>> "washington journal" continues. host: our first guest of the morning is the coeditor of the autobiography of lite. can you give the audience a sense of why you use that term towards the audience?crat lite. can you give the audience a sense of why you use that term towards the audience? lite. can you give the audience a sense of why you use that term towards the audience? guest: an election year is a good year to write election strategy. a nonelection year is a good year to think about what your party is already about.

we are the listeners concerns this morning on borders, that is something important. in another factor that seems beyond key is economic. what you're getting right now is a lot of people writing economic policy for possible candidates that sound good but is not really optimal in economic terms. what this piece says is if you write economically politically, even in a nonelection year, you get some optimum policy, and voters can tell the difference and do not like you. what do i mean specifically? a child credit sounds great. a lot of us have children. but a child credit is not optimal policy. optimal policy is a reduction in the income tax or capital gains tax. what republican advisers are concerned about is that that makes republicans sound elitist, but it is not elitist when you create a job, and the person who

gets that job often is not what some people call elites. i think the word "elite" ought to be banned from the english, or at least american, language. it is misleading. the job is created for the person who wants the job, and the policy being written right now is not pro-markets or pro-jobs, it is provosts -- pro-votes. host: you spoke -- you focus on specific plans. tell us what is wrong with it. guest: i do not want to be mean, but the point is that the policies of a child allowance may be necessary to get votes, may certainly be valuable to certain -- some families, but they will not necessarily be valuable to other families. it is a consequence of singling out a single group, which is frankly creepy.

and there is no real economist in the united states who does not deny -- who would deny, rather, that if we cut the capital gains rate to 5%, we would not have enough jobs. if we cut the capital gains rate, which is a very right wing or free market thing to say right now, very low, then we will have jobs even for people who are not that well trained. the second part is to train them with all the money we get when our economy grows fast. another example would be the income tax, to make it more complex with child allowances. there are already multiple definitions of child in the code. there are so many letters of child advantages. we are going to put off voters by hurting our trust relationship with them. someone who always changes terms

and favors some groups is not someone you want to do business with. host: you also give historical perspective, particularly to the economic proposals from gerald ford. can you provide some of that context? guest: we came to this piece saying what happened in the past when the republican party went for votes or what sounded good rather than what is optimal. the examples we isolated was the gerald ford situation. he was a really nice man, he was in a difficult situation, coming to the presidency after a scandal. in that instance, it was not january 6, it was the watergate scandal. so he said i will go to the center, to hold the center -- ford was an athlete -- he said i will hold the center, which nixon wanted to do, and nixon was not a great economist, and i

am just going to be kind to everyone and try to get democratic votes. that policy did not work. jimmy carter went to ford's right. of course, on economics, he studied up on the misery index, terrible inflation and unemployment we had. and he went to ford's right as well in foreign policy. in the famous television debate where ford sounded like he might that poland was a free country. republicans should stand for republican policy and not be embarrassed about it. that is my recommendation. and the positive example where it worked is calvin coolidge, who also had to clean up after a scandal, in that instance, the teapot zone, so what we say in this column is, if you go over there to where republicans are supposed to be, voters will thank you for it, and certainly the economy will.

because the 1920's boomed. it was not a fake, it was a real boom. and republican free market policy facilitated that. host: our guest will answer your russians about the republican party and some of the things she highlighted. if you want to ask her questions, it is (202) 748-8000 for democrats. republicans, (202) 748-8001. independents, (202) 748-8002. you can text comments on (202) 748-8003 or post on our twitter or facebook feeds. you mentioned the former president calvin coolidge. what is it about that president that fascinates you and what is it about his velocity -- philosophy that maybe informs your own? guest: calvin coolidge is the most mispriced president in the market of opinions, because he delivered a strong economy. and in the style we use today,

that is to say he under promise and over delivered. imagine if you knew a car dealer orkut car company who did that. by doing so, he won back the trust of the cynical public. someone calls him silent cal, then over delivers -- americans tend to like that. host: this is our guest. you talked about economic fundamentals that republicans should hold onto, specifically -- i think you have already highlighted this, but if you can expand on it -- particularly what they should be holding onto instead of what is being proposed by sun -- some senators . guest: well, tax cuts really work. what we need now, in addition to whatever we are doing, is to spend less, which is why we are in such an odd moment, and to make the economy grow.

if you are spending too much, the only hope you have to mitigate the troubles you caused through spending is to grow fast. what was so interesting about the 1920's was we were in a competition with another economy, the united kingdom. the united kingdom went a social democratic path, even though the leaders who took the country in that direction were not called social democrats. that is the way they went, and we went more free market path. we strengthened and solidified our position as a world leader. england lost their position as the global leader of finance. it was not secure until we pursued better policy in england less good policy. england really suffered from monetary and spending policy. you know the word the dole,

which we do not use in america now, because it is pejorative. that is the word they use to describe on a plumbing payments of the 1920's indiana kingdom -- because all parties agreed that that discouraged people from working. when politicians see that a policy fails and is embarrassing, they just change the name. people are cleverer than that. if staying at home is too valuable, then perhaps people will work less. host: we have calls lined up for you. steve in florida, democrats lying. you are on with our guest. go ahead -- steve in florida, democrats line. you are on with our guest. go ahead. caller: i started voting in the dawn of the republican -- the reagan administration.

we have had to move through supply-side economics. it is a political gifting system disguised as an economic theory. what i see in supply-side economics is a short-term superficial sugar high, followed by recession and a spawning of political scandals. such as the savings of loans and the housing crisis and such. my question is could we come on some common ground where maybe we give operations -- we tax them less, we go through the regulations line by line, because the regulations that are gutted out are regulations that are needed for free enterprise. the antitrust regulation, price-fixing regulations,

employee-friendly legislation. if we could give them an incentive through the tax system to not just buy back their stocks and to not send corporations overseas to protect them from having to pay taxes on their revenue. host: thank you. guest: thank you. that is a good question p8 i think we agree more than we disagree. what i am talking about is creating a system that is friendlier to all, not friendly to a few groups. and if calvin coolidge was alive and was looking at ronald reagan, he would say wait a minute, they cut taxes but did not budget. part of the problem i think is that coolidge had twins -- one named budget bureau and the other tax reduction. and imagine -- you cannot have a

tax cut without an eye to the budget and serious control of the budget. the tax laws of the 1980's were uneven and unfair. i was not speaking of corporations. i was speaking about general direction of tax cuts, and i do not think that you have to add whole bunch of other legislation in, as you are suggesting, was in the 1980's. i am just saying, generally speaking, when you remove the barriers to growth, businesses can provide jobs. i am working on a book about what markets gave economies in the 20th century, which was a lot. host: from our republican line, andrew. caller: i appreciate this lady honoring calvin coolidge. he is the best president of all time. the business of america is

business, not government. if you look at the roaring 20's, regular americans got electricity, model t, radios. i wanted her opinion on the size of the federal government. coolidge would be shocked to see the size of the federal government, involved in every part of the economy, labor, commerce, health and human services, education, housing and urban development. you have 5 of 10 of the richest counties in the usa in the washington, d.c. area. i want the republican party to go back to coolidge and honor his legacy. guest: thank you so much. pennsylvania, is that correct? host: yes. guest: thank you. that is true. children learn a fantasy in school, and one thing they learned is that the 1920's were a bubble in jay gatsby's champagne glass, that was a fake

decade that caused the great depression, and each chain in that was flawed. the 1920's were real. the 1920's did not cause the entire depression of the 1930's. they may have triggered a crash eventually. what did people get in the 1920's under calvin coolidge? electricity, which means they got washing machines. that was very important for households. they got the model a at the end of the decade, and they got indoor plumbing. if anyone works in the poverty area, you know the lines between abject poverty and beginning to do all right, working class, is indoor plumbing. also radios and saturdays off. it was a fabulous decade. i am concerned about the debt, and i think there will be a challenge to the u.s. dollar, but i've been wrong on that so far, so i am humbled. history suggests there will be a challenge to our economy, because even the u.s. -- more, i

am concerned -- coolidge said we have to leave room to experiment. government cannot replace things in the spirit, by which he meant, when government crowds in, people do not know how to think for themselves, and they feel crowded. that is the way the covid experience has been, one long set of orders, ambiguous, often, which has caused us to question ourselves. coolidge understood that you are pulling government back not just because you are a free marketeer but also because you are pulling the government back to leave the individual autonomy for the spirit. when you thing about it, it feels natural. i will decide when i do this or that, a lot of recovery comes from the individually. host: you are joining us just off the heels of the package of

the american rescue plan, no republican supporting that plan. is that a bad look for the gop? guest: no. what coolidge did was spend less. he was mr. austerity, yet he was very popular. one thing about the last question -- i've noticed, over time, that republicans do not really like calvin coolidge. i mean professional republicans. they will reach back to lincoln, who is wonderful, but not involved in a domestic economy in peacetime. they will reach back who knows where. they like reagan, that is it. would like to invite republicans and democrats -- coolidge was popular among democrats as well. have a look at coolidge, help us bring coolidge to more american kids. at the coolidge foundation, all we do is train cage in -- train

kids in calvin coolidge. we do not indoctrinate him. he is just missing from the schoolbooks. he never yelled, did not say mean things about either side -- he said negative campaigning was inefficient, because you are giving your opponent airtime, and therefore depriving your party's policy of the airtime it requires for its barbs, your devotion to barbs. also interesting about coolidge was he followed the republican platform religiously. -- well, the plot forms are negotiable. this year, the platforms should be the center stage. the writing of the platform for the losing party should be its main job, not horse picking which candidate looks better on tv. host: there is a viewer from twitter saying, if you mention calvin coolidge, you also have to mention herbert hoover, who took his predecessor's programs into the great impression, not a

successful end into the roaring 1920's. guest: great response. we have a new initiative -- please write the calvin coolidge foundation the info, if you would like a copy of the quarterly. we will also print the articles and put them online. the answer is if coolidge caused the great depression, there is one word -- no. hoover was more like a democrat than a republican. it is very interesting -- some of this has to do with personality types. hoover was a control freak. so was fdr. he was like a comic book cartoon figure. he was an eminent man with great experience, a successful engineer. he liked to run a crisis. that was his temperament -- dad was here, like that. hoover's policies work different

-- were infamous because he raised taxes dramatically, one. two, coolidge liked business. hoover paraded business in the crash for selling short -- hoover berating business in the crash for selling short. let the market do what it wants to do. hoover also exhorted business, and this became law to raise wages. when you raise wages, employees will spend more, keynesian policy, proto-keynesian policy. that was perceived as perverse, because if you do not have enough profits, you cannot raise

wages, and if you have to raise wages because the president is beating you, you rehire fewer people. high wage policy actually solidified unemployment, which is a tragic record, under fdr -- fdr. host: let's go to north carolina, independent line. caller: good morning. i do not read much, but i read your books and then steal. guest: thank you for saying that. caller: i will try to make this quick. i do not think people are going to vote against their own best interests. and they do not understand that trying to vote for a policy that would help business in lieu of voting for stimulus money, which basically pays for consumers. it helps the consumer. we are a consumer nation.

we do not produce anything, and that is a dead-end route. i wanted to say that. i wanted your thoughts about the stimulus package compared to the great society, because i feel that -- they say it is the most progressive policy ever. do you think that will cause damage to the working class, like the great society? guest: absolutely. the stimulus package is something that i would say lyndon johnson and franklin roosevelt, two great progressive presidents, would not have dreamed of. roosevelt operated in an economic emergency. we are not in an economic emergency. we emerged fairly well from this crisis. johnson had not really thought it through. where he spent his stimulus money was in manning up vietnam, not at home.

i think they would have been shocked. that is the problem with stimuli. you assume you have to ratchet up how much you are giving. to your preceding point, which is an important point, people are not dumb. they sometimes know or will know that, if the government says it is going to cut taxes on business, that they help them, too, because the records suggest that is true. i am including the income tax in that. but the politicians have to take the lead. if currently what you have to say to yourself, and my co-author looked deep into the policies of the gop, you have to say the gop as long -- is wrong. these political leaders are wrong, because they are focusing on giving child credits instead of helping business. it takes a lot of guts to say people who spend all their time on policy are wrong, but i think people know in their hearts that

if it is easier to run the ace hardware or the local shop to revive the local shop because taxes are lower, that has helped them not only as workers but also consumers. host: i want to play a bit from speaker pelosi after the package of the american rescue plan. she talks about the package but also republican reaction to that. [video clip] >> it is so exciting, if you know, because of what it does. vaccines into the arms of the american people, money in their pockets, workers safely back to work. it is a remarkable, historic, transformative piece of legislation, which goes a very long way to crushing the virus and solving our economic crisis. it is interesting to see during the debate how republicans are

talking about tax camp -- $1.9 trillion and their tax scam. 83% of their benefits to the top 1%. and this bill, the same amount of money. $1.9 trillion, overwhelmingly helping america's working families. host: what do you think about those comparisons? guest: i am not quite sure what the speaker is saying, actually. what is true is that the record suggests that the u.s. economy does better when left alone more. that is all i will say. i think families understand that. and the attacks between the rich and poor is kind of a cartoon that politicians put on us. most of us know poor people.

i think politicians kind of player cartoon game of making the divide worse than it has to be. host: as far as attacks and jobs act of 2017 that she is referencing, what did you think of that as a package? guest: the economy was fairly strong around those acts, so i do not see why they were so awful. look at unemployment up to the beginning of covid -- it was at historic lows. what is the thing you can give someone that is the most important thing to their well-being, it is not a child allowance. it is a job. host: let's hear it from forest hills, new york, independent line. caller: good afternoon. good morning. i want to bring to your attention, under the greatest republican president, dwight d. eisenhower, he taxed rich people, and in the next audit,

they got a nickel, and all of that money went to paying for the interstate highway system, which is now crumbling. the electrical system that is now crumbling, as we can see in texas. most of the schools you see in cities, all built in 1950's as well. trying to figure out how you were justifying lowering the capital gains -- guest: well, one fact -- as i say, my colleague and i are writing a book that is the history of the u.s. economy now. the 1950's were a wonderful decade where it appeared, on some days, that we could afford the high taxes we had, and the caller was correct. taxes were over 90%. why did that seem possible? because we had zero competition. europe was still in a bubble. asia -- we never expected that asia would build cars, for

example, we did not expect asia would ever build cars or make plastic toys. we had a selfish policy, and it turned out it went the other way. we are in a entirely different situation now. there were huge disparities between the european economy and us, between their standard of living and ours, not to mention the asian. if we have no competition and build high walls, we might be able to tax our wealthy that high, except they would disappear or go to an island. but now, we are in an entirely different situation. the 1960's showed that. my book, "great society," is about the high cost of good

intention. i spend a lot of it on the docks in long beach, california. the american culture, particularly the autoworkers u.a.w., said the asian cars will never be a threat so we can tax more heavily. we can spend a lot because there is no competition for mighty u.s. industry. that expensive attitude is what killed detroit. it is what killed flint. the reason flint has a water problem is there are scarce jobs in flint. why is that? because we believed in a high tax/high spend economy. host: christopher from pittsburgh for amity shlaes. caller: leave the economy alone. it is doing fine. it will do just great.

now that the democrats have spent their $1.9 trillion, of course we should be spending less, but what are you going to do? spend less on defense? are republicans going to be anti-defense department? and how about the chinese focusing their energy on attacking specific areas of technology like the semiconductor industry? are you going to try to support the u.s. semiconductor industry or just let that go? guest: the caller is hitting on something. i am not telling republicans what to do because i have scant evidence they care all about calvin coolidge. i am talking commonsense, free-market free market, which many democrats believe, too. i would not divide it that way. larry summers, former treasury secretary, they are deeply worried. you know, historically, less

government has been better for the united states, including for the purpose of deriving revenues to spend on defense. we don't spend that much on defense in the united states, certainly not relative to historic standards. on tv, people often talk about defense and say what a big share of spending it is. it is only a big share of discretionary spending. if you put it next to the entitlements, they are more. in my book, i have a chart that shows we begin to spend more on butter than guns since johnson. i don't think you have to cut defense. you could even expand it if you chose to, even as you cut taxes. that is not a fantasy. second, what i am concerned about, and i am looking at the

work of robert haig, is that the government likes crises because it gives government the excuse to be big or to expand. we saw that in covid. we will see it if there is a big scare with china, which may be the next republican policy, to focus on china and scare through foreign policy. i'm not saying china is not a concern. i am saying government likes that china is a concern and be aware of that. in terms of markets, have a look at what happened this last year. nobody thought we would have a vaccine in a year. people were laughed at when they said there would be a vaccine in the year. and everyone thought the government would do a good job distributing the vaccine. what we found was the private sector more or less developed the vaccine pretty fast, and the public sector bungled the distribution. host: amity shlaes, one of the

things we hear reported after the pass of the rescue plan was the effort on infrastructure. is this something republicans can sign onto to as far as working with the democrats on infrastructure efforts? guest: i'm not a republican advocate. i'm markets advocate. market people understand equipment has to work. yes, you just want to be aware that it does not have to be as expensive as people are making out. it does not need to trillion dollars more like that. local can do more than you think , and government, state or local, less. host: what does that mean? guest: that means you don't have to have it all come from a federal funnel. that means you can have private participation. look at the record of private participation in infrastructure construction. that means infrastructure might not be quite as we imagine it.

the bricks and mortar. if we had some kind of spending to spur the economy, we would have built malls 10 years ago. it turns out malls have less of a future than we imagined and would have been a complete waste. look at the history of japanese spending by the government. they infrastructured themselves into making themselves a concrete company. i wrote about the infrastructure stimuli spending of japan. it did not help the economy for a very long time. host: let's go to martin. caller: thank you. i am a public school teacher. i teach english and social studies. i don't know that much about calvin coolidge except for the quote about "you lose." i think of f.d.r. is pretty high on the list, i would put him at number three on the list,

because he brought us show social purity -- social security and other things. he was outflanked by huey long and by the right. he was a centrist in many ways. i am 51 years old. i have never seen a republican or democrat that has been fiscally responsible. we are all keynesians now. whether that is good or bad. people don't want small government or big government. they want good government. the stimulus we have thrown at this has not been targeted that well. i know that for a fact. it is where we are. i suppose it is better than not having done anything at all. there is a lot of waste in the defense spending as well, so you cannot just say there's waste with the stimulus.

there is waste in the defense as well. what we need is good governance and a better educated population. january 6 will show you that. host: ok. that is martin in dayton, ohio. guest: i'm glad to hear from you. i like teachers. we agree on the education. we need a better educated populace. that is the most important part. union, the reason nobody is concerned about the stimulus and should be concerned because we have no challenge to our currency. how did it become clear that england needed austerity? how did it become clear germany needed the economic miracle and a very conservative government, which is what germany had after world war ii? the currency collapsed. eventually, we will receive a

signal from outside the united states. it may not be now. it may be in five years, 10 years. but eventually, we will receive a signal we are lying to ourselves by overspending. and that signal will be that interest rates go to 20%. until that happens, we can see in theory that we are overspending and we can say let's enjoy it now as keynesians, but even keynesians would have been stirred by the current situation. go have a look and read him. i think the wake-up signal has not come yet or is not loud enough. that is our job to prepare. what would be an analogy in health care? antibiotic-resistant superbugs.

we know they are coming. we know soon the antibiotics will not work. we just don't know when, just as we knew that a form of sars disease would come and america would not be prepared. we just did not know when and which version. i don't want to scaremonger. but the fact is the united states is in a dangerous fiscal situation and will be challenged in its currency. host: which country will provide that challenge? guest: it may not be a country. it may be a combination of a company with a commodity and a country paying for it. that is the thing with change. even 20 years ago, what would challenge us? the franc, the pound, the euro? it does not have to come from a sovereign government now because of the change in technology. it could be a chinese currency.

the point is when you are biking, you can say gravity does not exist.

than two and a half hours. >> thank you all, and this is the first of three hearings this week in the senate finance committee and we are now going to --