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Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning, everyone. We'll talk today about the proposed rent stabilized rent hikes for New York City out this week up to 7% for a two-year lease. We'll take calls from tenants and landlords alike. We'll talk about the chokehold killing on an F train this week.

There's a lot happening in the economy this week. As another bank failed, Treasury secretary, Janet Yellen, said the US may begin defaulting on its debts as early as June 1st. The Fed raised interest rates again yesterday, its benchmark rate up to 5% for the first time in a long time. Article headlines by New York Times White House correspondent Jim Tankersley, who covers Biden with a focus on economic issues, one is called Biden's Climate Tax Breaks are Popular, Driving up the Law's Cost. Another one, Many Democrats are pushing the Fed to pause rate increases. Another one, Is the Debt Limit Constitutional? Biden's Aides Are Debating It.

We'll touch on all of those as we welcome Jim Tankersley back to the show, New York Times White House correspondent with a focus on economic policy. Jim, thanks for coming on. Welcome back to WNYC.

Jim Tankersley: It's always great to be here. Thanks so much for having me.

Brian Lehrer: Let's start with a looming default if they don't raise the debt ceiling. Why did Janet Yellen peg June 1st as the earliest possible date? That's soon.

Jim Tankersley: Well, it's a big guessing game basically, Brian. What happens here is that we've already hit the statutory debt limit, the government has hit the borrowing limit. Now, the Treasury Department is basically moving money around in order to keep paying the bills, and it has to keep guessing how long it can keep doing that until the money runs out. Of course, a big thing that happens that influences that is how fast the tax revenue comes in.

Obviously, April, when income taxes are due, is a big month for that. Coming out of those tax receipts, Treasury has a much better insight into, "Okay, how much more time do we have here?" What the Secretary said in this letter she sent to members of Congress and the President was, "We have way less time than we thought. It could be as early as June 1st, that we run out of ability to keep paying the bills, and so maybe get your ass together, we have to raise this debt limit and soon."

Brian Lehrer: Why are tax collections lower since April 15th than they might have been? Don't they have a pretty good idea of what kinds of taxes Americans are going to owe and pay?

Jim Tankersley: Well, they're lower compared to private forecasts, or government forecasts as well. That can be influenced by a lot of things. One big thing is just overall activity in the economy. If people were just not making as much money last year, or spending as much money, or reaping as many capital gains or a bunch of other things that you pay taxes on last year, then that's going to translate into less revenue for the government.

I think this is always a guessing game, economic data can only tell us so much, and we often see surprises one way or the other on how much we get in tax receipts. It's not enormous, but it's big enough to move up the date by a few weeks for when the government will run out of money.

Brian Lehrer: If the fall happens, we might first think of that as not paying interest on Treasury bills themselves or letting people cash them in right away, but is it also all the things the government spends money on that could be at risk, at least in the short term: social security, veterans benefits, everything else?

Jim Tankersley: Absolutely. We don't know exactly what Treasury would do. I think the prevailing opinion is that in an event where the government runs out of the ability to pay every bill on time anymore, what they might just do is wait until they have enough cash on hand to pay one day's worth of full bills, and then you pay that. If it takes three days to get that much cash on hand, then you pay day one's bills on day three. What that effectively means is that a bunch of payments will get delayed. The bondholders won't get paid if they are due that money that day.

Checks might not go out to pay members of the military, or people who work for the Park Service, or a bunch of other government employees and social security checks, or payments to Medicare providers. Those sorts of things could be delayed as well. The longer it goes on, the more that disruption mounts and the more you're that feeds on itself because now you're pulling money out of the economy. This is how economists think that recession could start very quickly, just because the government has basically ground to a halt on the timely payment of bills.

Brian Lehrer: Listeners, we can take your economy and economic policy calls for Jim Tankersley, White House correspondent for The New York Times with a focus on economic policy. The bank failure, First Republic this week, what we've been discussing so far, Janet Yellen, the Treasury Secretary saying the US may begin defaulting on its debts as early as June 1st. Also, the Fed raising interest rates again yesterday, and anything else related, you might want to bring up. 212-433-WNYC, 212-433-9692.

Take us a little further into what you were just saying, Jim. Let's say they don't have enough money to pay all the government bills on June 1st, who decides and how do they decide what to not pay first?

Jim Tankersley: The Treasury Department has to decide and we don't really know. Republicans in Congress have passed a bill out of the Ways and Means Committee that would direct the Treasury Department on exactly who should get paid first, the bondholders, Social Security recipients, some other people. First off, that bill is not going to pass Congress and get to the President's desk. Second off, it's not clear just how much ability the Secretary has to do that what's called prioritization of payments.

In fact, it could be as much as the computer systems. This is what Janet Yellen has said multiple times publicly. Their computer systems are not built to prioritize payments, they're built to make payments. Secondly, it's not clear under the law, if the Treasury Secretary could make choices over who gets paid first. Theoretically, that the government's obligations are all the same, so you either meet them or you don't.

Brian Lehrer: You said the computer system may not be capable of handling that prioritization as opposed to just paying the bills. You mean they're not going to leave it to ChatGPT?

Jim Tankersley: [chuckles] Yes, I don't think so. I think they are several generations behind that in the federal government's computer system. I also think on a serious note here, it would be really hard to make those sorts of decisions, and you'd be exposed to lots of lawsuits. If the Treasury Secretary just decides, "Well, we're going to pay the people who own our debt, but we're not going to pay the people who work for the Agriculture Department." Well, one of those workers could sue and say, "I was owed this money, I worked. It's not a government shutdown, those people would still be going to work. Therefore, you owed me something and you didn't pay and I'm suing you."

I think that is one of the many legal questions this administration is trying to figure out as we barrel more and more toward that what's called X date when they run out of cash to pay the bills.

Brian Lehrer: We'll get to your articles called Companies flock to Biden's climate tax breaks, driving up the cost. We'll get to your article Many Democrats are pushing the Fed to pause rate increases. Biden's Not One. That's really interesting. We'll get to your article in just a minute on Biden considering whether the debt limit is even constitutional. In other words, whether he even needs Congress's approval to raise how much the government can borrow, so that they can pay all these bills.

First, I want to take our first caller. Elisa in Hastings-on-Hudson has an idea of what should be at the top of the list of the bills they don't pay if this happens. Elisa, you're on WNYC. Hello.

Elisa: Hello. Good morning. Thanks for taking my call. Thanks for all you do to inform us. That's my question. Where are the salaries of our Congress critters on the list of what to pay? It seems like they're always getting their salaries when other folks are suffering.

Brian Lehrer: Elisa, thank you for that. We'll note that in this past month when New York state's fiscal year budget was late, the lawmakers did not get paid. Jim, what about the Congress critters as she calls them?

Jim Tankersley: Actually in the Republican bill that, again, has made it out of committee, has not passed the House, and will not pass the full Congress, I believe that they stipulate that members of Congress will not get paid until the debt limit will be lifted. In practical terms, I think probably what would happen in the scenario I described earlier is that they'd be in line with everybody else.

That if the Treasury is just like "Okay, we're going to get all the money to pay day one's bills. It takes us three days to scour the couch cushions and find that much money. Now we send out the checks for day one." Well, if they were to due that money on day one, they'd get it. If they're in line for day 10 or whatever, they'll get it whenever the government has money for day 10.

This is a big part of the the outcry that would probably happen here, is that vulnerable people who depend on the government are not going to get paid right away. People who are members of Congress and other people who people will be mad about getting paid will get paid at some point, but the longer this drags on, the more people will just everyone will miss getting paid to some degree or another and the more that the economic pain from it would mount, according to all these economic forecasts that I'm seen.

Brian Lehrer: Too bad all the members of Congress don't have anybody paying for their mother's house or paying their college tuition like Justice Clarence Thomas. All right. Your article on Biden's team asking if the debt limit is even constitutional. Maybe you should refresh people on exactly what the debt limit is and then tell us why are they asking that?

Jim Tankersley: The debt limit is a law that Congress put it in a statute that limits the total amount of borrowing the government can do. From time to time, the Congress goes in and raises that limit because we keep borrowing money. Since 2000, the government has been spending more money than it takes in, which means it's a budget deficit. Which means we have to borrow the money by issuing Treasury bills in order to fully fund the bills. That's not going to change anytime soon.

There is no plausible path in Washington DC for a balanced budget, even over the next decade, even among the Republicans who are pushing most for spending cuts. Because of that, we need to keep on borrowing money and the debt limit would need to be raised in order to do that theoretically. However, there is an idea that several legal scholars have been advancing, including back to the '90s even, that the constitution is murky at worst and definitive at best depending on how you view this about the idea that the government must pay its bills.

The 14th amendment to the Constitution has a clause that's called the Public Debt Clause, which basically says that the United States government has to make good on promises to pay money. There is discussion deep inside the administration and the Treasury Department and the Justice Department and the White House about if we were to hit the point where the government runs out of cash, is the government even allowed to stop paying the bills or would the Treasury Secretary have to keep issuing debt? Saying, "Hey, the Constitution compels us to pay people that we owe money to and so we're going to keep doing that."

Essentially that would spark a lot of lawsuits. It would be a way of saying, "We believe the constitution overrides this law, which is the debt limit."

Brian Lehrer: They would, under that scenario, do it now, start or continue to pay the bills and let the courts tell them later whether it was constitutional or not. Is this the same thing as your Times colleague, Carl Hulse, refers to in his article on the debt ceiling called the Democrats-- or in which he says, "The Democrats are taking steps to deploy their secret weapon." Is that the secret weapon or is it something else?

Jim Tankersley: No, that's a different secret weapon. Carl's story is very, very good and I would commend it to everyone. It's about what you might think of as a legislative secret weapon. The legislative secret weapon is what's called a discharge petition. A little more background here.

The reason we're in this fight right now in Washington over the debt limit is because Republicans won control of the House in November, and the Republican House does not want to raise the debt limit unless President Biden agrees to some spending cuts, and actually a bunch of other stuff that they put in the bill that they passed last week to raise the limit, including repealing the president's climate agenda and giving more subsidies to fossil fuels. There are a few House Republicans, the White House and other Democrats believe, who if push came to shove at the last minute, would vote to raise the debt limit just to keep the country from defaulting.

Because Republicans control the House, those Republicans couldn't just make the Speaker, Kevin McCarthy, put a bill to raise the debt limit on the floor of the House for a vote. That's where the discharge petition comes in. It's basically a workaround idea to force a House vote on what's called a clean debt limit increase. Raising the debt limit without any conditions attached. It's a legislation in case of break-glass idea. Where, look, if we're really close to default and you have majorities in both chambers, a majority in the House and 60 votes in the Senate to raise the debt limit, well, you could deploy this.

You could use this discharge petition to get the bill on the floor sometime in June to raise the debt limit and maybe avert the crisis that way.

Brian Lehrer: Page two, interest rates. As we talk to Jim Tankersley, White House Correspondent for The New York Times, who focuses on economics and economic policy. Our phones are open at 212-433-WNYC, 212-433-9692 as we're talking primarily about the debt ceiling limit looming as early as June 1st according to Treasury secretary, Janet Yellen, this week. We'll get to the latest bank that failed, First Republic, and the implications. Wall Street seemed to react with nervousness to that yesterday. Now the Fed raising interest rates again, its benchmark rate up to 5% for the first time in a long time. That decision was announced yesterday. What does it mean, Jim?

Jim Tankersley: It means a lot of things. Mortgages rates are going up. On the flip side, the interest rate you can earn in a savings account right now is as high as it's been in a long time. For all intents and purposes, the big news here is the Fed's fight against inflation. This is the Fed still saying they don't believe that they have done enough with their primary tool, which is interest rates to control inflation. They think they need to do more to bring inflation back down toward a 2% growth rate, which is the recent historical level and the Fed's target.

It's the way they do that. The very crude mechanism of interest rates is they are trying to make it more expensive to borrow money in order to reduce activity in the economy in order to reduce the growth of prices and so they are. This is just a quarter of a percentage point. Maybe the last one they do for a while, but it's one more quarter of a percentage point to make things more expensive to borrow money, make it just a little bit harder to get more money into the economy.

Brian Lehrer: It's intended to tamp down inflation, therefore Harry in Pound Ridge has a question about that. Harry, you're on WNYC. Hi there?

Harry: Hi. Thanks for taking my call. I haven't been able to read anything that clearly explains why consumer prices have remained so high even a year or two out after the pandemic. I know there are a lot of factors at play, including corporate price gouging, maybe our energy policy, the fact that demand for consumer goods is still relatively high. I know there are a lot of different factors, but I was wondering what you think were the most contributing factors for why prices are still so high on consumer goods.

Jim Tankersley: It's a great question. I think there's a bunch of things going on. Obviously, you've mentioned a few of the theories. It's important to say that Jay Powell, the Fed chairman, gets asked about this basically every meeting. He says what he thinks the answer is, but also there's some degree of we're not exactly sure how all these factors work together. The big things would be that, first off, there's just a very tight labor market right now.

It's still very hard to hire for job openings and there's a lot of job openings. Which is great for workers, but the Fed views this as a big component of why prices keep going up because wages are going up. Now that wage growth is cooling, but that's a part of what the Fed thinks is going on here. There's also-- the administration will tell you, still big supply chain disruptions and still mismatches between what people want to buy and how much is available.

When you have supply and demand mismatches, you get price growth. There is also an emerging theory and we've seen-- I think it talked about more right now in Europe than in the United States, but still a lot of progressive economists have been talking about it for a while. That companies are using the market power that they have from a high inflation rate to just keep marking up prices.

You can see that in some corporate earning statements where companies are basically saying that their sales didn't go up a ton last quarter, but their profits did because they were able to raise prices. I think the way to think about that would be the theory is that in times when people are used to prices going up, companies take advantage of that to keep raising prices, whether it's economically rational or not, so all of those things come together.

There's also just still some momentum for price growth. When inflation has been high for a while, it can just keep going. Because people keep expecting it again, expecting to pay higher prices in restaurants or expecting to ask for higher wages. We very crucially are seeing this cool off. It's not that the inflation rate keeps going up, it's coming down. It's just not coming down as fast as the Fed and frankly, the Biden administration would like it to.

Brian Lehrer: The politics of this, your article headline, Many Democrats are pushing the Fed to pause rate increases. Biden's not one. What's the political divide on this in the Democratic Party?

Jim Tankersley: Well, the political divide is more about who's talking about this publicly than it is about what people think is appropriate policy I would say. Sen. Elizabeth Warren and Sen. Bernie Sanders and a bunch of other prominent progressives in Congress have been banging the drum for several months now and increasingly for the Fed to stop raising interest rates. It's because they see corporate price gouging, as they would call it, as the primary driver of inflation right now which is not something you would necessarily control with interest rates.

More importantly, they see increased interest rates as really risking slamming the brakes on the economy, throwing it into recession, and hurting very vulnerable workers, low-wage workers, Black workers, the people who historically we can see are hurt the most when the economy enters even a mild recession. They are calling on the Fed, have been calling on the Fed to no avail to stop these rate hikes. The president though has a very clear policy of he does not comment on Fed policy. He is trying to be a break from Donald Trump who job-owned the Fed a bunch about interest rates when he was president.

The White House has just repeatedly over and over said publicly we are not going to comment on what the Fed is doing here. I would say the president's appointments to the Fed do not suggest that he is-- I mean, he reappointed Jay Powell, he does not seem super displeased with the way that the Fed is doing its job. He has chosen people who would not necessarily massively shake up the status quo of interest rate policy.

Brian Lehrer: Well, is the Fed's position that as much as it's going to cause an increase in unemployment and working people are going to get hurt, that working people are getting hurt more by inflation continuing as high as it is and that's their public good policy decision?

Jim Tankersley: Yes, I think the Fed sees it two ways. One is that the chairman keeps saying in his press conferences inflation hurts people on the margins a lot, price growth is really bad, we have to get it under control, and we are going to do whatever it takes to get it under control. There's also still this hope inside the Fed and even more so inside the administration that they can bring down inflation without a huge spike in unemployment. Basically, the way you would do that is by slowing job growth but not necessarily causing an economic contraction by bringing more people into the labor force to fill the current job openings, by better balancing supply and demand in the labor market.

It's a very, very, very difficult task to achieve. Powell yesterday was saying he thinks maybe there's still a chance it could happen because the labor market keeps surprising us. It keeps creating jobs even as inflation is coming down

Brian Lehrer: Back to the debt ceiling and the June 1st possible default date according to Janet Yellen, the Treasury secretary, partly because tax receipts are coming in lower than the government expected since April 15th. Carolyn in Neptune, New Jersey has a thought about that. Carolyn, you're on WNYC with Jim Tankersley, New York Times White House correspondent focusing on the economy. Hi, Carolyn.

Carolyn: Hi. Thank you for taking my call. Love your show, Brian. This is a question comment, if millionaires, billionaires, and trillionaires were to pay their fair share in taxes, would that solve the problem? It seems like there wouldn't be a problem if you could get them to pay a fair share.

Brian Lehrer: Carolyn, thank you very much. I guess the political sector will debate what's a fair share. Jim, one thing we know is that the Kevin McCarthy House bill linked to the debt ceiling that you referred to before, it includes wanting to cut things for a lot of poor people, SNAP benefits, VA benefits, payment to farmers, but the Trump tax cuts for the rich that were passed a few years ago remain untouched. I know you're a reporter, you're not a columnist. I don't know if you want to take a position on what's fair, what's not fair, but Carolyn's concern represents a lot of people.

Jim Tankersley: Well, I will say two things about it. The first is that President Biden released a budget which is the administration's statement on what it would like to see taxes and spending look like over the next 10 years. It is fair to say that President Biden has proposed a more aggressive way of targeting higher-income Americans for tax increases than any president in recent decades. They're proud of it. It is a central part of the president's agenda is the idea that we should raise taxes on corporations and the rich in order to fund better services for lower-income Americans in the middle class. He proposes a lot of tax increases in that budget and yet still comes nowhere close to balancing the budget over 10 years.

I think even if you took out all the spending programs he proposes doing and just devoted the tax increases he proposes to reducing the budget deficit, you still wouldn't balance the budget. You could make a big difference. It would be a much different fiscal situation if all you did was raise taxes at the top to pay down the deficit. I think it's impossible to imagine a world in which this would happen in Washington, but it's difficult to even imagine the hypothetical where the Democrats decide that what they want to do is avoid the debt ceiling crisis by just raising enough taxes on the rich to solely balance the budget, in part because they have a lot of other things they want to do with the money.

They want to expand government childcare services. They want to give more help to people going to community college. They want to do more for home healthcare, home health aids for the elderly and the disabled. There's a temptation to think that just raising taxes can solve these fiscal problems. The president has proposed reducing the deficit to some degree by raising taxes, but it's not anywhere in the actual Washington agenda to try to do that so much that you would balance the budget.

Brian Lehrer: By the way, Carolyn said if millionaires, billionaires, and trillionaires were paying their fair share of taxes, we wouldn't have this problem. Are there any trillionaires yet?

Jim Tankersley: I think there might have been for a little while. I don't think there are now. It's all on paper when you get to that high, what are your stock holdings worth? I don't think that we have a trillionaire but I could be wrong about that.

Brian Lehrer: Well, we'll probably soon have trillionaires even while a lot of homeless people are sleeping on the subways and some of them are getting killed on the subways. We'll talk about that later in the show. Yes, the wealth inequality in this country is just staggering. We may soon have a trillionaire. There certainly is an increase in the number of billionaires even as most people are not doing that kind of growth or experiencing that kind of growth in their incomes over the last several decades. That's a decades-long story. One of your stories I guess it's just out today, Companies flock to Biden's climate tax breaks, driving up cost. You're reporting on a paradox, right?

Jim Tankersley: Yes, actually, this is one of those where it's a little bit of a paradox but it just depends on how you view this. The crux of the story is that the Biden climate bill is working even better than even some Biden people thought it might and certainly better than a lot of independent forecasters thought it might at spurring companies to make new investments in technology and manufacturing meant to lower fossil fuel emissions. To that degree, it's a real success story. A lot of times with tax policy what you do is you are trying to encourage certain behavior and you see whether the tax lever is strong enough to get that to happen.

What we are seeing in early evidence is that the lever is very strong with particularly the advanced manufacturing tax credits that they created under the climate law to try to spur more battery plants and solar power manufacturing. By the way, a lot of this is in red states in the south, in the Midwest where these investments are being announced. The flip side of that is that the law did not limit how much money could be claimed by companies for these tax credits.

The more popular they are, the more it ends up producing tax revenues and growing the deficit, and what the Congressional Budget Office and the Joint Committee on Taxation found in their most recent report is that it's probably about $200 billion more over the course of a decade than they initially thought would be revenue lost from this. Again, that means it's more successful and likely to drive more emissions reduction and very likely more jobs created in the United States in clean energy manufacturing, just at a higher cost to the taxpayer because that's how it was designed to work.

Brian Lehrer: Right. That's a trade-off that people will decide if they think it's worth it or not and that other paradox that you pointed out in the middle of that answer, the political one really striking all the southern members of Congress, Republicans who voted against the climate tax breaks now trumpeting them to the companies in those states, where they're going to get those tax breaks, so trying to have it both ways. Interesting note on that point. Bob in Brooklyn has a different take on the Fed and interest rates. Bob, you're on WNYC. Hello?

Bob: Oh, thank you so much. Your guest there is being disingenuous here. Interest rates are very artificially low. We know that the 5% for a 10-year bond is really nothing. What killed the economy was the so-called quantitative easing, printing money and keep printing money, and interest rates were down to almost zero. I don't think there's really is that much inflation right now. Whatever the inflation stats are right now, it's not that high. It's been much worse in the past. Here in Brooklyn, you talk about mortgage rates, there's a housing demand in Brooklyn. The value of the houses keeps going up. A typical house, a one-family house is going for about $1 million.

The demand is unbelievable how many people are buying houses here in Brooklyn. What's really hurting people, supposing you've worked your lifetime and you saved a little money, or you inherited a small, modest amount of money and you're just trying to live on Social Security, if you're used to be working-class people put their savings in a savings bank, and you could get 5%, 6% with a CD, now you get almost nothing. Retired people, working-class people have to put their money into mutual funds, which means the stock market. Come on, The New York Times, you're just speaking for Wall Street. That's all you're doing.

You know working-class people are suffering under these artificially low-interest rates. Inflation is not really that high. Not really.

Brian Lehrer: Bob, thank you. I don't think our guest is speaking for Wall Street based on his reporting. Jim, that's the case for higher interest rates. The senior citizens who have to risk their money in the stock market, because there aren't decent bank account interest rates anymore, you could comment on that. I'm also curious if you think that zero, which we've had for a decade or so, is considered by Washington, the new normal. As soon as they get inflation under control, it's going to go back to zero or like Bob was talking about when he grew up normal was 5%.

Jim Tankersley: I would say to the caller that I'm not speaking for Wall Street here, and that I write a lot about the concerns of working-class people and that this is a thing that I have encountered throughout my career covering economics from all angles. It is particularly true that in the entire 2010s, you heard a lot of retired Americans who were getting nothing in a savings account really complaining about artificially low-interest rates.

You also heard a lot of working-class Americans at the start of their careers feeling like they needed the extra economic activity that that was generating because there wasn't a lot of jobs in the aftermath of the Great Recession and the economy was much slower to rebound than it is now. In historical perspective, it's really important to take what the caller just said seriously here. Interest rates are higher now than they've been since the great recession in 2008 and almost as high as they've been anytime this century but they are way lower than they were in the '90s and the '80s and the '70s back when inflation was higher than it has been until now.

We're in an unusual period of high inflation for the last 20 years. It is true that house price appreciation has gone way up, even with higher mortgage rates, but it definitely appears that mortgage rates are having a real effect on the volumes of homes being sold in the housing market. If you're a young person trying to buy your first home right now, there's a real difference between borrowing money at 7% than there was at borrowing money at 3%, which you could have done a few years ago, in terms of what you can afford, what your payments are, et cetera. There are lots of supply and demand factors that go into the prices of housing.

In terms of savings, this is always the trade-off that you hear about from leaders. Retired working-class people, in particular, want high yields on their savings accounts so they want higher interest rates, but earlier-career people who are looking to buy homes and cars would prefer lower interest rates because they would like to be able to buy those things with a cheaper loan. That's just a trade-off policymakers have to make. That's not about Wall Street. That's not about corporate interests. That's really about generational interests often colliding here.

Brian Lehrer: Last thing before you go, the latest bank failure, First Republic, now acquired by JP Morgan as the nation's biggest lender gets even bigger with that acquisition. Also, the stock market showed its jitteriness yesterday, because of the First Republic failure, yet another one after Silicon Valley Bank, and a couple of others a few weeks ago. The question is, is this over or are we headed for a potentially larger banking crisis à la 2008 or even if not that serious, something more serious than we've seen?

Jim Tankersley: I certainly think the danger is there for that. I wrote a couple of weeks back about some economists from Stanford, and USC, and Columbia and some other places who have a research paper where they just dug deep into the balance sheets of regional banks and found that if there's a big depositor run, you could see up to 200 banks fail. That would have massive effects for economic activity across the country, not just in coastal states where Silicon Valley Bank and First Republic had a lot of clients. That's scary. We should be scared about that.

Also, right now, I think policymakers have been trying to stop that. We don't see a big cascading run. We just see thus far a series of one-offs, but I think it is a big wildcard. It's certainly not a wildcard you would want in play at the same time as a wildcard of is the country going to raise its debt limit or default on its debts. This is a very difficult two-step for policymakers to be navigating, and I think, perhaps a much bigger risk to the US and global economy than we have all caught on to just yet.

Brian Lehrer: What about to the New York City economy? You're a White House correspondent but you work for The New York City Times and the commercial real estate weakness here with a lot of remote work and the other factors that are going into the devaluation of a lot of office buildings in New York City right now and a lot of the loans for those office buildings, the mortgages being held by regional banks around New York City. It's the regional banks that have had the most struggle here. What do you see as the potential implications for New York City's banking system going forward?

Jim Tankersley: Well, I think New York City is certainly exposed to exactly what you just said and actually, the researchers I wrote about are particularly worried about commercial real estate being a potential spark in a regional bank crisis, all the problems you just mentioned. Obviously, that's a vulnerability for New York and for other cities that are seeing what they're seeing with the commercial real estate sluggishness. These are all interrelated. Yes, I would worry about that too. I think that this is like I said, not the time you want to be having all these overlapping concerns happen, but here we are.

Brian Lehrer: Bank failures, inflation, rising interest rates, the debt ceiling, Jim Tankersley is covering them all as White House correspondent for The New York City Times specializing in economics. Thanks a lot, Jim.

Jim Tankersley: Thanks for having me.

 

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