Congress Has to Change Its 19th-Century Structure, Harman Says

Bloomberg Surveillance on Bloomberg Radio. As you've mentioned, it's you and General Assembly week here in New York and making fun of the traffic, but a big deal here is more than a hundred heads of state, world leaders descend on New York for meetings and dinners and the like, and of course President Trump in town schedule to address the UN General Assembly tomorrow for the first time. Converressman j Flober, Congressman Jan Harmon with us here now in

our Bloomberg studios. Former Congressman now at President of the Woodrow Wilson Center in Washington and DC. Great to have you with us. What are you gonna be listening for tomorrow? This is a big deal, suffice to say, to have this audience to be in that space. What are you gonna be listening for from the President tomorrow? Well, this is a chance for him to recalibrate his foreign policy.

I uh, I think his inaugural speech was disappointing, and here's a chance on a world stage with world leaders for him to sound much more visionary and hopeful, and he should take a chance to take the opportunity. In my view, he's also having side meetings with all kinds of folks Europeans, Africans, and he's having lunch with the heads of South Korea and Japan on Thursday. North Korea

will be the top of his agenda. And again, North Korea is an international problem, It's not just an American problem, and he needs to make the sale to the whole world about why we should work together to contain North Korea's missiles and nukes. What's your your sense of how he regards the United Nations at this point? Important it

is to him and his foreign policy portfolio. I do note that NICKI Haley u s ambassador to the U n Front and center, perhaps even more so than than his secretary stay talking about global issues, including the North Korea crisis as well. Have you seen an evolution in his thinking about this multi, multi ladder institution. At least well, he made a terrific choice in Nicki Haley. Um. Who knew that the governor of South Carolina would be such

a star on the U N stage? But she is. However, Um, my understanding is he's cutting her staff in half and this will be a place where he announces rolling back US foreign aid. As a member of Congress, I always was amazed when my constituents would say fifty percent of the budget goes to foreign aid. Well, excuse me, it's less than one percent of the budget, and it is

probably our best foreign policy tool. You were on the Intelligence Committee, the Homeland Security Committee, the Armed Services Committee. I really have a great sense of the way that security apparatus works in Washington, d C. You talk about staffing being cut back, security aid funding being cut back as well. How problematic is that to your mind? Um?

This president talks about reform of the UN, talks about reform of all of these institutions, has even joked about to Russia sending back a bunch of diplomats that's helping the bottom line. From from from a perspective of actionable policy, how affected. Are these institutions as a result of the cuts that we've seen thus far or the positions that

have gone unfilmed. Well, let's understand that I don't think Congress will stand for this, and I think many in Congress Lindsey Graham comes to mind, many in the President's party will restore the funding. So let's go there. But if the seventh floor, which is the main UH floor of senior people at the State Department, is empty, how can Rex to listen succeed. So that's the beginning of the of the problem. But in addition to that, UM

Jim Mattis are are very capable. Secretary Defense says that UH military policy has to be lashed up to diplomatic policy or whatever you want to call it for UH non non non military policy, and without people, you can't do it. Madam arro Space, that's what my father called you. You you were the congresswoman of the aerospace industry. Anyone would always say that you had a wonderful understanding of aerospace.

Are you taken back by the merger frenzy among defense contractors and in this highly technological expertise that we have U t X. Rockwell Collins of cedar rapids, and now we've got Orbital Sciences being crow bought out by north Room. Come on, it's all gonna be one big company, isn't it.

Is that what you want? Not so much. Perry, who was an extraordinarily good Secretary of Defense back and you know another century when Bill Clinton was president, had what was famously called the Last Supper, and that was with heads of defense firms. This is not a yes. And his point was that the UH defense procurement budget is getting smaller. We all thought there would be a piece dividend after the end of the Cold War, but at any rate, UH, and that these firms should consider merging UH.

And they also did consider. This was something I'm proud of going into UH many non military activities, dual use activities which made them stronger. So I'm not surprised to see continued mergers. The advantages that many of these very good firms, and Northrop is one of them, UH will be UH good stewards of this new acquisition. The disadvantages you lose the nimbleness and the flexibility of the smaller firms.

So I think it's a mixed bag. I'm strongly for a strong defense, as you know, and Madam Mary's space ain't bad. I used to call myself Boeing's mother was out of Boulder, Colorado. They played dead like nobody. Jane harmon with us the thirty six district, of course, at the Woodrow Wilson Center. Now we continue, Jane, there was that couch scene the other day, speak your Pelosi majority leader Schumer and some other guy from the other party.

Can the Democratic Party migrate over to Jane Harman's Democratic Party or is it going to be Clinton Pelosi forever? Well? How's this? What's the What are the young kids gonna do? Are they going to refine you in Scoop Jackson? Yeah? Well, I yes, I have called myself a Scoop Jackson Democrat for years. I actually knew him when I was a Senate aid in the early seventies and he was he

was Boeing Senator. So from from Washington State. But yesterday in this town there was a meeting of something called the New Center. The New Center is an idea factory co chaired by Bill Crystal and Bill Galston. Uh, imagine that. And it has produced a set of ideas and I think are very attractive to both parties. So that's out there. Maybe it'll get traction, Maybe people will move to the center in both parties. Okay, Secretary Clinton's out in a book tour taking a victory lap. I guess, And we

had all the uproar last week. David gurg covered it really well in politics. Congresswoman Harman, how do you win minute? How do you win Michigan? How do you win Wisconsin? How do you win the rectangle that looks like Tennessee? That was your district east of l A. Well, I won in a lean Republican district. Now, how did I in my first story terms? How did I do that? I had a vision of where we were going that uh people bought. You got to have a vision. It's

not just that the other guy's bad. It's why you're good when you left it. When you left the Congress, things were i'll say, getting bad in terms of partisanship, in terms of the ability for Congress to get things. Then we saw another continuing resolution here kicking the can for three months. Now, what do you say to those who are just completely skeptical of Congress's ability to get anything?

And what's it gonna? What's it gonna bring what's gonna bring you back to regular order in the US Congress? Do you think, well, I believe in Congress. I did leave because of the toxic partisanship, and I got a better offer to be in a bipartisan, nonpartisan intellect fund. Yeah, but not for me. It's not invest in me. It's invested in in amazing, brilliant ideas. So which is an easier sell, got to say. But at any rate, I

still think Congress can work. There's so many people there who want to do the right thing in both parties as they define it. What's wrong is the is the business models broken U. The game is to blame the other side for not solving the problem. If you work with the other side, you get primaried. California has figured out a better answer. We have UH citizen commissions to

draw lines. We have what's called a jungle primary where everyone runs against everyone, and that way you have to listen to other people and be open to other ideas. There's been a tendency to fix Congress by trying to blow it up. UH, And I wonder what you make of the way that many elected representatives have pursued that who has the institutional knowledge the memory, uh, to figure out the way that the Congress works, and to to

find solutions that will actually improve the way things working. Right. Actually, I like the last part of that question about improve Congress has a nineteen entry committee structure. I mean, why do we need an agriculture committee when we don't really have a Homeland Security committee with with ample jurisdiction, uh, etcetera. So I do think Congress has to change, and being disruptive is not a bad thing, but being disruptive with respect for the institution is the way it needs to happen.

We do a huge thing on STEM here. Thank you, New Jersey Institute Technology. You're Smithy, that's the ultimate liberal arts Massachusetts school. Tell me how if it's science in the new curriculum, A woman of the liberal arts, how do you fit science and math into the new liberal arts curriculum? Boy? Was that a softball? First of all, I applied early decision to Smith having never seen it from public school in Los Angeles. So very cool. Uh,

it was very cool. And Smith was the first women's college to have an engineering program and it's had it for years, So just so you know, so it's not so, how do we get quickly here. How do we get women to stay in math, stay in science and do it like the women that made Cassini I by making it more easily available and making it cool. And you ask about it on your program every single day, and more women will tune in and and put mentors on your program and they'll do it. We try to do it.

I know you're still congresswomen keep funding jp L Jane Harmon Madam Merrow Space from California has something to do with the school in New Jersey now as well. This is Bloomberg Ratter joining us now in our Bloomic eleventh three US too is the chairman of will It Advisors. UH great to have you with us here. Let me start just by asking you about the week ahead. Yes, we have the FED. We also have a lot of traffic here on the upper east side of Manhattan's the

UN General As simply gets underway. The President scheduled to speak tomorrow before that that international body. What are you gonna be listening for? We had a list of what this administration is prioritizing from UH, the U S Ambassador to the U N and from the National City. Your advisor on Friday reform high up on the list. The President attending a meeting about UN reform today in particularly, what are you gonna be listening for tomorrow? Well, as

you know, there are really two Trumps. There's the there's the more congenial, more broad, broad looking Trump, and then there's the more of the the ugly Trump. And it will be interesting, especially with Steve Batton gone from the White House, to see if we get more of the good Trump. Now, even some of of Trump's more experienced people do favor reforming the UN, cutting what we pay

to the U and things like that. So I think in the speech is obviously going to be presumably a hunk about North Korea, UH, and there's going to be a piece about how he sees the UN going forward. He does not like multilateral institutions. I think we've learned that about his personality, So it'll it'll be interesting. It could be a pretty tough speech. It could be a pretty tough speech, but I suspect he'll stay within the fairway.

How do you assess the efficacy of sanctions? We saw the U. N Security Council apply another round of them last week on North Korea. There's talk perhaps of Moore. We've had them in North Korea, on Venezuela, on Russia, on a number of other countries. How do you know if they're working? They I think sanctions at best take a long time to work. You can go further back in history and you look at Rhodija, you can look

at Cuba, you can look at Iran. Uh You're talking about things that take decades and may then even have no effect, and then at some point you just decide unwind them. But look, we have a limited toolbox of things we can do about North Korea short of military activity, which I don't think anybody thinks is a good idea, And sanctions are simply are simply one part of it. And I think I would give the President and Nicky Heilly in particular high marks for getting a fifteen to

nothing vote on a set of sanctions. And I think I think if you take out Trump or Trump has said, somewhat Trump has said and most of his tweets, the actual things that are being said by Rex Tillison and Nikki Hilly yesterday on the Sunday shows the way. It's the way the professionals are handling this is actually I think about as good as it gets. But there is the green marble of the u N. There is something about walking into that time warp of middle sixties architecture

and walking into that Assembly hall. I'm assuming he's never done that. He's going to go up there against that green marble and act at what ecumenical? Is that the right word? I mean, what if somebody pops off and says something, What if like somebody who's kind of somebody puts some you know, do you think he's gonna stay on message? I think he is going to stay on message. I just don't know what the message is, right. And

the Secretary Tillison's showing up, I assume. So every Secretary of State in history has been at the UN General Assembly week as far as I know, I assume. So Look, my my guess is that you will get. My guess is that he will get a measure Trump who will be tough about the u N and say that there should be changes and it's not as effective as it should be, etcetera, etcetera. And I think he'll be tough on North Korea, but I think he will stay inside the fairway in terms of talk. And I'm not even

a Golfer. But I think it will stay in the fairway in terms of the kinds of things. He says, I believe President She's not going to be here play President Putin is not going to be here as well. How much a vacuum does that leave? I mean, I think of of of the two countries on this globe that have the largest impact on a number of these big issues, be that North Korea or Syria. Uh, is it going to be a hindrance to actual things getting done by them not being here in New York? Yes?

And no. I think obviously in the modern world there's certainly communications back and forth with their people that will allow things to happen. But but I think it does. I think we do lose something because I think I think having our president have a chance to bilaterals with Putin with g is an important part of trying to diplomatically move the world forward. God, twelve seconds left left?

Long time? Can you own an Apple? Here? We've had really different a different set of opinions over the list, that's what. Yeah. I have never owned Apple, not because I don't like the company and obviously been wrong. I think I think they've done a great job I think that I think the existential question for Apple is what is the next act? And as Tim Cook able to

produce it? You know, Steve Jobs, if you just think back to when Steve when this thing made, When when Apple made some computers and that was kind of it, and Steve Jobs said well, We're gonna make a phone, and every said what And the phone is now over half the business, as you know, and the iPad and the Apple TV and the I Watch and all of the others now and now all the media stuff. The question really is, can Tim Cook produced an innovation on the scale of the kinds of things Steve Jobs did

that really transform the company? Steve Wrotner, thank you so much for you in perspective. How do you get around town? I do a lot of walking guy a helicopter. I I try not to go a little sixtieth Street and I do a lot of walking. You would be at

Steve Wrenner, thank you so much. As Willow Advisors should point out an investment advisor to Michael Bloomberg, the principal owner of the company and also of course owner of Bloomberg Radio as well, Alan Krueger here in Bloomberg eleven three US to the professor of Economics and Public Policy at Princeton, former chairman of the Council of Economic Advisors

under President Obama. This this week, the President has proclaimed this week to be Prescription Opioid and Heroin Epidemic Awareness Week. He's talked about opio addiction the problem of it in this country a few times. I don't think he's gone so for US to declared a national emergency yet, but it is certainly indicated that might be that might be coming. We talked about it in a social context, help us frame it in an economic context. How big an issue is this for the US at this point? Well, I

give the President credit for talking about the issue. I think it's important that we also take some concrete actions, and I was hoping that the commission that he set up would make proposals to try to reduce the crisis. I've been doing research on how the spread of opioid use has been affecting labor force participation, and as you know, David, we have a problem of low labor force participation in the US that's run into the opioid crisis. And I

think those two problems are now intertwined. When I look at prime age men, UM, I find that almost half for taking pain medication every day. Two thirds of those people are taking prescription medication. And a new study I have that I just presented at the Brookings Institution last week, I found that areas of the country where more opioid medication is being prescribed have seen bigger decline in labor

force participation. Of course, there could be other factors behind that, but from what I can tell, this is possibly depressed UM the participation rate by more than half a percentage point for prime age men. Again, we're talking about the through the economic factors here. When you look at the conversation about this issue in particular, how much dialogue has there been among economists and social scientists and addiction specialists

and medical doctors. You mentioned the commission that the President established. I don't think that there was a medical doctor on that committee of four or five individuals. Are you satisfied as you look into this that the kind of dialogue we need to have is taking place, incorporating your economics with the medical side of this issue as well. There's a lot of fascinating research that's being done. UM. Some of the results quite depressing. I'll tell you an example.

I have a colleague, Janet Curry, who has a study which finds that doctors who attended lower ranked medical schools are more likely to prescribe opioid medication, looking within the same county, looking within the same field as specialty. Um. So I think there's fascinating research that's being done. I

haven't seen much interest from policymakers yet. Alan Krueger were this folks, And again, as we like to do from time to time, particularly with someone with a reach of professor, Krueger has moved away from the usual, which is jobs in the economy, to his important work of Brooking's paper Run Opioid and and such. Um, there's some wonderful first order difference equations within your report, and maybe even so an oiler function because we're not quite sure. There's lambda's

and other Greek letters. What the public wants to know is Horse and Kurt, which is almost economics one oh one. Do the drugs cause the unemployment or does the unemployment cause the drugs? Well, that's an excellent question. And I appreciate Ton that you have a copy of my study right next to you. I really appreciate that. And you cut right to the heart of the matter. So I

appreciate that. You know, I think the arrows point in both directions, and in certain level, the initial causality is less important than the reality that this is a problem that needs to be addressed. This is so important. You nailed, You go right. It goes in both directions, But political discourse is no, it goes in this direction, and the other side says no, it goes in that direction. Can we get compromise on the couch in the Oval Office

on opioids and drug addiction? This heroin epidemic that we have no I think there is widespread agreement that this is a significant problem, and I think that came out in the presidential election. Um, there's been very little discussion about what to do it about it. I mean, let

me give you another example time. And one of the findings in that in that Brooking study is that three quarters of the prescription pain medication that man a rather the labor force are taking is being paid for by Medicaid, Medicare or Veterans Administration program. So the government does have levers to try to influence the initial prescription, and that does seem to be a source of a lot of the addiction. Even if people move to illegal drugs, it

seems that they're addiction is starting with prescription medication. That's such a good point. And on the subject of a legal us, I mean there's another economics issue here as well, which is just the relative cheapness of a lot of these drugs. They're easier to get, and they're they're less expensive as well. Well. That's part of the problem. The New York Times had an article today about insurance companies

being reluctant to prescribe more expensive but less addictive pain medication. Uh. And that comes down to economics, and I don't think the insurance companies are taking full account of the cost of the externalities of having over thirty thousand people a year or die from opioid abuse. We are our parents lectured us on heroin. It's what they were afraid of, and it was all you know within the culture and the music. This is completely removed from the drug culture

of twenty or fifty or a hundred years ago. And it's almost an economic discussion, isn't it about fenl or whatever it is. It's they're cheap and it's am I right, It's just there, it's they're cheap, it's highly addictive, and it's very powerful, and it's there and it's available. It's available. Isn't that fixable? You know, this problem is almost unique to the US. You look at the rest of the world, They're not going through this type of how do you fix it? Give me the gimme after the first order

difference equations. What's the Kruger solution? Well, I think there's some obvious solutions. In some states have started with this limit the number of pills that compete, that people get the initial prescription, make them come back and see medical profession, professional doctors. I think the medical profession bears a lot of responsibility. And you go to Manchester, New Hampshire, which I guess its ground zero in New Hampshire. Do you

blame the doctors? Do you blame the hospital? Do you blame Raytheon for pulling their business out forty years ago? I mean, where's the Kruger blame here? Well, you know, Tom, I'm focused on solutions, not on blames. So I think what we should do is say, how do we solve this problem? Figuring out an assigning blame when there's plenty of blame to go around is not terribly helpful. Is

this something? When you were cheering the Council of Economic Advisor, you would have these the access to somebody at DHS. In other words, how hard is it to get all of the parties within public policy to the table, to get folks heading up different agencies to meet with the White House to to work on these kinds of solutions. That's not hard at all. What the government is great at his meetings? Uh? What I found when I worked for President Obama at the Treasury Department at the White House.

Government is great at meetings, good at talking, good at listening. Action is more difficult, and particularly the action requires Congress. We've been talking around this a little bit here, but tell us just what data you looked at. How difficult is it to come by data on this subject of opioid addiction in particular? I started using a survey called the American Time Youth Survey, which is a real gem.

It's collected by the Bureau of Labor Statistics, and it had a supplement which I helped frankly to design, which asked people about their experience with pain and whether they took pain medication on the previous day, and when I started the study, I didn't expect to find what I found. You know, that survey found that in two thousand and third, teen of prime age men to fifty four who were not working, not looking for a job, took pain medication on the day of the survey. And I didn't know

maybe it was aspirin. You know, you feel differently if it's aspirin. So I did a survey myself where we identified about six men who were not in the labor force, same age group. We found that of them had taken pain medication. Two thirds of that group took prescription pain medication. And then I dug deeper in that survey. The c d C does a survey on people's experience with pain over time. It's a very big sample, uh Amazingly. One of the things that data shows is that pain has

not been declining. In spite of the fact that we've almost quadrupled the amount of opioids that are being prescribed. Pain for men or out of the labor force has actually been gradually rising over time. And I think there's a lot of other evidence that suggests that this treatment is not working. Um. So I used a variety of data but those are the main sources. I ask you just about the role economics can play in solving or

leading to a solution for social crises like these. As Tom was saying before we went to break um, this is something I think more people are talking about. Unfortunately, I think more people have experience with looking back at the history of of of economics and the way that it can influence discourse and conversation about issues like these. What's the role of economics in a conversation about hope

we had addiction in this country? Well, I think economics has an important role to playing, frankly, in all policy issues. I don't think it should be the only voice at the table, but I think it's an important vote, important voice. And in economics, we tend to think about incentives. You know, we we were pretty good at at at calculating costs, and we're pretty good at considering incentives. People don't always respond the way we think they should respond, but we

can think about what the economic incentives are. And I think this crisis is in part a result of economic incentives. It's in part a result of uh economic weakness and for three decades having a hollowing out of the middle class, and I think it's in part a result of incentives in the health field. Tom mentioned Manchester, New Hampshire is certently affecting some local communities more acutely than others. Although I would say with it with a broad brush, it's

it's happening across the country. When you look at this on a regional basis, are there places who have it worse than others? Absolutely? You know, if you look at prescription UH opioid medication and you compare the top temper cent and the bottom temper cent across America, it's a factor of thirty to one. So uh, I don't think there's any way that pain varies by thirty to one across counties. Um as best I could tell, it doesn't

vary by anything like that. So I think the medical profession practices, and we find this across medicine in many different fields. If you look at herne operations, if you look at cines arian sections, they're big variability. There's very big variability across regions. The Krueger style is rigid, rigorous economics and Matthew nous and then you will have a paragraph that you parachute in with and here you quote

Hillbilly elogy all the rage right now. J D. Vance, you quote Rick and Jackson, Kentucky, and you Crow's case. You quote Case Dton Angustaton the laureate. Uh and in case doing better than good on the depth of the deaths of despair. Okay, So there's a medical community and there's a fancy pants medical community. Is this about second rate doctors are the doctor's victim of the incentives? How do you blame the physicians um prescribing the medicines for

the deaths of despair? Well, I think some of it's seen scentives for the doctors think they don't have enough time to properly treat many of their patients. Sometimes there and so come on there and it's like sixty minutes last night. Basically it's a drug commercial with Steve Croft wrapped around it. Come on, these guys are are incentivized to move drugs, right am? I right? That was gonna be my next sentence. Uh, they're incentives pushed them in

this direction. Um. So I don't think they're necessarily bad people, but I think many are responding to the incentives. They phase pivot here and just ask a few questions about and leading up to this meeting, that's FED meeting this week. Earlier in the show, I was saying, real economics, we

could just to close things up. But uh, we were talking earlier in the show just about the focus that we've had on inflation in this country in particular, it seems like we've talked less about the labor market as a result of that. Certainly the FED is grappling with with both, although it seems like increasingly the part we're focused on on its inflation. How does the labor market look to you at this point? How concerned are you about slack? How concerned do you think this feed is

about where the labor market is at this point? Well, what I say is there's a lot of slack, but it's not effective slack. So eleven and a half percent of prime age men are not in the labor force. That's certainly slack. It's not effective in the sense that they're not all that likely to come back to the labor force even if the economy picks up. And I think it is related to the opioid crisis that we've

been discussing. Um So I think the problems are connected. Obviously, given that the surprise on the low side and inflation the last six months has taken a lot of people by surprise. UM. I think that does deserve a trend, this amount of attention. The last cp I picked up a bit. I think that will give give analysts a lot to chew over um and there'll be more a lot more information coming in December on the opioid issue. And and that percent of the workforce, that second of

the workforce you're talking about. This FED must be as flummixed as everyone from a policy perspective about this issue. How tighter its hands, how tighter FED policy makers hands when it comes to dealing with this, this crisis in particular. Well, I think this is beyond the FEDS, UM, But it's a crisis that they're focused on. Janet Yellenside in the opioid crisis and testimony a couple of months. Have they acknowledged it enough? Do you think? Um? I think it's

something they're aware of. I haven't seen research from the FED staff on the issue yet, but maybe that's something they happen the works in time. We got left two ideas. The first one is my long read of the weekend was Allen blind to the former vice chairman of the FED, writing about his magnificent co author of a classic economics textbook, William Baubo. How does that process go if Princeton, where you honor a giant as you did with the death

of William Boma. Well, Bomble, as I've said on your show, was a real giant in economics, and in many different ways, unaccountable contributions were extraordinary. I mean in his eighties and early nineties, he was more productive than most economists are throughout their career. Uh. Bombl's cost disease is something I teach to my my freshman class. Uh. We we have a process when we have a university wide faculty meeting early in the fall to recognize colleagues who have passed

away in the past year. Uh. The factory member rights a statement. It's supposed to be a joint statement, but Alan blinders such a beautiful writer. Alan Alan roaded himself and Bert Malkill and I signed onto it asked him not to change a word. It was such a beautiful statement about Will's contributions. And the final thing is it is a travel Monday here at Bloomberg Surveillance where we ask all our guests about how tough was a trip. To tell us about traveling to last talk to Dr

Krueger from from the Canals. First of all, I'm obliged to point out that I was in Europe because I went to an economic conference that was in Croatia, and the easiest way to get there was to fly. Then it's rent a car and drive a King's landing and abrupt that was further north. It was umag beautiful, beautiful part of Europe. I had never been to Croatia before and it was a very very fine conference that I attended.

You didn't answer the question. Venni Venice was lovely as as I've I've only been to Venice a few times. It's lovely as it's been each time I visited. Very good. Alan Krueger will have him a joint interview with Luigi's The Constance. Yes, trips to like come O in the like, but yes, well I'm not I don't read o Keeper of the MX as No. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

or whichever podcast platform you prefer. I'm on Twitter at Tom Keene David Gura, Is that David Gura before the podcast? You can always catch us worldwide. I'm Bloomberg Radio.