Title: Tuesday Morning Economic News

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Brian: It's The Brian Lehrer Show on WNYC. Good morning, everyone. Here's a headline you might not have expected to ever see. It's from an opinion piece in The Wall Street Journal yesterday, "Trump wins Bernie Sanders endorsement." Wait, what? You're probably thinking, "This is an April Fool's Day, Trump wins Bernie Sanders endorsement? What?" Yes, it's real, and here's why. As the op-ed notes, quoting Reuters, "Sanders threw his support behind President Donald Trump's plan to convert US grants to chipmakers, including $10.9 billion for Intel, into government stakes in the company."

Sanders said, "If microchip companies make a profit from the generous grants they receive from the federal government, the taxpayers of America have a right to a reasonable return on that investment." Then he added, "Taxpayers should not be providing billions of dollars in corporate welfare to large, profitable corporations like Intel without getting anything in return." I spared you doing a Bernie Sanders imitation, but those were his words.

The column by Wall Street Journal assistant editorial, Page Editor James Freeman, notes that Sanders tried and failed to enable this kind of intervention in President Biden's 2022 CHIPS and Science Act. That's where these subsidies to Intel come from. The James Freeman column, by the way, denounces the idea, in case you were wondering, calls Sanders Marxist for liking it. I guess by extension, he's suggesting that Trump is being a Marxist here, too.

Freeman writes that turning Intel into the chipmaking equivalent of Amtrak is unlikely to be good news for American taxpayers or the company itself. We begin today with those strange bedfellows, President Trump and independent socialist Senator Bernie Sanders, on the government taking what I read is a 10% equity stake in a major US company, Intel. We'll ask, what does it all mean? That's hardly the only head-scratching economic news right now.

Yesterday, Trump met with the president of South Korea. Maybe you saw Lee Jae Myung continuing another pattern. Trump says South Korea has agreed to a tariffs deal that includes not just tariffs, but a promise to invest $150 billion in the US economy and buy more than 100 airplanes from Boeing, which, of course, is a US manufacturer. The deal with European nations announced recently had something similar about guaranteed investments here. What do these mandatory foreign investments mean for anyone's jobs or stocks or sovereignty or anyone else?

As you probably heard, Trump made another bombshell economic political announcement yesterday. After removing the head of the Bureau of Labor Statistics this month when he didn't like the July jobs numbers they put out, he has announced that he's firing one of the members of the Federal Reserve Board now, their board of governors, Lisa Cook, apparently because he doesn't like her opinion on interest rates. Officially, he said it's because she committed mortgage fraud. She, however, denies the charge and is refusing to resign.

Legal observers say firing a Fed governor in the middle of her term may not be allowed. This seems to be headed to court. Economic observers wonder anew about the impact at home as well as abroad if Trump strips the Fed of its independence, considered a gold standard for trust and stability of the domestic and even the world economy. That's a lot in one day.

Let's talk about some of these things now with two guests, Lydia DePillis, New York Times reporter covering the American economy, and Shawn Donnan, Bloomberg News senior writer on the economy, whose profile on X weirdly notes, he wrote it, so this is him noting about himself, that he is an Australian and a Boston Red Sox fan. I thought Trump and Bernie Sanders were strange bedfellows. Shawn Donnan, welcome, and Lydia DePillis, welcome to WNYC.

Lydia: Good morning.

Shawn: Thanks so much for having me.

Brian: Lydia, can we start with Intel? Can you remind us what this tech giant does and why it was getting taxpayer dollars in the first place from President Biden's CHIPS and Science Act?

Lydia: Sure. Intel makes microchips. These are essential components to most of our electronics and even big machinery like cars these days. It received incentives under the CHIPS Act to build out large factories in the US. Those incentive dollars hadn't been totally dispensed yet, so the Trump administration was leaning on them and saying these might not get totally given out if you don't agree to this equity stake, as you noted, which Bernie Sanders had been advocating for throughout the development of the CHIPS Act and never quite achieved. It is quite a turn of fortunes for Intel.

Brian: All right. Which one of you has a dog?

Shawn: It's mine. I'm sorry. We'll get the dog outside.

Brian: It's all right. What's your dog's name?

Shawn: It's Toby, who's watching one of his friends walk by on the road outside.

Brian: [chuckles] Toby. Good dog. Daddy's on the radio. Hi, Toby. It's okay. It's a little natural sound. It exists in the wild of your home, and there you go. Everybody knows that it's not their dog barking or some dog out their window that they have to pay attention to. Shawn, the idea there regarding Intel and why the government has to give it money, as I understand it, was that even though the US leads the world in designing computer chips, China leads the world in manufacturing them, and this money is designed to help this US company compete. How close to right do I have that?

Shawn: Look, that's right. The broad reaction here is one that started back in the Obama administration, actually, in the tail end of the Obama administration. It was a slightly obscure report that came out of the Commerce Department that said, "Hey, we really need to get our act together here in the United States on chips. We need to think about repatriating some of that production." Then during the first Trump administration, you had that conversation continuing during the Biden administration.

You had this, we should say, bipartisan CHIPS Act that was passed. Both parties agreed that repatriating production of semiconductors was important to the economy. Of course, you'd gone through the pandemic, where there's been all these supply chain problems, and semiconductors and chips are pretty important. People talk about chips as the oil of the 21st-century economy. It doesn't run very well without chips. The Trump administration is kind of continuing that.

It's venturing into a place, though, that Congress wasn't comfortable going when it was debating the CHIPS Act. This aid to this industrial policy focused on repatriating semiconductor manufacturing was very focused on loans and grants and trying to incentivize the construction of these massive chip factories in places like Ohio and in Arizona. Trump has taken that a step further. Like you say, it's a Bernie Sanders approach that Bernie hadn't been able to get through Congress, but I guess he's now got a new friend in the White House.

Brian: Lydia, can you explain this new part to any degree? What does the idea of the taxpayers now having an equity stake in Intel mean? Is it literally shares of Intel stock, or how are we all invested in Intel now?

Lydia: I believe that's the case, and it's not totally unprecedented. Obviously, the federal government did take stakes in large automakers when they almost went under during the Great Recession. That was for the explicit purpose of preventing them from disappearing because there are a lot of jobs tied up with that industry. This is not something that has tended to happen in American history outside of a crisis. Now, you might say, Intel was in a terrible position. It really had made some bad bets in recent years and maybe wasn't in a great spot to survive and thrive in the future without this kind of injection of capital.

It's important to note the US government doesn't have a board seat. There's no formal governance control, and so it's not totally clear what kind of influence the White House will exert over the company. Of course, it is taking a position that is basically what China might call a national champion. These are companies that, in countries like China, where the government has a stake. They're essentially state-owned enterprises. This is very common around the world. In that case, the profits and dividends do flow into the federal coffers. I don't think anyone is quite up close to the details of this deal, but I think that's the general gist of how this is supposed to play out.

Brian: Let me follow up on a couple of things you said there. One, you remind us of the government bailing out, I think is the term that people use. General Motors back during the financial crisis. Some of our listeners will remember one of President Obama's reelection slogans in 2012, "General Motors is alive, and Osama bin Laden is dead." There were some people, I think mostly Republicans, who opposed the bailout of General Motors. Did the United States government wind up making money from taking that equity stake or perhaps losing money? Do you know, Lydia?

Lydia: Yes. My understanding is that the government did come out net positive on that deal. The automakers, along with the banks, by the way, did pay back those loans in full. Shawn, correct me if I'm wrong. It can work out well. I think people do look back on that intervention as being generally a good idea. We still have the automakers now. Now, whether they have remained as competitive as they should be in the ensuing years, I think, is more debatable, but I think that history has generally regarded that decision well.

Brian: The other thing from your earlier answer that I wanted to follow up on was when you said it's not clear with a 10% equity stake whether the government will try to influence Intel's corporate decision-making. Now, 10% is still a small minority stake, but maybe it makes the government one of the biggest individual investors in the company. You tell me if you know. How could that be a potential threat or benefit if the government could be influencing the company on how it tries to grow its profits?

Lydia: There are many opinions about whether government is efficient allocator of capital, and I think that there's examples on both sides of that. Basically, when government takes a big role in an industry, it's because there is theoretically a national interest in directing it towards public priorities. Think about the railroads, for example. We have a national railroad company called Amtrak, and we think it's a public good to have rail service that is somewhat affordable and spread throughout the country. Think about our postal service. Obviously, that is government-run is supposed to be profitable, and it's because there's a national interest in getting the mail across the country.

In this case, it's been decided that there's a national interest in producing semiconductors in America. Presumably, the government will be using that leverage to make sure that Intel produces chips here instead of other countries. There's a long history behind why semiconductors are essentially invented in the US and produced overseas, and it's not the only product that happened to. Obviously, the same is true of advanced batteries. I think that is how they see themselves as using that leverage in this case.

Brian: Shawn, did you catch the derisive reference to Amtrak in The Wall Street Journal column I was quoting from that turning Intel into the chipmaking equivalent of Amtrak is unlikely to be good news for American taxpayers or the company itself. Do you understand the-- I think we've been hearing from the two of you what the Trump argument is for why this is good. What are the arguments against it?

Shawn: Look, the argument against it, and this is the argument The Wall Street Journal and others on the right of politics and economics will make, is that the government is just really bad at business. It's bad at making big strategic decisions. Amtrak doesn't have a real high-speed rail component when you look at other countries that do, although those other countries, in China and Japan, there's a big government role alongside the private sector when it comes to high speed rail. Look, it's a complicated relationship.

I think there's two key differences that really distinguish what President Trump has done here. The first is that when the Obama administration stepped in to bail out the auto industry, it was in the middle of an economic crisis of historic proportions. What had happened to those car companies wasn't their fault. It was a result of the economic landscape, and the government was stepping in to get them through a rough period in the American economy. It also was doing something that we're going to have to see and wait and see if the Trump administration does that, and it was creating demand for those car industries.

Everyone remembers the Cash for Clunkers program, whereby the government would pay you essentially for your used car to try and incentivize you to go out and buy a new car to create demand for GM and the other car companies that were getting government help. This time around, a big part of the problem for Intel is it doesn't have the customers it needs because it has fallen behind in the chips race. Essentially, it is not making the advanced chips that are in such high demand as a result of AI. That's the result of a strategic failing by the company and falling behind on innovation rather than the broader economic context.

Brian: In theory, can these government investments in Intel that started under Biden and are going to continue, apparently under Trump, turn that around? What's the economic theory for why suddenly Intel would become more competitive in the international chip market?

Shawn: It's a kind of if you build a day will come theory. A lot of the focus for the Intel, the chips money was focused on building this enormous facility in Ohio, just outside of Columbus and Licking County, Ohio. I've stood outside the job site there, and it is vast. Initially they were going to start with two fabs, as they call them, that were going to go into production starting this year, and then eventually that was going to grow to 10 fabs. They were talking about a vast expansion there. Just by creating that capacity here in the United States, the idea was that you would, at the very least, be producing here in the United States, and hopefully, demand would follow.

Now, what has happened and what Intel has said over the last few years is it has delayed this project is that it hasn't been able to line up the customers to do that. In some ways, this deal now and the $10 billion essentially that the government is putting into Intel is $10 billion that it had already promised to Intel in another form, though, in terms of loans and grants. That $10 billion, hopefully, if you're Intel, is going to be followed by Donald Trump becoming its best salesman and hopefully creating a market for its chips.

Brian: On the political point, Lydia, on which President Trump and Senator Bernie Sanders agree, that if the taxpayer is subsidizing a private company, the taxpayer should reap some of the benefits if our investment leads to more profit. It sounds like common sense and basic fairness when they put it that way. I understand there's the James Freeman argument in the journal that says, "But it's not likely to come out that way."

Even if we accept the common sense and common fairness premise, if I own a stock, the only time I can make money on it is when I sell, when hopefully the stock has gone up. If Intel stock goes up, does the US Treasury get money in some way along the way or not until it sells? If Intel stock goes down, are the taxpayers on the hook?

Lydia: You make money from a stock in a couple of ways. One is dividends, and the other is, as you noted, if you sell it. If the government does decide to wind down its stake in the future, if the company has recovered and that value has gone up, then sure, the US taxpayer comes out ahead. Now, as you noted, that value could also go down if Intel doesn't succeed. In this case, though, this is money that was already allocated by Congress, is my understanding. It's not as though this is new money that's coming out of some other pocket.

Perhaps the taxpayer isn't at huge risk here. I guess the greater risk is that you have imbalanced the playing field. Economists love to talk about efficiency. I think generally that principle is a little overplayed. There are other companies around the world that are very good at making chips, and maybe they make better chips. At the moment, a lot of them, because of the CHIPS Act, are making them in the US.

Now, are they now disadvantaged because the White House feels like it must defend and champion Intel? I think that remains to be seen. The other chip companies have been quiet so far on this deal. At least I haven't heard any cries of protest. I think that is another concern you might raise is that we want chips made here in America. We're doing that. Now, do we have to essentially favor one company over the other rather than just saying everyone who wants to make them here, here's your new economic reality, which they're also, by the way, planning to bolster by imposing tariffs on imported semiconductors? That would privilege those making chips in the US even more.

Brian: A few comments coming in from listeners and text messages. Listener writes, "Of course, Republicans were against Obama bailing out Detroit automakers. That's because southern states were building huge non-union factories for foreign automakers." Another listener writes, "The CHIPS Act was supposed to create manufacturing jobs, not give it to the company." Another listener writes, "Governments can decide based on the common good as well as efficiency and profit. That is a good thing. The common good helps all, markets don't. Shawn, what about that second text? "The CHIPS Act was supposed to create manufacturing jobs, not give it to the company." Is that accurate as a premise, and has it been creating jobs?

Shawn: That was absolutely accurate as a premise. It wasn't just the CHIPS Act. It was also the IRA, the Inflation Reduction Act, which put a lot of government subsidies into electric vehicle plants, battery plants, solar plants, wind projects, and so on. That was the whole Biden administration's industrial policy, which included the CHIPS Act, was aimed at creating an industrial rebirth in America with a big focus on creating jobs.

Now, the CHIPS Act itself, if you stand outside that plant in Licking County, Ohio, that's still being built today, it has created construction jobs. There's no doubt about that. In fact, they've been struggling to find enough workers to work on the site, enough electricians and pipe fitters and so on. That's partly a demographic question. You've seen people come in from outside Ohio to fill a lot of those jobs. The actual jobs working in the plant haven't come yet because the plant isn't finished, and there's big questions about that. That matters for another reason.

One of the things that came alongside the money going to Intel was money focused on workforce development, on creating the semiconductor engineers and the people who are going to work on the line there in Ohio. Those programs at places like Ohio State and some of the surrounding community colleges started, and they started to recruit students. Of course, those students, some of them are starting to graduate and come through, the plant isn't finished, that job isn't there yet, and so they're looking for employment elsewhere. There's a timing question in terms of the jobs.

The other thing is both President Trump and President Biden have promised lots of manufacturing jobs over the last 10 years in American politics. The reality is the US has been moving sideways in terms of manufacturing employment. Just since April, when President Trump introduced these tariffs on a lot of the world, which, in his argument, are going to create lots of manufacturing jobs, the US has actually lost 37,000 manufacturing jobs, almost 40,000 manufacturing jobs. Last year, leading up to the election in November, the US lost almost 100,000 manufacturing jobs, even though you had this industrial policy underway from the Biden administration. That's the intent. Whether it actually happens or not is something that we really don't have an answer to yet.

Brian: It's hard for government to move this needle when there are huge macroeconomic pressures coming from the private sector, it sounds like. Another listener writes, "Strongly disagree with The Wall Street Journal," writes this listener. "Amtrak is a national treasure. Let's not let them frame public transit in a negative light." Other listeners, you want to help us report the faster-changing-than-usual story of the US economy right now from the standpoint of your business or wherever you work. 212-433-WNYC or ask a question or state an opinion. 212-433-9692.

Does anyone want to add your name to the Donald Trump-Bernie Sanders consensus, we don't say that very often, that the government taking an equity stake in Intel or any other company that gets government subsidies is a good thing, or take The Wall Street Journal's position that it could hurt both parties, the company and the taxpayer? 212-433-9692, call or text. Anyone with ties to Wall Street, if you work for a finance firm or even if you just have a 401(k), do you want to weigh in or ask a question about another story that we're about to discuss, this political economic bombshell from yesterday, the president's attempt to fire Fed Governor Lisa Cook and take control of the Federal Reserve Board gradually away from the Fed as an independent arbiter of interest rates? 212-433-WNYC.

How about the tariffs and this idea of pressuring foreign companies, like we heard from South Korea yesterday, to invest in the US or will tariff you more? Give us your company's experience or just state an opinion or ask a question of our economic journalist guests, Lydia DePillis from The New York Times and Shawn Donnan from Bloomberg. 212-433-WNYC, 433-9692 as we continue after this.

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Brian: Brian Lehrer on WNYC as we continue on the intersection of economic and political news, major developments just in the last day with our journalist guest, Lydia DePillis from The New York Times and Shawn Donnan from Bloomberg. Before we go on to Trump's attempt to fire Lisa Cook from the Federal Reserve Board of Governors, let me get Jim in Brick in here on taking a government stake in the chipmaker Intel. Jim, you're on WNYC. Hello.

Jim: Hi. Good morning. I always remembered in technical terms the flip side of socialism, which was based more on international brotherhood concerns. When you nationalize it and make it very specific, the intervention of government into technology and business is fascism. If government is maybe even then putting the companies in competition for its favor, i.e. of the leader of that party, as a corollary, aren't we potentially selling out Taiwan, who is not going to be in such a competitive-- They make the most advanced chips right now.

Brian: Why would you, as an American, care about what happens to the Taiwanese economy if this is the [crosstalk]

Jim: As a corollary? I'm just saying this integration of business and government is not necessarily socialism. Socialism on a nationalist bent is fascism.

Brian: Jim, thank you very much. Lydia, I don't know if you want to weigh in on the F word and whether it applies in this case. I think the underlying issue that Jim is suggesting there is that if companies know they might get more government investment if they cozy up to dear leader, then that's going to skew profit-making decisions. That's going to skew business decisions into politics to please Donald Trump. What do you think about any of that?

Lydia: I think it's a really fair point. I think it also emphasizes the distinction between Bernie Sanders' version of what he would like to see and what we are seeing now, which is much more of a personalist style of industrial policy. I think the idealized progressive version of that is with clearer rules of the road and more subsidies that apply to all comers, essentially. That's what you saw in the Inflation Reduction Act. For example, anyone who could qualify for subsidies to build solar wind farms, for example, or to have your manufacturing plant making those equipment, then you would qualify.

I think there's a real danger in companies cozying up to the president because he does make decisions in a very off-the-cuff manner. As a reporter, I will note it has also made our job more difficult because companies are loath to show up in the press as being critical, especially if they have any kind of real business at stake. Writing about tariffs, if you are-- For example, I spoke with a medical device company that is being hammered by tariffs right now, but does not want to say that in public because they are hoping to get an exemption. It makes it very difficult to portray the reality of what is going on when you have that fear.

Brian: Just ask the former members of the Washington Post editorial board. All right. Next topic, the new political, legal, and maybe soon economic firestorm over Trump's announcement yesterday that he wants to fire one of the governors of the Federal Reserve Board, Lisa Cook, which, I'm reading, is legally questionable. His official reason is alleged mortgage fraud, which Ms. Cook denies. Lydia, I'll stay with you on this first. What's the real reason Trump wants to remove a Federal Reserve Board governor, as far as your reporting or your colleagues' reporting can indicate? Is it her past positions on interest rates?

Lydia: I actually don't think so, because if we take Trump at his word that he wants interest rates to go down, it's not as though Lisa Cook has been more hawkish on monetary policy than some of her colleagues. I don't think she was targeted for that particular reason. My feeling, and this is not based on any inside knowledge at the moment, is that they are going through and finding whatever they can that could cast anyone in a bad light. You saw this with Letitia James of New York, obviously, Adam Schiff of California, who were also hit with mortgage fraud allegations.

I think Trump wants to put his people on the board who will do what he wants. If that's Lisa Cook's position, great. If it's someone else, I'm sure all of the other members of the Board of Governors are going through their personal documents to make sure all their T's are crossed and I's are dotted for that reason.

Brian: Shawn, we'll leave the legal arguments here for another day, and when we have a legal analyst on the show, just noted that many news reports are calling these things legally dubious, and it does seem likely to wind up in court, whether Trump even has the legal authority to remove a Board of Governors member like this. Is there any immediate economic impact? I know the markets generally don't like the idea of a loss of Fed independence. Anything so far? I saw one report that the dollar was dropping a little bit against other world currencies in response. How would you start to say what is already happening or project what people think might happen economically as a result of this, if the president is successful in removing Lisa Cook?

Shawn: Look, I think the biggest concern if you are sitting outside of government or the Federal Reserve right now and you're setting aside the legal issues is what happens to inflation. The reason people for decades now have embraced the idea of central bank independence is that it's essentially having neutral refs who aren't tied to a political party or an administration, who aren't there to curry political favors, who aren't going to be swayed by politics, and they're simply going to manage the economy and the cost of money, which is the main lever that they have in interest rates, in a way that keeps inflation low and keeps employment as high as it can be before it starts to cause inflation to go up.

That balance is a technocratic balance. It's why Federal Reserve press conferences, if you're coming to them for the first time, feel pretty technical and arcane and so on. These aren't the everyday kind of political questions that they're dealing with. The reason the dollar is going down and bond yields are going up in response to this is people think that if President Trump is successful in bending the Federal Reserve to his will and stacking the Federal Reserve Board with more of his supporters, then that will lead to higher inflation for longer, that consumer prices in the US won't come down below what the Fed has nominated as this magical 2% target. It's now sitting up closer to 3%.

That will have an impact on the economic well-being of Americans, and it will have a persistent cost for the economy. That's the broader economic concern at play here. When President Trump is talking about lowering interest rates, it's not just about bringing down mortgage rates. For economists, it's about the broader health of the economy and questions over whether that kind of technocratic management is going to go away, and we're going to see a more politically driven management of the economy.

Brian: I guess skeptic on that answer and about the classic independence of the Fed could ask, why would a politically driven economy, particularly a presidentially driven economy or the kinds of economic decisions that the Fed makes, why would they be likely to be economic damaging since the president has every political motivation to make the country's economy do as well as it possibly can, Shawn?

Shawn: The president's motivation in terms of the economy is over the next four years. It's essentially a short-term goal for the economy for it to grow as fast as possible so that his party can remain in power and people can feel better about their lives. That's an entirely valid goal, but sometimes in economics, as in parenting, the immediate sugar rush has a cost later on, and that's the worry. You don't have to go back that far in American history to see an example of the cost of this.

In the early 1970s, Richard Nixon was lambasting behind closed doors at the time, didn't have social media for him to do it, but was lambasting the chairman of the Federal Reserve at the time, really applying pressure on the Fed to keep interest rates low, as it was combating inflation. What ended up happening is you had elevated inflation through the 1970s and big recession in the early 1980s, as finally the Fed stepped in and Paul Volcker stepped in to famously slay that inflation dragon, and that was at a big cost to the economy later on.

Brian: Lydia, a number of listeners are chiming in that the real reason-- One listener writes, "The real reason for trying to fire Lisa Cook is she's a Black woman." We have at least one other text from another number to that effect. Are people in Washington that you're reporting on, and I know you haven't written this up explicitly yet, but to your knowledge, are people saying anything like, "Look what they did at the Pentagon. They've reduced the rank or removed from leadership positions, women in general, Black women in particular." We know what's happening at the Smithsonian. We know what Trump's position is on affirmative action. I don't know that he's called Lisa Cook an affirmative action hire. I have not seen that. Is race resonating as an issue here or gender?

Lydia: I think it's absolutely resonating. Obviously, Lisa Cook was a trailblazing economist, the first Black woman on the Fed board, and her work is largely centered on systemic racism and inequality. She had a really hard time getting confirmed a couple years ago for that reason. Even when Trump was out of power, congressional Republicans had a lot of misgivings about confirming her. She's been in the target sites of conservatives since she came to national prominence. I don't think we can ignore that.

I do still think this was somewhat of an opportunistic firing on the White House's part. Obviously, anyone whose work has focused on issues of diversity or systemic inequality is dramatically out of favor. I think this has been probably the most pronounced in the military, because those firings have centered almost exclusively on women and people of color.

Brian: Richard in Wilton, Connecticut, you're on WNYC. Hi, Richard.

Richard: Hi, thank you for having me on. I think the real point for me when I hear about stuff that's going on at the Fed, and then the economic numbers that were released, we borrow a lot of money, and we do it really well, and interest rates are very stable. When you think that Moody's downgraded US Treasuries, probably at the same place right now. Then you have a situation where the Fed's independence becomes really critical to "are we investable or not?" If you can't trust our numbers because you have somebody who wants to have his numbers, it becomes a very, very dangerous place, and it's going to be hard to manage the debt if you are in question.

Brian: You wanted to mention the firing of the head of the Bureau of Labor Statistics in relation to this?

Richard: Yes. It's critical because if you start-- A lot of countries weren't investable because you couldn't trust their numbers, and we can be trusted. That's why we can borrow so much. When you think about the dollar, the dollar in last 25 years against the Euro at 117 is about the middle range, right in the middle. There's no urgency right now because we can borrow money really well, but if you change the environment, you take control of the Fed, it could create problems to borrow money.

Brian: Richard, thank you very much. Lydia, the firing this month of the head of the Bureau of Labor Statistics also raised suspicions that, like what might happen with interest rates, as we've been discussing, jobs numbers will start being cooked to make Trump look good. The first monthly jobs report after that firing comes out next Friday, first Friday in September for the month of August. What kinds of new questions do you expect to be asking?

Lydia: That's right. We're all a little bit apprehensive about covering that one. I think that we generally try to have a healthy skepticism of the numbers. They do change because it takes a while for all those surveys to come back in. We always want to paint a bigger picture of what other data is telling us about the health of the labor market. I think we'll probably lean a little bit harder, even more, on those other kinds of indicators to give you a multifaceted picture. It is really destabilizing to the practice of economic journalism and to economic regulation and to investing writ large.

I think the caller had a great point that this is just one piece of a larger puzzle of ways in which we are eroding confidence in management of the US economy, our understanding of even how it's doing. The thing about debt crises is that they happen gradually and gradually and gradually and then all at once, and by that time, it's too late. It has become more and more expensive to borrow as interest rates have gone up, and the debt is almost as high as it's ever been.

It used to be a conservative thing to worry about that, and progressives distrusted whinging about the debt because it was seen as a excuse to cut budgets. Now you'll even hear that from Democrats, saying we should probably try to bring this down while we can so that if there is a genuine crisis, we have a little bit more leeway to spend to get our way out of it.

Brian: Related to that, Shawn, somewhat related to that. Let me just touch briefly before we run out of time on the other story that I mentioned in the intro. The South Korean and other tariff trade deals. Trump met with South Korea's President Lee yesterday, and CNBC reports they have a deal that includes $150 billion investment pledge from South Korean companies, an order of 103 airplanes from US manufacturer Boeing, purchases of South Korean ships, and a shipbuilding partnership.

These kinds of investments are another thing I hadn't heard of before, but I'm no economics expert. I think one of the things that Trump argues in favor of the tariffs piece is that it's contributing a lot of money to the actual US government, which helps with the debt. What does it mean that the US has negotiated a deal for not just tariffs, but hundreds of billions of dollars of investment in the US?

Shawn: Look, one of the big questions on my mind as we go into the next few months and see out this year is how real these deals are, how durable they are. It should be pointed out we haven't really seen a text of this South Korean deal or a deal that was struck with the European Union. It took them a few weeks after it was first announced to even put out a joint statement on what they had agreed to in the case of the European Union.

All of these deals have these big number promises of investment. We should point out that's not $150 billion going into the US treasury and to pay off US debt. It's $150 billion investment in the US economy, which may eventually lead to taxes that the federal government can use and a faster-growing economy and so on.

Brian: Before you go on to the larger point, what form does that take if South Korea agrees to invest $150 billion in the US economy? We just talked about the US government investing billions of dollars in Intel. What form does this take when it comes from a deal with a foreign government?

Shawn: The form it takes right now is simply a promise that our companies are going to make these investments in the near-term future. Those investments could be the purchases of aircraft from Boeing, which isn't necessarily an investment, it's simply a purchase, or it could be Hyundai building new factories in the United States. One of the things that was included in the announcement yesterday was Hyundai announcing a new steel mill that is going to build in the United States, which would be a productive investment.

Brian: It requires, in this case, a foreign government to tell its private sector companies what to do to this degree?

Shawn: Yes, absolutely. In some cases, if you talk to European officials, there was a $600 billion investment promise that was attached to that deal. European officials will quite frankly say, "Look, we're a market economy. We can encourage companies to do this, but we can't tell them to." The question is, just how real are these promises? Are we really going to see all that money land? It should be said that foreign companies have invested a lot of money in the United States already over the decades.

There's something like $6 trillion in what is known as foreign direct investment from overseas sitting in the US economy right now. We are also trying to figure out, are these investments that happened because of Trump and tariffs, or are these investments that were going to happen anyway and maybe they are being recycled, dressed up, have a new bow wrapped around them, and presented to President Trump as part of a broader attempt to try and get him to ease off on tariffs and some of his other attacks on other countries?

Brian: Shawn Donnan, Bloomberg News senior writer on the economy, thanks to you, and thanks to Toby for not barking a lot during this segment. Lydia DePillis, New York Times reporter covering the American economy. Thank you both very, very much. We learned so much.

Lydia: Thank you, Brian.

Shawn: Thank you so much.

Brian: Brian Lehrer on WNYC. Much more to come.

 

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