Trump’s First 100 Days: The Economic Agenda

John Donvan
This is Open to Debate. I’m John Donvan. Hi everybody for a special episode to Mark Donald Trump’s 100th day in office, a debate recorded live at Bloomberg headquarters in New York City. This one moderated by Mishal Husain, award-winning journalist and also author of two books including Broken Threads. She is also editor at large for Bloomberg weekend and now Donald Trump’s first 100 Days The Economic Agenda.

Mishal Husain
A hundred days of President Trump being back in the White House have brought bold prescriptions for America’s future and uncertainty on where they lead. Will it be growth and prosperity, all stagnation and decline? That’s what we confront in this debate. Can tariffs be part of a winning us strategy? Is deregulation good for growth? And could the president’s medicine mean a recession from Bloomberg and open to debate? This is unresolved Trump’s first 100 days the economic agenda. Hello and on behalf of Bloomberg and open to debate a warm welcome from me, Mishal Husain, to this discussion of the past 100 days and the economic future ahead through three key questions. We are going to look at the choices made since January the 20th and hear some very different views on what they mean. Our venue is Bloomberg headquarters in New York City and the debaters will also face questions that come from those in our audience here. The open to debate unresolved format, which you’re about to see is going to involve yes no responses and short explanations before we get into discussion on each of the questions. So let us meet the debaters. Please welcome all five of them on stage.

Mishal Husain
So let us start with some introductions. Very pleased to see you all here. Thanks for being part of this. Let me begin with you Stephen on the far side, Stephen Moore, economist. You are an advisor to Donald Trump in his first presidential term co-founder of the committee to unleash prosperity. It favors low taxes, repealing regulation, reigning and spending. And you are also the co-author of the Trump Economic Miracle, which was published last year. Welcome Stephen. Thank you. Next to Stephen is Marianna Mascato, a professor in the economics of innovation and public value at University College London, the author most recently of Mission Economy, a moonshot guide to Changing Capitalism, which calls for boldness and experimentation to solve the big problems of our time. Welcome Mariana.

Mishal Husain
Also with us is Jeff Ferry, who is Chief Economist emeritus at the Coalition for a Prosperous America, which represents American manufacturers, also farmers and IT values quality employment, national security, and domestic self-sufficiency. Welcome Jeff. Jason Furman is a professor of economics at Harvard and he was an economic advisor to President Obama for eight years, culminating in being chair of his Council of Economic Advisors from 2013 right through to January, 2017. Welcome Jason to you and finally, very much on home turf is Alison Schrager, who’s a columnist at Bloomberg Opinion covering economics. Also a senior fellow at the Manhattan Institute, which believes in expanding economic freedom and is seen as a center right think tank. She’s also the author of, and I Can’t resist this title, Alison, an Economist walks into a brothel and other unexpected places to understand risk, which is probably a whole different subject of debate. Thank you all for being here.

Mishal Husain
So just a reminder, debaters, that what you’re going to do, you have blocks on your podiums and you are going to flip the block on your podium and say whether you are a yes or no in response to each of the particular questions. You are going to get 90 seconds to explain your answers to each of our main questions before we go into discussion. I’m fully expecting it to get contentious. You might even change your mind somewhere along the way, right? We are interested in the process of thought and challenge and indeed the comparison between theory and reality. So before we get into the first of our main questions, I want to get a quick big picture sense from each of you. An opening thought. If you like, you can just answer this with a yes no, a flipping of the block and just a sentence to explain this. This is the opening question. Have these 100 days made the United States economically stronger? So it’s the 100 days January the 20th to now. Allison, yes or no?

Allison Schrager
No, and I am disappointed. I was hopeful, but I think by any economic metric that matters to me, not just personally as an economist, I think we’re in a weaker position

Mishal Husain
Disappointed as an American or disappointed because of your background?

Allison Schrager
Both.

Mishal Husain
Okay, we will. That helps set the scene and we’ll come to your reasons and to the individual questions in a moment. So Jason Furman, have these a hundred days made the United States economically stronger?

Jason Furman
Absolutely not. It is an open question though, whether in relative terms China is now stronger after these a hundred days.

Mishal Husain
Okay, thank you for that. Jeff. Is the United States economically stronger?

Jeff Ferry
Yes, I believe it is because we are finally focusing on our domestic economy and rebuilding the domestic economy.

Mishal Husain
Okay, all to be discussed Mariana, after these first 100 days,

Mariana Mazzucato
No, they’ve weakened the foundations of both the US and the global economy.

Mishal Husain
Okay, thank you. And finally, Stephen Moore.

Stephen Moore
I’m a yes, but I will say this, the Trump came into office and he’s achieved a lot of the things already that the American people wanted a control of the border bringing in inflation down and some of the culture issues like racial preferences and DEI, which are dead and I think the American people are happy about that, but the trade wars are a problem.

Mishal Husain
Okay, and just to remind you that for the while there’s been a lot happening in these last a hundred days. Our debate for the purposes of these 75 minutes or so is very much the economic agenda. So thank you all very much for the responses to the opening question. Thank you. That sets the scene. Essentially this is Trump’s first a hundred days, the economic agenda. So let me take you to the first of our main questions if you like. Again, you’re going to flip the block, you’re going to say yes or no, and this time you’re going to get 90 seconds on the clock after we’ve heard from all five of you, that’s when we’ll go into the discussion. So here goes question one is can tariffs be part of a winning us strategy? Jason Furman, you get to go first on this one.

Jason Furman
I’m going to take No, there’s only a debate over the magnitude of the harm that tariffs are going to do. Everyone agrees that in the short term we’re going to get higher unemployment rate, we’re going to get a higher inflation rate and that job loss will be in sectors throughout the economy. What worries me more is that all of that short term pain is on the way to even more longer term pain. The issue here gets slightly subtle. When you place attacks on imports, you might think you’ve done a wonderful thing because now Americans are going to make stuff, but when you’re getting less imports, you’re also going to end up with less exports. That might be because other countries retaliate against the United States because our exchange rate changes because we have to change resources. And so where we’re going to end up is in the long run, maybe the unemployment rate will come back down, but it was 4% before this. Maybe it’ll be 4% after this, but we’ll have worse jobs, fewer exporting jobs in some of the industries that we’re most successful at. We’ll also have worse off consumers because they’ll be having to pay higher prices for lower quality things from the rest of the world. So tariffs can help small groups for targeted periods of time, but at enormous expense to everyone else expense that can just grow over time.

Mishal Husain
Okay, thank you very much Jason Furman for setting us off on that. Jeff Ferry. Are you a yes or no to this question?

Jeff Ferry
I’m a yes. Tariffs can help the US economy. I really couldn’t disagree with Jason Moore on this point. I’m going to start by reading something that Sean O’Brien, the president of the Teamsters Union, posted today on X. Amazon has zero allegiance to the United States decades after free trade politicians sold out American workers. Amazon has built an international empire fueled by industrial slavery, managed by the Chinese Communist Party while here in the US it neglects and abuses American workers. Now the reason why Sean is right in saying that is that if you look at economic history, it’s very clear that all economic growth since the middle Ages, since Flander’s textile industry in the middle Ages and through the Italian Renaissance and through the British industrial Revolution, and yes through the American industrial Revolution where we had very high tariffs from 1815 until 1939, the highest in the world by some measures that drove economic growth. The reason it drove economic growth is because you need to have growth industries at home serving domestic consumers and paying high wages to domestic workers. And that magnifies the effect. And after 1945, we led the world in many industries. Globalization beginning in the 1990s undermined all of this forcing American workers to compete with workers earning $3 an hour.

Jeff Ferry
So tariffs are one way to resolve this problem and rebuild the domestic economy.

Mishal Husain
Your 90 seconds is up, which is why I’m stopping you and I’m going to go onto Stephen Moore. Can tariff be part of a winning us strategy?

Speaker 7
I’m going to again be a yes, but I find myself somewhat in the middle of where Jason and Jeff are. I agree with Jason that the freedom to trade is the core of what economics is all about. If two parties trade together freely, then by definition they’re both better off. I don’t believe that free trade has hurt the United States, but I do think that Trump is trying to use tariffs in a strategic way to force other countries to reduce their tariffs. And it is a truism that the United States has virtually the lowest tariffs in the world. And what Trump is saying is if you want access to this giant $22 trillion consumer market, which is every country needs to have access to that, especially our major trading partners, you’re going to have to lower your tariffs if he can pull this off, and I think he will because a great deal maker, the United States will be better off. In fact, what Trump is asking these countries to do reduce their tariffs, Jason is in their interests as well. So I think he can pull that off. If he does, it will be better for all countries.

Mishal Husain
I think you’re answering a question that is more about the threat of tariffs rather than tariffs themselves being part of a winning us strategy.

Speaker 7
Well, look, there is no question that tariffs so far have caused turbulence in the market. We are probably going to find, but where I disagree with Jason talked about short-term pain, I think we’re certainly going to have short-term pain, but I do believe if Trump pulls this off, we are going to have a long-term gain.

Mishal Husain
Okay, thank you very much Stephen Moore for that. Alison Schrager, I’m

Allison Schrager
Also a hard, no, it’s not like this is the first rodeo. I mean we have a long history of tariffs not working. I mean generally Trump is not completely wrong when he says trading relationships are unfair. Other countries have high tariffs or barriers that act in a similar way to tariffs while we’ve had much lower ones. But the losers from that have been the countries that had the high tariffs up until a couple months ago. We were the economy that was the MD of the world despite these so-called unfair trading relationships. That’s a sort of unintuitive thing about tariffs is if you have them, you probably are the one who’s losing, said for instance Europe, it’s supposedly a free freight trade zone, but they have all these sort of non tariff barriers even amongst each other and that’s been really one of the reasons they’ve been slow at growth, not innovating and Latin America.

Allison Schrager
Another example of how high tariffs can destroy your economy. In the meantime, we’ve had low tariffs and we’ve been growing and in fact one of the reasons we have been growing is our current account deficit also means a capital count surplus, which means that one result of this is that capitals come here. That’s one of the reasons we’ve been funding our innovation, which is one of the reasons we have been the most successful economy and it is true that there have gains have not been equally shared that there have been problems, but tariffs are not the best solution for them. We did really fail a lot of people in America. I don’t deny that, but tariffs won’t help them. In fact, it’ll hurt the people we want to help the most.

Mishal Husain
Okay, Allison, thank you very much for that. And Mariana Matu?

Mariana Mazzucato
Sure. So no, but sort of maybe in the sense that tariffs, if they’re done in a strategic way, an intelligent way could potentially be part of a country’s industrial strategy. You could for example, apply those tariffs instead of just a blanket application across all sectors. You could say there’s a particular sector that we want to be more competitive in. It used to be called the infant industry argument, which we’re going to protect for a certain amount of time, literally to give that sector time for learning, for getting some government support to increase competitiveness. Now that’s basically called industrial strategy. So tariffs could be part of industrial strategy that is complimented by government investments in different areas like by the way we’ve had in the US secretly, I wrote a book called The Entrepreneurial State where I argued that the US likes to talk like Jefferson, but act like Hamilton, who you all should know who Hamilton was because of the musical.

Mariana Mazzucato
But he was someone who actually believed in active industrial strategy. And in fact, everything that makes your smartphone smart and not stupid. The internet, GPS, touchscreen, Siri, all actually came out of the US industrial strategy. There is no industrial strategy right now in the Trump administration. In fact, they are destroying or saying they will destroy the industrial strategy that exists. For example, the CHIPS Act. The CHIPS Act was all about actually getting that particular sector to be less reliant on Asian produced chips. And I’m sure we’ll come back to that later because my time’s already almost up, but that is actually being demolished. So tariffs without an industrial strategy is simply a mercantilistic strategy. And you talked about the Middle Ages. I think we’re actually going back to that period.

Mishal Husain
Okay, thank you all very much. So you’ve all had your opening 90 seconds. Thank you all. Thank you all for that. So I think everyone here and everyone watching now has an idea of where you are coming from. This is our opportunity to get into discussion so you can challenge each other as much as you like within reason within this part of the debate. Jeff, I want to start with you because that’s where Marianna ended as well. You made a historical argument for being in favor of tariffs. Aren’t we living in very different times? Do you want to take us back to the Middle Ages?

Jeff Ferry
Not at all. The reason I brought up the Middle Ages is to talk about how economic growth works and economic growth, and Mariana and I are kind of close on this actually. I mean I believe in industrial strategy as well as tariffs. And I think you’re caricaturing the Trump administration when you say they have no industrial strategy, they support the CHIPS act, which was initiated by Biden just as Biden supported high tariffs on Chinese EVs. So they don’t like to talk about it openly because Republicans and Democrats hate to compliment each other and admit that they’re borrowing from each other. But I think everybody recognizes that, look, this is a world where in America we pay the average worker $36 an hour. Mexico and China and Thailand pay $3 an hour. Vietnam considers that wealth. They pay their workers $2 an hour. So the question is how do you grow an economy when you face that kind of competitive challenge? And there were people who’ve said, Ross Perot said it best when he said, if we pay 10 times what a Mexican worker pays, we’re going to lose all of those jobs until the two wages match. That’s pure supply and demand.

Mishal Husain
Okay,

Jeff Ferry
So you need Jason,

Mishal Husain
Why do you respond to that?

Jason Furman
We pay $36 an hour because we have people that are vastly more productive than people are in other countries. That’s the result of American institutions, American capital, the proximity of the people you’re working with, the rule of law, and yes, an open economy that lets us specialize in the things that we’re best at. If you look since the year 2000, the fastest wage growth has been households at the 10th percentile. Its outpaced wage growth for households at the 90th percentile. The unemployment rate before all of this began was 4%. It’s going to be going up now, not down. So if we want to keep high US wages, the way to do that is to make sure that we’re not trying to do the things that they do in Mexico and Vietnam, but instead to do the things that we do so much better here in America.

Mishal Husain
Stephen Moore, I’ll come to you in a second, Marianna, but Stephen Moore, I wonder whether, because you said you were somewhere in the middle of the arguments that you are hearing, right? Although you’ve been an advisor to President Trump and his first term and you’ve written a book called Trump’s Economic Miracle, it sounds as if you are not completely signed up to the tariff strategy. Indeed, not long after Liberation day, you called for President Trump to go on to do a televised address around the world and essentially make a zero tariff pledge to every country that was willing to do the same,

Speaker 7
Right? I mean, what Trump wants is reciprocity. He wants to have other country. He’s basically telling the rest of the world. Let’s say if you have a 30% tariff, if you don’t lower your tariff, we’re going to raise ours. Now, that’s a risky strategy. It may work, it may not. I think it probably will. The one thing that Trump understands that I think everyone needs to understand is the United States is the hub of the world economy. We’re by far the richest economy. We’re by far the wealthiest economy. We have by far the biggest consumer market. So every country in the world, especially Canada, Mexico, China, the Europeans, they have to trade with us. They must, if China couldn’t trade with the United States, they would go into a great depression. Nobody’s really covering what’s happening in China’s economy right now. Economies in China is crashing because they’re not able to export the United States.

Speaker 7
Trump is using that leverage. If you want to understand Trump, you really do have to read the book, the Art of the Deal. You understands that when you have leverage and the United States has leverage over other countries, he’s flexing our muscle, flexing our economic power to force other countries to do things that in America’s interest, I’m in favor of that. I don’t like tariffs as necessarily the right approach. I do agree with Jason that we have prospered for many of the reasons that he discussed. I’m much more of a libertarian than maybe the rest of the people on this. I think the biggest thing we could do to economic growth is drastically reduce the size and influence of and not move towards a European industrial policy model. Europe is nowhere. Europe is yesterday’s continent. I still think we’re going to be the continent of the nation of the future.

Mariana Mazzucato
Mariana, right? I mean what’s really striking about Trump is that he never actually talks about the real ill, if you want, of us capitalism, which is that basically since the 1980s, large corporates have been able to earn profits without really investing. We have $7 trillion amongst the largest companies in the United States that have been used just to buy back shares, to boost stock prices, stock options and executive pay over the last 10 years. That’s a lack of reinvestment of profits into the so-called real economy. So that’s an example of a financialized form of capitalism. Forgive me for the kind of big words here, but it basically means instead of investing profits back in to better working conditions, to a better technological and organizational change in the company, you’re just worried about that short-term increase in share price, which by the way, stock options is how the largest, most powerful executives are paid.

Mariana Mazzucato
And so it’s not surprising actually that many times you talk about being conservative or not. But capital gains tax, for example, is really important in terms of if you actually want long-termism in the economy, you want to make sure that the time that your investment is held in order to get a capital gains tax reduction is long. So what Trump should be arguing for is that in order to steer growth in a certain way, we need more long-termism. We need companies to do their bit, but we don’t hear that. We just hear that it’s all about the foreigners that have kind of messed around with the US economy. And the reason I’m actually a fan of the CHIPS Act is that it designed into that particular form of industrial strategy, a reciprocity using Trump’s words, but with the private sector, in other words, you’re going to get close to 300 billion in support to develop chips manufacturing, but in exchange you’re going to improve working conditions. You’re going to have no share buybacks with the profits made from that government subsidy and you’re going to improve your energy efficiency and supply chains. Some have said that then he went too far as Rick Klein talked about the everything vagal. But that’s about a design challenge. The point is you don’t just do giveaways, tax reductions, regulation reductions without asking what do you need from the private sector, which currently is getting away with doing nothing.

Mishal Husain
And I’m going to remind you all that. You don’t all have to be too polite to each other. You can actually interject.

Jason Furman
I want to be polite about reciprocity at some point. So tell me when I can

Mishal Husain
Go on. Go on then.

Jason Furman
So Steve, we had reciprocity on January 19th. Our tariff rate against rich countries was about 2%. Their tariff rate against us was about 2%. If you looked at the second decimal place, there were about 45 countries that had lower tariff rates than us. Now, we don’t have reciprocity because we’re taring, including the penguins who never tariffed us, where we threatened a 50% tariff against Otto because they sell us diamonds and somebody had the wrong formula and got confused. And I do not think Donald Trump shares your view. I think he’s closer to Jeff’s view. If he did, there is a way to get zero tariffs with Vietnam, Malaysia, Japan, and 10 other countries, which is to join the transpacific partnership. He pulled us out of that, that had all those countries eliminating their tariffs to the United States. Two other big problems with him getting a deal. The IMF just updated their global forecast.

Jason Furman
They downgraded every country in the world. Their second biggest downgrade of any of the major economies was the United States. We’re in a war with every country in the world. They’re only in a war with us that weakens the United States. It’s going to make us harder for us to sustain this. And by the way, China can sell to lots of countries, but the stuff we get from China, we can only get it from China. We can’t get it from anyone else. And then the very, very last thing is your zero for zero deal. Donald Trump under the law can raise tariffs as much as he wants. Maybe we’ll see what the courts say. He actually can’t lower them to zero without going to Congress. He’s trying to go to these countries and say, I’ll undo half of the totally nonreciprocal thing I’ve done to you in exchange for you doing amazing things to us while we’re suffering more than them. This isn’t five dimensional chess. This is like deranged junk in.

Mishal Husain
We have a few minutes left of discussion on this before we move on to our next question, but I want to bring in a question from the audience here. Alison, perhaps you can answer this. This sounds like a plea from the heart. How can any business, especially smaller businesses, plan for the future if successive administrations change major rules of the game every four years? Should we do something to limit the scope or scale of these changes via law?

Allison Schrager
Yeah, I mean there’s a reason why the president is not supposed to have the power to levy taxes like this. It’s supposed to come through Congress. I mean, that’s for a lot of political reasons that I’m hoping maybe it’ll get rectified. I mean, one reason I’m not as upset about tariffs as a lot of other economists is I just don’t believe it’s going to last. It’s just too stupid. So someone eventually is going to take away the keys. It might be the next president, it might be a Democratic Congress, it could be a Republican Congress. If it goes bad, it could be the Supreme Court. It’s just, as I said, this is the problem with having executive orders do major policies. Even if you do agree with these tariffs and I believe they’re going to go away, they’re just going to be too harmful that it does make it impossible to plan. And in some ways, actually I’m, one of the ways I’m also a little optimistic is eventually again, we’re going to take away the keys, the tariffs are going to go away. Maybe I’m just hopeful and overly optimistic, but then that could actually reinforce the strength of our and show that we’re ultimately a little unpredictable in the short run, but ultimately a good fading partner.

Mishal Husain
Okay. Jeff, you are the one who, out of everyone here has more than Stephen, you’ve done a full throat to defense of the tariff policy. Has there been no point in which we’re in these last a hundred days, which has given you pause? I mean in the two days after the liberation day announcement, more than $6 trillion was wiped off the value of American shares,

Jeff Ferry
Right? So I actually do agree with Jason saying that reciprocal tariffs, well he said it slightly differently, but I would say reciprocal tariffs are a red herring. This economy was built on domestic growth and domestic consumption. We made automobiles beginning with Henry Ford for Americans to buy, people in other countries couldn’t afford to buy them. Even today, we have very few successful export industries. So for Donald Trump to say we’re going to force Otho or some other South American or Asian country to cut their tariffs, even if their effective tariff rate was 20 or 30 or 40%, they’re still not going to buy a lot of American goods. What we have to do is have a strategy that creates growth. And I’ll give you an example. The most successful economy in the last 50 years is Singapore because they’ve run a trade surplus every single year almost for 50 years. Now. They focus on industries that pay high wages within their country. They don’t want a lot of imports, and it’s a successful formula. Now just we have to figure out how we can emulate that. And of course we start with very high wages. So we have a challenge, Jeff, but those are the lessons.

Mishal Husain
Allison, Jason, I’ll get Mariana in as well.

Allison Schrager
I just want to quickly throw some water on our sudden interest in infant industries. They might’ve worked arguably in Singapore or South Korea, but it’s not worked anywhere else. And everything about the way we do industrial policy suggests that we would do a lot more like Argentina than we’re going to do it like Singapore.

Speaker 8
Jason,

Jason Furman
If I look at other countries like the United States, but the mirror image who’ve run large persistent trade surpluses decade after decade. Germany iss the one that comes to mind. It is way behind where we want to be. They went all in on manufacturing, all in on a trade surplus. They neglected investment, they neglected technology, they neglected growth, and they would give anything to trade economic places with the United States

Jeff Ferry
Right now. I agree. Yet they have greater equality and less social division and less polarization and less lurching from left to right every single year the way we do in this country. So there are

Jason Furman
Things I like about Germany

Jeff Ferry
Too. Alright, so we’re somewhat

Mariana Mazzucato
Close. I was going to say it’s quite funny if you are as conservative as you say you are, that you would even mentioned Singapore. I was conservative. Singapore, over 70% of the land is owned by the state completely. That is actually part of their housing policy. It’s a mixture of, so you can’t pick and choose. Yeah, but you need to look at the system the systemic way if you want, that a country is thinking about its growth. So we can’t look at a tariff policy in a country and then avoid the fact that again, the public sector owns the land and that’s how they’ve actually kept down the real estate bubble that we’ve had in the west. It’s called the financial crisis.

Jeff Ferry
You can pick and choose and you must, and I’ll tell you why, you must, if you look at made in China 2025, it was published or it leaked to the west in 2015, 10 years ago, they said they intended to lead the world in it. Electric vehicles, robotics, renewable energy, and a number of other industries, their batting average is pretty close to 700 or 800. They are doing great. I agree

Jason Furman
With Mariana. If we want to target an industry, we want microchips drones, we get our drones from China. I hate that. I’d love us to make drones in the United States. It’s possible that targeted tariffs could even be part of the answer to that. But that is a very limited national security. Prioritize set goals, don’t do random blanket tariffs on every country

Mishal Husain
In the, I just want to get a thought from Stephen in and then we’re going to move on.

Speaker 7
Well, I can settle the argument Singapore. Singapore is by far, they’re in the top three of all the 150 major countries in the world in economic freedom and economic freedom is free trade, it’s low tax rates, it’s very limited government and low government spending. By the way, the other country, until very recently, that was one of the top five countries in the world that was free was Hong Kong. Hong Kong has Milton Friedman used to talk about this all the time. Hong Kong had no natural resources. It had complete free trade. And by the only thing I disagree

Jason Furman
With, Jason, Steve, by the way, are we moving up or down this ranking?

Speaker 7
No, but here’s the,

Jason Furman
Are we more or

Speaker 7
Less, the only thing I strongly disagree with you on, Jason, I don’t think your numbers are right. These countries are imposing tariff and non tariff barriers against the United States that have created an unlevel playing field. Look

Jason Furman
At sugar milk.

Speaker 7
We do it all the time

Jason Furman
Too.

Speaker 7
Well, right. I want to get rid of all the subsidies.

Mishal Husain
Okay, we are going to move on now. I’m going to ask you to reset your blocks and then we’re going to move on to the next question. But thank you all for your responses so far. You are watching Trump’s first 100 days, the economic agenda from Bloomberg and open to debate. So now on to our second question. At the end of January, there was an executive order to slash federal government regulations 10 have to go before any new one is introduced. The president says that cutting senseless red tape will lower costs lead to higher growth and usher America into its golden age. Among those currently being reconsidered are regulations on mercury and air toxicity, on wastewater, on rules for power plants and on the amount of capital banks have to hold. Hence our next is deregulation, good for growth. And on this I’m going to turn first to Stephen Moore, yes or no on this. And you’ve got 90 seconds

Speaker 7
A firm. Yes,

Mishal Husain
Go on. Explain 90 seconds. We’ll take his time.

Speaker 7
Oh, I’ve got a minute. 30. Okay, so look, nobody’s talking about letting pollutants in the water and things like that. What we’re talking about is the extraordinary costs of regulations that have virtually no benefit or the benefits dramatically exceed the cost. I work with an economist at the University of Chicago named Casey Mulligan. He estimates that the excess costs of regulations to the American economy above benefits are about 1.5 trillion a year. That’s a lot of money. So yes, we have to eliminate regulations that don’t work. It’s about time. By the way, these regulations should also be approved by Congress. I think all laws should be approved by Congress and we’ve given too much power to these regulatory authorities. A perfect example of this, by the way, is what the Biden administration did to our energy industry. We were the energy powerhouse of the world. We led an oil, gas, coal, nuclear power. Biden comes in with regulations that strangled our oil and gas industry, put our coal industry basically out of work and out of business, and we suffered greatly from that. So let’s be number one in all these industries in having rational regulations that cost a lot less.

Mishal Husain
Okay, thank you very much. And I’m going to turn to Mariana Mascato, are you a yes or no? Is deregulation good for growth?

Mariana Mazzucato
Deregulation is not good for growth. But the real question is what are we even talking about? So you said we’re not talking about putting pollution, polluted things in our waters and so on, but actually we are talking about that. In other words, if you think of all the different sectors, whether it’s life sciences, whether it’s automobiles, whether it’s food, it was actually regulations that first of all made those things safer. Cars crash less. Medicines don’t kill us, food doesn’t poison us, but it actually, if it’s done well, right? Because everything we’re going to say is you can either do something stupidly. We just talked about how tariffs have been done stupidly. You can also do regulation stupidly. It can just become a whole list of things that you’re telling the business sector what they must do. And you don’t let that kind of entrepreneurship come about.

Mariana Mazzucato
But the truth is that many businesses that get government support or doing their thing, unless you have regulations, there’s no reason to innovate and to invest. In fact, there’s been some really interesting studies that have shown that smart regulation in, for example, the life sciences, pharmaceutical and biotech sectors actually required then innovation in order almost to get by that regulation. And so in a country, I come back to that issue where we have lots of profits getting invested out of the thinking about smart regulation like as I mentioned even in the chip sack that actually required companies to reinvest, to invest in energy efficient supply chains, better working conditions. And there’s many other examples like that around the world that can actually stimulate business investment and growth ultimately is a result of business investment, but also public sector investment that crowds in that business investment and using regulations smartly instead of just deregulating, the economy is about achieving that.

Mishal Husain
Mariana, thanks. Your 90 seconds are up. Jeff, yes or no? Is deregulation good for growth?

Jeff Ferry
Yes, deregulation is good for growth. I’m closer to Steve on this one than I am to Mariana. One of my great disappointments with the last two Democratic administrations, including the one that my friend Jason served in, is too much attention to regulation and not enough attention to economic growth. So to give you an example, according to the mining industry in the US it takes approximately 10 years to get a mine approved in this country. Is it any wonder? We are dependent on China and other countries for rare earths, for lithium, for any number of important minerals. It’s not only the mines, it’s also refining the minerals. Americans have gone into a sort of lazy mode where we’re going to take years and years to examine every possible pollution problem. And I absolutely agree we should not allow pollution into our water, but the authorities should be forced to make that decision in a year or two, like the best countries in the world do. This is what Singapore’s, and you could even call it a benevolent dictatorship. I think we need a little more executive authority. I don’t mean Donald Trump’s authority, I mean a little more decisiveness and focus on an end result because the people who benefit when you build mines, mines pay extremely high wages. It’s the workers who benefit and the entire auto industry is dependent on a long supply chain of materials, which the regulatory state has made it impossible almost to produce in this country.

Mishal Husain
Okay, Jeff, thank you Jason.

Jason Furman
No, sensible deregulation is a good growth strategy. Don’t think it’s a huge one in terms of the magnitude of growth, but on balance, I would have more regulations rather than less. That’s not what we’ve seen though in the last a hundred days. Let’s just take the energy sector that Steve brought up. First of all, oil drilling went up and up and up under President Biden and was higher than it was in Russia and Saudi Arabia. There were a few rules too many in the fossil fuel industry, including not allowing natural gas to be exported. We’ve gotten rid of those rules, but now we have a lot more rules and deliberate obstacles to creating wind and solar in the United States. So the industry is a mixed story. One of the biggest areas of deregulation has been crypto fart coin now has a market cap of over a billion dollars.

Jason Furman
That’s not really a great way to grow your economy. Number three, I come from work for an institution that the Wall Street Journal editorial page recently said, Donald Trump is trying to run Harvard. He is putting an enormous, enormous number of rules on how our scientists do medical research and do the like. And finally, when you take a chainsaw to the FDA, it is already slowing approvals of drugs and medical devices and it’s going to do even more in the future. So it’s a very, very mixed record that I think will be likely bad for growth. Not good.

Mishal Husain
And the last of the five to answer given initial 90 seconds to this is Alison Reger. Is deregulation good for growth? Allison?

Allison Schrager
Yes. I mean it’s just almost definitionally. I mean there’s a trade off with growth and safety. It’s just like financial markets that if you take a slower steadier approach, you’re going to have a lower return. It’s the same with the economy. More regulations are supposed to slow growth and that is a trade off we make as a society. And we don’t want, I am a free market person, but I don’t want to live in an economy with no regulations at all. But the issue is that we do have way too many and it’s not only strangling growth, I think it’s really also contributing a lot to the inequality that we’re seeing and that we are going through an economic transition. It’s not only from trade, it’s also from technology. And the problem is a lot of lower income people are not taking advantage of that in part because they can’t move.

Allison Schrager
They find it hard to change jobs. Now, as Jason brings up, a lot of the deregulation Trump did in the first 100 days certainly didn’t tackle those issues. I think we’ll be hopeful that later on that his deregulation policy will look more like it did in the first Trump term, which actually was good for growth. But we definitely have gotten to the point certainly since the 1960s, the number of regulations has grown exponentially and that has been strangling growth and I think contributing to inequality. So if we really all the sort of problems that we’ve been identified of why we need tariffs, I think it’d actually be much better addressed through a smart deregulatory strategy.

Mishal Husain
Okay, thank you all very much. So we’re into discussion on this second question on deregulation to the audience. You can submit your questions through the QR code and they’ll come through to me on the iPad here. I want to start with you, Mariana, you used the term smart regulation. Jason used the term sensible regulation because I think no one wants to be for regulation per se. So you want to add those adjectives to it. But I wonder, I know that you believe in bold government, right? You believe in ambitious ideas to grow the economy in the right way. Is unleashing business reducing the, do you recognize this idea of a burden on business that gets in the way of that?

Mariana Mazzucato
Well, what’s interesting is that the same people think of Elon Musk who talk about the need for deregulation then with the other hand get massive subsidies. He’s gotten over 20 billion in subsidies from Uncle Sam. So what you actually need to be thinking about, I think any country is that kind of portfolio of different levers. I mean, the only way we got to the moon was not just about public investment, but smart tools like procurement. This guy earnest bracket, don’t ask me how I know his name, but it was head of procurement for nasa, realized that they were never going to solve all those different problems that the astronauts had. What would they eat? How would they move without actually thinking about the problems that needed to be solved along the way? And they transform procurement, which is the demand side tool, in order to actually work with the private sector.

Mariana Mazzucato
It’s always with the private sector, but in a functional way. So smart regulation, for example, you were talking about natural resources. Think of the lithium that we need in order to electrify our cars. Well, currently lithium extraction in countries like Chile are incredibly intense in terms of the use of water. And so a country like Chile, which actually has I think a pretty ambitious leader Borich, who talks about sustainability, he says, well, how we’re going to extract that lithium needs to change. We’re going to regulate it so it uses water less. So it allows them to both extract and to be a global leader in lithium, but to do it in a particular way. And that would be impossible to do that without regulation. 80%, sorry, of industrial wastewaters not recycled. That’s crazy. Given that it’s the state that gives the contract the water rights to say Pepsi Cola put it in the contract, first of all, like the water, Stephen

Speaker 7
On the minerals issue, this is an important one. It’s actually a perfect, and you brought it up Jack, and you’re exactly right. We just did a study. We have about $12 trillion worth of minerals in this country, in Colorado, in Wyoming, in the Dakotas in Montana. We are by far the most resource rich country in the world when it comes to minerals. And you’re exactly right, Jack. We haven’t been doing virtually any mining in this country for the last 25 years. It’s almost criminal. And the point is now we have to go hand in glove to the Chinese, to the Russians, to these Eastern European countries. Please give us your lithium and these other resources that we have you happen. It’s a perfect those results Example of how regulation strangles are economy. But Stephen, it just one other quick point. Everybody keeps talking about industrial policy. We just had a massive experiment, industrial policy, and it was called wind and solar power. And so the Biden administration gave about 400 billion of subsidies for wind and solar before Biden came into office. We had 80% of our energy in America came from fossil fuels, 80%. You know what it is today after spending $300 billion, 79%, we haven’t moved the needle one iota. Somebody should say whatever happened to that 350 billion. It’s a perfect, if you want to destroy an industry, have the government subsidize it.

Mishal Husain
Okay, Jeff Ry, I’ll tell

Mariana Mazzucato
Elon Musk,

Mishal Husain
Stephen’s making an argument for tapping into resources that have been underutilized or not access sufficiently. But if we look at the kinds of regulations that are in the frame right now for going, the ones that are being reconsidered, a lot of them are under the EPA. They are things like water and particulate matter and air quality and wastewater. That is what’s in the frame right away. You are really happy for our children and grandchildren to not be protected to the extent that they currently are on those things.

Jeff Ferry
No, I want them to be protected. My point is that we can protect them and make a decision in 365 days. We don’t need to spin things out for 10 years and allow 75 different committees to hold hearings and file motions. I mean, we’ve become too litigious a society and really too timid a society and we undervalue economic growth and we undervalue good jobs and that’s strangling us in those areas.

Mishal Husain
Jason, you did acknowledge, I think in your opening words that perhaps there was too much regulation in the Obama administration’s time.

Jason Furman
We added some regulations, subtracted some regulations on balance. I agree with Allison that some of it was a trade off. And so we wanted to deal with climate change. We wanted to deal with risk in the financial system. We wanted to deal with lack of health access. And if you’re going to give up a little tiny bit of growth, and I think it’s quite tiny for all of that, sign me up for it. But the issue here with this administration is I agree with Steve. There’s too many presidents have made this stuff up on their own without Congress, but the king of making stuff up without going to Congress is the man who’s sitting in the Oval office on truth social making something up right now. And there’s all these little wonky, nerdy things you do in the government. It’s called the Administrative Procedure Act where you publish something, you have notice in comment, you listen, you make revisions, et cetera. We really tried to do that. And here it’s a favored company gets a favor, a disfavored company gets punished. Look at what’s happens to companies where their FCC license is threatened. That’s essentially a form of regulation and that type of random, you’re deregulating for some but not for others. And doing it based on political favor, that is the characteristic that some of the least successful countries economically in the world all have.

Mishal Husain
Allison, you did make the argument that deregulation is good for growth. What about risk in the financial system and rules around, for example, the amount of capital that banks have to hold?

Allison Schrager
Well, I mean you have to be very careful with regulation. I think we often think more regulation, good regulation, but it’s also smart regulation. For instance, after the financial, we put a lot of restrictions on banks with lending. So now a lot of corporate credit is now going through private credit, so more in the shadows, less transparent. So ultimately what we want to think about when we don’t want to, we just need more regulation to make it safer. We want to think about how can we encourage the financial sector to actually just be more resilient, toll miller equity less debt. And I said to have more transparency. So that doesn’t mean that, oh, if we deregulate the financial sector that things are going to be less risky or we’re going to be prone to a financial crisis. In fact, I think we’ve seen too much regulation actually diminishes transparency and we don’t really know where all the bodies are buried.

Mishal Husain
So would you be happy to roll back some more of the regulation that came in after the 2008 financial crisis? Some of it’s gone already.

Allison Schrager
I mean, some of it, I mean, I haven’t thought of anything off the top of my head lately with the Trump administration, but certainly, yeah, I mean I’ve very concerned about how debt has largely moved out of the banking sector. I mean, right now, as I said, there’s also a lot of concerns that the treasury market is sort of more prone to crises because banks aren’t able to hold as many treasuries. So I mean, there’s a lot of, I mean, I don’t know if Trump’s necessarily being very thoughtful about this, but there’s probably a lot of room where we could deregulate the financial sector and make it safer. Do you think he’s being thoughtful about it,

Mishal Husain
Stephen?

Speaker 7
So I wanted to give an example of where regulation caused a financial crisis, and that’s what happened in thousand eight when all the banks failed. And the major culprit of that was the government and the housing industry because the government regulators of the banks told them, you have to invest in mortgage backed securities. Those are the safest thing you can possibly invest in mortgage backed securities. So all the banks had massive amounts of money invested in mortgage bank securities because those would never fail. Don’t worry. Those are safe investments. And of course what happened is there was over investment in housing, the very financial instruments that the banks were required by the government to buy are the ones that failed. It caused the greatest financial crisis since the Great Depression and it was a direct result of over government regulation.

Mishal Husain
Okay, we are going back to quite a distance before even the first term of President Trump. But Jason, did you want to respond to that because you were part of an administration that came in then

Jason Furman
Sorts of interesting things here. Should you let banks hold more treasuries and not penalize them with a risk rating on it? I agree with Allison on that. Did we do too much encouraging housing? Yes, we also did at the same time that we deregulated Fannie and Freddie and also weren’t looking at countrywide within the financial system. The biggest problems we’ve had in the last couple of years weren’t in the shadow banking sector. They were in the banking sector with Silicon Valley Bank and the like. But all of this to me is a super interesting, fun conversation about financial regulation, but it’s missing the really key point that in the last a hundred days in very, very important respects, we’ve reduced the capacity of government to regulate, to approve things. We’ve added new regulations, we’ve penalized disfavored things. This is not the path that’s going to increase economic growth in our country and it’s going to hurt other goals at the same time. So it’s that rare lose lose combination.

Allison Schrager
So would you say the problem is that we’ve added too many new regulations? Not that we’ve got taken away too many regulations.

Jason Furman
I think we’ve done a, I think first of all, regulation, I think success depends on state capacity and when you are going to have a regulation, we’re going to have drugs and medical devices are going to need to pass a regulation, otherwise you’re not going to have them. Once you have that regulation, that plus funding for the FDA is better than that rule plus no people working at the FDA to answer your mail when you submit your drug and device.

Mishal Husain
Okay. Jeff, I want to close this section with a question to you. You are obviously strongly for deregulation, but it is not clear yet is it exactly how much of that we will have? Because the idea of the executive order is that you have to get rid of 10 regulations in order to bring in one new one. But of course if you decide not to bring in that one new one, the 10 also stay. So we don’t know what the scale is going to be at this moment in time.

Jeff Ferry
Yes, I would agree that we don’t really know what the scale is. We can judge by Trump’s first term that he is serious about deregulation. And I think deregulation’s a very broad term. I mean, I do believe in regulating the financial sector because of the interdependency, even though I think Steve has a very good point that the lurching of the government from one set of rules to another set of rules helped create the crisis. I’ve been very clear about my views about regulating mining and how yes, we should absolutely regulate, but we should do it in a much more systematic and aggressive fashion. So that’s all I can.

Mishal Husain
Alright. Stephen, did you want to say something very quickly before we move on? You looked like you were about to say something when Jeff started talking.

Speaker 7
No, look, I think we’ve seen a lot of examples of what we overregulation has hurt the economy. And look, it’s a red herring to say, oh, we’re going to have pollution in the water and we’re not going to have a financial safety system. Nobody’s talking about that. The same thing like this big debate about Medicaid. Oh, all these people who need Medicaid are going to, no, what we’re saying is there’s 150 billion of fraud and the Medicaid system, sometimes the soundbite is what carries the debate. So they, oh, they’re going to take pregnant women off of medic. No, we’re not. We’re just going to stop the fraud.

Mariana Mazzucato
Mishal, can I just say something super quick? We keep using this word like capacity or smart versus stupid. But the biggest problem right now I think is that there will actually be, forget that the firing of public sector workers, there’s going to be a massive hemorrhaging. People won’t want to work in a state that is being described as the problem. That is just having these kind of blanket cuts here and there. So smart states and good capacity can only be done if you’re able to actually attract some of the top talent that want to work in the state. And Steve Chu Nobel Prize winning physicist was running Obama’s DOE, not because he was asked to do a little carbon tax here or there, but because there was a real vision initially in terms of how to actually steer that economy in a green direction. We have the opposite of

Mishal Husain
That now, and I am going to now ask you to reset your block so we can move on to the next question. Thank you so far. This is Trump’s first 100 days, the economic agenda, a debate from Bloomberg and open to debate. And our third and last question is about the economic outlook. Bloomberg economics assessment is that in January, president Trump inherited an economy with low unemployment and inflation heading back towards Target. A week ago, the International monetary fund raised the probability of the US going into recession this year from 25% back in October to 40%. Now, as the markets reeled in early April from his tariffs announcement, the president said, sometimes you have to take medicine to fix something. So our question is, could the president’s medicine mean a recession? Alison Trager, you go first on this one. Flip the block 90 seconds, yes or no?

Allison Schrager
Yes, emphasis on could because I don’t think it’s a foregone conclusion, but the odds of recession are undeniably higher. If you look at every economic metric, the one that’s bothering me most is higher interest rates on the tenure. No matter what Trump would like, the Fed doesn’t have a lot of control over that, and that is reflecting more market risk. And that said, increase, that sort of slows economic growth with, oh, I should be clarify by medicine. I am referring to high tariffs and strategic uncertainty, which Scott Besson said is a key part of his strategy. So the uncertainty is also making it harder to make business decisions, to make investments, to hire new people. Again, all weak in the economy. We also are going to have fewer people through less immigration, which also lowers growth. And as I said, less investment for more uncertainty.

Allison Schrager
But as Jason pointed out, and I’m probably stealing a bit of his thunderer here, it’s not just that we would’ve a short-term recession. The medicine he’s talking about, if it stays the way it is, uncertainty and high recessions also mean slower growth. Even if we come out of recession, we’ll not be as prosperous as we were before. We’ll be less productive. We’ll be slowing growth. Now, I said it’s not a foreground conclusion. There’s still chance we could end up with lower tariffs that are a lot less harmful to the economy. So I’m not saying it’s a guarantee, but I think it’s undeniable from almost every economic indicator that the risk of recession is certainly much higher than it was a couple months ago.

Mishal Husain
Alison, thank you very much. I’m going to turn to Stephen Moore next on this one. Could the president’s medicine mean a recession? Yes or no?

Speaker 7
So are you saying, I want to make sure I get this right. So if I say yes, I’m saying there will be a recession

Mishal Husain
Could you’re saying there could be could

Speaker 7
Resident? I’m going to answer, no, I don’t think there’s going to be a recession. I think that, first of all, I think it’s a joke that the Bloomberg said that Trump inherited a strong economy. Really. I mean if the economy had been strong, Kamala Harris would be president today.

Mishal Husain
I said, I’m going to clarify. I said inherited an economy with low unemployment and inflation heading back towards,

Speaker 7
Yeah, the problem was that people lived through for the things they had to buy a 25% increase in their costs under Biden. What happened, just so people know, we just a big study on this, that it was exactly the opposite of what the Biden people tried to, they wanted to create a more equal distribution of income. And what we now know is that the richest people did the best under Biden middle class did poorly and the poorest

Mishal Husain
Did. The question is about the future, not the past.

Speaker 7
What’s that?

Mishal Husain
Could the president’s medicine mean a recession? The question is about the future.

Speaker 7
The past, look, if you’re losing for half of Americans, they were poorer after four years of Biden than when Biden came into office. I would make the case to you. That’s a recession, right? If you’re poorer than you were four years previously. So Trump inherited an economic mess. I believe that we’re going to, I think we’re going to invert a recession. A lot of this does depend on what happens with these trade deals. If Trump can get these trade deals announced and they’re real, and I don’t know. I mean, I don’t know if they’re real or not, but I’m here to tell you if Trump gets trade deals with India, with Britain, with the Europeans, with Canada, with Mexico, I think he can do it. And it turns out that these countries agree to lower their terrorists. I think you’re going to see, and then we get our tax cut done. You’re going to see the biggest economic boom ever for this country.

Mishal Husain
Okay, thank you Stephen. Mariana, could the president’s medicine been a recession?

Mariana Mazzucato
Yes. Does that

Mishal Husain
Look like?

Mariana Mazzucato
Yes, yes, yes. I mean, first of all, just look at the data. We’ve been talking about it over 3 trillion in market values been erased. And what’s interesting actually is that both bonds and equities are falling at the same time, which really shows there’s very little faith right now in the US Treasury. And so I think first of all, we should just step back. Recessions are kind of normal. They come with the business cycle. The real danger is when those recessions turn into depressions. And I think that’s almost the bigger question, will this lead to into really severe recession? And another cool thing you can do is go on your computer, just download all the data from the government statistics. You will see that before Keynesian economics, this idea that actually government should play a role. It should play a countercyclical role precisely. So recessions don’t turn into depressions.

Mariana Mazzucato
We actually used to have depressions, proper depressions every 10 to 15 years. So when you don’t have a view of the state as being important when it’s just less regulation, American istic policy around tariffs, less planning, tax incentives. And so forget actually that very important lesson that we’ve learned since basically 1945 onwards. Then that’s the risk that we are going to actually go back to just a very weak state, an incapable state firing all these public sector workers. And the problem is that it’s also happening at the same time that we have this massive policy confusion, things are introduced and taken away these U-turns. And I think ultimately this is about, is there any economic policy? I mean we’re talking about economics here, but ultimately this has been kind of political policy. Maybe you should have more political scientists here because there’s not much economics behind what Trump is doing.

Mishal Husain
Thank you. Mariana and Jeff Ferry. Could the president’s medicine been a recession?

Jeff Ferry
I actually think yes, there is a definite possibility of a recession, but I disagree with what the folks to my left have said in that. I think we have to distinguish in a way, Donald Trump was right when he said, sometimes you have to take the medicine and sometimes the medicine hurts, and we’re trying to restructure the economy to bring back high value industries and high value jobs and that might cause a recession. And the reason that might cause a recession is the corporate sector in America has got very used to a model where we produce in Asia, as I said, at $3 an hour, we sell to Americans who are earning 36 as long as they’re prosperous and when they get poor, we’ll find somewhere else to sell to. And American corporations are very, very upset at that model. I mean, I quoted the teamster guy because Amazon is outraged that they can no longer buy cheap crap in China for $3 and sell it for 25 on the Amazon website.

Jeff Ferry
So stocks may go down, so there could even be a recession. Also, there was some strong positive momentum in the last year or two of the Biden administration. Remember the Biden administration ran deficits of one and a half trillion dollars, which is a very strong stimulus to the economy. Now I think it’s interesting. I think Trump and the Republicans say they’re going to cut that deficit descent. The Secretary of the Treasury talks effectively about cutting it in half. I think Trump won’t let him because Trump will realize that could cause a recession. So let’s keep spending money, but he will find a way to blame it on the Democrats. And I guess the last point I’ll make is that Mariana, like many people misunderstands Donald Trump. His goal is to put on the red cap and get on the stage and dance to YMCA and bond with the common person. But behind the scenes, he’s a very clever businessman. And when you look at the auto tariffs and you look at what’s happened in the last month, and I wrote a blog about this Nissan, Nissan, Hyundai, Toyota have all said, we’re going to move production to the United States. And I would bet a million dollars that he had those conversations in the White House before he proposed the auto terrace.

Mishal Husain
So

Jeff Ferry
He knows what he’s doing.

Speaker 7
Jeff, I’m not to your left.

Jeff Ferry
Hang on. I

Mishal Husain
Need to, can we come back to

Jeff Ferry
That thought? You the disc left.

Mishal Husain
Jeff, we’re going to come back to that thought, Stephen, because Jason hasn’t had his initial response. Could the president’s medicine mean a recession? Jason?

Jason Furman
Yes, except I would prefer it if we rephrased it as arsenic, not medicine.

Jason Furman
This is a very, very unusual recession. No one was talking about a recession four months ago. I have real criticisms of President Biden’s economic policies, but we had a 4% unemployment rate, healthy job growth, healthy GDP growth. No one was talking about a recession. Now every major forecaster has the odds above 50% and that is entirely caused by one person and one set of policy changes in my entire life and my reading of history, I just can’t think of anything else nearly as extreme as that. The issue that we have is the level of uncertainty is insanely high.

Jason Furman
There’s a measures that economists have. It’s higher than it was during COVID. It’s higher than it was during the financial crisis. There’s uncertainty about how uncertainty will matter. There’s also uncertainty about how much uncertainty there’s going to be three months from now. Steve, you think there’s going to be nirvana and free trade deals with countries around the world. We might be back to a 50% tariff on Otto and maybe a hundred percent on the penguins. If they’ve done something bad to us by then, anything could happen. We take two more drops of this arsenic that I’m sure will have a recession. Even if we stop the medicine right now, there may be enough in the works that those ships that are coming from China or not coming from China with nothing on them will spiral through our economy over the coming months. And the very last thing I’d say is the biggest problem we had before this was inflation. There’s no debate in the world that tariffs are a way of making that worse. Not better, Steve.

Mishal Husain
Okay. Thank you all very much. And we’re going to go into discussion on this now. Stephen Moore, can I come back to you? First of all, do you acknowledge economic conditions have deteriorated since January the 20th?

Speaker 7
Look, they have. I mean there’s no question about it. And I do think it is almost entirely due to the tariff wars. It’s the tariff tantrums. So the real question for people to think about is whether you believe that this is short as Trump said, this is short-term pain for long-term gain. We don’t know the answer to that right now. None of us know. Jason makes his prediction. He may be right. We will see, as I said, I have confidence that Trump will pull this out and that he will get deals with our major trading partners and we will end up with freer and fairer trade. And if that happens, we’ll see a lot of global economic growth. Jason’s right? You’re exactly right. Uncertainty is a terrible thing for the economy and that nobody what the terrorists are going to be. I don’t like the fact that Trump sometimes moves the goal line and that makes it difficult to get of the countries together. So we will see, I mean I want to have this whole gang back together in six months and we’ll see whether I’m right or wrong. So I’m optimistic about the US economy right now. I really am.

Mishal Husain
Okay. Sorry. You are.

Speaker 7
Yes

Mishal Husain
You are. Did you say temper tantrums earlier in your answer that you think economic conditions have deteriorated because of temper tantrums, tar

Speaker 7
Tariffs.

Mishal Husain
Tariff, tar tantrums. Okay, fine.

Speaker 7
The tariffs

Mishal Husain
Okay, because of the tariffs

Speaker 7
Fine. The tariffs have what caused this. Trump told us that there was going to be some pain from this and there has been. And look, I talk to manufacturers all the time who say, look, right now my production is really ground to a halt when Jason’s right, nobody knows what’s going to happen. But I do think Trump said that might even have an announcement in the next few days. And if that happens, I think that the economy can turn around very quickly.

Mishal Husain
Okay. You are optimistic. So do you think the markets are overreacting?

Speaker 7
The markets just in the last, it’s funny. I mean if you look at what happened, I just wrote a columnist on April 21st, virtually the Wall Street Journal, the New York Times, the Washington Post had all these front page, no story. This April is the worst month ever for the stock market. April is the, well wait a minute, it’s only April 20th. What’s happened since April 20th? We’ve seen a 2,500 point increase in the Dow. The Dow was up again. So that suggests to me over the last couple of weeks, Jason, that the investors are feeling more confident about things

Jason Furman
Honestly. Right? Every time Trump backs off one of his ideas, the market goes up. Every time he doubles down on his ideas, the markets on tariffs go down. Steve, I agree with you that if we get zero tariffs for the whole world that we will have a better economy,

Jason Furman
But we didn’t need to blow up the world to do that. We had zero tariffs agreed in the transpacific partnership with a really important set of countries in the world and it was Donald Trump that took us away from that. And I would say to you that the good case scenario when I talked to people close to all of this is that some of these tariffs go away, some of them stay and we end up with an average tariff rate of about 12%. Right now we’re at 20, so we come back down to 12. If we come to 12, the two most economically successful countries, and this is the fantasy scenario I’ve heard out of the White House, the two most economically successful countries with 12% tariffs are Iran and Venezuela. All the other ones are even worse than them. Is that your idea of end game

Speaker 7
Here? I don’t understand. Most countries have tariffs. They’re much higher than 12%.

Jason Furman
The average tariff rate, there’s numbers, Iran and Venezuela and a bunch of poor countries have 12%. Which country do you think has 12?

Speaker 7
Steve haven’t

Jason Furman
At the numbers.

Speaker 7
Canada has. We have a free trade agreement with Canada and they have all sorts of terrorists that go up

Jason Furman
50. Canada has an average tariff rate of around one point percent. If you think they have an average tariff rate of 12%, you don’t actually understand trade policy and don’t understand what’s going on.

Speaker 7
No, I’m just telling you what the numbers show. Average tar rate is one half percent. Steve, and these countries have much higher tariffs than you’re talking about.

Jason Furman
They have different tariffs on different things just like we do. But you look at the average across all of it, 12%, the place that is the fantasy scenario here is an extremely rare thing around the world. Only poor countries do that. And you want us to do

Speaker 7
That? We’ll have to look at the data on

Mishal Husain
That. I want to bring Allison in and then Jeff and Marianna. So Allison, what is your response to what you’ve heard so far? Well, because you highlighted both, not only the tariffs but the uncertainty,

Allison Schrager
Which apparently is part of the strategy. And I mean I keep hoping that we’ll just wake up tomorrow and be like, guess what? Low tariffs for everyone and it’s going to be smooth sailing, but it’s becoming clear that the sort uncertainty is also part of the strategy and we’re not going to have good growth. We’re not going to have hiring as long as there is uncertainty. And as people have pointed out that even if we do get a good deal, how stable does that feel? It was done by executive order or it could change day to day. I mean, even under the first Trump term, he did get a really good trade deal. I was at first skeptical they would improve upon nafta. He actually did improve it with UMCA and apparently some trade is still going through that, but it’s not even clear which one, it’s not even clear. He’s even honoring that. While I’m still hopeful that we’ll end up with lower tariffs than we started, that’s just seeming more and more likely because uncertainty seems to be a big court of part of that strategy and that’s very corrosive for economic growth.

Mishal Husain
Okay. Jeff, you said that yes, the president’s medicine could mean a recession. You seem to be suggesting that in order to with the aim of fixing the economy, that recession would be worth it. Is that what you think?

Jeff Ferry
Yes, I do. I mean, I agree that there is a lot of uncertainty in the economy today, and I wish that there was less and that Donald Trump would be more explicit about his goals. And like Mariana, I think that tariff policy ought to be targeted at specific sectors. But I think the corporate sector is unhappy about tariffs because as I said, they make huge profits. I mean, look, I was unlike most economists, I’ve worked in industry, I worked for a company called Nortel in the late 1990s. I was part of the team at Nortel. I was a marketing guy, so I wasn’t a manufacturing guy, but I was brought into the meeting where we decided to offshore all of our production from the US and Canada to Asia and lay off 40,000 workers. And one of the things, and the goal of that was, gee, to be honest with you, we couldn’t figure out how to compete with Cisco and Microsoft and Sun Microsystems, but we could certainly out how to cut our costs and the way to cut our costs was to dump all the unionized employees in Canada and the United States.

Jeff Ferry
So now we’re turning around to these kinds of corporations, the Trump administration is and saying, we’re going to try to put a stop in that, or we’re going to try to throw a lot of sand in those gears. We’re going to make it harder for you to offshore to, as I said, virtual slave labor in China and $2 an hour labor in Vietnam. The corporate sector’s upset and profits could go down and it’s a long game to get back to where the lower 50% of the population do better. We have undermined and minimized the middle class in this country.

Mishal Husain
Marta, can I ask you to respond to that and whether there is anything in what Jeff is saying that you would agree with, what do you think of the offshoring of and the decline of American manufacturing?

Mariana Mazzucato
Well, first of all, it’s quite interesting that the companies that are getting exempt, right, in terms of Apple and Microsoft, I mean those are precise. So if you look at what we’re hearing including in different surveys is that it’s actually the small medium enterprises that are getting the most hit, the large corporates that you’re talking about to a large extent, especially in some of the most advanced industries that we should be trying to develop. Again, coming back to the chips example are not going to be included, but I just wanted to say, look, we have a live experiment. We had the 2018 tariffs and we saw what it did to steel. So just in steel production it actually increased by a thousand jobs. But in all the steel supply chain, we actually lost 75,000 jobs because of all the costs. Similarly with agriculture in the first term, the Trump administration actually authorized, I have the numbers here, 61 billion in emergency relief payments to cushion the farmers from the impact of tariffs.

Mariana Mazzucato
That was an amount roughly equivalent to all the tariff revenue collected from the US businesses. So I always come back to this point, it makes little economic sense. And then he talks about the external revenue service, right? In other words, that somehow he’s also going to decrease tax for everyone and then through the tariffs, that’s going to make up the income. It makes no economic sense, literally the mass of it. So last year the IRS Internal Revenue Service took in close to $3 trillion and we imported at the same time 3.3 trillion in imported goods. So literally, if we reduce tax to the level he is saying, we will actually require a hundred percent tariff across the board to fill up the coffers of the so-called external revenue service. I just think we literally, I don’t know if you need economists here. There is no economics behind this. There’s no math by the way. So don’t get any mathematician here either. You literally just need political, I dunno, or psychologists psychiatrists do that. The next debate, definitely.

Mishal Husain
Okay, we’re nearly out of time, Jeffrey.

Jeff Ferry
I just want to comment on one thing that Mariana said. The myth that the steel tariffs led to the loss of 75,000 jobs is a myth and a crime perpetrated by economists using a deadly weapon called regression analysis. With a regression analysis, you can prove almost anything you want to see. What really happened with the 2018 steel tariffs is the US market share and steel rose by 10 points the leading US steel company. The steel industry you have to understand has two excellent companies that the technological cutting edge and one in the middle and then one loser, the loser is US Steel. The winning companies opened about 12 new steel mills, each of them employing 300 to 500 people. Steel prices rose according to the International Trade Commission by 2.4% in the United States as a result of the 25% tariff. We’ve seen this again and again, that US prices rose by a tiny fraction of the headline value of the tariff. So to find 75,000 jobs that were eliminated, by the way, there are dozens of steel manufacturers in our organization and steel buyers and they all love the steel tariffs. It’s almost the number one reason why

Jason Furman
That wasn’t a very persuasive argument for trying to cause a recession, which is what’s going on right now.

Speaker 7
One last thing before I know we have to break up, but Jason, in 2017 in Ottawa this happened. The G seven meeting happened and Trump said at the end, it’s been validated by news reports and I’ve talked to Trump about this. He said to all the world leaders, we’ll go to zero on terrorists if you do, and you know what? The Japanese, the Europeans ran out of that room as fast as

Jason Furman
He pulled out of a deal with Japan to do that. Steve,

Speaker 7
No,

Jason Furman
He pulled out of

Speaker 7
The deal. They ran away from the deal. So how can you,

Jason Furman
He

Speaker 7
Pulled out of it. Anybody who really actually believes that we have lower terrorists than the rest of the world, you’re not even including the fact. The first thing that happens when we sell something to Europe is they slap it with a 15% tax rate at the border through their value added tax, which is something we don’t have. We have an income tax, not about attack.

Jason Furman
It’s not a single economist on the planet on earth thinks a value added tax. It’s a trade distortion. It’s a tax based on the things

Speaker 7
They make there and the things, Jason, it’s a tax on our experts. It’s a tax on our experts on earth,

Jason Furman
Understands economics. He thinks what you just said. I know that’s what all the see Nazi sides of us. It’s two sides of

Mishal Husain
We’re calling the doctors in next. Okay, thank you all very much. That is all we have time for. There is full coverage of these past 100 days and the economic agenda as it continues across Bloomberg News. I’d like to thank our debaters, Jeff Ferry, Jason Furman, Mariana Matu, Stephen Moore, and Alison Reger. And I’d like to thank the teams at Open to Debate and Bloomberg who made this happen through our partnership and to thank all of you for being here and for watching wherever you are in the world. Thank you all. Goodbye.