tonight on c-span or anytime on demand at c-span.org. >> c-span is your unfiltered view of government. we are funded by these television companies and more. >> homework can be hard. squatting at a diner for internet is harder. we are providing low income students access to affordable in effect -- internet. >>cox along with these other television providers giving you a front row seat to democracy. john: we return to the u.s. economy. our guest is heidi shierholz, president of the economic policy institute here in washington d c. remind viewers what epi is, your mission?

heidi: the economic policy institute is a think tank centered on middle income in economic policy discussions, to use the tools of economics to actually uplift those people. john: how are low and middle income people doing in today's economy? heidi: that is a very good question. this recovery has been an absolutely remarkable to cover. -- recovery. we lost 22 million jobs in march and april of 2020. it was the most sinking feeling i could imagine. it was twice as many jobs we lost during covid compared to the great recession ended took -- and it took 10 years to recover from the great recession. so i thought this was going to

be a nightmare and was going to particularly had low and middle income people. because that is what happens when there is a recession and what happens when there is a slow recovery like the aftermath of the great recession. congress did step up to do the kinds of policies that we needed to spur a strong recovery. and we have had this remarkable recovery. right now, the private sector has more than gained back the jobs that it lost in the worst of covid when covid first hit. the public sector still has a ways to go. we can talk about that. there are issues with the need to hire back in the public sector. but all of that means, the low to middle income people, the hit that they took from the recession was ameliorated as much as possible by the very quick recovery. that does not mean everything is

great. nobody has to return back to the february 2020 economy. there were real problems, rising inequality, structural issues, a big gap between black-and-white unemployment, wage gaps, other racial inequities, but lower and middle income people, the speed of this recovery has meant that the lower and middle income people did not take the hit that they had in the aftermath of prior recessions. john: are we in a recession right now? heidi: we are not in a recession right now. there are a lot of conversations about this. we have got job numbers from july that are extraordinarily strong. we added 520,000 jobs in july, over half a million jobs.

the unemployment rate jumped. --dropped. those are not the kind of statistic that support a recession. right now, we are very much not in a recession. i have some trepidation about the near future. we know the federal reserve has been raising interest rates to try to slow the economy. that is the point of them raising interest rates. they raised interest rates aggressively. if they have raised them too fast, we don't get out but they raised them aggressively. if it has gone too fast, they may have secured a recession in coming months. that remains to be seen. i very much hope that is not the case. john: why has the economy been contracting for two quarters in a row, one of the definitions of

a recession. how do you explain that contraction at a time when we are getting good job numbers? heidi: that is a really good question. there was always a difference between headline numbers, the overall gdp growth and the broad picture of the numbers and what they say about underlying trends. there are some differences going on right there. we did see a contraction in the overall headline numbers for the first and second quarter of 2022. but when you dig into the numbers, i don't think the first quarter contraction was an actual contraction because it was driven by things that don't reflect underlying trends. it was driven by a real decline in inventory and real decline in net exports.

and both of those things do not actually signify purchasers within the u.s. pulling back. they don't. they aren't really signifying any -- a contraction in the way the other measures within gdp really do. so, i don't think the underlying numbers signal a pullback in the first quarter. they signal a very slight pullback in the second quarter. i think instead what we are seeing when you look at gdp numbers is not two quarters of contraction. sit -- continued growth in the first quarter and a slight contraction in the second quarter. all that spells to me a slow down, but not yet a contraction. and if you combined that with what is going on in the labor market, the labor market numbers, it is pretty clear that we are not yet in a recession.

john: let me give our numbers if you want to talk about economic policy with heidi schierholtz. republicans, (202) 748-8000. --"washington journal" continues. --(202) 748-8001. i democrats, (202) 748-8000. independence,. (202) 748-8002. do you think inflation is on a downtrend? heidi: it looks like we have reached the peak. we actually saw zero inflation in july. >> there has been confusion about that.

there is a zero number coming up. heidi: there are two different measures. the zero is month-to-month. from june to july there were no price increases on average. 8.5 percent is year-over-year, so that is comparing july to the prior july. that is the difference. those numbers are good numbers if you want to look in the longer run. it is 8.5% over the year, but to get an idea of where things are headed right now, how things are changing in the recent past, that you look at what is going on in the last month, so that is where the 0.0 comes in. i think we have reached that peak and it is going to come -- starting to calm down. the reason we didn't see inflation in july is that it was driven by a big decline in oil

and gas prices, big decline in airline fares. and one of the other things is, we know gas prices have declined further since the inflation reading, so i expect that to continue put downward pressure on inflation. i feel pretty optimistic. we have seen easing of supply-chain issues that have been boosting inflation. we know that businesses and people, people bought a lot of goods during covid. covid is still going on, but they have started to back in the -- hold back --pull back in the purchase of goods. and you see businesses having their inventories built up now higher than they want to. in order to move that inventory, they have to reduce prices.

that is going to start putting more downward pressure on prices. you are really seeing a lot of the dynamics that were keeping prices high starting to abate. i do not want to claim that inflation is low. it is very very high but all signs that i see, most signs i see, are pointing to its coming down. john: do you believe the inflation reduction act will reduce inflation? heidi: it will. the direct way it reduces inflation is that the bill the president biden is going to sign today that congress passed last week, it will him -- it will reduce inflation because it reduces the deficit. there is a lot of spending in

that bill, spending on climate, health care, that is all paid for by taxes on corporations and the wealthy. and it is actually more than paid for by taxes on the corporates and the wealthy, so it will actually bring the deficit down and that will put downward pressure on inflation. so it will have an effect on inflation. and the more immediate effect on families, things families pay for, will come through things like health insurance subsidies, for example, the caps on prescription drug expenditures, those kind of things will reduce costs for millions of families immediately. and then the inflation-reducing effect, it will take somewhat longer to be felt more more

broadly. john: this is ron in winter haven, florida, calling for the republicans. guest: -- caller: thanks for taking my call. my question is a comment. my wife works for walmart. you say the economy is not bad, there is no inflation. i went to the store yesterday and ido -- i know that a specific item that i buy on a weekly basis has gone up at least four dollars in two weeks. i don't understand how everything is getting reduced here and you say it is coming down, i think your comment was prices will go lower, but everybody talks about prices getting lower, but they are not getting lower. the president said the other day, when one thing goes up, another thing goes down. that is zero inflation. that is the dumbest thing i have heard and my life. thank you for your time. i hope you get this country right because democrats are destroying it. john: what is your response?

heidi: i am so i for not -- i am not sorry -- i am sorry for not explaining this as carefully i -- as i could have. when i say inflation is going to come down, that means prices will not continue rising as dramatically. for most goods, we are not actually going to see prices drop. in good times and bad times, we have rising prices, it is a core part, and not a bad part of our economy that you see a little bit of inflation all the time. the problem is, that inflation right now is very high. i don't think we are going to be seeing a big deflationary period, i don't think overall we are going to see prices come down. but what we want to see is the peak of price growth slowing, and that is coming down the pike.

the other thing is some prices will come down, and some prices will go up. so the broad inflation numbers that we hear in the news, those are averages across the whole economy. so any individual prices can look a lot different than the overall average. john: to the jersey shore, this is albert in as bare a part, a --in albery park. a democrat. good morning. caller: good morning. i am a big democrat, but i have mainly republican friends. i feel so bad for them. because they are looking at a fellow by the name of jim jones, who led everybody down to guyana for a more beautiful life. that did not turn out so well 40 years ago, when they drank the kool-aid. john: do you want to bring us to

economic policy? caller: the economic policy, mr. biden is right on the money. because things are starting to turn around and during the upcoming election in november, i will be working the polls for the democrats and i wish everybody would come out and vote, republican and democrat. god bless president biden. thank you. john: that is albert in new jersey. anything you want to pick up on? heidi: taking us back to economic policy, one key thing that you can see is very different from president biden and his predecessor is their approach on taxes. we know that under president trump, there was a massive decrease in taxes for corporations and the wealthy.

a huge portion, the lions share -- the lions share of the expenditures of the tax cuts under the trump administration went to the wealthy. it was very, very lopsided. the biden doing the opposite. in order to protect the climate and health care, the biden administration is raising taxes on the wealthy and raising taxes on corporations and making sure corporations pair more -- paid more like their fair share of taxes in this country. so, that is a real difference. i think it is actually ensuring corporations do pay their fair share, is the way we get to the kind of an economy that works for everyone. that is a big difference between the two presidents. john: this is tommy portland,

-- tom in portland, oregon. good morning. caller: hello. i am stunned and at a loss. this is --mrs. heidi shierholz, i am sure i am not the only one. but i am one of them. what are you trying to talk about with economic policies? everything that trump did, biden did the opposite out of pure arbitraryness. i don't understand. yeah, trump cut taxes. so we had huge -- low unemployment. why -- economic policies, asking other enemy countries for oil? it is just one after another.

it is absolutely imbecilic that heidi or anybody else -- what are you talking about? john: i think we got your point, tom. heidi? what is your response? heidi: there are big differences between president trump and president biden. i think one of the key differences is that policies with president biden are about a fairer economy, about ensuring that prosperous growth is fairly shared. i talked about one of the big differences in their tax policies, where trump really cut taxes for the wealthy and the corporations. biden is increasing taxes on the wealthy and corporations, to pay for things like health care and policies to fight climate change. that is a stark difference between the two presidents.

john: i want to come back to the inflation reduction act and plenty of tax provisions in that as well. i want to play jason smith, top republican on the budget committee during the debate over the inflation reduction act for -- before it was passed, arguing against what is in the legislation. this is what he had to say. >> we are debating what democrats call the inflation reduction act, which everyone from the congressional budget office to 230 economists, even senator bernie sanders says will not actually reduce inflation. when you strip away the fake sunset policies, this bill spends $745 billion and adds $146 billion to our debt. it adds $54 billion worth of debt in the first five years,

and 80% of the budget deficits don't even begin until after the year 2029. so, lots of spending upfront, lots of debt upfront and maybe savings eight? -- savings eight years from now? how is that going to put out the fire of inflation when the price of groceries is up 13.1% over the past year? senators manchin and schumer, secretary gallen and former president obama are on record saying you don't raise taxes during a recession. but that is exactly what this bill does. it includes $599 billion in new taxes and budget gimmicks. half of the tax burden falls on taxpayers making less than $400,000 a year. the choice this bill puts in

front of families making less then 200,000 is clear, put the government at the center of your health care decisions or face a $10 billion tax burden. it gets worse. this bill doubles the size of the irs. it doubles the size of the irs , so it can target and audit more middle-class families, and snoop to their bank accounts. -- into their bank accounts. i am not sure how subducting -- subjecting americans to more audits solves the inflation crisis. in my state of missouri, this bill would quadruple the number of audits. 18,000 more audits on hard-working americans who make less than $200,000 a year. john: representative jason smith. heidi shierholz? a lot there. heidi: a lot there and a lot of

it is wrong. i will take them one at the time. this point that economists saying that this will not fix inflation, that is wrong . i have letters signed by 126 top economists, including nobel laureates, two former federal treasury secretaries, two former chairs of the federal reserve , three former chairs of the white house council of economic advisors -- all of them signing this letter saying that the inflation reduction act will bring down inflation. so, he is wrong on that. the idea that this will not bring down the deficit is also dead wrong. the idea that it is frontloaded there's also -- is also dead

wrong. he may be confusing the inflation reduction act with the build back better act, which is an earlier iteration. that was very much front loaded, meaning there was a lot of spending in the front, the deficit increasing in the beginning and then, deficit reduction down the road. that is not the case for the inflation reduction act. it is not going to be a big deficit increase in the beginning. and his point on the irs, he is absolutely correct. it will increase resources going to the irs. and the idea that that is bad for the american people is laughable. the irs is deeply underfunded. that means people who have the money to pay the most sophisticated accountants can get away with not paying their fair share. the money going to the irs

really closes loopholes that allow corporations and wealthy individuals to get away with actually skirting the law, breaking the law, not paying their fair share. so, us investing in the irs means that more taxes are going to come in from the wealthy, and corporations who are skirting the law because there is not enough enforcement. so now is -- and now the irs may have a bad name related to paying your taxes, which is never fun for anyone. actually filling out the taxes can be a stressful situation, but what we do want from the irs is for them to have enough resources to audit the wealthy, to audit corporations so that they pay their fair share.

that is actually totally right. it will increase the irs at that is a really good thing for the american people, that we have an irs that can actually do the kind of enforcement to make sure that people who have a lot of money, to skirt paying their taxes, are less able to do that. john: about 20 minutes left with heidi shierholz, she's the president of the economic policy institute, epi.org and on twitter @economicpolicy. gary in corpus christi, texas, independent, thanks for waiting. caller: thanks for taking my call. i was wondering with the spending this bill does, i don't understand how that is going to reduce the final deficit, and

basically, i find it impossible to spend your way out of debt. increasing more debt is going to increase the debt and my grandchildren are going to be paying for what we are trying to get the money out for. john: gary, thanks for the question. heidi: i appreciate the question. it is a great question. the inflation reduction act increases spending and increase -- [indiscernible] it does both things. it does increase spending on crucial things like health care and climate in the climate crisis. but it increases revenues more. that is how you get the deficit reduction. so, it more than offsets, the increase in revenue we get from raising taxes in the inflation -- from the inflation reduction act more than offsets the

spending. that is how you get deficit reduction. john: sam in rome, georgia, the line for democrats. good morning. caller: thank you for c-span. every day i think c-span. my question is to my gop comrades with all these lofty accolades about trump and his economy, help me understand. my question is, help me understand. when trump came into office, did he not inherit a bull market? if i look back through the years, bush inherited a bull market through clinton, and to think the democrats have wasted two years trying to clean up the stock market crashes from the last republican. if i'm not mistaken, the last two stock market crashes we have had were both during republican administrations. can you talk about those transition economies and also talk about which economy has

reduced the deficit the most since the clinton years? heidi: really good question. this idea of what kind of economy presidents inherit is a fascinating one. obama inherited an economy in absolute freefall. he took office in january 2009, when we lost something like 850,000 jobs, in that ballpark. it was an economy in absolute freefall. over the course of his eight years in office, there was a recovery. one of the big problems was that congress stalled out and wouldn't do the kinds of things that we needed to create a strong economy in the aftermath of the great recession. that was actually not on obama. that was on congress. they didn't to enough to create

-- do enough to create a strong recovery. so, we had a very, very weak recovery from the great recession. but then, by the time trump took office, it was starting to look a lot better. trump really did inherit that -- an economy that was growing. he then did get hit by something completely out of the loop the -- the loop. the coronavirus. that was not his fault. the weak response to it, you can pin a lot of that on him. but that was a completely random event. it is absolutely true that biden inherited an economy that was on the upswing. we were seeing -- let me say that a little bit differently. in the last few months of the trump administration, the

economy was starting to slow down again. in august of 2021 -- wait, i'm going to get the numbers wrong, but we started to see the coming slowing. and when biden came into office and passed the american recovery plan act in march 2021, that really put the economy back on a really strong trajectory. so, the kind of economy that a president inherits is a very interesting question. it is not in their control, so what they really do with it is the most important thing. john: the american rescue plan, $1.9 trillion in spending. what was the most important that -- parts of that plan?

heidi: the most important part of the plan was it size. it really put us on track to a very strong recovery. there was aid to state and local governments, state and local governments took a big hit, and -- big hit during the recession so getting aid to state and local governments so they could shore up and hire back, there were some caveats, but that was a big part of it. extending the child tax credit, and making the child tax credit fully refundable. it was in normal times and right now -- those provisions have now expired. those benefits for children were actually held hostage to their parents being able to find a job. you don't get that child tax credit if you are not employed.

one of the things that happened in the recovery act, they made it what is known as fully refundable, and that is a way to say you get those credits even if you don't have a job come -- job, even if you don't have enough income to offset the size of the benefits. and that alone dramatically reduced child poverty. in the midst of a pandemic, we saw a decline in child poverty because of these kinds of of provisions. it was a remarkable package. john: to denison, texas, david, republican, good morning. caller: good morning. give me a minute here. the recovery act spurred the big jump in inflation. it has continued since. good lord. the inflation, excuse me, this current, inflation reduction

act, which is a ridiculous name, only 12% of people believe it is going to reduce it in 40% -- and 40% believe it will make it worse and the others don't know. $400 billion for climate. $80 million for the irs. 26 billion dollars for three years of health care subsidies, which is a budget gimmick. they know it is going to get extended for the rest of the 10 year period. if they put it out for 10 years, this plan would have been negative or no budget deficit reduction under any copulation. -- calculation. that is what they commonly do with budget connect, using an impartial year. nothing in this is going to increase -- increase the supply. if anything, it is going to bring demand down. this idea that you can take money out of the free market economy, give it to the government and expect an increase in wealth resulting in more taxes, resulting in a decrease of the deficit, is impossible. they are taking money out of the productive parts of the economy.

this tax bill where they are going to make corporations pay their fair share, quote unquote, the reason they get into a no tax payable scenario is because of the incentive for investment and the accelerated depreciation which lets companies and has allowed companies to increase manufacturing, bringing companies back to the u.s. for manufacturing, the 600,000 jobs that came back that were supposedly only going to come back due to a magic wand. $400 billion for climate change. john: you bring up a lot of issues, can i give heidi a chance to respond? heidi: the idea that the recovery act spurred the big spending bill to fight the recession that we had in march 2021, the idea that that caused this inflation is flat wrong. one of the ways you can look at it is, look at what is going on

around the rest of the globe. what you see is that inflation is high everywhere. and as you look at the scatterplot at the relationship between how much countries spent on the recent recovery and how much their inflation accelerated, there is no relationship. inflation grew dramatically no matter what countries did, as far as fighting, as far as relief and recovery from the covid recession. the global rise in inflation is not the fault of the u.s. relief and recovery package -- full stop. that is not what is driving our inflation. that is an important myth to put to bed. another point the caller made about how raising taxes on the

-- will actually hurt because -- raising the taxes on the wealthy and corporations make hurt, because the wealthy and corporations may not make investments that would boost the economy, that is also totally false. and we can look to very recent experience to show that it is in indeed false. during the trump administration, there was a massive tax cut for the wealthy and corporations. if it were true that the tax increase now was going to hurt investments, you would definitely expect that the tax increase back then would unleash investment. if you look at the data, it 100% did not. you look at data on investments, you see the trump tax cuts, and

there is no break. the tax cuts had zero effect on investments. so this idea that if we raise taxes on the wealthy and corporations, it is going to hurt our broader economy, that is a total myth that has been used over and over and over again to keep wealthy and corporations from having to pay their fair share. john: is the best way to fight inflation to raise interest rates? heidi: really good question. i think it depends on the situation. what raising interest rates really does is, it slows the economy down. it makes it so -- it reduces job openings, so workers have less bargaining power, so wages grow more slowly. then, any feeding of higher

wages into higher prices gets stopped. that is the idea behind the fed raising interest rates. so you want to look and see if that is the appropriate thing to do now. i look at the data and i am like, they should really think hard about doing more increases in interest rates. because what we see is, if you look over a longer period, an increase in july in wages, but over the longer period, wages have been steadily declining. i should be careful thinking about the earlier caller. wages are not declining, wage growth is steadily declining. wage growth is still high but it is coming down. the idea that the fed would raise interest rates to slow

wage growth but run the risk of actually causing a recession or deepening an recession, they may have already secured for the coming months, i hope they really think hard before doing that again. what we see is that inflation is moderating because of reduction in gas rises, alleviation of supply chain problems and businesses start reducing their inventory and trying to get inventory to move. we are seeing inflation -- it is terrible on families, it is creating a lot of hardship but it is coming down. the fed should really think hard before they raise rates again. host: time for one or two more phone calls.

romney in houston, texas. independent. caller: i understand why all these people in texas call and because they get it. the only thing that raises inflation is government. and how they print money. they printed over half $1 billion for this new deal and the gentleman that called from texas earlier was right. i cannot believe that heidi can look into the camera and say the things she is saying. it is not true. the only way to raise inflation is to print money and that is what we are doing. host: you talk about this worldwide inflation. what do you think is the reason

for the inflation around the world? if the supply chain issues or the war in ukraine? caller: it is -- guest: it is the last thing affects of covid and the war in ukraine. it increased energy prices for the war in ukraine and covid causing supply chain problems and shutdowns. what is starting to alleviate now and another phenomenon that is starting to alleviate is that during covid, people changed their spending pattern. they don't engage in services. instead of people letting go there gym membership -- they bought in home equipment. they spent on goods. and that extreme man on goods

and you are seeing supply chain snarls. that drove up prices. that is starting to abate and it is coming down as the forces -- covid is getting under control. it is not that the government is printing money. that is decidedly not at all what has caused this inflation. host: we will have you on down the road. the president of the economic policy institute. thank you for your time. >> connecticut government -- joys of conversations on federal investments that can improve job opportunities. that is from the urban institute 11 a.m. eastern. this afternoon, a number of the state attorney general's discuss

the right to attorney access since the overturning of roe v. wade. free on c-span or on the free c-span now video app or live on c-span.org. >> over the past few months, the january 6 committee held a series of hearings rebuilding findings from their investigations. we will look back at the hearings, featuring never before seen evidence, depositions and witness testimony. tonight at 8 p.m. eastern, state political leaders and election officials from georgia and arizona describe the pressures they face from president trump and his allies 2d furnace -- to decertify the election and the harassment and threats they receive from their supporters. watch anytime on demand at

c-span.org. >> a look now at the live coverage on c-span now. on easter, the atlantic council arrived initiative host a discussion on arrest influence on the middle east. former congresswoman robert comstock and bill christer -- crystal look at the midterm elections. there is a briefing streaming about monkeypox. you can download c-span now for free on google play and the apple app store. >> davey pepper -- david pepper is with us. he authored -- he is former ohio democratic party chair and has authored several books including laboratories of autocracy of wakeup call from behind the lines.