Bloomberg Wall Street Week: Stimulus Special

Johnson sec Chairman j Clayton. Bloomberg wool Street Week with David Weston from Bloomberg Radio. The check is in the mail for schools, for states, for restaurants, and oh yes, for of American households. This is a special Stimulus edition of Bloomberg Wall Street Week. I'm David Weston. President Biden pledged to get the virus under control and get Americans vaccinated,

a priority that is reflected in the stimulus package. Everything in the American Rescue Plan addresses a real need, including investments to fund our entire vaccination effort, more vaccines, more vaccinate tours, and more vaccination sites. About seven percent of the one point nine trillion dollars will go towards the country's pandemic response, including testing, contact tracing, and vaccine distribution. The government is not alone in its efforts to get

people vaccinated. In North Carolina, Honeywell has been partnering with Atrium, one of the largest health care systems in the country. We have CEO Eugene Woods. How the campaign to get shots in arms is going. Yeah, the challenge has been from the beginning is getting enough vaccines. I think you see things ramping up and so we're excited about that now. Really it's just a distribution issue. I do have concerns that we need to to take a state like North Carolina.

We're about ten million people in North Carolina. If you take out the two million that or sixteen and under we've got to vaccinate about, you know, to get her her immunity. So that's eight millions. That's about seven million or so that we need to get vaccinated. And we've gotten one point five shots and arms one point five million shots and I'm so far, so we still got

a ways to go. That's aid. We went from about the bottom fifteen in terms of states to number one, uh last week in terms of over sixty five getting shots and arms. So we're gonna continue this path, and as as supply becomes more plentiful, I think we're gonna be able to continue to use mass mass vaccination sites to get shots. Before this this variant comes into play, which is what concerns me. Are you getting any resistance at all? Because we hear some descriptions that could be

of the population that just isn't really interested in getting vaccinated. Yeah, that's the challenge, right, So if you think about her community, depending on what scientists you talked about, we need to get about the population vaccinated. Right now, there's about hesitancy about about thirty percent that I'm hearing the latest statistics, So to get we have to eat into that about right, And so that's the work that we're doing right now.

There are some glimmers of hope um African Americans, for example, who have had for all very good reasons and mistrust of the health care system. Back in the number said they we're going to get the vaccine vaccine. The most recent numbers I saw us at six. So we're beginning to make some progress, but they're still work to be done.

So address that question very specifically, because I know in New York, for example, that there's a disproportionate number of African Americans and Latin X individuals who are more at risk, disproportion number who haven't gotten the vaccine yet there they are under indexing. Is that true in North Carolina at this point? It's true all over the country unfortunately. And that's why you've got to be really really intentional about

your strategies to reach those communities of color. So, for example, we have roving bands that we're working with this coalition of churches, about sixty churches. They're African American and Latin X. And so we're going through the parking lots and and we're really saying tell us where we need to go, and in the roving bands and think about a physician office basically on wheels, and we go to where where we're needed sev of the people that were vaccinating or

people of color. And then when we've done the mass vaccination events at Bank of America Stadium, we preferentially opened the schedule to those churches another other vulnerable community. So you've got to be really intentional about the strategy. The one thing that I'm proud working together with Honeywell, the

Panthers and Motor Speedway. We put together a playbook. Andy Slavitt, who's on the President Biden's Corner Virus task for US, asked for sort of what have the key lessons learned, and so we shared that a couple of weeks ago. He shared that with the governors and we're hoping that that there's some insights there that could help the country

do this well. So, Jeanne, if you would take it a half step back here from the specifics of the vaccination and talking about healthcare provision more generally in this time of the pandemic and beyond. We now have a new stimulus bill one point nine trillion dollars has a fair amounty money in there actually subsidize some uh the exchanges. So the people in Ford Healthcare, do you see a

shift going on because of the stimulus bill in your business? Yeah, I mean, I think we're really excited that the stimulus bill has a number of important provisions, including, you know, additional dollars for for for distribution of the vaccine, and there's some other uh part of that that includes helping some of these community based centers that are really been struggling and also rural care. So we're we're excited about that that what we didn't see in that is additional

relief for providers. Uh and to the extent that we would hope. We've been on the front line of this health systems and so we're still not out of the woods. So we're we're hoping to work with the administration to have other opportunities for providing additional support to the health systems like ours, because we're still very much in the battle.

What about the cost of healthcare? We hear from some people that with the move to telehealth, which seems to have really ramped up during the pandemic, that we may actually finally be able to bend that cost curve a little bit. Are you finding that in North Carolina? Yeah? I mean, I think we could spend the next hour

talking about the cost of health care and affordability. We we do know that it's a multi factorial issue that includes pharma, that includes insurance companies, providers, We all own a piece of that. But I think that what we learned in the pandemic is that we can provide care in vastly different ways. For example, we started UM when we when we had some challenges with occupancy bed occupancy.

We started this hospital come program. We've seen fifty thousand patients in their home during this COVID UH and that's just a different sort of way to deliver care. So we really think the learnings that we've had through this through this past year will carry forward and among other things, will will help with affordability of healthcare. That was Atrium

Health CEO Eugene Woods coming up. What the stimulus package would mean for the states and what the three hundred and sixty billion dollars they get will pay for from Ned Lamont, governor of the state of Connecticut. That's next on Wall Street Week on Bloomberg. This is Bloomberg Wall

Street Week with David Weston from Bloomberg Radio. One of the most controversial parts of the one point nine trillion dollar packages the aid for state and local governments, with Democrats insisting it's badly needed to make up for lost revenues and for increased costs they've incurred because of the pandemic that has led to more than a million state and municipal employees losing their jobs. About one fifth of the one point nine trillion dollars stimulus package will go

to states and local governments. The Care's Act, signed into law a year ago, included one hundred and fifty billion dollars in aid to states and localities. This time they're getting three hundred fifty billion dollars and an additional ten billion dollars to put toward critical infrastructure projects. Here's New Jersey Governor Phil Murphy. We need a big chuck of state local aid. And we're not alone. This is every

American state. That sounds abstract, but what that means is keeping the frontline workers, police, fire educators, healthcare workers employed in their position, delivering the services that our residents so desperately need. But Republicans take a very different view, saying the state assistance amounts to a bailout of states that have run up their bills under Democratic leadership. Those at a focused bill of targeted bill. We need to help the people have lost their jobs. We need to help

our small business. No, it was a payback to New York and California. I mean, think about what they've done with the state bailoffs that Senator Rick Scott of Florida, and it does appear that at least when it comes to revenue losses, different states have had very different experiences. Here's Jamie Diamond from JP Morgan Chase. Half the states revenues went up, they didn't go down. Do they need help? So they should be cautious about overdoing it. Get us

through the problem. Keept the country growing, but you know, don't try not to overdo it too much. According to the Committee for a Responsible Federal Budget, states and localities have received three hundred sixty billion dollars from the federal government since the beginning of the pandemic, but states say they need more assistance because much of the funding provided

to them has been limited to specific programs like Medicaid. Again, Senator Rick Scott, our state revenues are equal to what they year the year before, and they gave more to states like New York and California than state. It's like my home state of Florida. But I mean, it makes no sense how unfair this is to the American public. Whatever the merits. In the end, about one fifth of the one point nine trillion dollar stimulus package will go

to states and local governments. We asked Connecticut Governor Ned Lamont why his state needed the money. Look, we know that we've got our budget set for the next couple of years. We know that we don't have to raise any taxes. We know that there won't be any broad layoffs, and that's all thanks to the state and local aid. But more importantly, I love what we're doing on education. We have our schools have been open su September, but we still have our kids who haven't been in the

classroom for um nine months. We've got a lot of catching up to do, and it's a chance to make sure that wasn't a last year. We can build off of it. So what are you gonna do with the money that you get? I mean, as a practica money. You just mentioned employment issues, your budget and taxes, but where's the money really gonna go. We're gonna spend it. Well, first of all, on education. I can tell you the

school year doesn't end on June. It restarts again on you know, July six, and we're going to have a lot of activities in and around camps and learning experiential a lot of kids who really haven't been with their peers in a long time. Do I everything you can to help them catch up. Maybe bring some college kids in as apprentice teachers to help them learn and have role models there and then come to fall, we'd have after school activities, social workers and help these kids hit

the ground running. Is there any consideration at all of extending the school year? Absolutely, I mean whether I legally extend the school year or just say, starting July tenth, we're going to have a two months of summer programs. We'll figure out how to phrase that. So if it's in facts the case that the schools are open but you don't have all the students back in the classroom, what is the barrier? Why aren't they back in the classroom.

It's it's sort of tragic, Davi. But I mean in our suburban towns are more rural towns, predominantly white towns, of the kids are back. But a lot of the kids in our urban centers, small as they may be, were likely to be a children of color. They were hit particularly harder, their families were by COVID, and they've been a lot more reluctant to get back. But now we got our teachers vaccinated, our healthcare um frontline, and the schools are vaccinated. They're calling up the kids saying

come back for the final two months. It's worth it. Are all your teachers back are essentially all your teachers back. Essentially they're all back. And what other effects we have. I'm talking about employment because we saw in the last employment numbers for the country the place where we really lost a lot was actually in state and local employees. What's happened in employment situation in Connecticut? Where are you compared to a year ago? Where are you going in

terms of you know, actual state employees. That number has been trending down for quite some time, and frankly, I don't see us ramping up a lot. It's not COVID related, but we're making more investments in a computer technology so we can be a lot more efficient and less cost I'll tell you the other thing I'm really excited about, David as uh the money for daycare and childcare. We lost a lot of employees and the service industry, overwhelmingly women,

often women of color. And the fact that we're going to have heavily subsidize are even free daycare and childcare, uh, you know, for the rest of this year, can make a big difference in helping them get back into the workforce. Governor, what about infrastructure, Because one of the things we've heard about is not only a promise perhaps infrastructure coming down the pike, but also that some of the money going to state and local government could be used for infrastructure.

Is that true in Connecticut? Uh? That is it's it's not big dollars for infrastructure. We need that infrastructure bill going through. And we've got old infrastructure here in the Northeast. As you know, this stuff was all built, uh you know, sixty eight years ago. So what I've got our Department of Transportation doing right now is doing the design, build, engineering,

ready to go. So when the federal government says, here's our infrastructure plan, will be funded, Connecticut and get in the front of the line and get some of that, give us an update. If you could governor on where COVID is in the state, it can etiquette. I've been sort of watching the positivity rates and they've been coming down. For you. Where are you in terms of the extended the disease in the state and restrictions. So when it comes to um you know, infection rate like the rest

of the country, we've come down. It's not down to you know, one percent, it's hovering around three percent. But the good news, David, which people want to pay more attention to is Uh, they tend to be younger people who are a little more likely to be the ones who are infected. Now, Folks fifty five and over overwhelmingly vaccinated or will be in the next ten days or so. So we have a lot less infection, a lot less

complications with the most at risk group. So I think even though we have sort of a three percent two to three percent infection rate, um, it's not really impacting our hospitals, emergency rooms. I see us fatalities that those numbers continue to get better. Where are you on the restrictions Texas? Of course, in Mississippi have just taking them all off. It's only voluntary. Where is Connecticut? I think I heard on the radio that you're going back to

a hundred sent in the restaurants. Is that right? Yeah, that is true. We're doing uh, you know, restaurants retail houses of worship at a hundred percent occupancy. But we're maintaining the mask requirement and we're maintaining the six foot of distancing. That was Democratic Governor Ned Lamont of Connecticut coming up. Everyone agrees that it's important to get children back to school, but what does it take to do

that safely? Randy Weingarten, president of the American Federation of Teachers, says the Sinner's Package is the lifeline the education system needed. That's next on Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. Education in the time of the pandemic has been hard on teachers and students. Schools across the country would try to reopen, only to be forced to close again when

COVID nineteen cases spiked. Here. Senator Ben Cardon of Maryland, are schools need to open safely and be able to remain on open safely. The American Rescue Plans sets aside about one billion dollars to help K through twelve schools reopened by funding improvements the ventilation systems and buying personal

protective equipment. There's a lot of resources and energy focused on making sure that we contain the pandemic and importantly that schools can open safely so that all of those parents can get back to work knowing that their children are are learning what they need to learn in school. That's Heather Bouchet, member of the White House Council of Economic Advisors. While parents are eager to get children back

to school. Some teachers unions have resisted a return to in person classes for fear of new waves of COVID cases. Here's Wall Street Week special contributor Larry Summers entrenched. I'll say it, uh, teacher union interests that have resisted going back to school have really been putting their own material benefit I had of uh, the interests of their kids, and that is not the best tradition of the teaching profession. Teachers were forced to shift their lesson plans online abruptly

when lockdowns were imposed last year. According to the Economic Policy Institute, a third of surveyed educators felt that the training they received for online learning was not useful. We can understand and help our teachers use technology in in more fulsome ways and more effective ways, and we can take leadership at the federal level around broadband and device ubiquity.

That's former Education Secretary Margaret Spellings. Access to devices and consistent internet also deepened longstanding racial and economic disparities in students. Here's Robin Hood Foundation CEO Westmore. You know when when when schools closed? And in New York City alone, you know three hundred thou school children lacked access to devices. Under the one point nine trillion dollar stiments, planned colleges and higher education institutions would get almost forty billion dollars

towards financial aid grants for students. Again, Margaret Spellings, we have just wide variety from gigantic little cities in our flagship universities to you know, very customized learning at smaller liberal arts colleges or hbc U S or m s I S, etcetera. And so yes, they're all under strain, they're all under financial challenge. Randy Weingarten has become the face of teachers unions in the United States, having served as president of the American Federation of Teachers for over

twenty years. So we asked her straight up, is it the unions who are keeping our school children out of classrooms? You know, we did a poll in February early February UM and asked our members if we got what the a f T had been proposing for a long time and then layered on with with vaccines, meaning if we were able to have the mitigation strategies that CDC says

is important. That is also important in all of these new studies that show that kids can go back, if we had the testing like the NFL had, so that you can not only reopen, but stay open because you were managing and seeing a symptomatic spread, which is what is most of the spread here. And if we have

vaccine access, so mitigation testing and vaccines. A d eight percent of my members said that they were willing to be in school with a plan like that because they know how important it is for kids to be in school and do in school learning. So it's always been not an either or for us. It's always a both, and how do we make school shore that in school learning is safe so that we can make it safe for everyone. It's a lot safer than it was, though,

isn't it. I mean, for example, in Cleveland, there's a priority given to vaccinations for teachers as it moved a long way the direction you get too, because those parents are saying, when do we get our kids back into the classroom. Yes, it's moved. I mean, I think what you've seen is we've learned a lot last September and October. I mean, the difficulty, David, was that Trump refused to do any of the things that we asked him to do. That the doctors and the experts told us we needed.

You know, I tease a lot that I'm so studies teacher and a lawyer. I don't even play a scientist on TV. I have to listen to the scientists in terms of what they tell us we need. And what happened was we asked Trump and Divorce, would you get us data, would you get us the guidance in a in a real and transparent way, and would you get us the resources. They basically said no to all of it and just created the polarization. But you had districts and you now have some of the CDC reports that

kept on trying different things in the fall. We learned a lot from them. Biden, the new president is getting us the things we need. This, that the mitigation strategies, that resources for them, and that's why you're seeing so many districts now reopening, and we now have less than less than of districts that are still all virtual. So there's been a sea change in the last I would say two or three months, led by New York City now Chicago pretty soon l A and and lots of

small cities in between. That was Randy Weingarten, President of the American Federation of Teachers. Coming up, we take a look at just how historic this stimulus package really is, with special contributor Larry Summers at Harvard and Neil Ferguson of the Hoover Institution. That's next on Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week with David

Weston from Bloomberg Radio. The idea that it's prosperity that causes inflation may not have any factual support in history, But since when did fact every interfere with Washington policy making? That was Lewis Ruckeiser back in January of two thousand one. Twenty years later, that debate over what causes inflation is dividing economists and policymakers once again in a time of easy money and at one point nine trillion dollar infusion

of support into the economy. We asked economists in Wall Street Week special contributor Larry Summers and historian Hoover Institutions Neil Ferguson about what we can learn from the history of inflation. Well, I think it's pass of a continuum of uh acts by democratic administrations that have expanded the role of government in alleviating poverty and economic hardships. So you can trace a continuous line if you want, from the New Deal through Lyndon Johnson's Great Society to this.

But there's a difference. This is a very very large amounts of money relative to the US economy, and it implies very large deficits by the standards of of peacetime. Remember the CBO pot last year's deficit close to of g d P, and its latest projection for this year's is around ten percent. These are very large deficits in peace time, and they come at a time when the federal debt has reached its highest level since the end

of World War Two. So I think there is a kind of key question here which really has to do with the macroeconomic implications of pouring quite a lot of fiscal fuel on the fire of an economy that is already coming back rapidly from the pandemic thanks to vaccination and our our rapid approach of herd immunity. Now I'm treading into Larry's mind field of of macro here, so

I'm going to step back and let him comment. But I do think that the historical significance is is really in terms of scale and the timing of such a large fiscal stimulus to the economy. So so, Larry, we've heard something similar from you in the past. Now that we have the bill I really enacted into law, what's the best thing that can happen because of this and the worst? From an economics point of view, let me just say, on the Democratic tradition, there's a thing here.

The refundable child Credit, which is less than five percent of the total stimulus that we're providing this year, will almost certainly be continued, and we'll make an immense contribution to reducing child poverty in America. And it's a very very positive thing and a huge historic achievement. But it's five or less of the total stimulus this year, and

it's something that will continue. I think the decision to put one point nine trillion dollars of stimulus on top of nine hundred and fifty billion dollars of stimulus will set the economy on fire, with growth at seven or more UH this year, assuming we progress against COVID, and I think is playing with fire. A simple view would be that I think there's a one third chance that

the Fed will stay behind UH. The curve, inflation expectations will ratchet upwards and will become a inflationary country for at least a time above the two UH target. UM.

A second risk is that the Fed will respond. They've given all the things they've been saying, their sharp response will be unexpected by markets, and as has been the case in the past when the Fed has had to step in to stop an incipient inflation or incipient bubble, it will be a chaotic process with very substantial instability

and possible recession. And I think there's a one third chance that somehow the needle will be threaded and that we will UM enjoy a period of very rapid growth and there will be a smooth exit back to reasonably rapid, reasonable okay UH growth. But I think that we are taking very substantial risks, both on the inflation side and

on the fiscal monetary collision side. That's why, if things continue on trend, the interest rate in the first quarter of this year will have gone up faster than in any year in the last century except for UH nineteen eight. That's why you see increasing numbers of indicators pointing UH to more rapid inflation, pointing to the development of possible UH labor labor shortage. Uh so, I think there are

very substantial risks on the path that we are on. Neil, you wrote a piece, a terrific piece for Bluebird Opinion actually on the subject of the history of inflation, going back to Milton Friedman, what happened the sixties and the seventies. I must say, I have youngsters in the newsroom who come up to me and say, I wasn't around for inflation last time. How does it work? Are we in danger? What do you say to those people? Is this in any way parallel to what we saw in the sixties

and the seventies. Well, I think it's worth looking at the nine sixties because I suspect younger people have a pretty hazy idea of what happened with inflation before they were born, and the bit coal view in my experiences, well, that was something that happened in the nineteen seventies because

of the oil shock. That's not quite right, actually, because what happened in the sixties was in the first half of the decade inflation was low, stayed well below two percent, and then in the mid sixties it took two big jumps, first up to three percent, then up to six percent. And that that was the moment that inflation expectations became unanchored, as we would now say. And I think the key

here is what can we learn from that experience. So that was an increase in inflation that predated the seventy three events that caused the oil shock, and it's often blamed on the stakes by the Federal Reserve. That was the view of the late Alan Meltzer in his history of the period, and indeed people at the FED at the time acknowledged by ninety eight that they got it wrong. Now, the monitor's view was that monetary aggregates had been growing too fast and that was the reason things went wrong.

My view as an historian is that that's kind of a simplistic view. It's almost tautological to say that inflation is always and everywhere a monetary phenomenon, which was Freedman's view. It's partly a fiscal phenomenon. And this is of course what Larry has been arguing in his recent commentary that if you do really large fiscal deficits that has potentially

inflationary consequences. But the key is expectations. The FED today seems to have a theory that inflation expectations will not be affected if there is a temporary bumping inflation in the second half of this year or the beginning of next year. I don't think that's historically very well founded. The lesson of the sixties is that if you do the great society, if you do butter, and then you do guns as well, which was Vietnam, then you can

get inflation expectations unanchored. And I tried to make the point in this piece because I don't want to be called in inflation is to a second time. I plead guilty to having been more worried than I should have been a bad inflation back in twenty I think what made the sixties different is that they were using a war in Vietnam, and we're really not in any comparable military engagement, you know, Afghanistan. Yeah, we're still there, but

the presence is is tiny. I think what would change the game today, and I want to emphasize this point, would be if the U. S. And China suddenly got into a serious foreign policy crisis over say Taiwan or

the South China Sea. That historically is the kind of thing that time and again has caused inflation expectations to jump, and I have a chart in the piece which goes all the way back to for the UK trying that nearly every time inflation expectations in the UK surged it was because of a war, and usually a war that was going wrong. Sorry, as I recall your one third one third one third, you had two thirds with inflation that something needed to be done about, whether it was

or not. The first one was it gets out of control. The second one was the FED has to act too sharply. Is there a way? What is the proper way for the FED to manage that? Right now? To avoid those two alternatives, I think they need to become much more attentive in their rhetoric to the risks of UH inflation and the need for action. The FED traditionally makes clear that it's going to be preemptive with respect to assuring

price stability limited inflation. Now the FED is mostly concerned with preempting the possibility that it would have to raise rates by explaining how if there is inflation, it will just be transient UH and so forth, by directing attention not just to employment goals, but to employment goals for

specific UH demographic groups. Thanks to former Treasury secretary in Wall Street Week special contributor Larry Summers and Hoover Institution senior fellow Neil Ferguson Finally, one more thought, what difference

does the day make here or there? On Wednesday, White House Press Secretary Jen Saki insisted that it was the forty nine day of the Biden presidency that conveniently made the president's prime time address the next day fall exactly halfway into his first one hundred days, a time that he said as a milestone for getting a lot done, including getting one hundred million Americans vaccinated. Axios actually has

picked up on it. They noted that whether it was really forty nine or fifty days, depending on whether you counted his inauguration day as his first day in office, a dimly echoed that early dispute, remember it, between the Trump White House and the Press Corps over how many

people really attended President Trump's two thousand sixteen inauguration. But whether it was forty nine or fifty or even fifty one days, no one can deny that the Biden administration has done something bigger and faster than just about anybody could have predicted. Something on the order of President Obama's stimulus plan to pull us out of the Great Financial Crisis, or even even President Roosevelt's New Deal package to pull

us out of the Great Depression. History will judge the consequences, but will likely forget the exact timeline, just as it's a long forgotten that FDR's first one hundred days radio address, well it actually happened on day one forty three of his administration. That does it for this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week.