America is back in a big way: Hassett

Key Concepts

• Bidenomics: The economic policies of the Biden administration, characterized by claims of reduced inflation and increased wages.
• Internal Combustion Engine (ICE): Traditional gasoline-powered engines in vehicles.
• Fuel Economy Standards: Regulations set by the government to improve the fuel efficiency of vehicles.
• Electric Vehicles (EVs): Vehicles powered by electricity.
• Tariffs: Taxes imposed on imported goods.
• Onshoring: The practice of bringing manufacturing and jobs back to the United States from overseas.
• "All of the Above" Energy Policy: A strategy that supports the development and use of various energy sources, including fossil fuels and renewables.
• Purchasing Power: The amount of goods and services that can be bought with a unit of currency.

Economic Policies and Their Impact

The discussion centers on contrasting economic policies, specifically those attributed to the Biden administration ("Bidenomics") and those proposed by former President Trump.

Biden Administration's Economic Claims and Criticisms:

• Claim: Inflation is down by more than 60% since the administration took office, and wages are up.
• Counter-argument (Kevin Hassett): This is a "lie." Cumulative inflation over four years under Biden is claimed to be over 20%. Wages for the typical worker have dropped by $3,000 relative to inflation over the four years of Biden's term, resulting in a loss of purchasing power.

Biden Administration's Automotive Policies:

• Policy: Proposed fuel economy standards aimed at phasing out internal combustion engines.
• Specifics: The administration was set to increase the required fuel economy for U.S. fleet cars to 51 miles per gallon.
• Analysis (Kevin Hassett):
  • Current gasoline-powered cars with the best gas mileage (e.g., 36 miles per gallon) would not meet this standard.
  • This policy is seen as an attempt to force consumers to buy electric cars.
  • Economic Disruption: This shift could lead to job losses for workers in the gasoline station industry and auto manufacturing sectors focused on internal combustion engines.
  • Grid Impact: Eliminating gasoline-powered cars would increase the demand on the electric grid by an estimated 25%, a significant increase comparable to the growth since 1970. This would require substantial increases in electricity generation, potentially without fossil fuels.
  • Consequences: This could lead to a situation where no gasoline cars are available for purchase, gas prices skyrocket, and there's an "impossible increase" in required electricity generation.

Former President Trump's Economic Proposals:

• Automotive Policy: To do away with the proposed fuel economy standards and allow for the sale of "ordinary normal cars."
• Energy Policy: Championing an "all of the above" energy policy, including "drill baby drill," which implies increased domestic fossil fuel production.
• Tariff Policy:
  • Claim: Tariffs are bringing in trillions of dollars of wealth and enhancing national security.
  • Impact: Tariffs are credited with stopping eight wars, five of which were due to trade and tariffs.
  • Manufacturing Impact: Tariffs are seen as a driver for bringing manufacturing back to the United States.
  • Example: General Motors plans to invest $4 million to bring manufacturing back to the U.S. from Mexico.
  • Auto Production Data: U.S. auto production fell by 5% under Biden but surged by 10% so far this year under Trump's influence.
  • Onshoring Gains: Due to onshoring, partly attributable to tariffs, the U.S. has gained $1,200 in purchasing power this year after adjusting for inflation.
  • Factory Growth: Tracking of new factory groundbreakings shows an increase to about 20 in the last two months, with these being "billion dollar factories." This indicates a significant resurgence in U.S. manufacturing.

Arguments and Perspectives

• Biden Administration's Perspective (as presented by the interviewer): Bidenomics is working, with inflation down and wages up. Tariffs are bringing in wealth and national security.
• Republican/Trump Administration's Perspective (as presented by Kevin Hassett): Biden's economic policies are detrimental, particularly the proposed fuel economy standards which are seen as unrealistic and disruptive. Trump's policies, including tariffs and an "all of the above" energy approach, are credited with boosting manufacturing, creating jobs, and increasing purchasing power.

Data and Statistics Mentioned

• Inflation down by "more than 60%" (claimed by Biden administration).
• Cumulative inflation over four years under Biden: "over 20%" (Kevin Hassett).
• Wages dropped for the typical worker by "$3,000" relative to inflation over four years of Biden (Kevin Hassett).
• Purchasing power gained this year: "$1,200" after adjusting for inflation (Kevin Hassett).
• Proposed U.S. fleet car fuel economy standard: "51 miles per gallon" (Biden administration).
• Current best gas mileage for gasoline cars: "36 miles per gallon" (observed by Hassett's staff).
• Increase in electricity demand on the grid: "25%" (estimated impact of EVs replacing ICE vehicles).
• Grid increase since 1970: Comparable to the 25% increase needed for EVs.
• General Motors investment: "$4 million" to bring manufacturing back to the U.S.
• U.S. auto production under Biden: Fell by "5%."
• U.S. auto production so far this year: Surged by "10%."
• New factory groundbreakings in the last two months: "about 20" (Kevin Hassett).

Notable Quotes

• "BIDENOMICS IS WORKING. SINCE WE TOOK OFFICE, INFLATION IS DOWN AND WAGES ARE UP." (Interviewer, quoting Biden administration claims)
• "I WOULD STATE THAT INFLATION IS DOWN MORE THAN 60%." (Interviewer, quoting Biden administration claims)
• "WHAT A LIE THAT WAS. IN FACT, BIDEN'S CUMULATIVE INFLATION WAS OVER FOUR YEARS OVER 20%." (Kevin Hassett)
• "THEY WERE TRYING TO BASICALLY END THE INTERNAL COMBUSTION ENGINE WITH FUEL ECONOMY STANDARDS THAT WERE CRAZY." (Kevin Hassett)
• "SO OTHERWISE WHAT THEY'RE DOING IS TRYING TO MAKE EVERYBODY BUY ELECTRIC CARS..." (Kevin Hassett)
• "...IF YOU TAKE ALL OF THE GASOLINE AND SET IT TO ZERO AND MAKE PEOPLE DRIVE ELECTRIC CARS THEN IT INCREASES THE AMOUNT OF ELECTRICITY WE HAVE TO HAVE IN THE ELECTRIC GRID BY 25%..." (Kevin Hassett)
• "PRESIDENT TRUMP STOOD IN FRONT AND EXPLAINED HOW HE'S GOING TO DO AWAY WITH THESE FUEL ECONOMY STANDARDS AND MAKE IT SO PEOPLE COULD HAVE ORDINARY NORMAL CARS AGAIN." (Interviewer)
• "ALL OF THE ABOVE. THAT'S WHAT THE REPUBLICANS HAVE LONG CHAMPIONED ALL OF THE ABOVE ENERGY POLICIES WHICH SEEM TO MAKE SENSE..." (Interviewer)
• "WE'VE HAD TREMENDOUS SUPPORT ON THE TARIFFS AND IT'S BRINGING IN TRILLIONS OF DOLLARS OF WEALTH. IT'S BRINGING IN NATIONAL SECURITY AND I'VE STOPPED EIGHT WARS AND OF THE EIGHT WARS FIVE OF THEM HAVE BEEN BECAUSE OF TARIFFS AND TRADE, SO THEY ARE VERY IMPORTANT..." (Interviewer, quoting Trump)
• "...WAGES IN THE BIDEN ADMINISTRATION, SOME BIDEN SPOKESPERSON SAID WAGES WERE GOING UP MORE THAN PRICES. THAT WAS JUST NOT TRUE..." (Kevin Hassett)
• "...IN THE FOUR YEARS OF BIDEN WAGES DROPPED FOR THE TYPICAL WORKER BY $3,000 RELATIVE TO INFLATION..." (Kevin Hassett)
• "...WE'VE GAINED THIS YEAR BECAUSE OF ALL OF THE ONSHORING IN PART THAT IS ATTRIBUTABLE TO TARIFFS, $1,200 ALREADY AFTER ADJUSTING FOR INFLATION..." (Kevin Hassett)
• "SO PRESIDENT TRUMP IS CREATING AN ECONOMIC BOOM AGAIN JUST LIKE HE DID LAST TIME..." (Kevin Hassett)
• "...WE'VE BEEN TRACKING ALL OF THE GROUNDBREAKINGS FOR NEW FACTORIES AND ARE UP TO ABOUT 20 OVER THE LAST TWO MONTHS AND THESE ARE REALLY BIG BILLION DOLLAR FACTORIES SO THE U.S. IS BACK. THE U.S. IS BACK IN A BIG WAY." (Kevin Hassett)

Conclusion

The discussion presents a stark contrast between the economic narratives of the Biden and Trump administrations. While the Biden administration claims success in reducing inflation and increasing wages, Kevin Hassett, representing a perspective critical of Bidenomics, argues that inflation has significantly increased and real wages have declined. Hassett highlights the potential negative impacts of Biden's proposed fuel economy standards on the automotive industry and the electric grid, advocating for a return to policies that support traditional vehicles and fossil fuels. Conversely, the Trump administration's policies, particularly the use of tariffs, are credited with bringing manufacturing back to the U.S., creating jobs, and boosting the economy, as evidenced by increased factory production and a rise in auto manufacturing. The core argument is that Trump's approach fosters an economic boom by prioritizing domestic production and energy independence, while Biden's policies are seen as disruptive and economically damaging.