Make Me Smart February 1st, 2023 transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kimberly Adams 

We’re ready. Let’s do it. Jake was ready too!

Kai Ryssdal 

Hey everybody I’m Kai Ryssdal. Welcome back to Make Me Smart where we make today make sense.

Kimberly Adams 

And I’m Kimberly Adams, this is “What Do You Want To Know Wednesday”. You bring the questions and we do our best to provide the answers. You can get your question on the podcast by leaving us a voicemail at 508-U-B-SMART, or you can email us at makemesmart@marketplace.org. And we occasionally respond to various contacts on social media platforms as well.

Kai Ryssdal 

That’s true. That’s true indeed

Kimberly Adams 

Yes. So our first question is about the oh, so contentious debt limit, our favorite topic, even though we sort of talk about it every day. Here we go

Simon 

Hi, Kai, and Kimberly, this is Simon in Astoria, New York. Why didn’t the Democrats raise the debt ceiling last year when they had control of Congress? Surely they could have seen that this fight was coming. Thanks.

Kai Ryssdal 

You want to take it? It’s a political question here is that it’s I mean,

Kimberly Adams 

It’s a political and it’s an economic question. But sure, why not? Look, there was some talk about doing it during the lame duck period. But Congress, you know, in a something I feel is like a mantra for us, Congress just didn’t do the work. It faced opposition from Joe Manchin, even on the Democratic side in the Senate, because he is the person who has often stymied the Democratic agenda in the Senate, and it didn’t have any Republican votes. So they were likely not going to get it through the Senate. And some additional context, the debt limit was most recently raised in December of 2021. And they thought it was going to sustain the federal borrowing through the beginning of this year. And so this is something that we knew was coming that the Democrats knew was coming. But knowing something is coming doesn’t mean you have the votes for it. And a lot of newly elected Republican representatives, you know, were running on the fact that they were going to hold the debt limit hostage until some serious concessions were made. If you recall, to those epic, 14 votes for Speaker of the House. And, you know, some of the deals that were made were around concessions over the debt limit. And many Democratic politicians have been calling for this ceiling to be raised suspended or eliminated before the end of last year, you know, as you were suggesting, Simon, but they didn’t. And so part of that was because they were instead focused on doing something else that they hadn’t done, which was passing a short term funding bill to avoid a government shutdown in December. Plus, you know, the Republicans that might have been on board to get something done, just said it wasn’t an urgent issue at the time. Wow. And, you know, it’s, it’s one of these things where we are… It’s supposed to be uninteresting. It’s not supposed to be this way. And I was like, two… it must have been more than two weeks ago, because this was before my vacation. When you were talking on the Weekly Wrap with I think it was Sudeep and somebody else about how, you know, everyone assumed it was going to get done. And all of this is just posturing in the meantime, but I don’t know, man. I don’t know.

Kai Ryssdal 

That’s exactly what I said at the time. It was Kate Davidson and Sudeep Reddy on the wrap on Friday, about three weeks ago. And they both said, “I’m pretty confident it gets done because the economy will crater if it doesn’t get done.” And I said, “Yes, I know that. But you guys were ignoring the politics.” But by that time, we were at seven and a half minutes, and I really had to go. But yeah, I think that’s exaclty right. I think people are ignoring the dug in nature, as opposed to last time in 2011. When you know, there were grownups in the room.

Kimberly Adams 

And may I also say that this was the exact same argument, we heard about the Speaker of the House vote. People were like, “oh, everyone’s complaining about it. But at the end of the day, everybody’s gonna fall in line, and it’ll be fine.” And sure, eventually, but for a good little bit of time there, it was not fine. And imagine something similar playing out over the national, or sorry, over the debt limit. That has way more consequences and not having a speaker of the house.

Kai Ryssdal 

Yeah, totally agree. Totally agree

Kimberly Adams 

All right. Next up, Jeff, in Texas. Why don’t you take this next one Kai?

Jeff 

Hey, Make Me Smart. This is Jeff from Austin, Texas. I got a question about the whole, like, Biden loan forgiveness thing. So that’s obviously like tied up and I was just wondering, are there other ways he could do it? Like, for example, could he just lash interest to zero so that they could only pay on the principal? Just wondering if that’s the solution to this whole thing. Thanks for always making it smart.

Kai Ryssdal 

Well, so maybe, or maybe not as the answer, Jeff. So look, this is… this is… we should have done this when we had Amy on right, because Amy covered education a really long time. But here’s here’s the spiel on the Biden student loan forgiveness plan. It depends on something called the HEROES Act, which gives the Education Secretary, which is to say the president, the ability to waive or modify student loan balances in the event of a national emergency, which is the pandemic, right? That’s where we have been for the last three years and the state of emergency by the way goes away, like in May or something. The opponents of course, argue “that is not the way the law is supposed to be used. And oh, by the way, is the pandemic stolen national emergency.” So there’s that. Supreme Court hears arguments in lawsuits at the end of this month, the administration court says it’s confident the opponents of the administration say of course, they are confident. So you know, the justices get to decide. There are Democratic politicians mostly on the left, right? the progressives, who say they think the Biden administration really ought to just try harder or to find better lawyers basically, and use a different law. They say the administration could use something called the Higher Education Act to justify student debt relief. Yeah, maybe, maybe not. It’s actually really, really challenging. And there are ways and permutations that the laws can be used to cut principle can cut interest payments can cut all of that stuff. But it’s all going to wind up in court again. And I think the Supreme Court has not heard the last, honestly, they’re gonna rule on this thing at the end of the month, or hear on this thing at the end of the month, and then rule, as Nina likes to say a decision is expected by June. But it’s going back to the court for sure. So the answer is maybe they couldn’t, maybe they couldn’t, but the lawyers are gonna sort it out. You know?

Kimberly Adams 

Can I tell you something totally unrelated about the Supreme Court?

Kai Ryssdal 

Of course

Kimberly Adams

One of the best things in Washington is like the people watching, and I was in an Uber today, and I’m pretty sure that I saw Ketanji Brown Jackson on the street.

Kai Ryssdal 

Is that right? That’s cool.

Kimberly Adams 

I was like, “There’s no way I just saw her.” And then I looked at it was like one of the streets that leads from where the Supreme Court is. And I was like “it might actually be her.” But you know,

Kai Ryssdal 

That’s so cool.

Kimberly Adams 

I was driving past. Yeah, though that was kind of cool. Anyway. I know it sounds cool in that way. Yeah next up

Greg

Hi, this is Greg from Providence, Rhode Island. And I was reading some conservative media that they’re claiming the Trump tax cuts have been paid for. I just wanted to know if that was true. Please make me smart.

Kimberly Adams 

Okay, this one is complicated. The short answer is no. Right? Because even though corporate tax receipts have gone up recently, it was not because of the tax cuts and Jobs Act paying for themselves. So for this one, we got help from John Buhl, at the Tax Policy Center. And here’s what he said… Even when the tax cuts and Jobs Act was passed, no scorekeepers, like the Congressional Budget Office or the Tax Policy Center itself, had any thought that the legislation would even come close to paying for itself. And we did a lot of stories on this at the time, that it was not going to pay for itself. The CBO actually estimated that the Tax Cuts and Jobs Act would add $1.9 trillion to the debt in the first decade after the cuts were passed. And that’s even after considering additional economic growth, that those tax cuts were supposedly going to bring. And this is the argument that you’re often going to hear from people who are supportive of these tax cuts was that “hey, those tax cuts for businesses boosted economic growth and therefore, you know, that offsets it.” Now then, last year, there were some Trump administration economist who argued that those cuts themselves had indeed, boosted growth enough to help boost those tax receipts and in addition, boost corporate tax revenues and do all these magical, wonderful things. But, you know, back to John Buhl at the Tax Policy Center, they debunked that. They said that the corporate tax receipts initially came in below what was forecasted. And when I say corporate tax receipts, I’m talking about the tax money that corporations are paying to the US government, which is, you know, proportionally a lot less than you might pay to the US government, but whatevs. Corporate tax receipts initially came in below what was forecasted after the Tax Cuts and Jobs Act passed. That did change after 2020. But that wasn’t because of the tax cuts. It was because of the trillions of dollars in federal stimulus and loose monetary policy from the Fed and the work from home helping businesses maintain more productivity than expected and a bunch of other factors related to the terrible, awful pandemic that killed more than a million people in this country. So the tax cuts are likely in the news again, because there are a lot Republican lawmakers, who are, you know, some of them preparing presidential or Senate or whatever runs, but also many who are getting ready to push to make some of the individual income tax provisions in the Tax Cuts and Jobs Act permanent. Because as often happens with these big pieces of legislation that barely get through, some things end up sunsetting in the law, and then there’s another push later on, to make it permanent. So you know, if you ever hear us talking about tax extenders, God helped me, that’s basically stuff that was passed into law years and years ago, but has an expiration date on it. And so every so often, Congress will have to vote to basically keep something going. Something similar is happening with the Tax Cuts and Jobs Act, where Republicans are trying to make some of these cuts permanent and tweak some of the business tax provisions. Plus, you know, 2024, it’s just not far away. I know that was super complicated. But the short answer is no.

Kai Ryssdal 

The short answer is no. And a good rule of thumb, when somebody tells you that the tax cuts are going to be paid for, there is no tax cut in the history of tax cuts in the American economy that has ever been paid for. Full stop. Yeah. So yeah, the answer is no. All right, here we go. Next one, hit it.

Rachel 

Hi, Kai and Kimberly. My name is Rachel from Redding, Pennsylvania. Last Thursday, you said that the percentage of people in unions has gone down, even though union membership seems to be on the rise. I’m curious if there are union drives happening in more white collar industries, specifically, tech jobs. It seems as though places like that would benefit from unions and the representation that they provide. Thanks for breaking things down for me, Rachel.

Kai Ryssdal 

Yeah, so the short answer is yes to that question. But look, here are the numbers. Lots of people are joining unions nowadays. 273,000 people join unions in 2022. But as I think we said at the time, the percentage of people in this economy, who are actually members of organized labor and are in union shops is 10.1%. Very low. Low by historical standards. And if you want some comparison 1983 It was 20.1%. So unions are incredibly popular right now. We’re seeing that in Starbucks. We’re seeing that all over the place. Lots of people are joining unions, and they are actually petitioning or trying to join unions in white collar occupations. Places like Amazon Activision Blizzard, Zenimax, which is owned by Microsoft are trying to unionize. There are pushes for unionization there. It was also actually in the Democratic House last year, in the House Representative. Staffers there voted to unionize. I think the Republicans now that they’re in charge, or either have or will perhaps Kimberly, you know this, either have or well said “no, no, no, there’s not going to be any unionization in the house representatives.” So there’s that. And look, white collar workers join unions for the same reason that that blue collar workers join unions, right? They want job security. They want guarantees from their employers about things like staffing and hours and overtime and security and all of those things. It just it’s it’s the protections that are needed are the same, even though the basic pay scales may be different in the occupations. The kinds of work may be different. Unionization is popular for the same reasons. I don’t know Kimberly what do you think? I didn’t hear it. I saw it go by in my Twitter feed but I think somebody has the tape. Yes?

Kimberly Adams 

Yeah. And well, I mean, a very easy one to look at is the media industry. You know, we are white collar workers, on our good days. And, you know, there have been lots of news organizations that have unionized recently, including our own, and so like, yeah, it’s definitely a push, and it’s a change. And I think, you know, we had a show on this and I imagine that Marissa and other folks will put it in the show notes, looking at why unionization is happening differently now than it is. It’s a lot of these smaller shops, unionizing one by one as opposed to sort of getting 10s of 1000s of workers signing up for a union, you know, at a factory all the same time. And so, yeah, times are a-changin’. Okay, one last question. Lee from the DC metro area wants to know, “Did you hear the plug for Kai from Peter Sagal? Peter Sagal, Yes. On Wait, Wait… Don’t Tell Me. I didn’t hear it. Did you?

Peter Sagal 

In recent years apparently we have been bombarded with like cool and attractive names for things we really should be afraid of like mega drought and polar vortex and Kai Ryssdal.

Kai Ryssdal 

That’s pretty good. Pretty good. I love Peter Sagal. I love Peter Sagal.

Kimberly Adams 

Are people afraid of you Kai?

Kai Ryssdal 

I don’t think so. But you know, what…. Is it a compliment? I don’t know?

Kimberly Adams 

I mean you just got compared to a natural disaster.

Kai Ryssdal 

Was he was he ragging on me. I guess maybe he was. I’ll take it though come on. I will take it. I will take, oh my god. And on that note we are out of here but What Do You Want To Know Wednesday comes to an end with a very unique piece of tape. If you’ve got a question for us about business or the economy or tech or what Peter Sagal said on Wait, Wait… Don’t Tell Me. You know how to get a hold of us. 508-827-627. 508-U-B-SMART or makemesmart@marketplace.org That’s too funny.

Kimberly Adams 

Make Me Smart is produced by Courtney Bergsieker. Ellen Rolfes writes our newsletter. Our intern is Antonio Barreras. Today’s program was engineered by Jayk Cherry.

Kai Ryssdal 

Ben Tolliday and Daniel Ramirez composed our theme music. Our acting senior producer is Marissa Cabrera. Bridget Bodnar is the director of podcasts. Francesca Levy is the executive director of Digital and On Demand. Boom