capacity over the long-term free economy to develop the best products and find the fit. we are going to outcompete everyone over the last century based of those principles. with the double down on the efforts not try to be pale comparison to the ccp. that's a really bad idea. but to be better versions of who we are historically, that's how we win in the next century. >> please join me in thanking chairman mchenry. [applause] next we will have a led by my colleague judge locke we will begin shortly.unny.

>> hi, everybody i'm judge gallant senior fellow with the senior research fellow man ãã i'm very pleased to have introduced and moderate the panel on the cost of intervention. before i start, to set the stage and go a little b

further. one thing that's easy to forget and spread wide and came to recessions in modern memory.st you would think it would have a very positive political boost from overseeing recovery dropped to the highest level what the best we've seen in 40 years the biden camp lane after what he characterized as the chaos of the trump years but surprisingly to many people he actually oversaw one of the most activist economic policies in modern times rivals in some sense the achievement of the great society or new deal in terms of economic interventionism in terms of spending and new regulatory policy. although the administration has

seen a rise of very low unemployment as the administration likes to emphasize is also seen an era of very high inflation vast unprecedented levels of govemenew interventionist policies. these are three of my favorite commentators and speakers versus brian reidel senior fellow of manhattan institute, and served as director of budget from marco rubio 2016 campaign. if any of you have followed the news recently you probably have seen brian commentating in many different publications. stephen myron on the my left is a fellow at the manhattan institute former senior advisor of the u.s. treasury. is published widely in academic forms such as the american

economic journal. in the middle right there is allison schrager also seen your fellow at the manhattan institute. she's the author of the very fun but serious book i highly recommend to you. also a regular contributor ■iat the economist. and bloomberg. if i could i would like to start with may seem overbroad question that ■

plan shows us we were getting a highly medical partisan and quite ideologically progressive administration. office, there was so much stimulus already in the system and the economy was reopening that the cbo said the economy was only $420 billion below ■capacity. we got $350 bailout state budget deficits that didn't actually exist. union pension bailout money for schools, unemployment bonuses,

all grieved with child credit and even more rebates. so economists across the spectrum warrant this bill is too big and it's going to trigger inflation. they got ignored for two reasons. first it was a democratic narrative that had grown out of the great recession that the great recession's recovery was held back by not enough stimulus in government i think that was wrong that was the narrative. second, because that bill became more about what text then policy, democrats refuse to negotiate or compromise they saw this christmas tree bill p@

bill. ...... the idea of a build back better collapse, and the biden reelection. and for decades.

and i know you bring a little >> i agree with this policy driving inflation is the most consequential. inflation is one that i want to emphase another one part of the reason is because of inflation and another is because you need it available if something happens. and it was for this impression. we have this in which to do so.t

during this expansion is historically reckless but also it leaves you with no thing to third and you have limited response. inflation and

monetary policies to protect that. no policymaking jake sullivan lester where he had this consensus. and if you call in the early post pandemic years always people were like, it became a focus which ie and think more carefully.

in this idea like i didn't realized environmental restrictions for would have to hire more. i don't think the government has internalized that and i don't see it being we shouldn't direct resources and human capital.■(■ fred is trying to go. financial capitalism■u getting these policies.

i thought it had gone and we had the clinton administration believing in markets. >> those of us who remember the time one or two or 3% gdp now look back in admiration of that. for the first two years of biden's terms a sympathetic congress discussing these massive interventions if anyone

feels fe to jump in, the animations like this ideology behind it and to do with whether or not they are involved in the planning >> the theme of the first two years was unions and industrial policies. have seen based on rev it was stepped on the school fighting inflation.

the way, he chose union and labor over inflation. they are picking winners and losers. >> the policy going on these going on. these winners and losers and prioritizing labor over the higher goal to fight inflation. thirty or 40 years and policies without trade-off. i think that's gone. inflation is not back even if it

goes down and their minds. in the consulate o activities and there are no costs so it is a complete believe. >> and that is the ideology. and no inflation for about a decade. combined with i think being sidelined in the biden administration and you can consider that. it is about the economist. thise

to use and comprehend. >> i think we have been seeing this for several administration. grab whatever power they5=

and it was trying to rein in t nixon. president continues to grab more power expect especially accelerated bush and now congress doesn't assert itself anymore. and was so huge also discovered■ executive driven spending and poor healthcare.

building and infrastruure and we have seen very aggressive lighthouse though the power can while we expected it, the changes are how brazen it's become. in congress used to be the oppoe and take as much power as you want. >> when they come into power but this scale being different i

think it is a new way and$1.5 t. during the first term. >> do think it is distinctive? >> i think it is distinctive. last ten years it's emerged one of the major issues in the 20th century and in china and would go to the leader and maintain middle-class it becomes harder that's expensive in america. it is adding to the cost of making things and regulations raise the cost of reduction by

raising the cost of influce. there are many regulations that the administration and sometimes written into statutes of the law that require companies subsidies from the jobs act to observe requirements which makes unions preventing firms from competing on labor costs and reducing costs of building something, i just raises the cost of doing business in these requirements are throughout the biden honors program and range from things like requiring a ton of features and cars to reduce missions mark requiring cars shut off if they are idling. there are dozens of things like that and every one of them mes ,

use american labor in factories, you make it competitive and china doesn't care about that so they will come undercut you because they are making it lower because they don't have, some regulations are necessary. we have a lot of regulations that are important for so many are absolutely unnecessary and raise the cost. it is a major problem in wanting to prioritize issues like the competition will china. >> many of us haveone of the fundamental visions is subsidized demand and restrict supply.

, how much would you say inflation could be in by moments with recovery and federal reserve and they have inherited? >> inflation at its peak two or 3% due to expansionary policy and post pandemic supplies and since then the issues have been largely resolved but it's worth reflecting on my inflation is still high and giving a real test once inflation is in the■ economy, it is hard to get rid

of so it's laying blame they are in expansion. the whole purpose of moment. policy is decreasing demand. three and a half% inflation a couple of years in the becomes the wage contract. the becomes a normal inflation. lehman morneau forng persistent.

>> the nature of the fiscal policy from the federal reserve's behind failing to deal with inflation? >> initially behind the curve, i don't think they are now, you can quibble with how restricted they are being their job is larger largely undermined and we are running enormous49 debt that can be inflationary. it ties future in terms of the independence we have high interest when we have a lot of debt and that is even more work

can be undermined. related to interest rates, many of us have lived in the last couple of years the median priced home has doubled. taken to the fact that higher interest rates on housing, median mortgage on the home has doubled. what is the this policy? first, they assume more policies thanhe economy and regulation of force the fed to raise rates even higher. the harder washington, biden presses the gas from of the higher the fed hits the brakes but the white house unveils a tax credit for buying housing

for just going to raise demand more. the policies drive up interest rates brother with policy against it and subsidizing demand. this is why i promise pulled her hair out. >> a lot of this done by unilateral support. suvs but buying catalogs to benefit from the taxpayer subsidies. somebody buying an 80000-dollar cadillac doesn't need a tenth of the cost covered over by the

taxpayer. they were divine trade agreement. thereby keeping and a lot of it is language and unilateral action. vicious cycle inflationary demand coming up interest rates and the deficit.

the economy interest can be to trillion a year by the end of the decade in the biggest expenditure outside of social security and 25% of the federal taxes will go from the debt. it is a moderate economic administration would change many things. after the new deal and it is

dealing with the deficit. >> one of the most importantzr questions is the competition with china and precious time in which to really make an effort maintaining supremacy and middle-class. to the extent we spent four making american manufacturer activity building extensive to the extent we haven't done much to make america to invest higher work. we've given time in which to continue building up the engine trying to ignore the market so look at the auto industry now, china went from being

nonexistent in auto export international auto export, to of a sudden the last nine months or so. weur physical state, maintained an expensive currency and regulated our economy being uncompetitive and have not taken the time we have to compete with china. getting what regulating a.i.

going back to neoliberalism not. these things are in great society we still have. get rid . >> one of the legacies against the biden administration is this view that on a physical basis we can increase any f everybody and give everybody these benefits and pay for the whole thing. we have these expectations of economics completely outside of economic reality.

within decades. could not close up by taxing the rich. 400,000 in taxes even as we expand medicare your reading these lawmakers to rain back. >> how much of this can be undone and they are there and the ideology is under now.

hoping for people to change course. >> the biden administration keeps giving people money. obviously inflation andme sort . and they might be open to it. >> you can take the approach, the new supplies that have come

subsidizing sectors of the having the best lives rapidly over these is to make the inevitable solution more painful. ultimately the governments are promised more than the y will ever be able to deliver. that's the mathematical fact. the longer we wait the more interest rates go up in the process, the hemore that goes back into the

than they would have been. your benefits are to be cut more women would've been had we addressed this earlier. that's the hard economic reality of not only losing but going backwards over the years collects some very names doing that has been incredibly unpopular. chairman mchenry mentioned in the last brief how freddie has proposed adding what might be $1 trillion in spending. absolutely extracts debating inflatn but that's what they want to double down on. this would be more hypothetical question than most of those but

can we or should we expect something different from the second bride in turn if he beats the current polling and odds and wins again in november. what's the likelihood of that. ? >> so much depends on outside, versus the control of congress. think that you and i try very hard to get the band back togeer and spend like the first two years they might find voters are less enthusiastic now that we have inflation but if the republicans hold the neither side has much desire to talk not much is going to happen legislatively which is normal for presidential second term. much is also going to depend on the economy as their debt crisis as their recession is inflation keep rising what happens in tain and ukraine.

even if social security had solvency. i will also add, at the end of the next term president biden is going to be 85 years old. there is a legitimate question of policy the president will even be at that point relative to his path in the white house. i know there's a lot of talk and stories about the outside influence factors policy advisors have because the president is a little glass and control because of his age he stopped so the election of the second term we might see more empowerment we heard a lot that one of the reasons the president moved so aggressively on the student loan bailout that he didn't really campaign on it is because he had a lot of younger 30-year-old staffers

who had ããin the white house. one of the staffers cannot thinconcerns being governed by biden or others and there's no one i would know when i would less like to be governed by them 30-year-old white house staff. >> i think it largely depends on who's in congress otherwise it's rejected. who's in this administration? generally get the b team in the second administration it could be even about how we've seen is ]éthis marginalization economists. it does seem that economic policy is largely generated in the philosophy from lawyers now. esstened we were to use

economic policy which horrified economists. i don't see, he doesn't have a lot of top-tier economists in the first administration. so it's gonna largely be driven i imagine it could be a lot more of f the same. >> i'd say the lesson the biden administration took away from the 2022 midterm when member inflation was even more in 2022 than it is now there's a lesson a lot of them took away was inflation but they didn't predominantly vote baon cultural issues and noneconomic issues. i think that's a lot of them

think now as a result of the last election cycle. therefore i think if we get a second term for president ■> biden. they think it's working, they think about long-term fiscal sustainability they think inflation is generally speangsomething not an actual nomaterial and economic issue. or you are confused about the economy. it's never a legitimate concern. if they have another term there take it way will be that voters will say they're unhappy with inflation but. >> give them more money. >> nobody thinks what i face the fiscal crisis require accounting on this although obviously these things are possible to impossible to

predict. >> i don't think we get a fiscal crisis yet i think the fact is people want to buy. [singing] bonds enough there's course a lot of other ãã interest rates go high but they don't get to financial crisis level high certainly not in the nextour years. b>> but it is inevitable at so point. >> yes. >> it cannot happen. >> unless it comes from noneconomic means. the various cold war eg again don't walk around the world ãã the various cold war's around the world get hotter. what if there is a war what you do there could be some sort of shock noneconomic in nature which adds to the crisis but not likely to be ã¦

>> i think it's time to open up for q&a. does anyone in the audience to pose to the panelists? >>.ç3■7■ what is one thing the administration has said that you do think is generally genuinely 㦠>> i will be somewhat i'm against all the trade stuff but i think during the pandemic we made them aware that how verbal we were, they were making a lot of ããi don't think it means we don't trade and revert to ããi think we should be dependent on one country. i think making us less dependent on that one country is absolutely a good policy.

>> if i had to find some positive for biden's economic record i have to brought it out and say i think standing up and funding ukraine not only is good as defense policy i also policy is lots but cheaper to spend 60 billion now than trillion dollars later the president did sign into law the fiscal responsibility act even if it d also add finally grading on a curve, while the president's trade policies have been very disappointing, he's not in trumps legal being 6o■anti- ããi you're judging very purely on trade policy you could say as bad as biden is on those he has resisted the excess of the

trumpets on trade he's not calling for 10% global tariff. i'm grading on a curve but i will give him that. >> just to take the other side, i thought president biden was that i come in and gerid of all the tariffs on china and it's been retained largely so competition with china. but more broadly, i think the infrastructure focus on infrastructure is a good thing. y but i think the idea was on the right place but as allison said, i was totally d by not realizing you don't actually take steps to make building infrastructure affordable than you can't afford it. if it's gonna cost billions of afford to do that we have to take steps if were going to have we we ghave to

take steps to make it within r nd we didn't do that. >>. [inaudible] i think structurally we are in the highest interest rate. really it's what often matters more for consumers and i think

ultimately that comesown function of the fiscal stance. it is a function of how much we are trading and all these sorts haof things. ultimately when we have higher inflation we have more inflation uncertainty. and both contribute to higher interest rates. if they can do all they want but it's good to be really really hard to get mortgage rates down to what they ever were i don't there are ever going to get down to what they were because i think this is the biggest moment nothing to do with the biden administration, and wasn't inflation that was definitely an error even as late as 2022 the fed was buying every mortgage-backed security on the market. even when there was bidding wars going on over the country so now we have all these people who have supercheap mortgages and that's going to cause a stortion in the housing market for years to come. >> to quickly jump in on

something i have written about as how exposed the federal debt is on interest rates. right now the cbo, the current policy baseline has the debt going to 234% of gdp 30 years, that's the current arpolicy baseline tax cuts are extended, discretionary ■ñ spending, historically it's been about 40 just went up to 100 to go up to 234, below the those numbers assume that the interest rate paid on national ever. the latest sales of debt are about 4.5 percent right now. and interest rates rise, every point they rise, that's $35

trillion and interest cost over 30 years, that's per point. much is that? that's the cost of adding another defense department. if rates are 4.8 instead of 3.8, add another defense department become if rates go to 5.82 defense department funny how that's going to 350% of gdp. the sad reality is that your lawmakers have gambled ó)on long-term fiscal policy on the hopes that interest rates never reach 4% ever again. i'm not sure that's the best. >> i can always trust brian to bring me back down to earth again. how can i possibly believe.

now are all just mulling on our mortgage future. someone recently held shopping ulcers noncommercially and my friends who got mortgages in 2021, it's brutal. it's brutal in comparison. with that i would like you all to think the panelists. that's