118. Jason Furman, American Economist & Professor

Show Notes:

Jason Furman discusses his journey in economics. He shares his experience teaching Act 10, a course that has evolved over the years, using ideas from psychology and economics that are still relevant today. Jason also discusses his time at the Kennedy School, where his current role is Chairman of the Council of Economic Advisors. It was while at the Kennedy School that he was recruited to work in government. He initially didn't want to go into public policy or Washington, but eventually discovered his passion for it. In 2008, he was asked by David Axelrod to move to Chicago for the Obama campaign. He met with Obama and discussed his view of the economy and the issues being addressed in the campaign. 

Working for the Obama Campaign

Jason talks about participating in the campaign, which was an amazing experience, as economists typically do economic policy on a campaign, discussing what will happen next year when they become president. The economy was falling apart, and Jason was able to use his knowledge and experience to help address the issue. In the midst of a financial crisis, Obama decided to support George Bushes' idea of a "bank bail out" to save the banks. This campaign became almost as much like governing as campaigning, with Obama meeting with Bush's treasury secretary, Treasury staff, and the Fed. A small team worked together to devise solutions to save the banks, revive the economy, and rescue the auto industry.  Jason talks about the market collapsing and how Obama worked on various aspects of the crisis, including the fiscal response, the Recovery Act, the Affordable Care Act, the fiscal cliff, tax reform, technology policy, infrastructure, China, and climate change. The experience was both exciting and challenging, as markets were collapsing and the future of the economy was uncertain.

Exporting Crude and Environmental Concerns

Jason shares an example of where analysis matters. The United States faced a ban on exporting crude oil due to environmental concerns. The analysis, led by a climate change expert, found that the carbon content of US oil was lower than that of Canadian oil, which led to a ban that hurt American jobs and pushed the world towards higher carbon oil. Jason and his team put forward their analysis and the President, who was interested in the idea, met with his environmental and political advisors to discuss it. Despite some disagreements, the President agreed to sign an executive order to implement the idea. However, political concerns arose, and the White House decided to negotiate with Republicans in Congress to make the oil export concession. Six months later, Republicans extended tax credits for wind and solar, which the White House considered a good policy. This case highlights the importance of analysis and the combination of analysis and politics in a decision-making process.

Climate Policies and The Financial Crisis

Jason discusses two decisions that he believes were crucial. The first was for climate change cap and trade, which would have limited carbon emissions and set up tradable permits. The House passed the bill with the support of 55 senators, but it was not passed due to the filibuster. The second was immigration reform, which would have had a stronger border, expanded legal immigration, and a path to citizenship for undocumented immigrants. The financial crisis hit, and Jason explains that Congress had a fixed amount of money for tax credits, states, and unemployment insurance. He talks about Congress spend and automatic aid systems. 

Advice for Trump Administration

Jason shares his advice for the incoming president. He states that the economy is in good shape and should not be messed up by big tariffs, immigration, mass expulsions, budget deficit increases, or interference with the Federal Reserve. Jason also discusses mainstream democratic economic policies or beliefs that he would disagree with or push back against. He tries to be unvarnished in his views in real time, and has tried to be honest about his opinions during the presidential campaign. He agrees with a decent fraction of the Democratic agenda, but there is a tendency to ignore trade-offs and the need to decide how best to use finite budget resources. The conversation turns to the debate on tariffs on electric vehicles. 

The Oval Office Environment

Jason shares his experience in the Oval Office. He talks about President Obama’s approach to policy discussions, debates, and political advisors.  He mentions that the President was also good at compartmentalizing, which is important when dealing with highly emotional issues, such as a school shooting, and being able to move on to international tax policy. Overall, the Oval Office environment is a mix of political and policy discussions. The conversation turns to the Affordable Care Act, the opposition to it, and a government mandate for health insurance, which was originally from a conservative think tank called Heritage. Jason talks about some of the controversial points from both Republicans and Democrats, including costs, what and who should be covered, and defining sharing.  Politics played a significant role in the creation and implementation of the Affordable Care Act.

Practical Experience in Policy Making

Jason discusses his economic research and his practical experience in policy making. He focuses on tax reform, sustainability of deficits, and inflation sources, which he worked on in government. Jason shares his views on tariffs. He also discusses the need for cities like San Francisco and New York to address housing issues, arguing that there isn't enough supply of housing due to restrictions on building. He talks about expanding housing vouchers for low-income households and expanding housing voucher programs to serve everyone. Jason believes that for some people, subsidies are needed, but for most people, cheaper housing is needed, requiring more housing. He also discusses the impact of immigration on inflation and prices is a significant economic issue, as immigrants are the labor force that contributes ideas, innovations, productivity, and start businesses. He moves on to the Chips Act, which aims to increase manufacturing of advanced microchips in the US, and has been a legitimate goal, with manufacturing subsidies of $39 billion. 

Influential Harvard Professors and Courses

Jason shares his favorite classes and professors at Harvard, including Ec 10, which was taught by Marty Feldstein, who became a mentor and friend. He also mentions Professor Jeffrey Williamson's class on economic history, which he still thinks about to this day. 

Timestamps:

02:44: Experience Working for President Obama 

09:24: Policy Influence and Decision-Making

15:24: Advice to Presidential Candidates and Policy Disagreements 

22:11: Oval Office Meetings and Policy Discussions 

27:07: Return to Harvard and Teaching 

32:18: Policy-Oriented Research and Personal Life

33:49: Quick Takes on Policy Areas 

36:50: Reactions to the CHIPS Act and Personal Interests 

39:10: Reflections on Harvard and Final Thoughts 

 

Featured Non-profit

This episode’s featured non-profit is the Committee to Protect Journalists recommended by Peter Lattman who reports:

“Hi. I'm Peter Lattman, class of 1992. The featured nonprofit of this episode of The 92 report is the Committee to Protect Journalists, an organization that advocates for press freedom around the world. I have been proud to serve as a board member of CPJ for the past five years. And you could learn more about their work at their website, www.cpj.org.”

 

To learn more about their work visit: www.cpj.org.