Want to show everyone watching online that you can enter questions into the chat. Or on twitter at bbc life thank you so much for joining us today. My pleasure, think you. Before we dive could you tell us a little bit about why and what you are focusing on over there . Yes. It came out of my different experiences in washington, we have been very have some time at the white house. Rend the Commission Budget office i was the red director of under the Mccain Campaign and it dawned on me that in those jobs, you did policy research, policy options advice education but you did it in a very particular way. You did not have the luxury of saying to your boss, you know, i do total migration when it comes up let me know. Im not interested in this inflation thing. Whatever is happening you had to convey whatever your Research Findings were in english to nonspecialists. There was a premium on the communications function and the education process of it. If the white house is all about the president s agenda, its about the president s agenda. Obviously the cbo is my statute nonpartisan. Yet to make sure you dont have anything like that in there. Campaigns are political events. It is can you make policy good politics . At the end of the campaign, i thought about what im going to do next. I realized it probably wasnt just my political bosses who were interested in that kind of information that there might be an appetite out there for people who dont spend their time reading papers. Something was up in the gulf of mexico asked the question what are the options we have here . What do we want to think about doing . So it is dedicated to that. We are a centerright organization. We are honest about our meetings. We Like Solutions and to policy problems. We are going to try to cover the waterfront on policy issues. We dont do social issues and we are not stacked up to do International Enter affairs or things like that. We are going to try and weigh in on whatever is going on typically in the congress. That was my orientation at the outset. In the regulatory activity is where policy is being made so cover that as well. The mission really is to get up every day, look at the policy area and ask what do people need to know about what is going on and try to convey that in a way that is digestible and understandable to nonspecialists. Im enjoying it immensely. And you definitely are the right person we want to talk to today. I will say i just discovered your daily edition. I was preparing for the interview and i spoke to someone about Economic Policy. It was interesting to read. As i told you before, i will warn viewers, the economic section is really my personal therapy. Whatever angst i may have usually shows up in there. There is a lot to be nervous about these days. Of course, we have an election coming up, that is the premise for our event series. The issue with the economy, it is the issue of the day. We have inflation, a recession, as you know there were positive signs yesterday but we just dont have very high inflation. Record high infect. Before we get into the politics what is your opinion under the state of the economy and for this conversation what is going to be the status of inflation or recession three months from now . Is it going to still be a factor . The news of the day, there is a lot of excitement about the Consumer Price index that was released yesterday because it shows the cpi inflation is flat through the month of july. Im an economist. I live to provide a dark cloud for every silverlining. Im just here to say that that report is looked at carefully it shows no sign of progress. We knew gasoline park prices were down. If you look past that, there is nothing but more to say. Core inflation, nonfood, nonenergy inflation, it was the same as the month before. Food, energy, and shelter are about half of the familys budget. I spend a lot of time in the shelter component. It is a third of the cpi by itself. It was up yet again. It has been rising continuously since january of 2021. It is up 5. 7 year after year. You cant get to a 2 target with shelter inflation 6 . Everything else has to be zero. The fed is going to have to do the kinds of things that bring down shelter inflation and other kinds of services. That is where inflation is right now. You have to lean hard into it. We are going to see more of the same for months now. One of those months is going to be november when the election takes place and at will come on the heels of having the race rates to try to get inflation back under control. I think that is the future. So how much is history working against President Biden and the democrats . Is there ever a point in u. S. History or a sitting president lost control of either chamber . Im going to dodge the question for a second and go back to the recession issue, i dont think we are in a recession i just want to be clear about that. A recession is a sustaining brought economic activity. We dont have the breath of decline that qualifies as a recession. Its hard to imagine a recession with the labor market adding 500,000 jobs in a month. It doesnt feel like a recession. We have some signs of problems, there are no questions about it. The fed has been quite honest about the fact that raising rates my still within faced inflation. History as against them because the odds of pulling that offer low. We may enter a recession late this year, early next year. The doom and gloom of the moment is overstated. But to your point, midterms are typically bad for a sitting president. The opposition typically takes over. Big change is in control. Most people when you look at the polling the economy is the number one issue. It has not been good for this president. The second issue is crime and there is very little a president can do about that on the ground. It is a bad issues that in a time when that president can take a hit. It is not promising for President Biden. So we have three months before the election. Congress will adjourn shortly. There is not a whole lot that can be done for a policy perspective. The democrats did just pass the Inflation Reduction Act which i believe the house will do this week and get back in tomorrow. Is that going to curb inflation . Really for democrats who are facing the ballot box in november is there anything they can do between now and then . The theory of the cases that if you want to use fiscal policy, taxes and spending to curb inflation you want to raise taxes or reduce budget deficits and that is what they advertise the Inflation Reduction Act is doing, reducing that despite 300 bug in dollars over the next 10 years. The problem with that argument is that means there is about 30 billion a year in that economy, that is not a big enough lever to move inflation at all. Its very tiny. Second problem is that all that does to production comes in the last five years. We have five years of modestly at the front end and that adds to inflation. You know, if we dont have inflation that close to 2 after five years everyone will understand why i always carry cash in my passport. Its going to be bad. This is a nonissue with respect to inflation. The Inflation Reduction Act is to its not about inflation. In the end inflation and the contribution of congress to inflation or combating inflation comes to the impact of all of its actions. While we have been talking about the Inflation Reduction Act, Congress Passed the chips and science act. They also passed the pact act which has up to 600 billion of spending. That is usual for the congress. So if inflation is still an issue, mike it likely will be into next year, and republicans to take the house, personally im a little skeptical about the senate you still divide a government. You still have a democrat in the white house and republicans in the senate. What do republicans do . Is there a middle ground here for them to work with the president . Or is it to be expected expected there is pipe partisan support for the chips act. We are putting too much money into the economy, and you are not going to be able to roll any of that back when they take over. So the uncomfortable truth is once you let inflation get ingrained, you have no real good choices. One choice is live with the inflation. We see how powerful that is. That is not a real option. The other choices do the kinds of things that the Federal Reserve is doing which is raise Interest Rates and make it harder to buy Credit Finance activities. Pull money out of the Financial System to reduce liquidity and tighten financial conditions. That is pretty much a bad news scenario when the person is no longer buying a house, cant get a new car, there is no demand for your products, thats very attractive period what can congress do . Cut spending or raise taxes. Neither of which is a lot of fun. The notion that there will be some great thing that they can agree on is overstated from the outset. No one likes the things you have to do to fight inflation. So probably the best thing that congress could do is think about how can we make sure we dont get in this position again. Lets not do the things that put us in the position to sort of push inflation. Part of that was excessive stimulus in the rescue plan. It was just a big pause here. I dont see a divided Congress Making that mistake. I think they would check that so that is one thing they will do. Addition by subtraction. Addition by subtraction, do not make a mistake. The second thing they can do, they can have some sort of honest conversation about the Climate Strategy and how we could adapt the strategy to recognize that in most Economic Analysis of climate policy, natural gas in particular is the british feel. When you have a strategy that allows them to survive as a bridge to the future, we can get all of these local shops and oil to gas markets. That is the place one would hope you can come to some agreement with the congress. Climate strategy that is predicated on taking fossil fuels out of the economy quickly exposed the u. S. When the ukraine invasion happened. You also mentioned a couple times housing. We know that there is a serious shortage of affordable housing. Not to mention the rising cost of mortgages. Last month at a housing summit, there was a huge driver of the economy. What do you expect republicans to do about that housing adjustment . Is there some bipartisanship around things like the low income house tax credit . Let me just backup a little bit and set the stage of this because this will be a very hard problem. When the pandemic it, the fed began cutting rates immediately. Also, mortgagebacked securities. It printed 100 120 billion. Inflated Financial Markets with dollars. About 5 trillion total during that time. A lot of that was flooding into the mortgage market. It was a real stimulus of the housing sector as part of the fed actions. It is now going to reverse course on both fronts. That means the extra help that the Housing Market got in the stimulus will be the pressure that comes from tightening. We have seen Mortgage Rates go up, we have seen the refinancing market disappear very quickly. But it is also now pulling them out of the Mortgage Finance capital market. Housing will get extra pressure from the bed. That is how the fed helps cool the economy. If the people are not buying houses, no one builds the house. You dont put furnaces in them, you dont put ovens in them, you dont do other things that feedback into the economy. The process because a lot of the economy. We can expect that to happen. In this Housing Market, we already had record low inventory, few vacancies and the homeowner costs are quiet hi. We are saying lets do less supply. The fed is trying to stop that. If you undertake a fiscal policy to do that, they will turn around and lean harder. That is a really difficult problem. I dont want to minimize what you can do. Things that will make the fed 20, that is the solution. The zoning laws, what are some of the trigger points of things that Congress Might do . My list of things that Congress Might persuade the organization to do is make the building of homes cheaper. Lets drop all the tariffs on lumber, steel and aluminum, inputs to building houses to make them cheaper in any way you can. Those are the things that congress can do and they are also trying to influence state and local decisionmakers to changing particular land use laws and zoning restrictions that inhibits the supply. That combination is about all you can really do if you want to focus on getting more housing built. You mentioned Congress Just passed the chips act. It started as a much bigger proposal and it kind of got narrowed down. There is still a lot of concern about supply chain. Particularly how workforce shortages are impacting the euro. There was some bipartisanship around the chips act. Do you sippy do you see supply chain issues continuing to be a struggle . I am a little perplexed by the obsession of policymakers with supply chains. Lawmakers dont have any supply chains. If i am a Semiconductor Manufacturer and my only source is in taiwan and i think taiwan is a very risky location, the obvious business is to diversify and go somewhere else. There is a real private business set up to civil to solve all the supply chain problems. It is not something the policymakers need to jump into. You can make money if you can get your products to your customers on time and cheaper. They have every incentive to do that. We learned some lessons about excessive concentration. But i dont think there is as much of a policy issue there as policymakers seem to think. For that reason, the number one reason we had supply chain disruptions is people have covid19. The number one priority Going Forward continues to be the Global Health mission of combating the virus. That is the government pause appropriate role in cleaning up that strain on the economy. I hope one of the things republicans can do is continue to stay ahead of any residual waves and pandemic mutations that would threaten the ability of the economy to whether this. Weather this. At this point, the variants dont seem as deadly. Fewer hospitalizations, not as many headlines but there are a lot of people out of work on a regular basis. There was a lot of disruption in the workplace and we are seeing it. We are having trouble with productivity growth. We need to keep our eye on the ball with regards to the public mission. You see it everywhere now. Every day, there is somebody else out with covid. The implications to the economy are still very much there. Youre talking a little bit about trade and supply chain. We are seeing the populist wing of the Republican Party thanks to President Trump. Thence to President Trump we have seen that taken hold. That is still reflective of the establishment. I think it is called into question where the party stands with trade and business. Republicans were known my entire life as the party of what are your thoughts on where the republicans might be next year . Trade agreements and there is a big push on yesterday and europe is doing a lot. Where will republicans be on all that . Thank you for a very hard question. I think your diagnosis is right. The party is divided and does not have a unified philosophy that guides it Going Forward. So you can anticipate some backandforth on that front within the party and across the party. I dont expect it to be especially clean in terms of the design of policies. But i think the important thing to recognize is that the populace have a point if they believe the party is the party of big business. You dont want to be for big business. You wont be for the customer, the household and the businesses are a conduit for delivering the things that generate greater prosperity and opportunities for everybody. If youre only paying attention to the business, youre making a mistake. Populism is a good thing if it means less Pay Attention to the consumer. Lets let the consumer on the show. When it turns into we dont care about the consumer, we just want to beat up this business for the joy of beating up his big business, i think that is where it gets off track. There has been a fair amount of appetite for new approaches to competition policy, antitrust, merger review that move away from the traditional approach which i will control the i will call the consumer welfare state where you evaluate a merger. Like this business is too big or the industry is to concentrated or things along those lines. I am not a big fan of those approaches. But there is support for some of that in the Republican Party. That is when i would keep an eye on. Something that Going Forward there might be some action on. The other place i would expect some real effort is on financial regulation. Some of that will be disagreements and i think the role of the Financial Markets and climate policy, esg, the fcc , i think that will be a flashpoint between the parties and things like what are we going to do to regulate crypto . That will be a point of agreement. They will have an interest in finding out a way to make it safer for cryptocurrencies. And i think it will be a place they can cooperate. A reminder to the audience. Put your questions in the chat. I have one more and then i will turn to the audience questions. What do you think the republicans will do when they take office . How is that different from what you would like to see them do . As a most parties want to retake control. The first vote is to make a point. We are in charge