, because i think we all agree there is some level which is unsustainable. The question, really and this is the narrow debate is whether 50 of g. D. P. Is such an unsustainable level that we all ought to be tightening our belts and condemning the economy to slow growth. But the truth is, as you said, no one knows what no, you said that. No one knows well, you are saying you know what the figure is. If so, tell us what the figure is. Im saying that americas historical experience shows that an economy which is otherwise healthy, which is investing a lot of its product, can sustain a deficit of 119 of g. D. P. That was the peak after world war ii and not have that do terrible things. On the contrary, that did beneficial things. Theyre having the same debate 30 years ago that im asking you all about now. What is the number . Youre saying it could youre comfortable with 200 or 300 . There is no clear number. Yeah, margaret, i said i was comfortable with 200 and 300 , if the purpose of the borrowing is to build future capacity. That is, if the economy will grow dramatically because of your Public Investment, then the debt as a percentage of the g. D. P. , as the percentage of the economy, will naturally decline. I would be concerned, however, if we were not spending that on Public Investment. And let me just say that i have a certain credibility, certain creds here because i was a member of an administration the only one that actually balanced the budget and ended with a surplus. You served in the Clinton Administration, which, of course, was the last administration with the help of a Republican Congress to achieve this historic budget surplus. Is it your view that that was the right policy for president clinton to pursue . No. Actually, margaret, i thought that it was unnecessary. There were a lot of things that president clinton could not do in terms of Public Investment in education, in infrastructure, in basic research and development that he and ideally america should have done during those years but did not do because of this totem of bringing the deficit down and balancing the budget. I dont think we want a rigid formula here. It turns out that we could get and this actually is one of the legacies of the Trump Administration we could, as an economy, grow very fast and not risk inflation and have a very, very large National Debt, much larger than we assumed we could as a proportion of the total economy. And many of us watching the Trump Administration lead us into this kind of extraordinary debt were surprised because nobody knew that we could have avoid inflation with unemployment that low and with that much National Debt. Well, i was surprised, too. But maya, id like to ask you, is the debt,s the National Debt a totem . No, i have a very different take on that. So, let me turn back to sort of where we were before the covid crisis, which was, the Trump Administration led us to borrow almost 5 trilli during a period of ecomic expansion. This is unprecedented because normally what we have done is brought the debt back down when the economy is strong, borrowed when the economy is weak. And the approach there seemed to be, borrow for every single thing you can find. The result of that is that you can put a sugar high into your economy. You can have kind of pumpedup growth for a short amount of time a year, maybe two years but it is not going to persist. So, i think the real issue here is what we do with all of this borrowing, is we continue to push the hard things into the future. And i think one thing weve all agreed on here is, we dont know what the number is. We dont know when your debt becomes too large. But what seems really dangerous to me is that our politicians seem intent on putting us on track where were going to find out. Do you think, maya, it was the right thing for the Clinton Administration to have balanced the budget and created a federal surplus . Absolutely. I was going to say congratulations, secretary reich. It was terrific work. They really did a good, balanced package. And i point to it as one of the last big successes that weve seen in government, where its its beyond just the fiscal problems that we have. Its when our political leaders were willing to do things that were hard. But now, nobody is willing to kind of level with the American People that you cant borrow indefinitely, and if you want to do things, you have to be willing to pay for it. And i think this is whats dangerous, the notion that everybodys trying to sell the American Public that you can have a free lunch, that this thing will pay for itself or this thing is so important, you shouldnt pay for it, or just go ahead and print lots of money. Those things are not leadership. And i think what the Clinton Administration, with the help of a Republican Congress at the time, was political leadership. Maya, you wrote an op ed in december, and you said, once the economy is strong enough, as indicated by growth and employment rather than political whims, the administration and congress should gradually implement sensible measures to get control of the debt. Now, the i. M. F. Has Just Announced this week that they expect the Global Economy to grow faster than it has in four decades, by 6 this year. And u. S. Unemployment in march made it down to 6 . So, is now the time, maya . Well, so, the good news is it seems like we may be, fingers crossed, on the path for a strong recovery. And after this terrible year, that would be a huge relief, particularly for all the people who have been suffering during this. If the economy really starts to boom, jobs come back, wages come up, so, thats terrific. I think it is right now the time to stop borrowing. We just had 6 trillion worth of money that was put into the economy. Thats a lot, and theres a lot in the pipeline. And it seems like its probably going to be more than we needed. The next step is to start paying for any new initiatives, and the great news is, the Biden Administration has come out with a big infrastructure bill and they are saying that we need to fully pay for it. That is the right first step. I think we want to see the economy actually be stronger, not just have projections, but we want to have a number of months or quarters of strong growth before you gradually start to put in a Debt Reduction plan. But right now is the time to stop borrowing, gradually pivot into paying for things, and then well gradually pivot into hopefully bringing that debt back down. So, its not growing faster than the economy, which is the trajectory that its currently on. If we were to go about prioritizing, paying down the debt, it is now 28 trillion. How would you even begin to think about that, maya . Sure. Ill tell you exactly how i think about it, but i would start by saying, we dont have to pay down the debt. All we have to do is switch it so the debt is no longer growing faster than the economy. If our economys growing faster than the debt, it will remain nageable. But we cant have it on the trajectory that its on, which is which is dangerous and unsustainable. Heres what i think we should do. We should start by sticking to the notion of pay go. If youre going to do something new, and thats on the spending side and the tax side, offset those costs. The second thing is, we have four major trust funds that are headed towards insolvency in just over a decade. Both of Social Security trust funds, disability and retirement, Hospital Insurance for medicare, and the highway trust fund. We have to fix those programs. There are many ways to do it, but we have to fix them. The next thing is, we have to start putting in a balanced package. And i would say you have to look at both spending and revenues. There are a whole lot of ideas that would be consistent with bidens plan not to tax people under 400,000. There are other taxes like a carbon tax that i think are important. We have 1. 8 trillion in tax breaks a year, called tax expenditures. We should wipe so many of those out, particularly in the upper end. And then, we need to think about spending reductions. So, we used to have spending caps in place. Theyre gone now. There were too aggressive before, but we should put in reasonable ones that congress can actually stick with and have some kind of a balanced plan. I couldo on all day about how you would pay for these things. Its the harder side of politics, but its how you build tradeoffs into the budget, so that you really do that exercise of, if somethings worth doing, its worth paying for. Secretary reich, let me ask you about something that ive observed in the debate about the National Debt, which is, it seems to be that there is a paradigm shift on the left that maybe the debt doesnt matter at all, ever. What is your view about modern monetary theory and this general approach to the debt . Well, i think there is something to modern monetary theory. That is, we do print our own ney, and the world is awash in money right now. Interest rates are historically, extraordinarily low. Not only shortterm Interest Rates, but longterm Interest Rates. But i ink it cannot be taken too far. Again, i want to emphasize two things. Number one, i agree with maya that there needs to be some discipline, and we cant just simply assume that we can just add forever to the National Debt. And i do think we have to raise taxes on the wealthy. Weve got to if youresking me how else we can get some money together, i would say lets take a look at national defense, whi is 720 billion a year. Were spending more than the ten nextbiggest nations put together, with regard to their spending on national defense. Its absurd. We could cut that dramatically i think biden is also on the right track in terms of asking big corporations to bear some of the burden. You know, the corporate revenues and maya, im sure you know this corporate revenues from corporate taxes, that is, used to be in the 1950s about 45 of total federal revenues. Corporate taxes now account for 7 of total federal revenues. A huge, dramatic, dramatic drop in who is actually paying the cost of our govement. And i think corporations ought to be asked to pay much, much more. Listen, there has been a lot of spending in recent years. There are economists that think that this amount of Government Spending could ignite an inflationary spiral like the u. S. Had in the 1970s. At what point, do you all have a view, at what point the Federal Reserve should raise Interest Rates . Or is inflation, like debt, something that the government can ignore . Let me just say two things. Number one, its not just spending, its also tax cuts. I mean, the big trump tax cut was about 1. 9 trillion or 2 trillion of the over a tenyear period. Thats not nothing. Number two, i think that what we do need to be aware of is that there are structural chaes in the Global Economy and in the United States economy that may make it easier to avoid inflation than it was in the late 1970s when paul volcker broke the back of doubledigit inflation. Alan greenspan in the 1990s was very explicit, unusually for him, because very often you couldnt tell what Alan Greenspan was saying. He avoided being understandable. But one of the things that he was very explicit about was that we were living in a new, globalized economy in which companies can get additional capacity for production very, very easily and very, very cheaply abroad. And also, labor unions were far less powerful than they used to be when a third of the countrys private sector workforce was unionized in the 1950s. Now were down, down to, under 7 is unionized. So, for that reason, inflation for those two reasons, inflation is less of a problem than it used to be and poses less of a threat even though we have a lot of spending and a lot of tax cuts. And maya, did you want to add anything . Well, i think that that thats right, that globalization has changed the macro dynamics in our economy and both inflion has been easier to control and Interest Rates have been lower than we thought they would be. But those trends are not going to last forever. I think more troubling right now is that if Interest Rates were to go up by a single percentage point, we have so much debt that that adds 3 trillion to our Interest Payment bill over a decade. Thats one and a half of the reckless trump tax cut. So, this and thats just one percentage point. We are really vulnerable. And i think i would describe the fiscal situation that we have in so many ways as increasing our pockets of vulnerability at a time where we already have risks and challenges we should be dealing with. We should be thinking about how to grow the economy for the long term. We should be thinking about how to update our social contract for the new risks and challenges around the changing workforce. But that debt is just a huge weight around us while were trying to think about all of those issues. President bidens infrastructure proposal will cost 2. 3 trillion. Maya, you wrote in a column last month, updating our infrastructure can definitely help our economy, but not if it increases our countrys already massive levels of debt. Proponents of the legislation argue that it pays for itself, in terms of economic growth. Does it . No, it doesnt. We should stop wrapping things in pretend promises. This doesnt pay for itself. Tax cuts dont pay for themselves. But that doesnt mean that this isnt a good thing to do. Spending on infrastructure is definitely an important thing to do, and thats why its so important that the Biden Administration has also said they plan to pay for their infrastructure. So, this is a very large package. I think we are behind on our infrastructure, but i would argue that this package is probably going to prove to be much too big in certain places. And you could scale it back to a more moderate size, still large, but more moderate. But as long as we are honest about what it will cost and what it will pay for, this is a good discussioto be having. I think its a little dangerous to put huge price tags, new spending agenda items out there before we have a plan to deal with the existing debt. I would flip these and say, how are we going to handle the debt so that its not growing faster than the economy, get it to a reasonable level . And then, how are we going to make sure that we make investments in the area of the economy that have been so neglected, both infrastructure and, really importantly, in Human Capital . Mr. Secretary, i have a feelg you have a different approach. Well, i do have a slightly different approach, and that is, it seems to me, if we are making Public Investments that qualify as Public Investments, in terms of, theres reasonable, empirical evidence that the return on every dollar spent for infrastructure or education or research and development or Early Childhood education is more, quite substantially more, than the dollars we put into it in terms of economic growth, in terms of overall prosperity, then we ought to be doing it, and we shouldnt be sort of rigidly restricted with regard to any kind of notion of National Debt. If something qualifies as a Public Investment because the return is substantial for the country as a whole, then we ought to be doing it. Could i put a finer point on that . In that, two, the actual package is 2. 7 trillion, it turns out. And theres absolutely no way that that big a package, all of those items, come anywhere close to paying for themselves. You could probably find a couple billion that pay for themselves. And so, we shouldnt pretend that its going to have a huge growth dividend that will pay for itself. Theres no study that finds that. And in fact, the Congressional Budget Office has also shown that if you deficit finance your infrastructure spending, it ends up probably creating negative growth because of the damage of the debt. So, thats why its helpful to pay for it in smart ways, as well. Let me ask you one final question. We have used, in the past several years, Federal Reserve monetary stimulus and Government Spending to pull us out of two recent crises the housing crisis of 2008 and now covid. If we had another financial crisis or another pandemic occurred, would the Federal Reserve and the governments Balance Sheets be enough to handle a crisis of the same magnitude . Secretary reich . Well, what we know from the Great Recession and the response to the Great Recession and what we can infer from the early responses to the pandemic is that we have the capacity in terms of fiscal and Monetary Policy to do whats needed to get out from under these crises. If anything, we failed in the Great Recession starting in , 2009 to do enough. I think that history will judge that we probably have done enough with regard to the pandemic to dig out from under this. But i think its important not to youre going to err on one side or the other because theres no science here. You dont know about the future. I think its important to err on the side of getting people employed, making sure that people are not suffering, making sure that people are housed and fed; and if you spend a little bit too much, so be it. By not putting our fiscal house back in order, do we potentially have fewer arrows in our quiver to solve the next cris . Yes. So, on this one, i disagree, becait does really gravely concern me that both toolboxes of fiscal and Monetary Policy are being depleted of all the tools. And if theres one thing we know, its that we will face another crisis. They are coming more regularly and theyre ary. Theres all sorts of different kinds of things we could be hit with, and we should be prepared. And so think the elegant solution to this is when we borrow in these crises and we will continue to have to, to tie that borrowing with longterm offsets. So, you can borrow a certain amount of money today to fight a pandemic or a recession or an attack, but when you do that, you have a bunch of things that youre ready, which you agree will be put in place, which will help get your longterm debt under control. Because the last time we came out of the crisis, the debt continued to rise for every year after that even when the economy was strong. And it didnt leave us as prared this time. Our politicians, theyre pretty good at borrowing the money. Theyre not so good at paying it back. We need to nudge them in the direction of being more fiscally responsible and focusing on the longer term. With that, Maya Macguineas and seetary robert reich, thank you for the conversation. And thank you, secretary reich, for returning to firing line. Maya, thank you for being here. Thank you. Thank you very much, margaret. Captioning sponsored by wnet captioned by Media Access Group at wgbh access. Wgbh. Org firing line with Margaret Hoover is made possible by foundation, robert grenier, charles r. Schwab, the david pepper charitable foundation, inc. , the fairweather foundation, Craig Newmark philanthropies, and by Corporate Funding is provided by stephens, inc. Youre watching pbs. Hello, everyone, and welcome to amanpour and company. Heres whats coming up. Prince philip earned the affection of generations here in the united kingdom, across the commonwealth, and around the world. Mourning prince philip, the duke of edinburgh, the man Queen Elizabeth called her rock, dead at 99. I look back at his tragic childhood, his lasting influence on the royal family and defining public service. Plus. The only go back to full compliance when the u. S. Has lifted all sanctions. Irans chief Nuclear Negotiator diggs in, but says indirect talks with the