The misunderstood Inflation Reduction Act

Make Me Smart August 17 , 2023 Transcript

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Kai Ryssdal 

Wait, God, here we go. Alright I’m ready. Hi, everybody, I’m Colin Rizzo. Welcome back to Make Me Smart where we try anyway to make the day make sense.

Nova Safo 

I’m Nova Safo in for Kimberly Adams, thanks, everybody for joining us today. It’s August 17. Thursday or as we like to call it on the Marketplace Morning Report team, Friday junior

Kai Ryssdal 

Friday, Junior, you know, I love it. Well, so so when I was on the morning show, which was a very long time ago, but I did the overnights for four years. And the thing about the overnights was you always earned your weekend by the time the Friday morning rolled around, and you were off the shift. And it was seven o’clock, eight o’clock in the morning. And you were done. And you’ve been up since midnight. Because that’s when you know the show was out of LA back then is supposed to in New York. You’d really earned your weekend, man. Like you earned your weekend. And if you played your cards right, you got a three-day weekend because you got Friday, Saturday, Sunday.

Nova Safo 

Yeah, I mean, if you don’t want to get any sleep for Monday morning, yeah, you’re

Kai Ryssdal 

Sleep when you’re dead. That’s what they said when I was in college. All right, we’re gonna do some audio from this week’s news, then we’re gonna do a little analysis on the side, maybe depending on how we feel about it. And that’s what we’re gonna do.

Nova Safo 

Alright, so let’s play that first clip.

President Biden

I’m not here to declare victory on the economy. Our economy is stronger and better than any industrial nation in the world right now. We but we have more work to do. We have a plan that’s running, turning things around. Inflation Reduction Act is a part of that plan. Bidenomics is just another way of saying the story in the American dream.

Kai Ryssdal 

So the President of the United States, obviously, this week on the one year anniversary of the Inflation Reduction Act being passed. So look lots of good stuff in there, I would submit for for all that the Democrats like to point to that as as a crowning achievement of bonds. Hang on a minute, let me get the dog, Bonsai! Come here, Bon come here, come here, come here!

Nova Safo 

That’s a good name. Does she look like a Bonsai tree?

Kai Ryssdal 

Well, she is short and stout. And and were she a larger dog, it would not be appropriate. She’s, she’s sort of a miniature version of a bigger dog. Yeah, I suppose that’s true. She’s very sturdy. Anyway, so Biden and the IRA. So look, the Biden administration is taking credit because that’s what politicians do. And they should take credit because politicians and presidents also get the blame for the economy, and it’s not their fault. So I have no problem with the Biden administration claiming credit for having reduced inflation and all of those good things that the inflation Reduction Act was purported to have done. The catch, of course, is that that’s not really what it did. I mean, there were some ancillary measures that did reduce inflation at the margins. But mostly, it was a bunch of other stuff that the President wanted to get done, which you can blame him for. And also, I saw the other day that he gave this speech where he said, I really, I’m sorry, we call that the Inflation Reduction Act because there’s so much other stuff in there. And I’m like, Joe, you did that as a sop to Senator Manchin. So don’t whine about it now. Anyway.

Nova Safo 

Right. That’s, that’s holding this up back then. Oh, yeah. I know. I mean, I think part of the issue is they have to cram so many things in these giant bills, to get everybody on board and something for everyone to get passed. So it’s really hard for the public to wrap their head around. Okay, what did legislators approve? And how is it affecting my daily life so they can make kind of a informed decision on whether they agree whether they want to keep going that way or not? So I think that’s part of the problem. It’s, it’s very, very tricky when it’s hard to know what’s in it. I mean, even I have to kind of go back and remind myself I’m not even, I had to go back and remind myself and some of the things in here, I honestly have had forgotten what was in there, you know, like, you can already apply for solar, putting a solar on your roof and getting tax rebates. I thought that we hadn’t kicked in yet, but you can get a 30% tax tax credit, it’s there. But when you get that tax credit, do people say “Oh, that’s from the Inflation Reduction Act.” They go, “Oh, great, money. Thank you.”

Kai Ryssdal 

That’s, that’s the problem. And that’s the challenge that the Biden campaign is going to have in the next six to eight months, right, is convincing people that they should get credit for all this stuff that’s happening, when in fact, people don’t connect the administration in power with good things happening in the economy. That’s that’s a that’s an old saw.

Nova Safo 

But let me ask you this. Because at this at the same time, the economy is, you know, relatively doing relatively well. We’re seeing inflation come down. And then we had, AP released a poll today, I think it was saying Biden’s approval rating and handling of the economy is at 36%, hasn’t budged in about a year and a half. Why?

Kai Ryssdal 

Yeah, well, so people remember inflation at 9%? Right? Yeah. Which it was a year ago, instead of the 3% it is now or the 1.9%. It is in the past 90 days. So that’s, that’s the biggest thing. Part number two of that is that when Jay Powell, the chairman of the Fed said these prices were going to be transitory. So first of all, he was wrong on inflation being transitory. But we all misunderstood what transitory meant, right? We said, Oh, the Fed chair says price increases are transitory that means they will go up and they will come down. That is not what happens, right? They have gone up and they have stayed up. And and that’s the challenge now that the Biden administration has to deal with.

Nova Safo 

It’s the it’s that frustration every time you go buy something, and it’s more expensive than it was two years ago. And you think, ah, the economy’s in trouble, even if it wasn’t exactly, exactly agreed. Alright, lead us on. Let’s do it. Next clip.

Sophia Saouma

So sometimes I work from home and because I’m actually neighbors with some of my other Sifties, well, yeah, Kelly and Jane. But this is one where sometimes we’ll actually stop by at local cafes, or because of internet connectivity issues. We’ll even hit up some of the local bars. This is one way they know to make us the virgin drinks.

Nova Safo 

Wow. So talk about changing work culture, right? This, this was a very interesting conversation I had last week in San Francisco at the headquarters of a company called Sift. That’s why they call themselves Sifties. And it’s kind of an online fraud detection company. And anyway, I went into their 30,000 square foot offices in downtown San Francisco. And there were maybe two dozen people in it. It’s designed for 200. Yeah. And they’re only open on Wednesday. So I went on the one Wednesday when they were actually open. So this is you know, they get it. They signed a lease in end of 2019. They realized that the workers even if they need to get together for work, they don’t even have to they don’t need the office to do it. They’re going to the bars, coffee shops. So will this company in the seven year, you know it’s a seven year lease, so it expires what 2026? Will it keep the entire 30,000 square feet of office space?

Kai Ryssdal 

Well, so look you you’re you’re at Marketplace world headquarters right now. I’m at my shed at home but you’re downtown right now we’ve got 20,000 square feet of office space, give or take maybe 25. And as I’ve said on the radio many a time and if anybody at our corporate overlords is listening, this is really a question that I think you want to answer to those of us who work at Marketplace world headquarters. How long is it going to be sustainable for us to have on an average day, four people in there so the last few days when you’ve been there? No but there’s been 8, 10, maybe 12 right? It’s been particularly bustling much room and it’s and it’s got to be costing this company so much money and I just don’t get it. I don’t get it and I don’t understand how it’s sustainable.

Nova Safo 

It’s probably not, not just for us, but for all these companies there at some point. They’re going to give back some of the office space they’re going to negotiate down the rents so you know, we’ve we’ve been covering this, you know, in the PM show, AM show, everywhere you know, about the reckoning that’s coming in the commercial real estate market, but it could directly ties into the trouble downtowns are having which was the two part story I did earlier in the week that this sound clip came from the reporting from that. Because downtowns have been designed many downtowns to be just the place you go to the office. And the researcher I talked to at University of Toronto made a very good point you said these are that’s a relic of the industrial past. Downtowns have to fundamentally shift what they do and what they’re about. Because those days are gone forever.

Kai Ryssdal 

Right? Well, so look, sorry, I’m just pulling this up really quickly, so I can speak about it intelligently, not like an idiot. Lead story on The New York Times this afternoon was for about a nanosecond how the city’s working on on taking office space in midtown Manhattan, like midtown south and turning it into residences, right? It’s unoccupied. Commercial real estate. So it’s happening.

Nova Safo 

That’s one of the things happening. That’s one of those, you know, the University of Toronto researcher Karen Chapple, she said, you know, everybody asks me what the magic formula is. She says there isn’t one, but certainly that’s one of the answers in a lot of cities, especially mid, middle mid-sized cities, actually, frankly, have been trying that out and it’s working out for them.

Kai Ryssdal 

Right. So I’ll read it. Here’s the headline, “New York plans to convert parts of midtown Manhattan to housing.” So there’s some of the most expensive real estate on the planet, right, that is not being used for commercial or industrial space. They’re going to make it into residences now.

Nova Safo 

Also, what our New York Bureau is.

Kai Ryssdal 

Well, you know, pull up a cot, everybody. Here’s another one, let’s go.

Janet Yellen

So I went with this large group of people, and the person who’d arranged our dinner did the ordering. There was a delicious mushroom dish. I was not aware that these mushrooms had hallucinogenic properties. I learned that later. I can tell you.

Erin Burnett

Later like in your when you were sleeping and having visions?

Janet Yellen

I was read that if the mushrooms are cooked properly, which I’m sure they were. It’s this very good restaurant, that they have no impact. But all of us enjoyed the mushrooms, the restaurant, and none of us felt felt any ill effects from having eaten them.

Kai Ryssdal 

So that was the Secretary of the Treasury obviously Janet Yellen on Erin Burnett show on CNN a couple of nights ago where Erin had read about this food blogger in China who paid attention to where Yellen went to dinner one of the nights that we were in Beijing. We you know, Marketplace traveled with her and we did an interview but but Yellen and her traveling party, her staff went out and went to this place where apparently they did hallucinogenic mushrooms. And the best part about that tape other than the Secretary of the Treasury possibly tripping on shrooms was that people get to hear her, actually in her natural state, which is to say, when you are talking to her off mic, off the record, no recording, no nothing. She giggles and laughs and she is personable and warm. And it’s really nice to have that little slice of her coming out because when you interview her, she’s very serious as it’s her j

ob, right? I mean, this is a woman who could move markets and change global policy if she says the wrong thing. So she knows what she’s doing, obviously, but it’s great that she let that slice of her come out I thought.

Nova Safo 

Yeah, and what a, we need stories like this. We really do.

Kai Ryssdal 

That’s what I’m saying, that’s what I’m saying. That’s great. All right, last one of the day and then we will move along. We’re going to play a little round of name that tune, a little bit of a song that a listener sent us as their economic anthem of the moment. We talked about this a couple of times we’re going to try to guess what it is I am very bad at name that tune. No well, you are at least more musically inclined. So yeah, so I’m going to fire up my Slack so that somebody can hit me up with it once it plays but here comes the song.

Chumbawamba

I get knocked down, but I get up again

You are never gonna keep me down

I get knocked down, but I get up again

You are never gonna keep me down

Kai Ryssdal

Is that Chumbawamba or something? Somebody hit me. I might be right, which would be amazing. Yay. Yes, yes. Chumbawamba. Unbelievable. I am I have a little bit of hip. Of course that song is probably like 25 or 30 years old. Anyway.

Nova Safo 

Hey man, a win is a win, man. Take the win.

Kai Ryssdal 

A win is a win. Steve in Massachusetts sent us that song we will have a link to the show notes, in the show notes to the Spotify playlist with all of those listeners submissions. And if you’ve got one hit us up with it. You know how to do that. It is God what is it? 508-U-B-SMART or makemesmart@marketplace.org is how you do that. Here are the lyrics thank you to Marissa Cabrera, “I get knocked down but I get up again/You ain’t never going to keep me down/ I get knocked down but I’ll get up again/You’re never going to keep me down.” I think it’s ain’t never gonna keep me down right anyway. There we go. There we go.

Nova Safo 

You guys have so much fun on the show. I’m a little jealous. And tomorrow we’ll get to drink alcohol so it’s really great.

Kai Ryssdal 

We do, although you know, I have to figure out how much I could drink because I have to do a thing with my mother-in-law tomorrow. But anyway, that’s all alright, we’re done for today. Tomorrow is economics on tap. I will probably have a beer because I want to. YouTube live stream at 3:30 Pacific 6:30 Eastern, sign up for our weekly newsletter while you’re just hanging around waiting for that. We’ll share reading recommendations let you in on what we’re drinking for happy hour tomorrow even though Ellen Rolfes wrote me at like five o’clock my time this morning and said “What are you drinking tomorrow?” And I said I don’t know I’ll figure it out later. Marketplace.org/newsletters is where you can sign up for newsletters.

Nova Safo 

She wrote me last, yesterday afternoon and I frantically when looking for an answer.

Kai Ryssdal 

Make Me Smart is produced by Courtney Bergsieker. Today’s episode was engineered by Charlton Thorp. Ellen Rolfes, the aforementioned Ellen Rolfes writes our newsletter. Our intern is Niloufar Shahbandi.

Nova Safo 

Marissa Cabrera is our senior producer. Bridget Bodnar is the director of podcasts and Francesca Levy is the executive director of digital.

Kai Ryssdal 

I’m just gonna I’m just gonna say here I’m better than I thought I was. Chumbawamba, I said it was 25 years old it was released in 1997, 26 years ago. How good am I?

Nova Safo 

What? That’s great. You need to buy a lottery card today.

Kai Ryssdal 

I am on fire.