Sunday School 7/31/22: Extra Credit

Picking up where we left off with your Sunday School, we're back in the Face the Nation classroom with John Dickerson and Neel Kashkari, president of the Minneapolis Federal Reserve. 

If I had to pick a favorite Fed banker, he'd be it; I've learned from and enjoyed his interviews. 

Kashkari's concerned about inflation, of course, saying that it's "higher than we expect. And it's not just a few categories. It's spreading out more broadly across the economy." And that, of course, explains why the Fed is "acting with such urgency" to rein it in.

He said that while wages are going up, they're not keeping up with inflation, so "real wages, real income" are going down. He also gave a simple definition of inflation. 

Just at its basic level, inflation is when demand is outstripping supply. We know supply is low because of supply chains, because of the war in Ukraine, because of COVID. We hoped that supply would come online more quickly. That hasn't happened. So, we have to get demand down into balance. Now, I hope we get some help on the supply side. But that doesn't change the fact that the Federal Reserve has its job to do, and we are committed to doing it.

And what does "help on the supply side" look like? Kashkari said he speaks with "global businesses" that are working on getting their supply chains "sorted out" so they can have products on shelves and meet demand. Some progress is being made, he said, but "it's taking a lot longer than they thought," and longer than he thought, too, which is why the Fed's efforts are needed.

Dickerson mentioned his conversations with Sens. Manchin and Toomey about taxing corporations that aren't paying a minimum tax now. He wondered if that would hurt supplies and increase inflation.

Kashkari said that's the same thing people say about raising interest rates, and he also talked about the difference between the long-term, where both higher taxes and higher interest rates could have an impact, and the short-term, which is where we have to focus now, because 

the demand side effects totally swamp the supply side effects. And so, when I look at a bill that's being considered, that your two senators talked about, my guess is over the next couple of years it's not going to have much of an impact on inflation. It's not going to affect how I analyze inflation over the next few years. I think long-term it may have some effect. But, over the near term, we have an acute mismatch between demand and supply. And it's really up to the Federal Reserve to be able to bring that demand down. 

Recession was a topic, too: whether we're in one, and why it matters - or not. Kashkari said "it really matters when Americans feel it, especially in the job market, especially in the job market, that's the most important part of the economy, so to speak, for Americans is their job." 

Do they have a decent place to work and earning decent wages? And, typically, recessions are -- they demonstrate why job losses, high unemployment, those are terrible for American families. And we're not seeing anything like that. The labor market, so far, is very strong. We are seeing some sectors, like the tech sector, start to shed workers or start to cool down in hiring. But fundamentally, the labor market appears to be very strong.

This is the reason why President Biden said, to equal parts dismay and delight, "that doesn't sound like a recession to me." Kashkari did say that "GDP, the amount the economy is producing, appears to be shrinking." These are the "mixed signals" that everyone's trying to figure out - mostly by talking to Larry Summers, it seems. 

Kashkari isn't focused on that so much.

From my perspective, in terms of getting inflation in check, whether we are technically in a recession or not doesn't change my analysis. I'm focused on the inflation data. I'm focused on the wage data. And, so far, inflation continues to surprise us to the upside. Wages continue to grow. So far, the labor market is very, very strong. And that means whether we are technically in a recession or not doesn't change the fact that the Federal Reserve has its own work to do, and we are committed to doing it.

And, a final thought on GDP: Dickerson said when it goes down, "isn't that kind of what the Fed's trying to do, slow down growth...?" Kashkari said they "definitely want to see some slowing," and that they don't want the economy to overheat. And, he was honest about the situation; he admitted there's "not a great record" of transitioning to a "sustainable economy" without pushing it into recession.

Typically, when the economy slows down, it slows down by quite a bit, especially if it's the central bank that is inducing the slowdown. So, we're going to do everything we can to try to avoid a recession, but we are committed to bringing inflation down and we are going to do what we need to do. And we are a long way away from achieving an economy that is back at 2 percent inflation. And that's where we need to get to.

Are you feeling the recession, or are you just feeling inflation? Or, maybe you're lucky and aren't feeling the pinch at all? Chime in if you like.

See you around campus. 

Sunday School 5/22/22

Let's dive in to your Sunday School lessons, starting with Margaret Brennan and former Dubya and Obama Defense Secretary Robert Gates in the Face the Nation classroom.

On the expansion of NATO, with Finland and Sweden applying to join the alliance, Gates gives Vladimir Putin a lot of credit.

...it's an amazing thing he's done because he's -- he's gotten Sweden to abandon 200 years of neutrality... one of his many huge miscalculations in invading Ukraine is he has dramatically changed the geostrategic posture of western Europe... 

Speaking of the Ukraine war and 'winning,' he said 

If winning means taking over the country and absorbing it into Russia, the whole country, I think that's very unlikely at this point... in terms of pushing on to Odessa or trying to bring a change of government in Kyiv or absorb Ukraine, I think if that's winning, I don't see that he can win. 

Brennan asked about Putin resorting to tactical nukes; Gates said the chance is "low, but not zero." Without any military purpose - "no large masses of Ukrainian forces that would be taken out," the only purpose would be 

to try and break the will of the Ukrainian people. And I think that moment has come and gone. I don't think that there's anything at this point that will break the will of the Ukrainian people.

Not only that, but according to Gates, in that neck of the woods, the winds "tend to blow from the west..." You get the drift of that, right? Sorry, I couldn't resist.

Gates says China can't make up for all the economic losses Russia is facing; he also thinks Xi Jinping will realize that he may have "totally underestimated the West," including America's leadership, Europe's coming together, and the power of the shared sanctions. And, he may have to take a hard look at his own military, given how things have gone for Putin, and ask himself if his military's as good as his people say it is. 

Brennan asked him about "polarization" in our country, which Gates has said was our "biggest threat." He hasn't seen a whole lot of improvement, although "there is one glimmer of hope," thanks to Xi and Putin - and it extends beyond the situation in Ukraine.

They've actually brought Republicans and Democrats together on Capitol Hill, and with the administration.... so maybe that's a foundation. Maybe there's a way to build on that. And, who knows, if you begin to get it in national security policy, maybe you can get it in some other places.

Next, let's head to the right and into the Fox News Sunday classroom, where Martha MacCallum chatted with Brian Deese, National Economic Council director. He's not a fan of the 'r' word, as MacCallum called it, but he sure is a fan of words.

While there are absolutely risks with inflation front -- first and foremost, this is what's most important, the United States is better positioned than any other major economy to bring inflation down and address these challenges without giving up all of the economic gains we've made, and that's because of the strength of our recovery. We have the strongest job market in modern history. Americans are getting back to work in jobs with higher pay. And that's meant that Americans can increase their savings, pay down their debt. Businesses are investing. Entrepreneurs are creating new businesses at record rates. And manufacturing is coming back to the United States at record rates as well...

MacCallum interjected, saying "I know that 'recession' is a technical term -- but you know... whether or not we hit that technical benchmark, Americans feel like they are in a recession... So, I'm asking for your opinion, as the economic advisor at the White House, should people be prepared in the United States that we are or will be in several months heading into a recession?"

Blah blah blah, "people should also take confidence that we are better positioned than any other country to navigate through this and keep our recovery going." blah blah blah 'What we need to do now --" 

And again, MacCallum tried to pin him down. "You know, so I'm just asking, what -- what do you recommend to them in terms of specifics and what they can do to try to whether this a little bit easier as we go through what you're calling a transition?"

Blah blah blah "these prices create real hardship and they also create uncertainty. We understand that" blah blah blah "top economic priority." We can do this, he said, 

First, we need to give the Federal Reserve the independence to do what it does. It has the tools to combat inflation. Second, we need to reduce costs and make things more affordable for families during this period. So, steps that we can take to reduce the cost of the Internet bills that families pay, or the prescription drug prices that they pay a really important right now. And, third, we need to bring down the federal deficit. Because of the president's policies, we've made a lot of progress on that front, the deficit down $1.5 trillion already this year. But we need to make more progress on that as well. That will help reduce price pressures in the economy.

Blah blah blah "we can navigate through to more stable growth that will generate better outcomes for families" blah blah blah "we're on the way. We've got to focus on inflation, and that's what this president is doing."

There was more, but you get the drift. High thump factor - lots of words - but I'm not sure if there was anything in it that mattered. He also talked with Dana Bash in the State of the Union classroom; perhaps there's something valuable in that interview.

Finally, Martha Raddatz talked with former Joint Chiefs chair Adm. Mike Mullen in the This Week with George Stephanopoulos classroom. Like Gates, he was moved by requests from Finland and Sweden to join NATO.

What strikes me... is how deeply neutral they had been for decades and decades and how concerned they obviously are with this threat that has been generated by Putin. And so, I’m encouraged by that. I’m encouraged by the unity of NATO. Almost every European I’ve spoken to considers the threat in Europe now existential to them and I think that speaks to the -- the move on the part of both Sweden and Finland. And I'm -- I'm encouraged by that. I don't think that it will cause, you know, a nuclear action on the part of Putin at this particular point.

He believes Putin originally wanted "to take Kyiv, overturn the government, put a puppet in as a leader," but now "he is going to do everything he possibly can to lose as little in the east as possible." Given that President Zelenskyy also wants that territory, 

I think we're in for a long one. It's going to be bloody. It's going to be visible. It's going to be what war is. I think we'll see Putin continue to devastate the infrastructure with respect to how he approaches it, the long-range weapons. I think what we've done to supply them has been extraordinary, quite frankly, and we need to continue to do that.

He's "encouraged" that communication channels between high-ranking Americans (Mark Milley, the Joint Chiefs chair, and Defense Secretary Lloyd Austin) and their Russian counterparts have reopened. As to what the re-opened communications mean? He said it's hard to know, but it's a "big step... and hopefully" it's a start towards getting "some diplomatic outcome..."

All wars have to end. We need to be thinking more and more about what does that mean, what's on -- both sides, what is -- what's OK so that this is contained as opposed to exploding into a massive Holocaust for not just for the region but for the world.

Moving to North Korean, Mullen called it "deja vu all over again, from his father, and his grandfather, as well as Kim Jong-un himself." There's "no easy answer here," and there's no solution without Beijing.

And our relationship with China is -- is worsening, so that makes it -- solving this more difficult. I'm encouraged by the president's trip. I'm encouraged by the time he spent in South Korea and I know he just arrived in Japan. And I'm encouraged ... that they're working together, and that trilateral peace - Japan, South Korea, and the US - working together is really critical.

He said that Biden's meeting with the other three 'quad' countries - Australia, Japan, and India - is "fully critical to contain what will be a real challenge in North Korea" and its development of nukes.

Finally, because everyone in the classrooms was asked about baby formula, regardless of their role, Raddatz brought it up. I like the way he handled the question, championing the accomplishments of the US military.

..., I'm so encouraged by what our troops have been able to do. So, a C-17 that could fly howitzers, you know, into Germany to support Ukraine, turns around and -- and flies 71,000 pounds of baby formula back to the US. In two days. In two days, land in Indiana. 

Good on them. 

See you around campus.

OrangeVerse LIII: Bad to Worse to Horrid

Continuing our stroll through the president's personal rose garden - the one where word salad is the special of the day, every day, and 'me' is the first and last letter of the alphabet.

In yesterday's edition of OrangeVerse, which didn't even include all of his remarks, he started out talking about vaccines, and ended drawing letters in the air. In between, there was the floating plague from China, and trade deals, a recitation of the months of the year, and more. 

And we'll open today's edition with the subject of opening.

Nearer, Coronavirus, to Thee

You've got to open it up.

And you do social distancing

and you wear masks if you want

and you do things - you can do a lot of things.

You're getting closer together. Even you, I noticed

you're starting to get much closer together. 

It looks much better, I must say.

You're not all the way there yet but you'll be there soon.*

Opening the Patient

But it's a tremendous thing

that happened. And the reason

 it happened is because we had 

a really strong patient.

We had a patient that 

was so powerful,

so strong, 

that we could 

close it and open.

Analogous to Nothing

And I give you this analogy -

somebody told me yesterday 

- it was Larry - Larry Kudlow. 

He said, Sir, this is like a hurricane.

And we were worried; we didn't know:

Is this going to be a hurricane or a major,

major recession? A major recession that's not

artificially caused because we - artificially - this was

artificially closed. We just said, "Boom, closed." And

everything just stopped. And also, you know what else

stopped? Big numbers on death, by doing it. 

And that's why I had to do it.

We've made every decision

correctly. But it was like

we stopped. So it was an

artificial closing.

A lot of people

got it right. They

had confidence

in me, they had

confidence in this

team and they got

it right. I think that's

the only thing they could

based it on because we were

in unchartered territory.

Focusing on 'Them'

It's - I'd like to just say that

renewal restoration or recovery

of the most vulnerable areas of 

America is going to be my focus.

It's going to be a big focus, because

it's taking care of itself but we have

to help that very vulnerable area.

They're vulnerable. It's not right.

And we're helping them, and we

have helped them in the past. 

There were also Opportunity 

Zones, criminal justice reform.

It's Time to Get Back on Script (for 19 Words, Anyway)

It's now time for us to work together as we rebuild,

renew, and recover the great promise of America.

And that's true. We're going to work together. 
It'll all work out. It will all work out. 

Some of the governors may need

 a little help yet, but I think, 
for the most part, they're

in good shape. 
We have fantastic military; 
we have fantastic National Guard.

The National Guard was barely used.
And these people have done an unbelievable

job. They helped the Secret Service in Washington. 

Secret Service, by the way, are unbelievable. The job they did

in the White House is unbelievable. There was never any form

of, like, "Oh, gee, this sounds dangerous." All I could see was what

was on television. But they were outside, and the Secret Service was 

incredible, but we were also helped by the DC police and we were helped

by - the National Guard was unbelievable. 
They came in and they - 
this was like a piece of cake.

Send in The Guard

And I really am suggesting - 

because if you look at Minnesota

and the great success we had there 

and other places, I'm suggesting to

some of these governors that are 

too proud in New York - I mean

you see what's going on there.

Don't be proud. Get the job done.

You'll end up looking much better

in the end. Call in the National

Guard. Call me. We'll have so

many people - more people than -

 you have to dominate the streets.

You can't let what's happening

happen. It's called "dominate

the streets." You can't let that

happen in New York, where 

they're breaking into stores

and all of those things. And

by the way hurting many

small businesses.  

You can't let it happen.

26 Words From the Script, Some Babble, and 
63 Words From Hell

Equal justice under the law must mean that

every American receives equal treatment in every

encounter with law enforcement, regardless of race,

color, gender, or creed. They have to receive fair treatment

from law enforcement. They have to receive it. We all saw what

happened last week. We can't let that happen.

Hopefully, George is looking down right now and saying,

"This is a great thing that's happening for our country."

This is a great day for him.

It's a great day for everybody.

This is a great day for everybody.

This is a great, great day in terms

of equality. It's really what our

Constitution requires, and it's

what our country is all about.

One more set still to come. 

*The White House press corps was surprised to see that their chairs, originally set up for social distancing, had been pushed closer together before the start of the poetry reading.