Claudia Sahm on why we shouldn’t be worried about inflation right now

Rebecca talks to former Federal Reserve economist Claudia Sahm about the economic debate over the scale of relief we need right now (and why handwringing “inflationists” need to take a seat). Subscribe to Off-Kilter on iTunes. Subscribe to Off-Kilter on iTunes.

Earlier this week, in a hearing on the state of America’s economic recovery, Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee that the employment rate for low-wage workers — those hit hardest by the pandemic — is “probably above 20 percent.” That harrowing figure comes against the backdrop of two similarly harrowing figures: the first, that 1 in 8 U.S. workers are relying on unemployment benefits right now, and the second? Roughly 11.4 million workers are set to begin losing jobless benefits on March 14, according to Andrew Stettner, a UI expert at The Century Foundation. Thankfully, a major dose of relief is in sight. With President Biden’s $1.9 trillion COVID relief package on the move in Congress, and with the first glimmers of what a $3 to $4 trillion infrastructure and jobs package might look like on the horizon to follow, Rebecca talks to Claudia Sahm, a senior fellow at the Jain Family Institute and a former economist at the Federal Reserve, about the economic debate over Biden’s COVID relief package, why we shouldn’t be worried about inflation right now, what concerns about “runaway inflation” have to do with the toxic culture of economics, and more.

This week’s guest:

  • Claudia Sahm, senior fellow at the Jain Family Institute (@claudia_sahm)


♪ I work and get paid like minimum wage

Sights to hit the clock by the end of the day

Hot from downtown into the hood where I slave

The only place I can afford ’cause my block ain’t safe

I spend most of my time working, tryna bring in the dough…. ♪

REBECCA VALLAS (HOST): Welcome to Off-Kilter, the show about poverty, inequality, and everything they intersect with, powered by the Center for American Progress Action Fund. I’m Rebecca Vallas.

Earlier this week, in a hearing on the state of the economic recovery, Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee that the employment rate for low-wage workers in the U.S. — the people hit hardest by the pandemic — is, “probably above 20 percent.” That harrowing figure comes against the backdrop of two similarly harrowing figures, the first, that one in eight U.S. workers are currently relying on unemployment benefits, and the second, that roughly 11.4 million workers are set to begin losing jobless benefits on March 14th, according to Andy Stettner, a UI expert at The Century Foundation.

Thankfully, a major dose of relief is in sight. With President Biden’s $1.9 trillion COVID relief package on the move in Congress and with the first glimmers of what a $3 to $4 trillion infrastructure and jobs package might look like on the horizon to follow, I sat back down with Claudia Sahm of the eponymous Sahm rule. She’s a senior fellow at the Jain Family Institute and a former economist at the Federal Reserve, and she shed some light on the economic debate over Biden’s COVID relief package, why we shouldn’t be worried about inflation right now, and what her research tells us about the scale of federal fiscal response we need to make a full economic recovery. Let’s take a listen.

Claudia, thank you so much for taking the time to come back on the show.

CLAUDIA SAHM: Yeah, thank you for having me. I’m looking forward to this conversation.

VALLAS: Well, me as well. And we were sort of talking a little bit on Twitter recently where we got the idea for having this conversation. So, I really appreciate you making time in an extremely, extremely busy week.

So, before we get into the scale of the federal fiscal response that we need and some of what I mentioned about inflation, let’s start with just setting the stage for where things stand right now with Biden’s COVID relief package, the $1.9 trillion dollar rescue plan. Give us just a quick refresher on some of its key features. Part of it is an urgently-needed unemployment insurance extension.

SAHM: Right. Well, I think the first thing that we really need to focus on the relief plan is it’s big, right? $1.9 trillion is what looks like is going to make it all the way through. And part of being big is it goes broad. About half of the $1.9 trillion goes to families. So, whether that are the $1,400 stimulus checks, the extra unemployment benefits, there’s provisions for child care, reopening schools. I mean, there’s a lot in there that’s very much focused on the suffering that is still happening in this country. I think that’s appropriate. And then the other half, there are communities, state and local governments, there is the vaccination effort that we should be putting all the money into it that it needs, and there’s money for small businesses. So, you know, you can’t go big in terms of helping the country without putting big money behind it.

Now, you talk about specific provisions, and I agree with you: The extra support that is going to unemployed workers is absolutely essential. We are almost a year into this crisis. We have millions of workers who, by no fault of their own, lost their jobs suddenly, many of them who have not come back. And we are still about 10 million jobs short of last February. And that is a larger shortfall than at any point in the Great Recession. That is massive. And we know many of the people who have not come back come from lower-wage jobs, and these are exactly the people who are not prepared for a disruption even of a couple weeks, let alone almost a year. And so, that lifeline that goes to the unemployed and their families via the jobless benefits is essential.

And what we’ve seen at this point, because we have people who are long-term unemployed, we have people who wouldn’t normally have unemployment benefits, like the self-employed. There’s news out today from the Department of Labor. They are interpreting The CARES Act rules as to include people who could not go back to work because they felt unsafe, like we are in a pandemic, right? So, these are all federal programs, and they are set to expire in mid-March. And that’s really the bulk of people getting unemployment benefits or getting them via the federal government. So, those programs absolutely have to be extended. They’ll be extended. And the other thing is the Biden plan extends them months, not just, we’re going to do three months. These will go into hopefully September, maybe August. But this is further down the road and at a place where we could reasonably be expecting things to be getting more back on track than they are right now.

VALLAS: Now, and we’ll get a little bit into what some of the critics of the plan are saying in just a moment. But just to take your optimism of it, it actually does look like this is going to move through Congress. Of course, Democrats are using a process that we’ve talked about in depth on this show called budget reconciliation as a strategy for actually getting to move this package through the Senate, despite the fact that there isn’t a single Republican who appears to be interested in lending their support to the package. That, of course, despite the fact that 80 percent plus of Americans think that this package is the right size or actually are worried that it’s too small, about 60 percent of Republicans or more even support this package. And yet, not a single Senate Republican vote. That may be the outcome that we see. And yet, the package may be able to move forward because of that process, budget reconciliation, which allows certain types of legislation to clear the Senate with just 50 votes.

One of the quotes that gave me perhaps the greatest shot of optimism from just the past few days was hearing from Representative Don Beyer, who is the Vice Chair of the Joint Economic Committee. He says, “We have the recovery plan well in hand. It’s ready to go. Everybody’s talking already about what’s next.” And we started to get just a little bit of a set of glimmers from the White House about what might be next, and that sounds like it’s going to be a second package coming on the heels of this COVID relief package. They’re calling the second package a recovery package. It has an emphasis, we hear, on jobs and infrastructure, with mentions of child care and racial equity as well. And it’s starting to sound like they might be targeting, say, $3 trillion as a starting point.

Claudia, talk a little bit about what you think the scale of the fiscal response that we need is when you don’t just think about this one COVID relief package that we hope will clear Congress as you predicted, as I think I’m hoping and crossing my fingers will happen, but as we start to hear from the White House that that’s not going to be the end; it’s going to be the beginning of their commitment to economic relief.

SAHM: Yeah, no. The news that’s coming is very encouraging. And frankly, this next package, what is probably going to be around $3 trillion, this was the package that we were expecting from Biden. You know, on the campaign, there was a lot of talk about build back better. And that very much was we want to get to a better place than February of 2020. When we had three and a half percent unemployment, there were still millions of people held on the sidelines. And we still had systemic racism, and we still had people that didn’t have healthcare and health insurance, right? So, there were a lot of things that could be better about our country in February of 2020. And this next program is really to think big about how do we fix our long-standing problems? And I’m sure we can talk more about some of the ideas they have.

I think broadly, I think of — and I’d had conversations with members back in the summer. I mean, they were thinking ahead about this, too — and I want to see us do infrastructure that is defined in investing in people. Like we need bridges and roads, but we also need to shore up our social safety net. We know unemployment insurance did not deliver in the way it needed to. And I think there’s a lot of great proposals about how to do this. I am so eagerly awaiting to see what comes out in that proposal. And so, this is the piece we should’ve expected, and I really think we’re going to get it.

And the relief package that’s going through right now, this was the unpleasant surprise, right? COVID came back. We have to start by addressing the crisis that is ongoing. We cannot build to a better place on a foundation that is crumbling. And so, right now, we have to do what needs to be done to help people, give them a lifeline, kill this virus, and then at the same time, be like this is a one-two punch. We’re going to get people through this crisis, and then we are going to help get them to a better place. So, I think the two absolutely fit together. I mean, we’re talking $5 trillion getting allocated, hopefully, by the middle of this year. I mean, this is something, this is a type of federal response we have not seen since the New Deal. And that’s not being hyperbolic. I mean, this is trillions of dollars that have been spent in the last two years. And that’s, I mean, it fits with the crisis we have. And, you know, Godspeed.

VALLAS: Well, and President Biden, despite some level of criticism that we’ll get into now, he is himself on record saying his only concern about the dollar figures that are getting attached to these packages is not doing enough, not putting enough money into the economy. And I have to say, the first time I saw one of those quotes from him in defending the White House’s approach here, I felt almost like I was reading a quote from Claudia Sahm, right? Because that’s often what you are reminding us: The only thing we should be worried about right now is not doing enough.

Now, entered Larry Summers. [chuckles] And for anyone who’s listening who’s not familiar with Larry Summers, he is an economist, a former Clinton Treasury Department official, and he was Director of the National Economic Council under President Obama. Earlier this month — and here’s why I’m bringing him up in this conversation — Larry Summers penned a pretty widely read op ed. It really kind of shook open this conversation about the relief package. And it was a sort of a pearl-clutching op ed where he expressed great fear that the COVID relief package, that $1.9 trillion that you were just talking about, Claudia, might cause runaway inflation, something that some people sometimes call overheating of the economy. And a colleague of his who also has a fairly high profile in economic circles and is a past President of the American Economic Association — His name is Olivier Blanchard, and they’re frequent collaborators — he hopped into the conversation right after Larry Summers. And he agreed and said it wouldn’t just be overheating, it would be starting a fire.

You very quickly jumped in on Twitter, as did many progressive economists and really pretty much economists broadly who are well regarded, to say this is not actually a serious concern. Janet Yellen herself jumped in and said the concerns were unfounded. But this was really one of the reasons, Claudia, that I wanted to have you back on the show, was to explain and really kind of get into, in some level of detail, what the concerns about overheating are in reference to and why you feel that they are so unfounded. What is this debate all about?

SAHM: Yeah. So, I will say, Larry in particular has kept me busy for months. Right as the relief package was moving through and was headed to President, then-President Trump, to sign, he had a Bloomberg interview that he followed up with an opinion piece where he totally went after the $1,400 checks. And this is something I’ve worked a lot on in terms of I think this is good relief, particularly given all of what’s happening in the world, to do to families. And so, I was like, oh, here we go. And then, you know, but that really fit with what his, you know, starting with the op ed you’re talking about, I think that was in The Washington Post. He’s just been very big on we’re doing too much, right?

Or actually, I should back up and say. Because this is the way macroeconomists like Larry Summers and Olivier Blanchard engage, just so you know. A tip to those of you who don’t live in their world, Larry is identifying a risk to the economy. He’s not telling us this is going to happen necessarily. He just wants to make sure that we’re thinking about what we’re doing and we don’t make a rash decision, right? Now, Janet Yellen rightly called him out in a much more civil way than I would with Larry in pointing out that, yes, there is this risk. We are going big. Like I said, we’re moving into the trillions and trillions of dollars of spending the government did not expect to be doing and will be doing, right? So, yes, if you go big — And we have not done something like this before. We are in uncharted territories. And so, then there is a risk that we’ll see inflation, and once it gets going, it might really, as Olivier says, light a fire and then burn out of control or something. So, it’s a risk. But as Janet said, and I agree — and the quote you gave from President Biden — the risk of doing too little is so big. And she talks about the permanent scarring. And to me, that is so important.

You know, when we were back in March, and things were shutting down, and they’re like, oh, but the economy was so good before this. We’re going to be OK, you know? Yeah, we’ll shut down. It’ll be rough. We’ll open up. It’ll be great. OK, we’re a year into this. Do not talk to me about how awesome things were in February. We are not snapping back out of this so fast, right? And so, I mean, I do think we had, like the fundamentals going into this recession are very different than the Great Recession when we had families carrying debts that were just not repayable. So, that was different. But we’ve seen recessions like 2001 that were relatively mild recessions. The shock was all concentrated in high-wealth people, you know, the tech bubble. And yet, that was our first big jobless recovery in living memory. So, what Janet has talked about — and actually Jay Powell, the Federal Reserve chair, was on the Hill this week — we need to get people back to work. And we did not do that in a, frankly, humane timeline after the Great Recession.

So, I think what’s happened is there’s a balance of risk. We did this. I did this as a forecaster at the Fed. We say, OK, what’s most likely? And then we say, well, what’s the worst thing that could happen? That’s the downside risk. What’s the best thing that could happen? That’s the upside risk. And after we have done that, we sit down, and we talk about the quote unquote “balance of risk.” Is it weighted towards the upside or the downside?

And I think, you know, I have a real problem with the inflationists showing up — and they always do — and so focusing on this one bad, bad outcome without talking seriously about the good outcome of doing trillions and trillions of dollars of spending. So, it’s important to have them in the debate. I’ve tried to work hard and others have too, to complete the debate, like, bring in all the points, not just this one edge case.

VALLAS: Well, and Claudia, that’s such a great place to start. And it’s a really, frankly, charitable stage setting that you’re doing, considering the stakes here, right, and the type of relief that we’re talking about that these guys are trying to put the brakes on, right? That’s functionally what’s at risk here by overemphasizing the risks, as you describe. The Janet Yellen quote that I want to bring into this, because I think it nicely kind of sets up what I would love to have you explain just a little bit for folks who are not economists like you. She says, “I have spent many years studying inflation,” says Janet Yellen, “and worrying about inflation. And I can tell you, we,” she’s talking about the Fed, “have the tools to deal with that risk if it materializes.” What would happen? How would this actually play out? And why are you in the camp of basically people saying we don’t need to be freaking out about inflation right now?

SAHM: Yeah. So, a couple things here. One, I was listening this week to Chair Powell’s testimony on the Hill. So, there’s the Humphrey Hawkins hearings, the ones that were established when the Fed got its maximum employment mandate. So, I love the history of this. So, he’s sitting there and is getting asked over and over again by the Republican senators, “What about inflation? What about overheating?” And again and again, he’s like, “We’re 10 million jobs down.” The Fed has a kind of unadjusted unemployment measure where they say, hey, if you take into account all the millions of people who left work because they needed to care for children, they were afraid they would die if they went to work, the unemployment rate is still like 10 percent, right? So, they have been doing all they can to emphasize we have got to get people back to work. We have to do as much, we at the Fed. And in a very dance around, I’m not going to tell you how to do your job, it’s pretty clear. He’s like, do more Congress. Do more, right?

And I was thinking about this, that the Federal Reserve is an institution, for decades. And this is a point Janet had made because she was, for decades, in the Federal Reserve System as an official on the Federal Open Market Committee. They have a history of being so worried about inflation, not just inflation now, like inflation might be coming. Oh, inflation. Oh, dah, dah, dah, you know? They are so obsessed with it. And I thought, you know what? If you are a person that is more obsessed with inflation than Fed officials, maybe you should step back and kind of think about the priors. Because the Fed has learned from, especially the last recession, but decades of never getting us to full employment, right? And I think that we need to learn from our past mistakes and not repeat them over and over again. And I think no matter what Larry Summers says, this relief package is going through, right? And I think he’s forced us to think more about the inflation risk.

I personally think my probability of inflation becoming, even on a sustained basis, getting like two percent inflation, which the Fed has been trying for over a decade to get that and can’t seem to get inflation up, even if it, I think it’s unlikely we’ll see two percent inflation on a sustained basis, but if we do, Janet is right: The Federal Reserve has raised, like they can raise interest rates. They can pull back on the massive amount of support that they’re doing right now to the economy. The Fed has the tools to cool down the economy.

Now, people will say, oh, but the Federal Reserve does not have — I mean, that’s like real fine tuning, and it is possible. And then, years and years ago, many of our recessions were caused by the Fed getting a little trigger happy on inflation, right, if they pull back too soon. And I mean, it is true that the Fed, the way they slow the economy is they kind of nudge up interest rates. And well, you know, if we’ve taken out trillions and trillions of dollars of federal debt, that does increase the financing costs. But again, I just feel like these are all, they’re all bad scenarios that we should think about, and then we should assess them in the bigger picture. And that’s where I get very uncomfortable with these one-sided debates. And frankly, what’s kept me very busy is just debunking these. But it’s like whack a mole. I can’t get a piece written because another one comes out with a piece.

And what’s really been disconcerting to me is that the way they argue their case, the inflationists, they’re using data, particularly a lot of aggregate data, that doesn’t really engage with how unequal our economy is, how unequal this crisis is. And then they have a total disregard of all of the research that we have now in macroeconomics and in the policy world since the Great Recession. We’ve learned so much, and that needs to be brought into these discussions. And it’s really frustrating to see senior people who we were all taught to read their work and look up to them, just kind of phoning it in, so.

VALLAS: So, Claudia, one of the things that you often talk about, and I want to kind of pull us out for just a moment from just talking about the politics here and the policy here and the kind of straight up economics here. And I want to see if you’d be interested in talking just a little bit about a parallel that you sometimes draw between the kind of economic thinking, I would actually view it as somewhat toxic economic thinking, that you’re describing, right: the concern more about inflation in this context and with all the caveats and backdrop that you just offered, versus the level of concern that people might have right now about, say, workers who have been hit incredibly hard by this pandemic, who are low-wage workers facing an unemployment rate that the Chair of the Federal Reserve, Powell, who you just referred to, he says it’s probably above 20 percent, right? So, balancing those things and which of them wins out in the minds of some of these guys.

You have, at points, drawn parallels between that kind of toxic economic thinking and what you have described as toxicity within the field of economics. And you’ve actually very publicly spoken out about that toxicity. Talk a little bit about why you see a parallel there and the connections that allow the kind of economic principles and thinking to then sort of be influenced by some of the same things that might be underpinning the toxic culture.

SAHM: Yeah, no. And this is an area, this connection that I’ve thought a lot about. And the connection between how economists treat each other, like the toxicity in the way our profession is set up, who we reward, who we push aside, right? There are dynamics in economics that I know are harmful. I mean, every week, I have multiple people reach out to me, often students, either going through something that is horrific or are like, “I’m not sure I should go into economics. I’m so,” like, I see all this and I hear it. And I spend a lot of my time in private talking with these students, coaching them. Sometimes it’s really heavy, you know. And so, but I truly believe in our future. I mean, I will keep going and talking and pushing on the leaders of our profession, and I’ve done that very vocally. But nothing is going to change until they leave, until they retire. But I can help pull people up and create spaces, spaces for people who are in the profession that frankly have just been like pushed off to the side, right? So, I and other people are working very hard to create a space and to say, hey, the way we are is not OK.

Now, I mean, this is just basic, you know, like we learned in kindergarten, not to hit each other, right? But to me, as someone who’s worked in economic policy in my entire professional career, and actually, I started as a research assistant at the Brookings Institution, I am here because I believe economists can do good in the world. The focus I have is through economic policy. I do a lot of macroeconomic policy. And I don’t know how you can’t care about the people who are around you and be able to care about the people, the millions of people, that your decisions, your policy advice affect that you don’t see every day, right? And so, I mean, I get a lot of flak from the senior people. It’s like, “Oh, you need to be rational. You’re so emotional.” And just like, you know? We’re actually affecting people, millions of people in the United States and billions of people around the world. The United States, the economic policy advisors can do so much good in the world, and they can do so much harm, right?

And I think, you know, there were recent examples of this. I got involved in a lot of the discussion around the $1,400 checks. There was a very prominent study that came out from Raj Chetty and other coauthors who are at a think tank at Harvard. And their analysis, which is just like a one-pager that dropped and said at the end, no household over $78,000 should get a $1,400 check. It would just be a waste of resources. And [laughs] I dropped everything because that meant that 50 million Americans were not going to get the $1,400 check that they had been expecting. And I know in that 50 million, because that’s a lot of people, men, women and children, some of them need that check. And to sit and do like a slap together analysis. I mean, technically, and I’ve talked about the analysis was not good, but to have the audacity to put that out when it affects people! [laughs] So, but that doesn’t play well among economists. But I feel very strongly. I am a person, too, right? So, that was just an example of where I saw the elitism. Every time a Raj Chetty paper comes out, it is a news event, right?

So, I saw this kind of interaction in the economist profession, in our tribe, and then I was watching how it could potentially affect other people. So, to me, and I may be biased in this, this is a connection I feel very strongly, that I see Janet Yellen has spoken about this as well. But I can’t run a little experiment. I can’t take Larry away for a little while and see if policy goes better and then put him back in, and, you know. So, I could be wrong about this. But it’s something I’ve thought about for years and years now because I can’t figure out why we just jump in and throw elbows, both inside our seminars and in our departments, and then also like when they let us out in the world.

VALLAS: Well, and just hearing you talk in particular about, I think the way you put it was, if people are not mindful of and caring about the people around them, how the heck are they going to be caring about the people who are far less proximate? I’m botching the way you phrased it, but I think a lot about that as well, especially on the proximity front and connected as well to the types of lived experiences that describe most of the people who have traditionally been in leadership roles within economics. And it’s not just that field, but it certainly is a lot of old white dudes from Ivy League schools and who have not experienced, themselves, the kinds of hardship that might have been an education in why those $1,400 checks matter as well.

SAHM: Yeah, no. And I think economics isn’t special. We have this issue that people who have power and privilege are the ones in the room when the big decisions are made. And many of those decisions end up disproportionately affecting, especially when there are negative effects, people who are not in the room. And to me, that’s a big, big reason why having a diverse group of policy advisors, a diverse group of researchers, is important. But I have been very adamant that I just don’t, I don’t want to just see you check the box. If you’re going to bring in someone with a diverse background — and you absolutely need to. And I think of diversity on all kinds of different dimensions — then you got to bring them to the table. Which means some of you who’ve had power and privilege for a long time — and I have a lot of privilege too — you need back up. Make space at the table, and then go in the second row for a little while and watch how it works when you’re not there.

Because I just, the balance has…. I think you can see in a lot of places, like we were talking about economic policy, monetary policy, fiscal policy for a long time. Workers, marginalized workers, their families, people with less education, rural or inner cities, they just, policy hasn’t been designed to help them or even to respect them, right? So, let’s turn this around. And you can’t just pretend like, oh, we’re going to help them now. Because all the good intentions in the world are not enough. People don’t want words. They need support, and they need to have the agency to get the support that they need and want, right? So, it’s really complicated.

And we can, I can be empathetic. I can try to talk to a lot of people, and I do. But I can’t substitute for a Black woman. I can’t substitute for an immigrant farmer. I can’t, you know. So, get them in the room, get them, like, talk to them. What I can try and do is bring their voices and make myself open, something I love about Twitter, make myself open to those people so they can say, “Hey, that idea, that is totally stupid. Oh, that idea? Yes, please keep pushing that,” [laughs] you know. So, it’s just it’s an attitude change, and we just have to take people seriously and respect them.

VALLAS: Well, and that’s a big part of what you also really, the role that you also play, right? And you mention Twitter. That’s actually a large part of how I sort of view you within the Twitter ecosystem, is as somebody who really endeavors — and you often actually talk about how you’re intending to do this. So, I don’t think I’m reading the tea leaves here. I think you’re very public about this is as a priority for you — but you really endeavor to break down the complicated, wonky stuff that might only be getting talked about in kind of inside track rooms: those tables that are not the inclusive ones yet, or at least they’re not where they could or should be. And you seek to translate it and digest it and get it out there so that people can understand the stuff that often gets discussed by the very serious people as though, oh, no, no. The general public wouldn’t be capable of understanding this. You really, you take that on head on and you say, no, we actually need to be communicating about this stuff. People are totally capable of understanding these things, that we just need to break it down.

SAHM: Yeah, no. I truly love economics. I mean, I think about economics probably way more than I should or even like the most excited economists. And I love it because, like I said, I truly became an economist because I believe we could do good in the world. And over time, what I realized, too, is economics is for everyone. We are all making decisions about our finances. I mean, when those decisions go wrong, that creates a lot of strain on families. Do you get to send your kid to college or not? I mean, this is a huge source of family disputes, right? So, getting the economics right, empowering people to have the tools that economists learn all about, that’s important. And I want people to understand what’s going on in terms of the policies to help them. Because once they understand, then they can weigh in, right? And say, oh, no, no, that’s not good, or that is good.

And to me, one of my big missions, before the whole world blew up and fiscal became a big focus of my work, was to tell people about the Fed, right? Because the Fed can do great things, but it has a little bit of a Wizard of Oz kind of feel to it. And so, when I write at The New York Times, I was brought on to write regularly about the Federal Reserve for an audience that probably doesn’t think about monetary policy in a deep kind of way. And that translation is hard. Some of the Fed stuff is kind of tricky to explain, but I love doing that. And what’s so much fun is at Bloomberg Opinion, I write about inequality, right? And I’m the one writer they have to cover that. So, I just love different audiences trying to fill in the blanks and also to get their reaction.

Now, it is true. I do enjoy Twitter. Every medium is its own audience. And so, I like to, I mean, I basically like to talk to people. So, I’ll meet them where they are. One of the things that’s been so funny with Twitter is, I’ll see something like economics-wise, and I’ll start tweeting about it. Sometimes I’m fairly animated with the tweets. So, when the Raj Chetty paper (we talked about this) went into The Washington Post, as soon as I saw it, I had this Twitter thread that was just like, oh my Gosh, ahhh! And so, but what was hilarious is the ramifications of that was for the next week, I did, I don’t know, two, sometimes three, press calls a day explaining to journalists what that paper was and why there were concerns. I mean, those calls were like an hour each because it is technical, and journalists and laypeople can’t pick up the one-pager. And I mean, I read the appendix of the appendix, and I’ve worked in this space and I’ve done. So, I could have a very balanced view of what it said and it didn’t say, what the pros and the cons, the rest of the research. And those were not me ranting off in 280 characters, but it did start from like, hey, she seems to think she knows something about this, and it sounds kind of smart. Let’s call her up. And so, it’s been a good place for me to do that.

There are downsides to it. I mean, and well, I mean, we all are learning there are many downsides to Twitter, right? But for me, I try to walk a very fine line of being a policy expert. And I take that as I do research, I read research, I synthesize it, I give the best advice I can. I am not political. I don’t want to get into that space. And to stay a researcher, you can’t be an advocate, right? So, and I do have research colleagues who like, it’s kind of like I’m losing the grasp of being a respected researcher because I care too much in public. Now, you know, I can, they’re pretty clear I can do the Twitter rants and reasonable writing and do research, but it’s tough. And it especially gets tougher as I rant and rant about these very senior people that I’m supposed to worship. But I like a challenge. [laughs] So, writing economics for the world is not the only one that I’m trying to do right now. It keeps me busy.

It’s also just hearing you say that, though. I mean, what a wild double standard considering, right, who is totally fine to pass for researchers on the right that are well-respected enough to be quoted in major news outlets. And yet, their views can be, in some cases, reprehensible. And the critique that you’re citing that anyone might be thinking about you as a researcher with credibility is that you care too much about people and about the policies. So, I’m just going to call that out and name it.

SAHM: Welcome to economics.

VALLAS: Oh, yeah. Well, amen. So, the last kind of parallel that I will draw here, and then we’re going to run out of time, although I would love to spend all afternoon talking with you, although I’m glad that that means that if our conversation ends, you will get to get outside and enjoy some nice weather, right? Which is what everyone should be doing right now. Go for a walk. Hopefully everyone took this podcast on a walk. I should start actually tweeting that, that this podcast should always be listened to on walks. The other parallel that really jumps out probably not just to me but to anyone listening is — and this gets us back to the Biden COVID relief package and the Biden recovery package that’s coming, that infrastructure and jobs and child care and racial equity package that we apparently are going to learn the details of once the COVID relief package passes and is on his desk so that he can move on to the next thing — and that is the massive gap between where the Republican Party is. And I don’t mean the voters, I mean the folks in Congress and the American people.

I want to go back to that polling data that I cited before, because it just really, really bears repeating. And the support for this package, for this $1.9 trillion package, it’s well over 80 percent, and it crosses over party lines as well. And the way it breaks down, I’m going to disaggregate this just a little bit, is 40 percent of Americans think that the $1.9 trillion package is about the right size. And another 40 percent of those 80 percent of Americans who support it think that it’s too small. They’re concerned that it’s too small. It’s just such a clarion call from the American people: We need this relief, and we get that big is the name of this moment. And yet, not a single Republican vote likely to be part of what gets this relief to the American people. Do you think, Claudia, that if the package does really pass with zero Republican votes in the Senate, something that would be on track with what we’re expecting right now — maybe something will change, but it’s not what it’s looking like right now — what would be the significance? What would be the visibility to the American people, 80 percent plus of whom are saying, “Please get this to us,” or seeing that package passed with no Republican votes? Is this, and could this become, the moment where the curtain really starts to be pulled aside to show just completely how out of touch Republicans in Congress are with what the American people are screaming for in a moment like this?

SAHM: Yeah, well, most of the American people — I mean, this is kind of sad for those of us that spend all our time in Washington, D.C., working on policy — most of the American people really don’t care what we’re talking about or what we’re arguing. I mean, it is clear we have a very divided country, and that has a lot of ramifications that are problematic. I understand why President Biden talked about trying to be unified. He talked with Republicans about their counterproposal for a relief package. Biden came in with $1.9 trillion. They came in with $600 billion, right? There was a lot of daylight. It was clear anything that they could even kind of sort of call a unified approach, even if they didn’t get a Republican vote, was going to have to be south of 1.9 trillion. After a lot of discussions, and I think these were in good faith, thing’s going to be 1.9 trillion or very close to it, right? So, there’d been a promise to try and be unified. I think I take President Biden at his word. I think we will continue to see him make those efforts.

And yet, the real promise, another big promise he made is we are going to help you. We are going to get money out to you. We hear your pain. And at the end of the day, what Americans do pay attention to is what’s in their bank account, right? So, they’re going to focus — I certainly would. I’m not getting a check, but I would focus on this too — if a couple thousand dollars shows up in my bank account, and I can buy something I couldn’t before or just put food on the table for my family, I don’t care who voted for it, [laughs] you know? So, I think what…. And that’s what the people are telling us. They’re saying, “We need help.” I think there’s a big part of like just give us some money, and let us do what we need to do, right? And that may be a message that comes back, right?

I think there’s a lot of reasons we’re probably not going to see Republican votes. And it’s not because they don’t care about people, right? We are just in a very divided, politically-fraught environment. And yet, I mean, I am an optimist at heart. No one would get this from watching my Twitter feed, but I am. And you see some green shoots, right? Romney’s plan about the child transfers really just give money to people that have kids. I’m not here to endorse that plan. But it is so a step in the direction of near-universal cash relief for families with children. And there are some really thoughtful ideas about how to administer it. And there’s tradeoffs, and I don’t want to get into the details. And President Biden has a plan that starts moving us towards these benefits, giving people money, as opposed to monkeying around with the tax system.

And so, to me, that’s a sign of, hey, we recognize that some of our well-intended programs we’ve had in the past to support children and their families, yeah, we could do better. And the ways that they’re moving in towards of thinking about better, well, giving people money has been a big part of this relief effort. And so, if you start seeing that show up in more permanent programs and you start seeing some bipartisan support, to me, that’s encouraging. We have a long way to go. As soon as Romney announced his plan, most Republicans that one would’ve thought maybe we’re close to this, all denounced it. So, we’re not going to go from zero to 50 in terms of unity in the country. But I feel like we can get there. We have to get out of this crisis. We have to have people back on their feet so that we’re making decisions from a place of considering lots of options and not just being in crisis. We’ve got to have a moment just to stop and think about what’s best for all of us.

VALLAS: Well, and I am 1,000 percent with you on the optimism that could flow, should flow, maybe does flow for some of us from that Mitt Romney Child Tax Credit plan, which, as you noted, I also don’t endorse. And there’s some pay-fors that make it something that is concerning to a lot of us who think about not just how something might boost certain families’ incomes, but also, where the money is coming from. A lot more of that detail in last week’s episode of Off-Kilter, for anyone who wants to hear a deep dive on the Biden and the Romney proposals to turn the U.S. Child Tax Credit into something more like a child allowance, like most other wealthy nations have, which would actually reach the poorest children who are currently left behind, largely left behind, by the U.S. Child Tax Credit because of how it’s designed. So, I am with you, Claudia on that being definitely a step in the right direction.

I remain curious to see what will happen in terms of public perceptions of the Republican Party and particularly Republicans in the Senate, if they really are about to object across the board to the package that Americans are screaming for and that will put money into people’s bank accounts because of it being the kind of tangible relief that people will see and say, “Thank you. It is finally here,” despite the wishes of Republicans who’ve been trying to obstruct it. But we will see if that tune changes moving forward. And I will take your optimism. I think it’s certainly warranted and needed in this moment from that Romney plan at a minimum.

So, Claudia, we’re going to run out of time. But in the coming days and weeks, is there anything that you feel like folks should be especially keeping an eye on as this debate continues and as the House takes steps to move the COVID relief package and hopefully send it over to the Senate, what are you going to be keeping your eye on as all of this moves forward?

SAHM: Well, my biggest thing is just watching it move through the House and the Senate. I mean, there’s deliberative bodies. Things that could change. The price tag could move around, components. Once it’s in the hands of Congress, I, as a policy expert, just kind of sit back and fingers crossed. I often say that when The CARES Act went through the Senate, I did not sleep until they passed it. And this was like in the wee hours of the morning, because I was so worried someone was going to wake up and be like, “Oh, this is way too generous,” and like start, you know, the unemployment insurance benefits in particular. And so, I’m just going to be watching that it gets to the President’s desk. Middle of March is when a lot of these enhancements of the unemployment benefits expire. We need to get it signed as soon as we can so that there’s not a disruption in benefits. So, I’m just going to be watching that it happens. It moves fast.

I do think, stepping back from the next couple weeks, we need to be honest with the fact that the path forward is tough. There’s a lot of encouraging signs that the vaccine is really getting going. It’s spring. [laughs] It’s nice to be outside. This is going to be a large relief package. People are going to, those checks will come out within days of it being signed, right? It’s going to make a difference. But nobody’s got a magic wand. We’re not going to flip the switch and COVID is gone, and we’re all back to work and doing our stuff. So, I think it’s just when you raise expectations, they can be dashed, right? And none of us are going to be totally happy with where this goes. But we just got to hang in there. We got to keep pushing, and we’re pointed in the right direction.

So, like I said, and I hear you about proposals that come out. Some are going to be good; some are going to be bad. I just am happy to see us having a policy debate and really discussing things. Because back in December, I did not have high hopes for the runoffs in Georgia. We would be having a very different conversation today if it hadn’t been for Stacey Abrams, all the organizers, the fine people of Georgia that went out and voted. And this is huge because we need this relief. We need an infrastructure package, and it’s going to happen, right? Which is really exciting. But it’s not like it’s the magic wand. We’re trying to fix really tough problems with the crisis, and then we’re going to turn to even more tougher systemic problems. So, that’s what I try and keep in mind so that I can keep some of that optimism without just being pummeled every time I look at the news, and they tell me all the bad things that are happening.

VALLAS: Such a good note to end on. And you’re 1000 percent right about the perspective. We would be having an entirely different conversation if Georgia had not gone the way it went, and instead, we were dealing with Senate Leader Mitch McConnell and seeing what kind of relief, if any, could actually get through on the heels of what we saw last year. So, absolutely I think the right note to end on. And Claudia, I hope at this point you can get out for a walk and still enjoy some of the nice weather. I always love seeing your pictures from your walks that you share on Twitter. It’s one of my favorite things that you ever tweet out.

Claudia Sahm is a senior fellow at the Jain Family Institute. She’s also a former economist at the Fed and is the godmother of the eponymous Sahm Rule, of course, which we didn’t talk about this time, but is obviously part of the DNA of the recovery package, given the inclusion of triggers. Claudia, thank you so much for taking the time and for that note of optimism, which I think is really, really important, not just in moments like this, but to help us get through really the rest of this year, which is only going to get a little more challenging as the fears and hand-wringing around deficits, which we know Republicans are only going to be turning up the volume on in weeks and months ahead, get worse.

And that does it for this episode of Off-Kilter, the show about poverty, inequality, and everything they intersect with, powered by the Center for American Progress Action Fund. I’m Rebecca Vallas. The show is produced by Will Urquhart. Find us on the airwaves on the We Act Radio Network and the Progressive Voices Network, and say hi and send us your show pitches on Twitter @OffKilterShow. And of course, find us anytime on iTunes or wherever you get your podcasts. See you next time.

♪ I want freedom (freedom)

Freedom (freedom)

Now, I don’t know where it’s at

But it’s calling me back

I feel my spirit is revealing,

And now we just tryna get freedom (freedom)

What we talkin’ bout….