Where's the Infrastructure Money, Goolsbee Asks

strong because our people are strong. This, in fact, is our new American moment. There has never been a better time to start living the American dream. America has also finally turned the age on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our wealth. Under the current broken system, a single immigrant can bring in virtually unlimited numbers of distant relatives. Under our plan, we focus on the immediate family by

limiting sponsorships, two spouses and minor children. I am extending an open hand to work with members of both parties, Democrats and Republicans to protect our citizens of every background, color, religion, and creed. That was the President of the United States Donald Trump in its first State of the Unit address, and I get to say good morning to Tom Kane for what it's been like. What tomp over a week,

two weeks since you and I've been together. Yeah, we missed an he throw by twenty minutes, we actually did. You were going to a work. That's right. That was an interesting um So I really like that string of highlights from the speech. We can talk later about the one one paragraph that alluded to maybe the Department of

Justice in the uproar over Mr Mueller. But away from that, the clear consensus John I got from experts this morning was there was very little policy within the speech that they've I don't want to say they've run out of ideas, but usually in a modern State of the Union speech there's idea one, idea too, the idea three. I didn't hear that last night. There were themes without policy specifics. You can pick up on trade, he talked about the theft of intellectual property and now follow up on the

policy specifics. A lot of talk about infrastructure. Over the last couple of weeks time we heard that again, this idea of we can do something in fact to lou Aller, an Apra of Blimberg, did this great highlight reel of of the amount of times they mentioned we, more than a hundred times. The President mentioned we just thirty times he mentioned I can we can that get things done? No, I think it's very stylistic and and all that has become a a moment for us. But but there it

is joining us this morning. Martin Feldstine Baker, Professor Harvard, who has heard too many state unions. Were you in the room for any of the Reagan state of the unions? Were you one of the people down there? Yes? I was. You were not a designated survivor? No, I go although you are the designated survivor, and I have survived. I have survived. I don't think a laundry list of specific proposals is the right thing for the state. Then what do you want to hear? You've got a large, large audience.

They don't want technical details. So I think, and I think it's wrong to say that there's no new policies in this. It's just that the President announced his new policies in Davos. So the will go back to to the We'll go back to the uh E p p UM. That's a big change, and that was that was a real item in Davos. It was we will open a path to citizenship for uh the Dreamers, for the kids born in the United brought into the United States as

young children. That's a major change. So, UH, I don't understand why there's a sense that there's no specifics in this talk. So what were the specifics on tride in the stud of the Union was nine? There were no specifics on on trade. And but again the awkward problem is what do we do about uh so called voluntary transfers of technology where American companies are told that if they want to do business in China, they have to transfer their technology and they say, well, one point three

billion people in China, I've got to be there. So if they want to know the seek it formula for how we make donuts, will give it to them. Well, professor, voluntary, of course, is an interesting word that we can debate because for some companies in the United States they were said, there's nothing voluntarily about it. They want to be in

that market. And isn't this the President's ultimate problem with countries like China, that the entrance to get into this market is very very small, and before you go through that entrance, you have to give up some of what you've felt exactly right. So but again the public doesn't want to know that the strategy that the administration will use to try to get the Chinese to back off

that so called voluntary transfer of technology. Uh. The President Obama met with President she to talk about the the use of cyberspace stealing of American technology, and that got the Chinese to cut back on that. So we're gonna have to have a similar thing to deal with this not really truly voluntary transfer, just joining us. Martin Feldsteine with us for a nice amount of time this morning,

throw that he could be with us. Paul Krugman always up edding UH talks about trumpfrastructure, which I think is a very fair idea, and that every president has their own view of how you do infrastructure. You've seen infrastructure occur. You certainly have a vintage to remember Eisenhower in the

Interstate highway system. How do we actually do infrastructure in America so we can have airports and roads like John Farrell has it Heathrow and in scene at Coventry, remember Hea throw the British airport is not a government private it's a private airport. So that's one part. Do we need to do more privately? Do more privatization of infrastructure? But I think that when President Obama said we have shovel ready projects to stimulate economy, there weren't any shovel

ready projects. So what we need now is an inventory, a a a book of of designs, of specifications so that when the economy turns down, we can move I'll take your point, but are there's so many rusty bridges that we can't wait for the economy that's turn down. I don't think. Are we really going to supercharge the economy with bridge building it'll help when the economy turns down? Why not? Why not? Well, the economy is quite strong now.

I think it's gonna be hard to persuade the Congress to to um add to the deficit in order to do a substantial infrastructure. How they do the economy is weak, there will be a willingness to move forward. How do they do this in England? Mary Old England, Well, it's tok of infrastructure bonds funding big project X like high

spilled rail in the United Kingdom. But there's a big debate Thomas to whether actually these big, big spending items actually need doing at all in a place like the United Kingdom is a very different debate to the United States, where there's big bipartisan support for an infrastructure project. My question, Professor,

it's just how it's going to get paid for. The Treasury is going to have a refunding announcement a little bit later today, typical every three months expected, but this one more interesting because we want to know how these tax cuts are gonna be spent for where they're gonna wishoot along the curve. Now, if you plug infrastructure into the treasury market as well, we're going to see a

big boom in debt, aren't we. We're going to see a boom in debt, and my hope is it will come when it's needed for macroeconomic reasons, when the economy turns down and the Fed says, well, there's not much we can do because our interest rates are still two or three percent. I mean, I mean, John, I know you've had a hangover on platform three in Coventry before, but if you get Platform three in Coventry, you can

go to Edinburgh in four hours fifty nine minutes. You can got a train in there like I'm time London Houston in about sixty minutes time, and that's a high speed rail line itself. I can't we do what he takes for granted in England, for we can do it. There's no question that we can do it, but I think there's going to be a reluctance to do it.

Of course, again, a lot of the British rail has been privatized, so we're The solution for all these things is not more government activities, but I think we will need to get the government into this when the economy is weak. Martin Fell signed with Harvard University and John Ferrell from Platform three in Coventry this morning. Jared Cyberg is of Cowen. They do great, great research all sorts of areas kind of rumor of course, the legendary and airlines.

Jared Cyberg looks at a lot of things we could do this day of the Union thing, but I think we've done it John like eight times this morning, So Jared, I want to go to Cyberg currencies. And what I learned in Davos is government people are waiting, waiting, waiting, waiting, with one exception, and that is I see os Jared Cyberg, what is an i c O and does Washington have their attention on I c O s? Yeah, sure, so

great question. Um. I c O s are essentially a backdoor way to do an I p O, a way to raise money from investors, and uh, you know, Washington is not opposed to the plumbing of an i c O of of you know, creating a digital coin instead of a ship era of stock. What they don't like is doing i c O s that are not registered with the SEC, where you don't get all the protections. Are we going to get to a point where that's the toggle switch to whichever way we're going in crypto?

This crypto that is that going to be the key thing? So I really think you need to separate, uh it out I c O s versus you know, bitcoin and digital currencies. And I think the I c O I c O approach is something that's going to survive and something that will be useful, but you're not going to be able to you know. One of the things we always argue is that if you build a better mousetrap, but it's all premised on getting around consumer protections and

other anti money laundering rules. That's not viable. And you know I c O s that are designed to do that, that's not going to survive. Yeah. I I look at I c O s and what happened in Korea, what happened in China. That was certainly a huge issue, a point of discussion. I should say, in Davos, where is Secretary Minusia and this and where is Washington on this? Or is it just something removed in the in the in the distance. No, actually, I think this is moving

very quickly from the back of the front. Yeah. And we saw a Minusian yesterday. Uh, you know his testimony before Senate Banking. He was asked about it, and he basically said, you know, our money laundering rules have to apply, Our Bank Secrecy Act rules have to apply, and we expect other countries to apply their money laundering rules to this. And that's a much heavier regulated product than what's existed

before we even get onto cybercurrency. So I'm already confused about the Treasury secretaries current stance on the actual currency of the United States of America. I think you to last, what's your rate? I think that he is very carefully trying to walk back um you know, some of the comments that got so much attention and trying to go

back to a more neutral stance. And uh, you know, I think he was asked this yesterday as well, and I thought he did a pretty effective tap dance, uh to say, oh, I was misunderstood, you know, was out of context. I mean all the stuff that you typically here when somebody's realized that they may have stepped a little too far out of bounce the reaction of the rest of the world. Do you think that's what pushed him to take a step back, Jared? Or did this

come from within this administration? I'm not sure that's an either or answer. I think it's a both. I think that uh, he really he likely realized the gravity of the quotes that we were pulled out of that conversation, and I'm sure, uh there was pushback from you know, Gary Cohene and others within the administration, uh, saying you don't want to rattle these markets, and JAREDA maybe outside your preview, but we're gonna go to it anyways. Infrastructure, UM,

I've had three conversations on infrastructure. In the summary of all them all different, but the summary simple, nothing's gonna happen. Can you explain to our audience why Washington cannot take a leadership position on infrastructure. I would just like them to fill the potholes on the road outside of my house. So, I mean, you know, you know, it's um, it's a question of money. You know, you know, the county claims they don't have the money, the state doesn't have the money.

And now the FEDS are basically saying, where are we going to get this one point five trillion dollars from? And you know, to to kind of circle back to where we started, you know, with State of the Union a little bit. Uh, there was no talk of deficits, of cutting the debt, you know, any any of that. And so, you know, you have Republicans who are reluctant to spend another one point five trillion. You have a president who's not really looking at entitlement reforms are other

things that maybe could offset that, And so we get stalemate. Jarisy, but Accoln Washington Research Group policy analysts joining us on the situation in the nation's capital. If stalemate also a consequence of the mid terms at the end of this year, Jarrett, Well, sure, I mean, although we're not quite at that point yet where Washington still can't get stuff done. UM. So, if if somebody had a more limited infrastructure plan that could be paid for, I still think you could get bipartisan

support for it. Um. You know, the problem is that this White House does not put forward detailed plans, and so nothing happened. Jared, Thank you so much. Jared Seedburg with some of what we've heard from any number of guests today, nothing happens. He's a former chairman of the President's Council of Economic Advisor, that would be President Obama. Austin Goulsby joins us now from the Boost School Chicago. Austin, you've spent a few years looking at public policy, any

number of smart papers on it. The consumer gains from direct broadcast satellites, that was a Barnburn I read every word of that evidence on learning and network externalities. Say what you on infrastructure? You're in Chicago, you know the value of the interstate highway system growing up in Wit. Are your caliph for in you? How do we jump start infrastructure after we heard Trump infrastructure last night, Well, Tom,

thanks for having me back. By the way, I was a little disappointed by the I like the tone of a lot of what President Trump said in the State of Union last night. It just seemed like he was trying to take a bi part as a note. But I was kind of disappointed on the infrastructure part because he didn't seem to have much of a plan. A plan was I call on you Congress to come up with a plan. Um he said one point five trillion dollars. What we're gonna have to see now is where's the money?

I mean, that's always the problem when it comes to the infrastructure, is we gotta we gotta wrap our heads around. Uh, it does cost money to build this stuff and this stuff, but it helps economic growth. Austin, we didn't have that problem when tax reforms slash text cuts. When you said where's the money? With tax cuts, everybody said, everybody voting for it said, you know, a trillionaire, A trillionaire, who's counting?

I mean, why are we having the same discussion about infrastructure when, without question, other than roads to nowhere, it benefits all. Look, I agree, And and that's what I was saying during the tax reform slash tax bill debate, is this is a big number. You know, arguably one and a half trillion with a bunch of accounting gimmicks that if you don't count the accounting gimmicks, that might cost three trillion or more. Imagine how much infrastructure you

can buy for three trillion dollars. Um Uh. I don't see how you know cutting the estate tax for for people making more than twenty million, who have a state that more than twenty million dollars, that that raises our productivity or our growth more than it would fixing our airport. It's building out our highways, fixing our ports. I mean, this is this should be more of a priority then it seems to be. And I don't quite understand why.

Austin Professor Jonathan, Here's something I don't quite understand is what's happened to a massive group of individuals that I heard so much from over several years where interest rates were record lows, all time loads in the United States and across Europe, where these individuals would say, there's the opportunity go out there and borrow and do something with that cash. And now I don't hear that as much anymore.

In fact, I hear people complaining. I hear people fearmongering about the budget deficit, about what will happen with the debt load? Those people were calling for this several years ago. So what happened, Well, you know, you've you've hit on the new reality of American politics, which is the hypocrisy

doesn't make any difference anymore. It used to be if you said something today that was the exact opposite of what you said eighteen months ago, you at least, you know, Tim Russard would kind of put that in your faith. You at least had to squirm a little, if not come up with an explanation of why you thought it was different for you know now from them now, I will say the Republicans have done that, and now the Democrats also are piling on in that. I think the

problem is the following. When it was President Obama saying let's borrow money to build out infrastructure because interest rates are historically epically low, now would be the time to do it. The Republicans were not going to allow him to borrow to do that. And now that it's the Republicans in control, the Democrats are not going to allow the reverse a half the Republican Party wouldn't before that, and so they would need support of the Democrats. And

the Democrats say, wait a minute. You know you don't want to do it the way we that we've historically done it. You know, you you want to try to turn it over to the private sector. Um So, I think that's where they are. Austin. I don't know if you've done under. Steve Levitt of freak Adomics has done it. But the gas tax is always a third rail, particularly

across all of rural America. Are we just really back to, you know where somebody says in the Oval Office, Mr Hassett or others, I'm sorry, Mr President, but you can't get a gas text through because it's a third rail in Kansas. Is that where we really are? I don't know. You know, you saw Senator Cornyn from Texas, which of all states you think Texas would be, you know, among the most anti gas tex uh talk about the gas tax, you know, not in a positive way, but not to

completely rule it out. But my intuition is is what you say, the Kindress is not going to be able to agree cross party lines on that constant goes with us. A former chairman of the President's Council of Economic I know you're not a big fitness guy. But you know there is a fitness tracking app called Strava. He's not a big fitness guy, he says, I can't imagine I'm wearing a no, no, no, but there is a fitness tracking please, there's a this is this is connected to

what we're gonna talk about. There's a fitness tracking app called Strava, and it has about a billion activities and three trillion points of latitude and so on. Anyway, a twenty year old year old Australian university student, Nathan Rousser, he noticed that the map showed locations and running routines of US military personnel all over the world. That kind of technology gets out there and it's very hard to put it back in the bottle. And our next guest

beast car Charter. I'm sorry, chat, I hope I did okay, professor. Professor disabused me of my bad pronunciation. You are the senior associate in International Business and Finance at Tough University. I'm sure that you saw this news report and this plays into some research that you've recently done. You've heard about this, correct, Yeah, absolutely, yeah. We seem to be getting news reports almost on a daily basis of user

data being compromised in one form of the other. So at some point it gets you practically need an app to keep track of all these apps that are kind of opening us up to all kinds of vulnerabilities. Tell us about digital trust and what you discovered? Well, I think as we sort of look at where we are in our state of relationships, the relationship with the digital economy, our dependence has grown, uh, you know, grown to addictive levels.

Our sense of distrust has also grown and certainly seen was in many ways, uh turning point, and essentially that there are three things that I believe we are not uniformly, but around the world. We're concerned about were concerned about privacy, were concerned about security, and we're concerned about reliability. And the extent to which these concerns are high or low

varies depending on where you are in the world. So largely speaking, we find that in the developed world we are much more concerned than in emerging markets where people are still new to this technology and they're excited about it. Okay, I want to ask a couple of basic questions, and these aren't fancy mckensey questions or anything like that. Are our computers at home, are iPads at home our cell phones?

Where ever? Are they quote unquote safe because that's where the ultimate distrust comes uh well quote and it is the operative term here, So they're safe as an uh. You know, if somebody were to really put their mind against getting into your device and uh and peer into your day day to day lives, they could potentially do that. But you're one among uh you know, three billion people

who are on the internet. So you know, if I'm going to waste my time trying to get into your system, I probably would go into you know somebody or not that you're not important, but you know there are many others. So I think in reality yeah, in reality not, you know, it's it's more or less sick. But if somebody could want want to get in, they could do it. I'm

like everybody else. Pay You've got the fancy imach at home, and you bring it home and you're unwrap it and you throw the perfect box out and you've got that lens looking at you on the iMac and you're going, who's on the other side of that lens? Well, and with the with the pervasiveness of Alexa and these interact I don't have the you will someone will I mean, whether it's Alexa, whether it's so Nos, whether it is

someone speaker that well. I mean Apple is also working on this, and Professor Chuck Gravorty, I'm wondering if you could speak about how this is going to affect business because Facebook has come under a lot of criticism because it doesn't necessarily police what goes on it's site. Yeah. So Facebook, of course has been almost the poster child for you know, our concern and also a post a

child for our total dependence on the digital system. You know, two billion people checked their Facebook post every uh, you know, every month. Um, I think Facebook has turned the page on two thousand and eighteen. Uh. You know, Mark Dacoberg came out the gate in the New yeark kind of saying, Okay,

this is the year when we fix everything. And essentially what he has done is he's uh pushed uh the buck over to the users and he's said it, I'm going to deprioritize third party publishers and make our interactions on Facebook more meaningful by prioritizing personal posts. And I'm going to ask users to rate media in terms of their trustworthiness. And I think that is just, uh, you know, not taking responsibility. You know, Facebook needs to come to

the realization that they're no longer a town square. They are the major source of news and information and they need to own up to the content. So what is your prescription for Mr Zuckerberg to do? They're fighting this tooth and nail and they're managing the message, which they've always been good at. What does bascars Checkerboti say they should do? Yeah, I think there are three things I should do. One is recognized that they are a major

news source. But Americans get their news from Facebook, so they need to be able to vet the content that's on it, and if they can't vet it, at least put a note against it. And uh, they can use human in eligence and artificial intelligence to do that. We hear every day about how smart everything is getting, So why can't Facebook get smart enough in terms of algorithms to sort through all the content that's on it. That's

thing number one. Thing number two is some of the biggest risks that we face in terms of what's posted on Facebook is not here in the United States, but in the developing world where Facebook is growing explosively. So countries like Myanmar where ethnic cleansing. A lot of that happened on the backs of rumors spread on Facebook. So Facebook needs to get on the ground and understand the local context of these UH societies that it has spread

so fast and where people you know. For them, Facebook is the Internet, and thing number three is they need to get off their total dependence on advertising revenue. They need to find other ways in which they can make money. So companies like Google, companies like Amazon, companies like Netflix. I figured it out. What can't Facebook do that? Mascar's check about it, whether with tough as we look at distrust on the Internet. You 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 Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio.