DAVE DAVIES, HOST:

This is FRESH AIR. I'm Dave Davies. In this incredibly close presidential election, voters repeatedly cite the economy as a leading issue. And if ever there was a circumstance where we should have plenty of information about the candidates' approaches, this is it. Republican Donald Trump was president for four years ending in 2020. After which Democrats Joe Biden and the party's current candidate, Vice President Kamala Harris, took the reins, a juxtaposition that should offer some basis for comparing the performance of the two tickets.

With that in mind, we've called on a respected economist to offer some perspectives on the economic records of the two administrations, and on the presidential candidates' campaign proposals for the country's economic future. Those proposals differ sharply on taxes, spending, tariffs, regulation, energy, and industrial policy, and more. Our guest is David Wessel, a senior fellow in economic studies at the Brookings Institution, and director of their Hutchins Center for Fiscal and Monetary Policy. Wessel worked for 30 years at The Wall Street Journal. He shared two Pulitzer Prizes for journalism, one at The Wall Street Journal, another at The Boston Globe. He's also written three books on economic issues.

David Wessel, welcome back to FRESH AIR. We want to talk about the economic records of the Trump administration and the Biden-Harris administration. But, you know, I have to note that there are so many economic statistics that you can make an argument for almost anything. So this is tricky. And in this particular case, it seems that COVID can muddy the comparison, I think, since it had such a powerful economic impact. I mean, how do you fairly judge these two? Do you cut off Trump's numbers at the end of 2019? How do you sort that out?

DAVID WESSEL: So first of all, I think that in general, we tend to give presidents more credit or blame for what happens in the economy than they deserve. As you point out, it's hard to evaluate a president's economic record by just looking at the GDP or the unemployment rate without noting that we had a huge pandemic on President Trump's watch, and we put the economy into a medically induced coma.

So, of course, that shows up in the numbers. The unemployment rate rose substantially at the end of his term. And the inflation rate was kind of under control at the end of his term and then picked up after he left office, but some of that reflects decisions that were made when he was president. Some of them reflects decisions that President Biden and Congress made after Trump was president. The way I like to look at it is not so much on the numbers, on the outcome, but how did they play the cards that they were dealt? What difference did each of these presidents make in the economy? And there I do think we can see some things.

So President Trump presided over a rather chaotic response to the pandemic, which was not helpful to the economy. But he also, and Congress at the time, passed a big fiscal stimulus thing, which helped lift the economy, help soften the blow of the pandemic. And although he doesn't seem to like to take credit for it, the rush to create vaccines was a huge economic plus. If that hadn't happened, the recession that we had, which was very deep, would have been much longer. And also, if you just look at the charts of the economy, the GDP and stuff, and you take out the COVID effect, it's hard to tell the difference between the two administrations. But that's not to say that there weren't differences. You know, as you pointed out, President Trump seems to think that every tax should be cut. He wanted much less regulation than President Biden did, and then we can expect Vice President Harris to do if she wins.

DAVIES: Right. You know, inflation clearly took a spike during the Biden-Harris administration. Trump in his debate said that the inflation was probably the worst in our nation's history. We're at 21%, but that's being generous because many things are 60, 70, 80% higher than just a few years ago. I mean, you know, Trump tends to speak in hyperbole at times. How bad was this inflation in context?

WESSEL: Well, it certainly wasn't the worst in our history. I mean, I lived through the early 1980s when inflation got well into the double digits and led to the Paul Volcker era at the Fed, where he raised interest rates sharply to force a deep recession order to break the back of inflation. So what happened was - well, I think what we now think happened - it wasn't so clear at the time - is first, we had a lot of supply shocks. Supply chains were disrupted. Chinese factories closed. And we told people, don't go to the movies. Don't go to Disneyland. Don't go to restaurants. Don't go to the office.

So people bought a lot of stuff. And so the price of that stuff tended to go up a lot. And it was compounded by some mistakes that the auto companies made? They didn't order enough semiconductors, then they didn't have cars to supply the demand. If you look at the charts of inflation, what you see is, inflation was pretty low, in fact, lower than the Fed's 2% target at the end of the Trump administration, and it hit year over year, a peak of about 9% in the mid-2022 era.

So why did that happen? And how much can you blame on presidents? I don't think you can blame them for the supply shocks. That was something that it would happen from outside. We didn't see a pandemic coming, and we didn't expect it to be so disruptive to global trade, and we didn't expect people to buy so many couches and TVs. But both President Trump and President Biden presided over big increases in fiscal stimulus - cutting taxes, giving people a lot of money, and that added to the demand in the economy, and that helped increase inflation. Inflation is essentially when you have demand growing faster than supply can grow. That's what happened. And so I think the initial Trump fiscal stimulus was well justified because we had no idea what the pandemic would be like. We didn't know we'd have vaccines.

That was a big insurance policy. I think the evaluation today of the March 2021 Biden stimulus was it was too big. And that contributed to the inflation that we had, and it forced the Fed to raise rates more than they would otherwise have had to. And that period seems to be ending. So you can assign some blame to the Biden administration for that. They probably did too much. There were some political reasons for doing that. But we don't know yet how the story is going to end. And if we end this period with inflation gradually coming down to the Fed's 2% target without having a recession, it will look like maybe a minor blip, but it will still look like a big success.

DAVIES: Right. And so where are we in terms of inflation right now?

WESSEL: Inflation is running at about something like 2.5% year over year. It's come down gradually, and that's good. Wages now are rising slightly more than the rate of inflation, so real wages are going up. The Fed has not quite declared victory, mission accomplished, because that's bad luck, but they come pretty darn close to saying that.

DAVIES: It's a lot lower. Of course, reduced inflation is not the same thing as reduced prices. And so the perception is groceries are still a whole lot more than they were five years ago.

WESSEL: Well, they are. That's right. It's not just a perception. It's a fact. So prices went up. Some of them have come down, like used cars' prices are down from their peak. Most prices will not come down, but then most of our wages won't go down either. Those people who got Social Security recipients when inflation was high got a 7 or 8% bump in Social Security benefits. We're not taking that back. No one's taking back the raises that you and I got. I don't know about you, mine didn't quite keep up with inflation. So I understand why people are annoyed.

So the perception is a huge problem for the Democrats. Things are more expensive than they were. Each of us has a kind of way we keep track of what's going on in inflation, and very few of us look at the Bureau of Labor statistics data. What we do is there's some price in the economy that we say, wow, that was more expensive. I often say that the biggest price in the economy is gasoline prices because it's the only price that's three feet high when you drive. I drive a Prius. I don't buy that much gas, but I still get outraged when I see gas that's 3.99 a gallon. When I came back to the office after COVID and I went to Starbucks, I was kind of stunned by how much more my tall skim latte cost than it was. Other people, it's the price of eggs or whatever. So people are right. Things are more expensive, and that's not good if you're running as an incumbent, which in a way Kamala Harris is.

DAVIES: You know, you said one of the things that led to the inflation that we suffered in, you know, a couple of years back was supply chain disruptions. And you and I are speaking Wednesday, October 2, and a dock worker strike has just gotten underway, and we don't know how long it will last. If it does, does it present the threat of disruptions could add inflation in the waning weeks of the campaign?

WESSEL: Yes. It really depends how long this lasts. If it's days or maybe a week or so, I don't think it's a big deal. We know that a lot of companies anticipated this and built inventories, and there'll be temporary problems, and they'll go away. If it stretches on, though, it could lead to shortages of some goods and push up prices, and that would be incredibly inconvenient for the Democrats.

One interesting thing is that, I mean, I'd love to be in those conversations at the White House where they say, OK, so we're really pro-union. We're pro labor. So we don't want to intervene here, but the president has the power under federal law to order an 80-day cooling off period - that is, to require the dock workers to come back to work.

And I wonder whether there aren't some people in the White House who are thinking, OK, if the longshoremen and the shippers can't work this out in a few days, maybe it would be better for us to annoy unions, but protect the economy in the days running up to the election by invoking that. This is quite different than when the autoworkers go on strike. There the president doesn't have that power, but he does with shipping and railroads. And so it'll be interesting to see if they consider that if this goes on for a while.

DAVIES: We need to take a break here. Let me reintroduce you. We're speaking with David Wessel. He's an economist at the Brookings Institution, and has spent many, many years in journalism, including work at The Wall Street Journal and The Boston Globe. We'll continue our conversation in just a moment. This is FRESH AIR.

(SOUNDBITE OF THE AMERICAN ANALOG SET'S "WEATHER REPORT")

DAVIES: This is FRESH AIR, and we're speaking with economist David Wessel from the Brookings Institution about the economic records of Kamala Harris and Donald Trump and their promises for the economic future of the country.

You know, we were talking about the records of the Biden-Harris and the Trump administration. But before we get onto their plans and promises, I wanted to just take a moment on major pieces of the Biden and its administration's domestic legislation. I mean, there were four, you know, big laws - the American Rescue Act, the Inflation Reduction Act. Some of these had big price tags. They may have had some inflationary impact, you say. How did they impact the economy and the government's relationship to people in general? Did it alter our economy in some fundamental way?

WESSEL: Yes, I think it did. So the first piece of legislation, the American Rescue Plan, March 2021, that gave people a lot of money. You may recall that President Trump had promised to give people $2,000 checks. They'd gotten $600 person checks. There was an election in Georgia where the two senators campaigned on giving people $2,000. So the Biden people came in and they felt like they were locked in. And so they sent everybody $1,400 a person or most people. And that gave people a lot of money to spend, and it took a long time for that money to work its way through the economy. And that probably did contribute some to the inflation. There was also some improvements in the child tax credit and things that helped poor families in particular, and there were things to increase subsidies in the Affordable Care Act and such.

But the subsequent legislation, the bipartisan infrastructure bill and the Inflation Reduction Act, those are really largely long-term investments. They didn't increase demand right away. They were designed to, and, to a large extent, are trying to influence the direction of the economy. So there are lots of charts showing how much investment in manufacturing plants has gone up since those bills were passed. We know that there's substantial money going - we'll see how it works out - to chip makers in order that we make more chips in the U.S., and we're less reliant on Taiwan and the People's Republic of China.

We know that there is a lot of infrastructure spending, whether it's broadband or bridges, that's being done. Those are things that the theory of the case that the Biden administration has is those are investments in the future. We're borrowing to pay for them now, but they will pay off in the future. And particularly on the area of climate change, I think they will have a significant effect. It was the most significant thing that the U.S. government has done on climate change since we began worrying about it.

A lot of economists would have preferred a different strategy - perhaps a tax on carbon, more of a stick approach. The administration decided they could never get that through Congress, so they're doing the carrot approach. They're giving people tax credits if they buy electric vehicles. They have all sorts of things that meant to make it easier to build clean energy and stuff like that. And I think those will have long-lasting effects on the economy, most of them favorable.

DAVIES: Before we leave our discussion of the records of the two administrations, we got to talk about Trump and the major tax revisions in 2017 with the Tax Cuts and Job Act, which Congress approved - a lot of tax cuts, a lot of moving parts to this. I mean, we'll talk about their plans for the future in a bit. But overall, what was the impact of these tax cuts on jobs, growth, the deficit, distribution?

WESSEL: They were big tax cuts. They unquestionably increased the deficit because when the government gets less revenue and doesn't cut spending, you'll get bigger deficits. There's a debate among economists about how much they did to increase business investment. Different people come up with different conclusions. It's kind of hard to say what would have happened without the tax cut. The direction is clear. They probably did increase business investment. The question is how much. And they definitely were slanted towards the people at the upper end of the income distribution. It made the tax code less effective at reducing the gap between winners and losers in the economy.

DAVIES: Right. And some provisions have expired. I gather some others will expire next year.

WESSEL: Correct. The major things that expire at the end of 2025 are the individual tax cuts, the reduction in income taxes that you and I and all the listeners pay. And so that's setting us up for a big showdown in 2025. President Trump wants to extend all those tax cuts. Vice President Harris wants to protect people who make less than $400,000 a year, but raise taxes on the rest of the people, essentially undoing the Tax Cut and Jobs Act for them and for business. The business tax cut, the big one, the cut in the corporate tax rate, that was permanent, to the extent that any tax in Washington is permanent, which basically doesn't mean much. President Trump proposes to reduce the tax rate on corporations from 21% to 15%. Kamala Harris wants to raise it from 21% to 28%, which is where it was before the Tax Cut and Jobs Act was passed.

DAVIES: And the critique by progressives that this act really skewed the economy to favor the rich over the poor - is that a fair critique?

WESSEL: Yeah. I mean, basically, our economy - to a large extent, the market forces in our economy have widened the gap between the people who do really well in the economy and the rest of the population. And we use the tax code to kind of try to restrain those market forces. The Tax Cut and Jobs Act provided less restraint against those forces, although it is worth noting that in the last couple of years, people at the very bottom have done better than people in the middle in terms of percentage change. For a variety of reasons - a tight labor market, perhaps raising minimum wages in many states, and perhaps because of new appreciation for the role of essential workers or frontline workers, whatever you call them, wages at the bottom have risen faster than wages in the middle of the income distribution.

DAVIES: Well, I want to talk about what these two candidates are saying about what they'll do. And I have to say, mean, I've covered elections for a lot of years, and I've read so many campaign platforms and promises and proposals. And you know, some proposals are more serious than others. I mean, some of them are never going to be enacted. Some of them the candidates don't explain how they will pay for them. Do you have any criteria for how you look at promises and see which ones should be given, you know, credibility?

WESSEL: First of all, in the past, we have occasionally had presidential campaigns where each side had laid out enough of an economic policy agenda so you could make spreadsheets comparing them. You know, the Romney-Obama election was an example of that. Neither campaign sees a need to put out a well-fleshed-out, detailed economic policy agenda that outside analysts can add up and everything. Each of them has presented a grab bag of things. Some things seem just overtly political. The best example of that, of course, is that Donald Trump proposed to exempt tips from income tax when he gave a speech in Las Vegas. And then a few weeks later, Kamala Harris did the same thing.

I think there's no economic rationale for that. There's no tax expert or economist that can tell you that there's some reason to exempt tips from income tax. Why should somebody who makes $40,000 in income in wages and tips pay less taxes than somebody who just makes $40,000 in wages. So that's just pure politics. It tells you that Nevada is a hard-fought contest this year. But other things are significant signs of how they would govern. As we discussed earlier, President Trump would extend all the tax cuts that were given, which were more to the rich than to the lower-income people. And Kamala Harris said she won't do that. She will raise taxes on corporations. She will raise taxes on upper-income people. She'll protect people who make less than $400,000 a year.

That's a clear difference. President Trump wants to cut taxes on business, he or at least his advisers think that that's good for the economy because it encourages investment, and we all are better off. The Biden-Harris view is that you can raise taxes on business, and it won't hurt investment that much, and it gives you the resources to spend money on other things, like expanding the child tax credit, which is a favorite thing of many Democrats.

DAVIES: We're going to take another break here. We are speaking with David Wessel. He's an economist at the Brookings Institution who's spent decades in journalism. He'll be back to talk more about the economic plans of the two major party presidential candidates after this short break. I'm Dave Davies. This is FRESH AIR.

(SOUNDBITE OF SONG, "WITH PLENTY OF MONEY AND YOU")

TONY BENNETT: (Singing) Well, baby, what I couldn't do with plenty of money and you. In spite of the worry that money brings, just a little filthy lucre buys a lot of things, and I could take you to places that you would like to go. But outside of that, I've no use for dough. It's the root of all evil, of strife and upheaval, but I'm certain, honey, life would be sunny with plenty of money and you.

DAVIES: This is FRESH AIR. I'm Dave Davies. Our guest is economist David Wessel. We're talking about the economic records of the Donald Trump and Joe Biden-Kamala Harris administrations and the economic campaign proposals of Trump and Harris in the current presidential race. Wessel is an economist at the Brookings Institution who spent decades in journalism, where he shared in two Pulitzer Prizes for his economic reporting.

Well, it's interesting to hear your take on the kinds of explanations the candidates have given. You know, Kamala Harris in particular has been criticized by some, by analysts or journalists - and you find this in opinion polls from voters as well - that she hasn't been specific enough about her plans. Now, she does have, like, an 82-page document on her website, which has a lot of detail in it. I mean, what's your sense of how well she has explained herself and, in fairness, how that compares to Donald Trump?

WESSEL: Well, I don't think Donald Trump has an 82-page document. He seems to spit out things that take you aback. They did put together a document. Some of it is rhetoric, some of it is detailed. I don't think - it's not a coherent theory of the case. It doesn't give you a preview of what the Harris budget would look like, what exactly - how she would pay for things. She does say that she will pay for what she spends. But what she says for the pay for - is don't add up to the spending. Trump seems more scattershot. And then the big centerpiece of his economic plan is raising tariffs.

And so his answer, every time you ask him or his people how are we going to pay for something, he says, oh, foreigners are going to pay for it because we're going to put a lot of taxes on them. Somehow, that will be pain-free to Americans, and it'll hurt the Chinese, the Mexicans, the Germans and the Japanese. But that simply isn't true. If tariffs work, they work by raising prices in the U.S. And almost all economists would say that the bulk of that is paid by the end user, the consumer. So that's a tax in a different name, and it's a tax on a much smaller base of things.

So if you happen to buy a lot of stuff that's imported, whether you're a business or a consumer, you're going to get hit much harder than somebody else. So that's where it falls apart. The Trump plan doesn't work unless you believe that tariffs are a painless way to get money out of someone else, and they're not.

DAVIES: Well, I want to walk through some of this in a little bit more detail. And I thought we'd begin by listening to a clip from Donald Trump. Each candidate gave a major speech on the economy recently. Trump's, I believe, was in Savannah, Ga. And let's hear a bit of what he had to say.

(SOUNDBITE OF ARCHIVED RECORDING)

DONALD TRUMP: Starting on Day 1, we will end inflation and make America affordable again. We will have - ready? - no tax on tips...

(APPLAUSE)

TRUMP: ...No tax on overtime.

(APPLAUSE)

TRUMP: And for our seniors, who have been devastated by this Harris-Biden inflation that was so unnecessary, caused by energy - they let energy go through the roof. It caused it, and also their spending, but I say even more by energy. We're going to have this for our seniors - no tax on social security.

DAVIES: And that's Donald Trump at a speech in Savannah, Ga. You know, you and I spoke a moment ago about the tax on tips, and you argued there's no real economic rationale for exempting that from taxes while others who make straight salaries or wages don't get that break. This thing about eliminating taxes on Social Security benefits, this would be a huge change, right? Do we know what it would cost?

WESSEL: I'm not sure I would call it a huge change. In order to provide money for Medicare and Social Security, Congress has decided over time that upper income people should have to pay income taxes on some of their Social Security benefits. And that money goes into the various trust funds. Some goes into the Medicare trust fund and some goes into the Social Security trust fund. Remember; this only hits upper income people, so these people who are living on Social Security or very small pensions don't get hit. And secondly, we already have a problem that there's not enough money in the Medicare and Social Security trust funds to fund the benefits we've promised. So the money would have to come from somewhere else, so we'd have to cut benefits.

Somewhere lurking in here is an idea about changing the way we tax people. And I don't think that President Trump has this in mind, but a number of accounts have pointed out that we could go away from taxing income. And instead, we could tax consumption, what people spend. And that is an approach that many economists have fantasized about over the years because it would encourage people to save more, and you could make it progressive. But I don't think that's what Trump is talking about. I think he's just handing out candy to voters because he knows that it plays well. And I don't think it reflects some coherent economic strategy.

DAVIES: Right.

WESSEL: And let me just say one thing that troubles me when we get into this, like, well, compare their child tax credit to the other person's child tax credit - that it kind of obscures what I think is a bigger issue for the economy, which is we know that a Donald Trump administration, based on what we saw in the first term and what we could expect if there's another one, would be more chaotic. We'd see presidential tweets that might roil the markets. We know that we'd be often in adversarial positions with our allies. And that kind of business climate does not seem to me to be likely to encourage businesses to invest or foreign companies to invest here, and to make the economy function better.

So it's somehow the zeitgeist. The attacks on the Justice Department, which are not directly economic issues, do affect how people feel about the economy, and therefore how much they'd spend and invest. I'm not saying that Kamala Harris would have, like, some economic nirvana, but I do think it would be calmer. And there'd be more of the old norms returning to how we do business in government than we will expect with a second Trump term, and that's maybe more important than comparing what the corporate tax rate would be under each of these.

DAVIES: We need to take another break here. Let me reintroduce you. We're speaking with David Wessel. He's an economist at the Brookings Institution who spent years as an economic journalist, where he shared in two Pulitzer Prizes. We'll continue our conversation in just a moment. This is FRESH AIR.

(SOUNDBITE OF STEFANO BOLLANI'S "ALOBAR E KUDRA")

DAVIES: This is FRESH AIR, and our guest is economist David Wessel from the Brookings Institution. He's had a long career in journalism, where he shared in two Pulitzer Prizes. We're talking about the records of the Trump and Biden-Harris administrations on the economy, as well as their proposals for America's economic future.

Let's listen to a clip from Kamala Harris. She gave an economics - a speech on the economy in Pittsburgh. Here's some of what she had to say.

(SOUNDBITE OF ARCHIVED RECORDING)

VICE PRESIDENT KAMALA HARRIS: Under my plan, more than 100 million Americans will get a middle-class tax break that includes $6,000 for new parents during the first year of their child's life...

(APPLAUSE)

HARRIS: ...To help families cover everything from car seats to cribs.

DAVIES: So Kamala Harris is clearly in favor of government intervening directly to provide assistance to families who need some help. And along those lines, she's also proposing $25,000 in assistance for new homebuyers. And I checked her economic plan on her website, and there's a little more detail. She says that it would be for working families who've paid their rent on time for two years and are buying their first home, and it would be up to $25,000 in down payment assistance, with more generous support for those buyers whose parents did not own a home. So there are some criteria that somebody would have to administer and figure out. This sounds pretty groundbreaking - is it? - I mean, and expensive.

WESSEL: So one thing that you note there is all these little caveats and stuff that mean that someone in the Harris campaign is trying to, like, contain this. You don't see that on the Trump side. They don't put any footnotes or caveats in their thing. So, like, the one thing that I just don't understand about this Harris proposal is this idea that you're going to give more money to people whose parents didn't have a house. Can you imagine what that's going to be like to administer?

DAVIES: Well, that's what was wondering.

WESSEL: I mean...

DAVIES: Yeah.

WESSEL: I know nobody feels sorry for the IRS, but I feel sorry for the IRS if they have to figure out how to handle the fact - well, my father left my mother when I was a toddler. I don't know whether he owned - I mean, it's just - that's - I don't think that can go anywhere. Look. Here's the thing on that. We clearly have a lot of anxiety and stress about housing costs in the United States. You can tell that because both candidates and everybody running for Congress talks about it, and they have a good finger on the pulse of what Americans are worried about.

And fundamentally, the problem is that we need to expand the supply of housing, and that would help bring down the cost, and Harris does talk about that. This $25,000 thing, I think, is probably not a great idea. It will help some people. It will have a cost. I don't know what the scoring is 'cause we don't have the details yet, but it won't have that big a cost.

Where I think - much more important is what Kamala Harris says about trying to streamline regulation, maybe provide incentives for state and local governments to loosen their zoning rules. I mean, there is now a sense - and this is a big change in the - even among some Democrats - that we have had made it too hard to build things in America.

You may have noticed that President Biden just this week signed a bill that waives the environmental - some of the environmental protection requirements, the impact statements that firms are required to build if they're building new semiconductor plants. Some people are quite upset about that, but I think that what - where - that's the more interesting and substantive thing. What could the federal government do to encourage the increase in supply of housing? She has a few things about that in the plan - about some demonstration projects and stuff.

DAVIES: Right. She talks about first of her tax cuts specifically targeted at encouraging home builders...

WESSEL: Right, right.

DAVIES: ...To build affordable homes and also a $40 billion local innovation fund to invest in...

WESSEL: Exactly.

DAVIES: ...Innovative strategies to expand the housing supply, which presumably states would administer, and some would do better than others. And some of that would...

WESSEL: Yeah.

DAVIES: ...Involve zoning regulations.

WESSEL: And I think...

DAVIES: A lot to be sketched out of there, I guess.

WESSEL: Yeah, but I think it's - that's a sign that the political system is recognizing that housing is a problem and that finding a way to increase the supply of housing is important to people, and they're looking - they're struggling to find ways to do it. Of course, one thing that would help is if mortgage rates were lower. If interest rates were lower, it would be easier for builders to get the money to build new apartment buildings or build more houses, make it easier for people to afford houses, and that will be determined in part by the overall budget policy of the government. If the government runs ever and ever bigger deficits, surely that will have an effect and push up interest rates, and that may make it harder to get more housing supply no matter what these little demonstration projects do.

DAVIES: Right. Well, one of the things that Trump has said he would do to reduce housing costs is to deport undocumented immigrants into the millions, and that would presumably free up space for the houses that they now own and rent. If he could execute such a mass deportation, what would the effect be?

WESSEL: Well, first of all, that's a pretty big if. We don't quite know how this would work. This came up some in the vice presidential debate, and JD Vance tried to make it seem manageable by saying, well, we'll start by just deporting the people who have been convicted of crimes. Of course, some of them are in jail, so I don't think they're demanding apartments. I don't think the evidence is very strong that housing costs are up a lot because of immigrants. Of course, in some communities where there are a lot of immigrants, where the population is growing, that means more demand for apartments, and that's for sure true. On the other hand, many communities have sought out immigrants because they need the workers.

So it's - immigrants do two things. They supply labor, and they demand goods and services. But I think this is just a way of demonizing immigrants 'cause that plays well with the Trump-Vance base. I think it's inconsequential from the housing problem we have on a national level.

DAVIES: We've talked about a lot here, but I'm - I wonder, are there things that you've observed in the economic records of these two candidates and/or their proposals that you think are important - we ought to know?

WESSEL: Yes. I don't think I've had a conversation that went on this long without somebody asking me about the Federal Reserve. Maybe that's because of - I work in a center that's called fiscal and monetary policy. In our democracy and in most capitalist democracies, the political system has decided that it's better to have an independent central bank that sets interest rates because if the politicians set interest rates, they have a temptation to set them too low. We get a little more growth now. We get more inflation than we want later, and then we have bad things happen to the economy. In general, most presidents in recent years have bought into this notion. Donald Trump doesn't really buy into it.

Now, he doesn't have a lot of power over the Fed immediately. There's no opening on the Fed board until early 2026. One of the governor's terms expires, and Jay Powell, the chair's, term expires in the spring of 2026. So there's not much he can do until then except cause a lot of problems. I'll talk about that in a minute. But who he puts on the Fed will really matter to what happens to the U.S. economy. If he puts someone on the Fed who people think is a person who will bend to Trump's whims, will be less likely to raise interest rates when we need them or will be more eager to cut rates as Arthur Burns was when Richard Nixon was president, that's bad for the economy. It would mean more inflation, and it'll also shake people's confidence in the way our system works.

And that matters a lot because we are huge borrowers on the global markets. Running these big deficits and even bigger deficits in the years to come mean we borrow a lot of money. People don't want to lend money to a country if they don't think that its political system works and if its independent central bank can do what's necessary to fight inflation.

DAVIES: You know, we've talked about Donald Trump's attitude towards immigrants, the threats to deport them. What would the economic impact be if many were deported? In general, what do you want to say about the immigrants' role in the economy here?

WESSEL: So, first of all, you have to say it would be incredibly cruel. How we do this without disrupting families and hurting people is the first question you need to ask. We do have a lot of immigrants in the United States, and a lot of them came here illegally. That's true. And we have to figure out some way to deal with this. I don't think that deporting them is going to work, but you asked about the economics. So the fact is that we have been able to create more jobs in the U.S. because we had a lot of immigrants to fill them. In fact, we didn't think the economy could continue to create 175,000, 200,000 jobs for as long as it did, and now we know that a lot of those jobs were filled by immigrants. We are also an aging society, and we have a problem with paying for the retirement of the baby boom generation, of my generation, and future generations.

When immigrants come to the United States, they tend to be of working age, and they pay taxes. Even people who come illegally are often paying taxes - Social Security taxes and other taxes. So we need people, and we need the money that they pay in taxes. Now, that's not to say that we don't have a lot of issues. There are some communities which are clearly overwhelmed with immigrants, and the way to deal with that, as has been often said, is to have a better immigration system and to deal with both the problems of the border and how we get immigrants.

And then the other thing that's important is that when Donald Trump talks about immigrants, you think everybody who comes is a drug seller or a child trafficker or even just, like, a low-wage worker. But we have a lot of immigrants in the United States who come here and do things like build companies. The CEOs of many of the tech companies are immigrants. And one of the things that I worry about is that we are making America look hostile to immigrants, making it harder for them to come here and go to graduate school in the sciences. Instead, they'll go to Canada or Australia or Europe.

And in the long run, we will regret that because one of the things that we have learned is that immigration can often be a way to get more innovation in a society. If the brightest minds in the world want to work here, I am sure we want to welcome them. And the whole Trump immigrants-are-bad thing tends to turn off some of the very people that I bet he would like to bring here.

DAVIES: Well, David Wessel, thank you so much for speaking with us.

WESSEL: You're welcome. I enjoyed it.

DAVIES: David Wessel is an economist and director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. Coming up, David Bianculli reviews "Nobody Wants This," the new romantic comedy series on Netflix, starring Kristen Bell and Adam Brody. This is FRESH AIR.

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