The Inflation Reduction Act may be smaller than the original Build Back Better plan, but it still represents a huge leap forward in middle-out economic thinking. The IRA addresses out-of-control healthcare costs, it helps build a fairer tax code, and it combats the climate crisis. It’s a huge win for the Biden administration and, more importantly, for the middle class. Economist Rose Khattar breaks down the many benefits of the IRA on our first episode back from summer break.
Rose Khattar is the Associate Director of Economic Analysis at the Center for American Progress.
Twitter: @rose_khattar
Top 11 Benefits of the Inflation Reduction Act https://www.americanprogress.org/article/top-11-benefits-of-the-inflation-reduction-act
I Helped Coin the Phrase “Middle-Out Economics”, Biden is Making It a Reality https://newrepublic.com/article/167506/biden-middle-out-economics
How the Inflation Reduction Act could help normal Americans fight rising costs https://www.businessinsider.com/democratic-budget-bill-inflation-reduction-act-could-fight-intrest-rates-2022-8
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
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Nick’s twitter: @NickHanauer
Nick Hanauer:
President Biden ran on building the economy, from the middle out. But the Biden Administration has both adopted the narrative, and committed themselves to the policy agenda it implies-
David Goldstein:
Right.
Nick Hanauer:
In the most robust way, in a generation.
David Goldstein:
It turned out to be a really great summer. We got what they’ve now called The Inflation Reduction Act.
Rose Khattar:
The biggest benefits of the Inflation Reduction Act really go down to the Administration doing its best to bring down costs on some of life’s biggest non-negotiable expenses.
Announcer:
From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics, with Nick Hanauer, the best place to get the truth about who gets what, and why.
Nick Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, Senior Fellow at Civic Ventures.
Nick, it’s our first episode back, from our first podcast summer break. What’d you do this summer?
Nick Hanauer:
Oh, just the usual fooling around.
David Goldstein:
Oh, just like me.
Nick Hanauer:
Yeah.
David Goldstein:
Taking the dog for a walk.
Nick Hanauer:
Yeah, no. I did some fun things. I went to Alaska with some of my friends.
David Goldstein:
I spent my summer, you know, what I usually do, which is watching Senator Manchin, to see what he allows Congress to do. And oh my God, Nick. It turned out to be a really great summer.
Nick Hanauer:
It was a great summer.
David Goldstein:
Out of the blue, we got what they’ve now called the Inflation Reduction Act, the IRA. And it’s another triumph for Dark Brandon.
Nick Hanauer:
What is Dark Brandon. I’ve heard that. What the hell is that?
David Goldstein:
So, it’s that Republican Trump-ist thing, where that “Let’s go, Brandon,” is their way of saying, “F you, Biden.”
Nick Hanauer:
Yeah.
David Goldstein:
And so there’s this Dark Brandon meme that has showed up on the other side. It’s Biden with the sunglasses on, and all buffed up, and getting things done.
Nick Hanauer:
Yeah.
David Goldstein:
And that’s kind of taken over, because it turns out that if you actually look at what’s happened in this administration, even though our 50-50 alleged control of the Senate, with Manchin and Sinema blocking a lot of the most ambitious packages. Despite all of the obstacles, the Biden Administration has been one of the most consequential since, I don’t know what. FDR?
Nick Hanauer:
Yeah.
David Goldstein:
LBJ, at least.
Nick Hanauer:
Yeah, it’s unbelievable. And if you add up the scale of the accomplishments. While everyone was winding about Biden being old, and feeble, and out of touch, and senile, and failed, he was quietly becoming the most transformational president we’ve had, probably since LBJ. There is simply no doubt that he, and this Congress, have gotten more done than any. No one comes close.
I mean, when you add up the Rescue Package that they passed initially, then the Infrastructure Bill, this bill, the CHIPS Act is incredibly consequential. The first time we’ve done anything on gun violence, in a generation. What else? I’m probably for forgetting stuff.
But the Inflation Reduction Act being sort of the crowning piece of that amazing string of accomplishments. It’s just really something to reckon with. And I think the people who have been, particularly Democrats, who have been carping about the Biden Administration, I just… Come on.
David Goldstein:
Right.
Nick Hanauer:
Is there a better example of letting the perfect be the enemy of the good? And holy crap.
David Goldstein:
And let’s be clear. It’s not just what they’ve passed through Congress. We’ve had the just incredible job growth.
Nick Hanauer:
Yeah.
David Goldstein:
We keep hearing how we’re in recession or something, and we still get-
Nick Hanauer:
Just bullshit.
David Goldstein:
We still get this job growth. Yes, inflation is high, but let’s be clear. We’ve talked about this. It’s high all over the world.
Nick Hanauer:
Yeah.
David Goldstein:
It’s not just the United States.
Nick Hanauer:
Right.
David Goldstein:
A lot of it is driven by these very volatile areas, which the Inflation Reduction Act addresses.
Nick Hanauer:
Yeah.
David Goldstein:
So to learn a little bit more about what’s in this act, and how it will impact, and let’s be clear, unlike a lot of past legislation, impacts average Americans.
Nick Hanauer:
Yes.
David Goldstein:
Median income Americans, the middle class. This is not something that, well, clearly it doesn’t benefit the rich.
Nick Hanauer:
Yeah.
David Goldstein:
‘Cause it actually taxes corporations, and it mean tests some of the benefits. And it’s not something that is aimed just at poor people. This is something where the vast majority of Americans are going to see benefits in lower costs, and in rebates for home improvements, that will dramatically lower their costs over times, and in lower costs for healthcare, and pharmaceuticals, et cetera.
And so, to talk us through the details of the Inflation Reduction Act, and its impact on everyday Americans, we’re happy to talk with Rose Khattar, from the Center for American Progress.
Rose Khattar:
I’m Rose Khattar. I’m an Associate Director at the Center for American Progress, also an economist, and recently published a fact sheet on the top 11 benefits of the Inflation Reduction Act
Nick Hanauer:
Rose, for listeners that may not know, can you sum up what the Center for American Progress does?
Rose Khattar:
Of course. So Center for American Progress is a progressive organization, which basically, I think, think of a traditional think tank, with a little bit more advocacy involved. So we put out a range of publications and research on different topics on the economy, on childcare, on different parts of the education system. But we don’t just write reports. We go out there and make sure, through mediums like this, that people are actually able to see the types of work we’re doing, and we do our best to also influence policy makers, and pushing them to pursuing a more progressive legislative agenda.
Nick Hanauer:
That’s great. So were you guys pretty fired up, about the Inflation Reduction Act finally making its way through Congress, and to Biden’s desk?
Rose Khattar:
It’s been a whirlwind of emotions, through the different variations of what was and what wasn’t going to be in the Reconciliation Package. And previously, it being called Build Back Better. And we got to a point where, I think, everyone had thought nothing was going to get done.
Nick Hanauer:
Yeah.
Rose Khattar:
I remember December of last year, how depressing it was to see it all fall apart.
Nick Hanauer:
Yes.
Rose Khattar:
And so, this has been really, really something to celebrate.
Nick Hanauer:
Yeah. So you and your colleagues came up with a list of 11 benefits. Obviously, there are more, probably. But help us understand what the big benefits are for Americans.
Rose Khattar:
So I think, to sum it up in a sentence or two, I think the biggest benefits of the Inflation Reduction Act really go down to the administration doing its best to bring down costs on some of life’s biggest non-negotiable expenses. So things like prescription drugs, healthcare, and energy. And all of this is coming at a time when the United States, and basically every other country in the world, is dealing with record high inflation. And so this is, I think, part of the Administration’s… One of the tools they can have to help fight inflation.
Nick Hanauer:
Right.
Rose Khattar:
But also deal with some of the costs that have existed, long before this inflationary moment. Things like prescription drugs have been expensive for a very long time. And this is the measure that would’ve been great if it was pursued five years ago, not necessarily just today. So it’s great to see them really driving down the cost of the things that have been expensive for a very long time.
Nick Hanauer:
Yeah. So let’s start, if you don’t mind, with the sort of healthcare bucket, and why don’t you go through what’s in the package that helps Americans with their healthcare?
Rose Khattar:
Absolutely. And I think one of the statistics that I came across, a little while ago, that really stuck with me was that one in four American adults have not taken their medication as prescribed, because it was just too expensive. And so one of the biggest things that the Inflation Reduction Act does is that for Medicare beneficiaries, it basically caps out of pocket cost for prescription drugs to $2,000 annually. And it’s going to help about a million seniors save about a thousand dollars each year, which is just a huge saving. And it’s not necessarily just about the saving part of it. Its that it’ll help more people get access to drugs that they need, to just basically live on a daily basis. So that’s, I think, one of the biggest parts of the healthcare package, is capping the out of pocket expenses on prescription drugs, but there’s also more to it that goes beyond that.
So the Inflation Reduction Act also empowers Medicare to negotiate with drug companies to lower prices. And it also, which is a huge measure, it’s preventing drug companies from raising Medicare prices in excessive inflation. So sometimes we can see Big Pharma going out there and putting up prices a little too high than is necessary. Up until now, that’s kind of been okay. And so, through the Inflation Reduction Act, it’s going to work to prevent that from taking place.
Nick Hanauer:
Yeah. And I do think that, for our listeners, it’s really worth underscoring how utterly insane it has been for, what has it been? Sorry.
David Goldstein:
Oh, when they added the prescription drug benefit to Medicare, that was during the W. Bush Administration.
Nick Hanauer:
Yeah. And they-
David Goldstein:
And that was a fight then, about whether to let Medicare negotiate with Pharma, over drug prices.
Nick Hanauer:
Yeah.
David Goldstein:
And Republicans blocked that.
Nick Hanauer:
Yeah.
David Goldstein:
They’ve been blocking it for a couple decades.
Nick Hanauer:
Yeah. And it’s just almost surreally shocking, to reckon with the fact that for the last 20 years, when Medicare bought drugs, it basically had to buy them at the highest list price.
David Goldstein:
Right.
Nick Hanauer:
Which, effectively, makes Americans spend, what is it? 2, 3, 4 times more? For the same drug that other people in wealthy countries spend? Basically turning Medicare into this giant source of ridiculous profits, for the pharmaceutical business, industry. It’s just unbelievable that we let this happen. And finally, the Biden administration has been able to push back on that. I mean, it’s pathetic that we had to do it. But it is a huge accomplishment.
Rose Khattar:
Absolutely. And I feel like time and time again, different presidents, different politicians have come out and said, “Oh, this is a really big deal. We really should do something about it, because it’s affecting people’s ability to live,” and nothing ever gets done.
Nick Hanauer:
Right.
Rose Khattar:
It’s like nothing ever gets done. This is a very good example of a clear measure that Congress could’ve passed a while ago, that would’ve helped save people’s lives, and make people be able to afford the drugs that they need to live, and also then spend money on other essentials.
Nick Hanauer:
Yeah.
Rose Khattar:
So it’s great to see it finally done.
Nick Hanauer:
Yeah. And there’s that neat thing that they put in about diabetes too, which is for insulin, right? That you pay no more than $35 per month, out of pocket for insulin?
David Goldstein:
On Medicare. But I’m curious, Rose. Does the Medicare negotiation, and these caps, does that help push down prices outside of Medicare, for people with private insurance?
Rose Khattar:
So there were measures that tried to go beyond just Medicare recipients, that the Parliamentarian basically threw out, and that members of Republicans in the Senate side didn’t vote for, then. So a lot of those measures actually got taken out.
I think there’s some argument that could be said, that we’re seeing Medicare lower prices that could push those providing drugs outside of Medicare to also lower their prices, as well. But I mean, we could have had it going beyond Medicare, and we can just thank Republicans in the Senate for not voting for that.
David Goldstein:
It was always my understanding that Medicare kind of set the price for a lot of services, in the healthcare industry. That a lot of other insurance companies worked off of, that was their starting point, was the Medicare pricing.
Rose Khattar:
Yeah, I think that is true. So I think it could put pressure downwards, in other spots, but it’s not necessarily as direct as what this is going to be able to do for those on Medicare. Yeah.
Nick Hanauer:
Rose, let’s move on to climate change and energy. This is the biggest single investment the country, almost probably, maybe in the world, we’ve ever made, to committing to dealing with carbon pollution and lowering energy costs, and increasing, how would you say it? Speeding up our transition to alternatives. So take us through that.
Rose Khattar:
Yep, absolutely. And I think you’re right. I mean, I know that it’s the biggest investment in America’s history, and I think given America is the biggest economy in the world, I think we can fairly assume it’s the biggest in the world.
Nick Hanauer:
Yeah.
Rose Khattar:
I wouldn’t quote me on that, exactly.
Nick Hanauer:
Yeah.
Rose Khattar:
‘Cause I haven’t gone through the entire world, but I think that’s pretty accurate. And I think the energy part of the whole package is actually one of my favorite. It’s actually my favorite part of the whole package, ’cause it’s not just reducing cost. It is aggressively tackling the climate crisis, which is beneficial to us now, and beneficial to future generations. But doing so in a way that’s going to create good paying jobs across the country. It’s building out a whole new workforce in America, and it’s making sure that those jobs are good paying jobs. It has a lot of mechanisms in there, that really goes to making sure people are getting paid good wages, which I think is sometimes a benefit that isn’t necessarily thought of, when you’re thinking of climate change.
Nick Hanauer:
Yeah.
Rose Khattar:
Usually we’re thinking of, “Oh, people are going to lose employment, because we’re transitioning.” But this part was really crafted with an eye towards making sure this is good for the economy, and good for workers as well.
So it’s got a range of things. I think some of the biggest things are is that based on the package, emissions are projected to be reduced by about 40%, which is huge. It’s also going to lead to about nearly 4,000 lives being saved annually by 2030, because of cleaner air. I think the idea that people die from pollution in the richest country in the world is devastating. And so, I think it’s, again, it’s something we don’t necessarily think about.
And then, in addition to the pollution and the literal lives that are going to be saved, it’s of course going to lower energy costs. And that’s obviously coming at a time when energy costs are really skyrocketing, and putting a lot of pressure on people’s budgets. And so there are various different mechanisms. So one of the things that could happen is a family could save about $1,800 annually, through their gas and utility bills, if they begin to electrify their source of energy. There’s also a lot of rebates, about nearly $28,000 worth of upfront incentives, to buy electric vehicles, again, through the electrification of cars. And in addition, again, this is all creating good paying clean energy jobs. I think the projections are about 1.5 million, by 2030.
Nick Hanauer:
It’s so exciting, actually. And the folks I know, who devote themselves to the climate space, are super excited about this.
David Goldstein:
So Rose, I have a really selfish question, and I don’t know whether you can answer this or not. I would like to convert my furnace to a heat pump. I have a bid in. It’s very expensive. Should I wait until January? ‘Cause I see all this talk, up to $8,000 in rebates for heat pump conversion, and so forth. What is this going to mean to average people?
Rose Khattar:
Yeah, I would be waiting, because this is the thing. Like you said, there’s money in there for very specific items. So it’s like your furnace, it’s like your cars. So I think it’s worth waiting, till this bill gets implemented. And there are particular dates in which all of these different measures begin. But I definitely wouldn’t go out there now, and make any of those purchases, because there are real dollar savings associated with electrification.
David Goldstein:
Right.
Rose Khattar:
But isn’t that a nice thing? When you can actually save money, and do good for the planet at the same time?
David Goldstein:
Yes. Yeah.
Rose Khattar:
I feel like for a long time, climate change has been framed as some people win, some people lose. And what I really like about this package is that it’s helping reduce costs, in a way that everyday people can understand what’s happening, but also doing it to reduce pollution, and reduce emissions, which will save lives in the end.
David Goldstein:
And another thing that people don’t wrap their minds around, we had that spike in gasoline prices this summer. And they’re still really high. If you were driving an electric car, the price of electricity did not spike. Electricity rates, they go up over time, but they’re relatively stable. They’re regulated. You know, don’t get them doubling or tripling, over the course of a month. So you’re able to budget what your costs are going to be for if you have an electric car, for your fueling the car. If you’ve got a heat pump, for heating or cooling your home.
Whereas having bought heating oil over the years, in this house, one year it’s $2 a gallon. The next year, it’s $5 a gallon. It can be really expensive, depending on when you fill that tank. And so, this provides a lot more stability into people’s budgeting, when they shift to electricity.
Nick Hanauer:
Yeah. And remind us what’s in the bill for electric cars.
Rose Khattar:
Yeah. So households will be able to save about $28,000 in upfront incentives to buy electric vehicles and household appliances. And I think the point that was just made about how volatile gas prices are right now, but also not right now, that’s just been a historic factor of gas prices, for example. That there’s a huge component of this, that means in the future, because we’re going to become less reliant on fossil fuels. We’re going to just have less inflationary pressures in the economy, in the long term.
Nick Hanauer:
Right. Absolutely. And the thing that, I think, is always important to remind people is that the petroleum, and coal, have basically not changed in cost over time for a century, on an inflation adjusted basis. But these new technologies, like solar and wind, are declining in cost, at extraordinary rates. And the quicker we can make the transition away from petroleum, and other things, to these alternative sources of energy, both the cheaper it’s going to get, but also the more stable the prices will be, permanently. Because the sun continues to shine, no matter what. And that will be helpful to everybody.
David Goldstein:
Yeah. And Vladimir Putin can’t cut off the supply of it.
Nick Hanauer:
He cannot. He cannot. And finally, we have started to do some important things to make the tax system fair.
Rose Khattar:
Absolutely. And I think I want to start with the one thing that isn’t in here, that I think really is important, is that no one making under $400,000 a year is going to pay any more in taxes. I think there has been a little bit of-
Nick Hanauer:
Lying?
Rose Khattar:
Little bit of fear mongering.
Nick Hanauer:
Lying?
Rose Khattar:
Yeah. A little bit of lying, on the side of some other people, who were going out there and saying that low to middle income Americans are going to be paying higher taxes.
Nick Hanauer:
Yeah.
Rose Khattar:
As a result of the Inflation Reduction Act. And I’m like, “That’s just not true.”
Nick Hanauer:
A lie.
Rose Khattar:
Like factually, that is not true.
Nick Hanauer:
Yes.
Rose Khattar:
So that’s not in it, but I can tell you what’s in it. And one of the biggest things that’s in it is that corporate tax avoidance is a huge problem in the US, and huge problem globally. Now what the bill’s going to do is it’s going to make sure that corporations pay at least 15% minimum tax, when they have at least a billion dollars in profits annually. Which, to me, just seems like something they should have been doing in the first place.
So the way I see this is that they’re really just cracking down on corporations, who were trying to avoid paying taxation, which I don’t see anything wrong with that. I think that’s a great measure. It’s a great way to pay for things.
Nick Hanauer:
For sure.
Rose Khattar:
That we need, like lower prescription drug costs, and clean energy. So that, I would say, is the central part of it. There’s also some money going to the IRS, to help deal with people who were cheating the tax system. And there’s also some money, some taxation on stock buybacks, which became part of a end of Senate, last minute negotiation, with Senator Sinema.
Nick Hanauer:
Yeah. We have been long time critics of stock buybacks. And again, we’ve talked about it on the pod before, but just to remind listeners. This is this practice of corporations buying their own stock back, to increase both the price of the stock, and the earnings per share of the company, which mostly benefits people on the top 1%. And the practice has gotten so out of control, that it now counts for almost 5% of GDP.
It’ll be well over a trillion dollars this year. And that money is creating no economic benefit, to the broader society. It’s just a scam to make rich people richer. It didn’t used to be legal. And then, at the beginning of the sort of Neoliberal Era, in 1982, they deregulated it, and Ronald Reagan deregulated it. And now, it is absolutely one of the most pernicious practices, in the economy today. It accounts for a huge reason for why folks don’t earn enough to get by, without help from the government. And there’s now, is it a 1% tax on stock buybacks? But it should be a 20% tax on stock buybacks, and maybe we’ll get there eventually.
David Goldstein:
It’s like a trillion dollars a year, in stock buybacks.
Nick Hanauer:
Yeah.
David Goldstein:
And one of the interesting things, of course, is that it creates… There’s two ways for a company to send money to shareholders. One is this indirect way, through stock buybacks. The other is through dividends. This creates a bit of a disincentive to go the stock buyback route. And if that pushes more money to dividends, that’s great, because dividends are taxed.
Nick Hanauer:
Correct.
David Goldstein:
Whereas a lot of this goes into unrealized gains, by just pushing up the paper value of the stock.
Nick Hanauer:
Correct. Yeah. Yeah. But a nice fat 10 to 20% tax on all stock buybacks would be an awesome thing.
Rose Khattar:
We can only hope.
David Goldstein:
Yeah.
Nick Hanauer:
Yeah.
Rose Khattar:
We can put that out there, and maybe we’ll see if that happens. And I think one of the really important things to say about stock buybacks is like, this is revenue that could go directly to workers, through the form of higher wages.
Nick Hanauer:
Sure.
Rose Khattar:
It could go towards investments that actually boost the economy. The way it’s being utilized now is not really creating additional output.
Nick Hanauer:
No.
Rose Khattar:
It’s not boosting our economic activity. It’s not benefiting workers. So this is a really good step in the right direction.
Nick Hanauer:
Yeah.
Rose Khattar:
And hopefully we see, now that it’s 1%, hopefully we can see it eventually being increased at some point too.
Nick Hanauer:
Yeah. But just quick math, I think it’s going to be a trillion two hundred billion, this year. That is for the bottom 90% of workers, that’s $10,000 per worker, per year. I mean, it’s just an astonishing amount of money. And we don’t have an inflation problem in this country. We have a wage suppression problem in this country. And every worker earned $10,000 more a year in the bottom nine deciles, everything would be a lot easier for everyone. And it’s stuff like stock buybacks that prevents that from happening.
Rose Khattar:
Absolutely. And it’s also why I really like that the way this bill was crafted, was with an eye towards reducing inflation, but not doing so in a way that actually hurts everyday Americans.
Nick Hanauer:
Right.
Rose Khattar:
Which is usually the way that we think about, “Oh, inflation is happening. We can only rely on the Federal Reserve to increase interest rates, and create mass unemployment.”
Nick Hanauer:
Right. And push us into a recession, which will reduce inflation.
Rose Khattar:
Exactly.
Nick Hanauer:
Yeah. So we’ll trade off 20 million more people being unemployed, for slightly lower prices for the rest of us. Which is Titanically stupid.
David Goldstein:
And I think this gets back, Rose, to something you said at the very top of this interview, when you referred to this as addressing non-negotiable costs. If dining out, the cost of dining out goes up, you can choose not to dine out so much. But you can’t negotiate the prices on healthcare. You can’t negotiate prices at the pump. You can’t negotiate the price of your home heating oil, or your natural gas.
And so this addresses these core costs that Americans, that American consumers, regardless of income, have no control over, whatsoever. And it’s a huge part of where the inflationary pressures are coming from.
Nick Hanauer:
Yeah. No, it’s really awesome. So one final question, Rose: Why do you do this work?
Rose Khattar:
Oh, why? So it’s actually, to be honest, the reason I became an Economist was I was in law school, also becoming an Economist at the same time. Came from Australia, very different education system. And I was working at a legal firm, and seeing the same problems day in, day out, just different people. And I was like, “I’m here to create systemic change.” And this is why I do this work. I think it is really, really crucial to be able to affect millions and millions of people, which is honestly, I look around and I’m like, “There are so many issues out there in the world, and this is my way of contributing to helping reduce some of the issues that are out there.” So, I mean, I really enjoy it.
Nick Hanauer:
That’s fantastic. That’s fantastic. Well, thank you so much for joining us.
David Goldstein:
Yeah.
Nick Hanauer:
And hopefully we’ll get to talk to you again.
Rose Khattar:
Great. Thank you so much.
Nick Hanauer:
That was a great conversation. And the more you talk about this bill, the more excited I get, about the elements in it. But the thing I think is really worth underscoring, and sitting with, is that President Biden ran on, and committed to, building the economy from the middle out. And I say that, at the risk of being self-aggrandizing, because listeners probably know we are the ones that created that middle out economics narrative, as a antidote to trickle down economics.
And we spoke at length, with the Biden Administration, about the necessity of doing it. And as we did the Obama administration, by the way, but they blew it off. But the Biden Administration has both adopted the narrative, and committed themselves to the policy agenda it implies, in the most robust way, in a generation. And we have a piece out in the New Republic. How did they title it? I helped coin the phrase “middle out economics.” Biden is making it a reality that we’ll put in the show notes.
I was super pleased to see that Ron Klain, the President’s Chief of Staff, just retweeted it saying, “This is what we’re doing.”
David Goldstein:
Yeah.
Nick Hanauer:
Which is really, really fun. And the Inflation Reduction Act is just another great example of the commitment to that way of thinking about economic cause and effect.
David Goldstein:
Right. And more importantly, I think, and this might sound weird to people that I’m saying it’s more importantly, but if you’re a long time listener of the podcast, you’ll get the theme here.
They’re not just walking the walk. They’re talking the talk. Talking the talk is as important, if not more important, than walking the walk here. They are passing legislation, that grows the economy from the middle out, and that’s great. But if that’s all they did, and Americans didn’t know that that’s what they were doing, and that’s what they were doing it for, it would not have the same impact.
Nick Hanauer:
Correct.
David Goldstein:
What’s important here, and we talk about this a lot, how important narrative is. They have consistently used that phrase, about growing the economy from the bottom up and the middle out. They have consistently reminded Americans that that’s how you grow the economy. Not cutting taxes for the rich. Not suppressing wages.
It’s increasing incomes, and reducing costs for 90% of Americans. For the middle class. And it’s a different way of thinking about the economy. And it is a learning opportunity for Democratic Politicians, to see that you can win on this type of narrative, and for the American people, for American voters, to understand that there is no big trade off between fairness and growth. That if we try to benefit the middle class, that’s not bad for the economy. That will not kill jobs. That will not reduce growth. That will not drive up costs. That’s how you grow the economy, create broad prosperity for everybody, and you just have to admire, through all the bad press that they got over that time, when people were criticizing the Administration, largely over things, which were not their fault, they stuck by that narrative.
Nick Hanauer:
Yeah.
David Goldstein:
They continued to talk through it, and they’re governing that way. And I think that is a real paradigm shift.
Nick Hanauer:
It is.
David Goldstein:
That you finally have Democratic leadership. The Democratic Party, led by President Biden, breaking from the old neoliberal talking points.
Nick Hanauer:
Yeah.
David Goldstein:
And if you think back to it, the last time there was a shift like this, it was in the Reagan administration.
Nick Hanauer:
The Trickle Down Era.
David Goldstein:
That’s right. I mean, it started in the Carter Administration. The Neoliberal Era really did start in the Carter administration. But the talk, the narrative, the changing of perceptions, the way people thought about the economy, to that trickle down supply side approach. That was Ronald Reagan’s great contribution.
Nick Hanauer:
Yeah.
David Goldstein:
We would say, for worse.
Nick Hanauer:
Yeah.
David Goldstein:
But the Reagan Revolution was real. We’re seeing the Biden Revolution right now.
Nick Hanauer:
That’s right. Absolutely. And it’s so exciting. And if we can keep this thing on track, I think the country is going to be in such better shape. It’s very exciting.
David Goldstein:
And Nick, they’re doing things. They’re being smart politicians, in a way that Democrats often aren’t. Democrats often negotiate against themselves, and like, “Oh, we can’t do that. That’s going too far.” I mean, one of the most exciting things they did, one of the cleverest, here’s Dark Brandon at his best, is the redefining of air pollution to include greenhouse gas emissions.
Nick Hanauer:
Yes.
David Goldstein:
Right? After-
Nick Hanauer:
And remind people why that’s so important.
David Goldstein:
Right. ‘Cause the Supreme court ruled that the EPA couldn’t regulate greenhouse gas emissions, because the Clean Air Act didn’t give them that power, because carbon dioxide was not a pollutant. You know, in a way it’s kind of true. When the Clean Air Act was passed, it was meant to control air pollution, carbon monoxide, and particulates, and so forth, to have cleaner air in terms of breathing. So that was the original intent.
And this Supreme Court said, “Well, that’s narrow. You can’t redefine it to include something which is destroying our climate.” So in passing this, the Democrats went and said, “Okay, Supreme Court. We’ve just redefined it. So now it includes this.”
Nick Hanauer:
Yeah.
David Goldstein:
And I’m sure it’ll be contested. It’ll go back. But I wouldn’t pass this court to be a bunch of total hypocrites, and find some other issue to prevent the EPA from doing it. But it’s a really bold, clever, smart-
Nick Hanauer:
Yeah.
David Goldstein:
Dark Brandon-ish move, on the Democrats part.
Nick Hanauer:
It is.
David Goldstein:
Finally Democrats playing the same game that Republicans are playing.
Nick Hanauer:
Yeah, absolutely. Well, on the next episode of Pitchfork Economics, we’re going to be talking about another one of our favorite subjects: Overtime pay, with the journalist Marcus Baram.
Announcer:
Pitchfork economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us, wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action, and Nick Hanauer. Follow our writing on Medium at Civic Skunkworks, and peak behind the podcast scenes on Instagram, @PitchforkEconomics.
As always, from our team at Civic Ventures, thanks for listening. See you next week.