Professor and columnist tyler cowen. I agree with a lot of the policy Solutions Proposed by other economists including larry. But i also think theyre asking the wrong question. The right question is why is there so little interest in listening to economists. People are in a kind of denial. They want america to go back to an earlier time, make America Great again. Theyre not willing to suffer losses to their own budgets or situations in life. So its ultimately a psychological and social logical problem. Not just one of the economists lecturing people more and more. Wnds conclude tontd with Foreign Policy and an assessment of the Trump Administrations platform in relationship with russia. We talk to julia loffe of the atlantic an evan oses no of the new yorker what he involved was really an outgrowth of a longstanding tradition in soviet intelligence was the idea of active measures, that is where the title of this piece comes from. Is that espionage is traditionally about the collection of foreign secrets, about trying to understand and anticipate events based on things that foreign powers dont want you to know and then there is Something Else. Which is a kind of covert action. And thats what active measures were. In this case what we saw was an active attempt to try to shift the course of american plilt kal events. And it succeeded frankerly to a degree that i think russian side really didnt thoroughly anticipate. The economy, and Foreign Policy when we continue. Funding for charlie rose is provided by the following and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Good evening, im ian bremmer sitting in for charlie rose. We begin this evening with the economy. President trump will seek to boost defense spending by 54 billion dollars in his proposed budget pan for 2018. 10 increase is set to be counter balanced by spending cuts from other federal vegs including the epa and the state department. The proposal expected to be released in march does not plan to change Social Security and medicare. All this and more concerning the u. S. Economy will be the focus of President Trumps prime time address to congress on tuesday. Joining me now from massachusetts is Larry Summers. He is a professor at harvard and its former president. Of course he also served as treasury secretary under president clinton and as director of president obamas National Economic council. Im pleased to have him on this program. Welcome, larry. Glad that you are with me. Good to be with you, ian. You heard the headlines as i have. Weve got a big increase in defense pending. Everything else that can be pulled back is going to be pulled back. And budget numbers at least for growth for 2017 not three to four percent as theyve been talking about. How does this strike all of you from harvard . Well, i wont speak for harvard. The numbers on the budget, the Economic Forecast is optimistic but not as ludicris as some feared. Raising the Defense Budget i think is probably a prudent investment in a dangerous world. Seeking to combine that with massive tax cuts, i think, means untenable cuts in other parts of the budget. Look, weve got more people in the United States who are in military bands than we do who are in the entire foreign service. In a world where our ability to get along with other countries, our ability to run effective counsel siller offices is is essential to controlling immigration, something the president has talked about, these kinds of slashing of the budget for diplomacy i think is very dangerous. We havent seen, and its no accident, what the plans are for domestic budgeting. But people in his world have talked about a two thirds cut in the number of employees at the the epa. Anything like that, approaching that, would mean the degradation of environmental regulation to the point where tens if not hundreds of thousands of people would die each year of pollution. We havent seen the budget plans for other agencies but what kind of civilization are we going to be if as rumors have it, the federal government zeros out funding for the arts, funding for our culture. So i think this is a budget that is going to be unrealistic to execute and dangerous in terms of the civility and generosity of our society, if it were to pass through the congress. But i think its very, very unlakely. Theres a long history of president s proposing vague, vague, huge cuts in the discretionary budget and then not being able to achieve them. My guess is that at the end of the day, he wont get all the tax cuts he wants. He certainly shouldnt get all the tax cuts that he wants. And that he wont get discretion ary sphending cuts that he wants either. I unlake many people who i agree with on many issues think that some increase in the Defense Budget probably is a prudent thing. Market response so far has been these guys are geniuses, right. Were at records in the United States. And everybody likes the regulatory pullback. Everybody thinks this is stim latif in terms of taxation and infrastructure. Do you think that the markets are wildly ahead of themselves . I saw Warren Buffett just a few hours ago saying actually no, hes still very bullish on the u. S. Market right now. Look, i think people have a tendency to make a mistake and look at markets and think of them as only being driven by whats happening in washington. There are a lot of things happening in the economy that influence markets and so it wouldnt attribute it all to any kind of reaction entirely to President Trump. My sense is that markets may have, may have a bit of a sugar high going. I dont expect tax cuts of the magnitude that most businessmen seem to be looking for to in fact materialize. I think there are much greater risks to the health of the economy from the protectionist policies that the Administration May pursue, than many others perceive. I think theres much more uncertainty being created by the president s proclivity to policy making by tweet. And dealing in terms of one off ad hoc arrangements with particular companies. And im not sure just how much is going to materialize in the, in the regulatory area. So i have a sense that there may be a bit of a sugar high going but that doesnt mean, that doesnt translate for me into some kind of near term Economic Forecast. And i certainly wouldnt be one of those whose confidently forecasting a crash. But i think many people are seeing increases in fundamental value that dont seem likely to me to materialize as i watch the political process, think about how congress is likely to act. And i think there are real risks to where were getting vees a vee the rest of the world that in a world where 40 of the profits of the companies in the s p 500 come from abroad. I think those issues loom pretty large. And should loom pretty large in thinking about the stock market value of companies. So talk about a couple of the big sort of announcements made by steve bannon on strategy. Weve heard him talk about dismantling the administrative state. Also talk about economic nationalism, certainly a big departure from where the u. S. Government has been going. Let me address the last one first. On the administrative state, do you see regulatory pieces in the United States that are just vastly greater than they need to be. Do you think for example doddfrank needs to be taken apart, where would you constructively head if that was your agenda right now . Look, are there excesses in the regulation of Community Banks . Yes. Is there more bureaucratization than would be ideal in the regulation of regulation of all Financial Institutions caused by doddfrank ra . Quite possibly there are. On the other hand, the president s chief Economic Advisor gary couldhen a couldhen a terted the other day that doddfrank cost billions of dollars. I have asked repeatedly for some backup, some documentation, some support for that claim coming from the president s chief Economic Advisor. At a time when the total profits of all the banks are less than 200 billion, no response. In the same interview koan talked about how we allow people to eat unsafe foods, some kind of analogy suggesting that we should dismantle the Consumer Financial protection bureau. I see the things that are done in credit arrangements to take advantage of unsuspecting people and it what take too long to explain them in detail to your viewers, but they are unconscionable. And there is much more that needs to be done to assure the proper provision of consumer credit, and the unsuspecting people are not stolen from by major Financial Institutions. So i think the idea that we should show be stripping away Consumer Financial regulation is cruel and is badly wrong. I look at what has happened to the water supply in flint, michigan, and in other places and i say to myself, do we need to be scaling back the efforts we make in this country around safe water . Do we want to go back to the days of the los angeles smog by a scaling way back what the epa does or by trying to produce some kind of renaissance of the kohlhepp industry . This is very dangerous stuff. Pharmaceuticals are more powerful than theyve ever been. Thats a fantastic thing. We are there adjustments that need to be made . Ive seen some situations where the fda would do the country a service by accelerating the approval of drugs, particularly in situations where people are desperately ill. But should we in some systemic way set the stage for more thalidamides by scaling back pharmaceutical regulation . No, we absolutely shouldnt do that. And what i find so disturbing in the approach that the president is taking and that many of those around the president are taking is not that they have views that are different from mine. I have views on most but not all issues go with democratic add administrations, others will differ. But that they seem to believe, they seem to take the concept of alternative facts seriously. So how do you balance, on the one hand you have what certainly seems to be a set of policies that would more greatly empower the big corporations and the big banks. On the other hand, you have a president that seems to be focused very strongly on calling those very players out, saying that theyre globalists and theyre not focusing on the american worker. One part of this is that this is a long tradition that weve seen in latin america. Juan perone in argentina is perhaps a classix example. You reject all the experts. You declare yourself to be a tri beun of the workers. And then once youre in power you cut a set of deals to protect a whole set of moneyed interests who then support you in various ways, perpetuate your power. Thats a long tradition and it often produces good results in the first few months because businesses get excited and have good animal spirits. But all you have to do is look at the economic history of latin america to know in the long run its a passport to nowhere. And i think theres a lot of that that is going on. Then theres a separate issue which is these intermit ent threats to Companies Like what the president did to the air Conditioner Company or what the president did about the price of air force air force one. And that stuff is symbolic. It is really small ball compared to the size of the economy. Look, take one example. He probably did delay or maybe even fore stall the movement of 600 jobs to mexico at carrier. On the other hand, the slil and destabilizing character, his rhetoric has destabilized the mexican peso by 15 or more, and that means that every business think being locating in mexico or the United States now sees a 15 greater cost advantage to mexico, relative to the day that he was elected. Thats got to be a far larger threat to ohio or indiana or pennsylvania than whatever could be accomplished with those 600 jobs. So sure, hell get some mileage out of these particular stories for a little while. But ultimately whats going to matter is conditions on the ground. But ultimately what the president is going to discover is that we live in a world of Global Supply chains, in which its not that we import a product from abroad and just eat it or consume it here. Its that we import and then we process and then we add to it, and then theres further stages of processing abroad. And then its brought back here and traded. And if we cut off imports were going to cut ourselves out of that whole process. And there will still be Global Supply chains and we just wont be part of them. And thats the threat from the approach that the president is taking. But there is a real bully pulpit here, isnt there, larry. Its not just a question of him calling a c. E. O. On the carpet or tweeting against them. If he really truly wants to become a job creation president , doesnt the person who controls in principle how the American Government is going to engage with corporations, the person who says the Defense Department is one of your biggest purchasers and so were going to treat you differently unless you actually invest much more substantially. I recognize the numbers so far have been small. I done think so. He could influence his policies. He could propose a real program of Infrastructure Investment on a large scale, not a set of tax credits for pipelines that are already going to be built. But a real program of Infrastructure Investment, that would create a lot of jobs. He could pursue a serious set of regional policies directed at focusing federal efforts on areas with the highest employment. That would make a real dirchtion. He could propose a set of effective wage subsidies directed at the categories of workers who are having the most deficit, that would make a difficulty, that would make a difference. But a bunch of meetings with c. E. O. S where he bloviates about job creation . No, that will not, over time, have any preeshable effect appreciable effect on the level of job creation. That will serve to divert attention from the many issues the country faces from rising mortality and decreasing health to crucial problems in education, to a genuinely decaying infrastructure that are going unaddressed. He may divert some attention from some national failings and failings of his administration, but i dont think theres any evidence to suggest that hectoring about job creation has effects at the level of the millions of jobs that you need to change if youre going to move the needle. If you had to go back and look at what the Obama Administration could have done significantly better, if you want to pick on one or two quick things that would have a more meaningful shot of actually persisting, what would they have been . A country badly under invested in infrastructure during the years 2009 to 2016 but that wasnt because of the Obama Administration. That was because the congress was unwilling to support substantial increases in Infrastructure Investment. The country ran a tax system that created a big incentive for capitol to stay abroad. But that was because the congress wasnt willing to agree on a Corporate Tax reform that wasnt a major giveaway. Could the Obama Administration have done more to promote Business Confidence . Yes. Would i have supported that, did i urge repeatedly the confidence is the cheapest form of stimulus . Yes, i did. But i think when you go back and look at the Obama Administration, the big story, the thing that history will remember, is that everything on the day the president took office looked like it did right after 1929 when the stock market crashed. And while performance certainly could have been much better, it was nothing like the Great Depression. I think that will be remembered as a positive achievement. I think the concern right now is that a lot of things starting with the stock market are very much looking the way they did in march of the Herbert Hoover administration. And that was an administration that didnt work out so well for the economy. Plenty of confidence right now in and around the administration. Larry, im sure well be talking about it. Thanks for joining me today. Good to be with you. We continue our discussion with a look at the wellbeing of the american people. Joining me now from washington d. C. Is tyler cowen. He is a professor of economics at george mason university. And columnist for bloomberg view. His new book, the complacent class, the selfdefeating quest for the american dream, identifies a crisis in social and economic mobility here in the United States. And i am pleased to have him on this program. Tyler, glad. Hello, ian. Congratulations on the book, just out today. And wish you well with it. Look, a lot of challenging topics in this book. The biggest one hits you right in the face is that the biggest problem we have in the United States right now is that our people are too complacent. Why dont i let you define that for a second just for the review