April 16, 2026 • 20 mins
On this episode, Lisa breaks down the state of the U.S. economy under President Trump’s second term and what it means for workers, businesses, and your wallet. The Heritage Foundation Economist Peter St. Onge joins the show to analyze how tax cuts, deregulation, and tariffs are reshaping growth—and whether it’s working.
We dive into rising oil prices, inflation concerns, and why Americans still feel squeezed despite cooling inflation numbers. Plus, a closer look at tariffs as both a negotiating tool and a potential tax on consumers, and whether they’re truly bringing jobs back to the U.S.
The conversation also explores the future of artificial intelligence and automation—what jobs are most at risk, where new opportunities could emerge, and how wages may shift in the years ahead.
Finally, we unpack the real impact of the latest tax changes, including how the “Big Beautiful Bill” is affecting refunds, small businesses, and long-term economic growth.
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Episode Transcript
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Speaker 1 (00:00):
Welcome to the Truth with Lisa Booth, where we'll get
to the heart of the issues that matter to you. Today,
we're talking about all things economy.
Speaker 2 (00:07):
We just had tax Day.
Speaker 1 (00:08):
Where we just paid a bunch of money to the
federal government to go spender money or hard earned dollars
I guess on leering centers across the country. But it
was the first tax day since the Big Beautiful Bill,
so we'll talk about refunds. We'll talk about the impact
that that had for Americans. We're going to have this
conversation with Peter saint One. He is a senior economist
(00:30):
at Heritage's Row Institute.
Speaker 2 (00:32):
We're going to talk about that.
Speaker 1 (00:33):
We'll also talk about how the war in Iran, how
that's impacting costs, gas prices as well, and also even
though inflation has cooled, prices haven't gone down as much
as we would like them too. So why have those
prices remained so stubbornly Hi, We'll dig into that as well.
We'll talk about AI's impact on jobs as well and wages.
(00:56):
So a lot going on, a lot to cover. We're
going to dig into all things economy with Peter saint One.
Speaker 3 (01:06):
Well, Peter sat on.
Speaker 1 (01:07):
It's great to have you on the show first time on.
Obviously no shortage of news to cover these days, but
a lot in terms of the economy, So looking forward
to getting your outlook on everything.
Speaker 2 (01:17):
Yeah, thanks for having me on. You know, so we uh.
Speaker 1 (01:21):
Looking at what we've seen from Trump two point zero
so far. How would you assess the economy under President
Trump since he took office versus you know, what we
saw under the Biden administration.
Speaker 3 (01:34):
So Trump two point zero is following the same playbook
as Trump one point zero, and it's substantially similar to
the Reagan playbook, which is cut taxes, deregulate the.
Speaker 2 (01:46):
Twist that well and drill baby drill. The twist that
Trump has really put on it is a.
Speaker 3 (01:52):
Almost single minded focus on working class wage journers, so
that you know, with deportations with illegals, there's a big
economic angle to that, which is that illegals are not
immigrating with neurosurgeons or college professors for work. In fact,
they're raising the incomes for those people because the illegals
(02:14):
didn't bring any neurosurgeons with them, so you get a
shortage of neurosurgeons. You know, the whole line that illegals
fix labor shortages. No, you get the exact same labor shortage.
But now once you have is too many illiterate brick layers.
You don't have enough neurosurgeons, school teachers, you know, on
down the line line men's skilled trades. So what Trump's
(02:35):
been doing is getting rid of the people who drag
down the wages for blue collars.
Speaker 2 (02:40):
And you know, I think they've noticed that. They appreciate it.
Speaker 3 (02:44):
So the flying the ointment at the moment is really
what's happening with the war, which almost the entire impact.
Speaker 2 (02:51):
Of the war is oil prices. It's not actually the
war itself that matters.
Speaker 3 (02:55):
Like Bill Clinton bombed Iraq recreationally throughout the impact on
the economy what they're spending, yes, but what really matters
here's the oil prices.
Speaker 2 (03:06):
So those have driven all of the numbers off the charts.
Speaker 3 (03:09):
Inflation last month was up zero point nine percent, which
is annualized double digits.
Speaker 2 (03:13):
That's the worst of bide inflation.
Speaker 3 (03:16):
Now, what we're seeing, which I think is interesting, is
that companies are not raising prices in line with that.
So if you look outside of energy, we do not
have a spike in inflation.
Speaker 2 (03:27):
Since the war began.
Speaker 3 (03:28):
Essentially, companies seem to believe that the war is going
to be short and so they're not raising their prices.
They don't want to alienate customers. And in fact, if
you look at the stock market at this point, it's
actually above the S and P is above where it
was when the war started. So even though oil markets
say that, you know, we're very much in the thick
of the war, not of the worst.
Speaker 2 (03:48):
Of it, but it's still ongoing.
Speaker 3 (03:50):
Oil markets are worried about the strait of horror moves,
but stocks and business behavior, they seem to think that
the war is essentially wrapped up. If that's the case,
we go back to where we were before the war,
which was very strong growth. You know, the left likes
to talk about the week job market. Almost all of
that supposed week job market was government layoffs and deportations.
(04:14):
So both of those groups show up as jobs. Maybe
they shouldn't, but they are counted as jobs. That was
nearly the entire story in the so called week job market.
Speaker 2 (04:23):
If you look at GDP growth, productivity growth, that has
been absolutely on fire.
Speaker 3 (04:27):
Productivity growth was i want to say, four and a
half to five percent that's one of the best numbers
we've seen since the nineteen eighties, so very strong economy.
When the war wraps up, I think we're going to
get right back to it.
Speaker 1 (04:38):
Is that intentional with padding the jobs numbers under the
Bide administration with government employees and illegal immigrant.
Speaker 3 (04:47):
Yeah, I think part of its padding. I think most
of it is just that that is their base, right.
The base for Democrats are government workers. Government workers contribute
something like ninety two percent to Democrats, and illegal immigrants
who are the future voters, right, those are the replacement
voters again, something like ninety percent propensity to vote Democrat.
(05:07):
So it's a helpful bonus that, you know. Admitting however,
many million migrants he did, expanding government spending, expanding government employees,
those all pad the jobs numbers. But I think the
main reason they do it is that as their base.
Speaker 2 (05:22):
That makes sense.
Speaker 1 (05:24):
You know, when you look into like add the tariffs
into the mix, do you how do you see them?
Obviously you know there will be.
Speaker 2 (05:31):
Some that say it's.
Speaker 1 (05:33):
A tax and you know Americans, and that those costs
are passed down other states necessary to onshore jobs and
to rebuild or manufacturing base like how do you read
it and what's been the impact on the economy so far?
Speaker 3 (05:48):
Yeah, so pretty much any serious economists is going to
recognize that a tariff is a tax. It's a kind
to a sales tax that only goes on foreign important products.
So if you want a small government, then you don't
like tariffs. Having said, there are two things that Trump
is doing with his tariffs that I think are really useful.
One of them is putting pressure on other countries to
bring down their barriers.
Speaker 2 (06:09):
That has absolutely been happening.
Speaker 3 (06:11):
He's been going through one by one negotiating with Japan, Europe,
China and getting them to reduce their trade barriers. There
were a number of countries that reduce their barriers ninety
nine percent. So if you're achieving that, then your tariff
is actually improving things across the board. This is something
that small government people should love. The other benefit or
(06:32):
use of a tariff is to reshore production. Now, the
kicker on production is that if you're going to bring
factories to America, you have to lower taxes and you
have to reduce the red tape, especially environmental red tape.
Speaker 2 (06:46):
They're not going to come here.
Speaker 3 (06:47):
You know, if you just put tariffs on and you
don't improve the domestic business environment, then yes, you're just
punishing Americans.
Speaker 2 (06:54):
It's a bad idea.
Speaker 3 (06:55):
Countries in Africa, Latin America, they've done teriffs for decades
and they've failed it because they.
Speaker 2 (07:00):
Don't improve the business environment.
Speaker 3 (07:02):
Trump has been laser focused on that, the Big Beautiful Bill.
Most of the cuts in that have been for small business,
the corporate tax rate, the QBI passed through accelerated depreciation.
These are rocket fuel for investment, for creating jobs. Of course,
he's been doing everything he can to get rid of
red tape with not much help from a GOP Congress,
(07:24):
but he has absolutely been taking every single box to
improve the business environment. If you are doing that together
with these tariffs, then I mean we saw the results.
He's got something like four trillion dollars of investment lined
up incoming investment, things like there's one hundred billion dollar
chit factory out in Arizona from Taiwan Semiconductor. Those kinds
(07:46):
of things are coming in because of the tariffs. To
put that in perspective, one trillion of investment is worth
about one million jobs, right, So four trillion. You know,
Trump's variously talked higher. Numbers could be six, it could
be eight. Let them in cook on tariffs, and we
could be looking at millions of jobs coming in and
those are manufacturing jobs. That's exactly the category of workers
(08:09):
who've been suffering for forty years because they got sold
down the river in bad trade deals. You know, we
would get financial or Hollywood or software or pharma, and
then we would give away everything else. We would give
away all the blue collar jobs. So they're finally getting
something out of this.
Speaker 1 (08:24):
I got to say, you could cuit commercial break more.
With Peter on the other side, Americans, we hear that,
you know, inflation's cooling. Inflation is cooled, but they feel
like prices are just too high still. Is that just
permanent now or why haven't cost decreased more?
Speaker 2 (08:44):
What's behind all of that? Yeah, it's tricky.
Speaker 3 (08:47):
So before the war started, official inflation numbers was something
like two point four which is pretty tame true inflation,
which is a non government aggregator prices, and they look
at millions of prices, they said it was zero point
seven percent. Was the inflation we were running before the war.
That is about as low as it gets. In fact,
you can't go negative because the Federal Reserve will intervene
(09:08):
and start printing money because they're definitely afraid of deflation.
They shouldn't be, but anyway they are because they're a
counterfeiting cartel, so they will start printing money.
Speaker 2 (09:18):
Right.
Speaker 3 (09:18):
So the lesson here is even when zero points seven percent, right,
even when inflation was as low essentially as possible, the
central bank, people were still upset about it. The reason
is that voters have not accepted by inflation. They have
not accepted that the world change. They're not happy about it.
They don't want it to have changed. And so even
if you're running at zero point seven percent, you know,
(09:41):
Trump had a couple of misstaps early on where he
was talking about how, you know, inflation's a myth, you
know this is all now, that's not how people feel it. Right,
Even if you can explain to your blue in the
face that you know, with a central bank, you're never
going to actually get deflation, voters aren't gonna accept that.
And so the best you can do is what I
think Trump spends trying to do, which is just throw
(10:02):
the kitchen sink at it. Try to bring down house prices.
Medical care insurance just across the board. But voters are
going to remain upset about inflation for a while here
because they really don't accept what Biden did.
Speaker 2 (10:14):
You know, we'll see a new FED chair here soon.
What impact will that have? Kevin worsh was interesting.
Speaker 3 (10:22):
Trump had a couple of candidates who were seen as
easy money, meaning inflationary, and Kevin really surprised the market.
So once when he was announced, gold and silver crashed
I think several percent within minutes. And when gold and
silver crashed on a new FED chair, that says that
this is going to be a hard money guy, that
this is going to be a guy who keeps rates
relatively high. Normally you would expect slower growth, but you
(10:44):
would expect lower inflation from a hard money guide. The
iconic hard money fedchair is Paul Volker the nineteen eighties
under Reagan. But what's interesting is that if you look
behind that sort of instant market reaction, for about fifteen years,
Kevin Warsh has been talking about something that Robin Hood
monetary policy, which is where you lower rates for main
street so you can get loans out the door, businesses
(11:06):
can borrow, they can expand, so you lower rates now.
Normally that would drive inflation, but what he wants to
do is to cancel that inflation by selling off I
think it's seven or nine trillion dollars that the FED
is sitting on of assets that have bought up most
of it during COVID.
Speaker 2 (11:23):
So he wants to sell that stuff off.
Speaker 3 (11:25):
That's gonna hurt Wall Street because Wall Street owns most
of those assets, things like treasuries. So if you sell
some at racist or at lowers the price and everything else.
So his idea is lower rates to goose goose mom
and pops small business Main Street, but make Wall Street
pay for it. So he calls that Robin Hood monetary
policy that I don't think has changed since the war.
(11:49):
I think Kevin Warsh, like pretty much the rest of
the world, thinks that the war is going to be
over pretty soon. In fact, he's given speeches where he
thinks that there may be a lot more room to
do that because of AI, because artificial intelligence, because AI
is lowering costs so massively in some cases ninety five percent,
that there may actually be room to.
Speaker 2 (12:08):
Cut rates very very low. This is wonderful for small business,
it's wonderful for factories.
Speaker 3 (12:13):
Expanding, and he thinks that AI could soak up the inflation.
Speaker 1 (12:17):
How do you view AI's impacts here in the next
like five ten years on the economy in terms of jobs, wages, is,
et cetera.
Speaker 3 (12:27):
Yeah, so every you know, automation is nothing new. We've
had it for thousands of thousands of years. The ancient
Greeks worried about oxen pulling plows. They said, we were
going to have unemployed men. We'd have to start wars
to get rid of them. The Middle Ages worried about
water wheels and windmills. Okay, automation is very old. The
Industrial revolution, of course, and the universal pattern is this,
you get a short term.
Speaker 2 (12:48):
Dip in jobs.
Speaker 3 (12:49):
Because the jobs get replaced faster than the new ones
get created. So you do get this period of ten
or twenty years where it can get harder to find
a job, especially if you're young because you don't have
experience yet. But the other end of it, after that period,
so twenty years down the line, you get the exact
same number of jobs one for one replaced, and the
(13:10):
jobs pay much much better. So you know, if you
look at the industri Revolution, for example, it replaced physical
jobs Initially all.
Speaker 2 (13:19):
The farm laborers lost their jobs.
Speaker 3 (13:22):
But they then they went out and found other jobs, right,
because the automation itself made the economy much much larger,
So you got all kinds of new jobs that people
couldn't couldn't even imagine back then. So when the smoke cleared,
if you look today, for example, a house painter in
America makes about two hundred dollars a day. A house
painter in India makes about nine dollars a day, and
(13:44):
that's not even a full investor revolution right, India has electricity.
Speaker 2 (13:48):
Another example is babysitters.
Speaker 3 (13:50):
There was a study recently babysitters nation wide make twenty
to twenty five an hour. That is the lowest skill
job possible. Sixteen year olds can do that job competently.
So I think a lot of the AI dooms day
it's coming from the left. It's coming from the exact
same organizations who've been peddling global warming dooms day for
(14:10):
forty years. World economic form outfits like this, I think
they want to scare people with AI because they're trying
to install universal basic income so they can convert voters
into government workers.
Speaker 2 (14:21):
But if you look at thousands of years of automation.
Speaker 3 (14:25):
You know, if you just think about it logically, like
you know, a phishing pole is automation, right, you could
catch the fish by hand. Is it a good idea
to throw away the fishing pole? No, because fishing poles
make us richer, fishing trawlers make us richer. So I
think we're definitely going to have maybe a decade or
two where you're going to see elevated unemployment, especially for
young people.
Speaker 2 (14:44):
It could be two three points elevated. They're going to
have to get creative.
Speaker 3 (14:48):
The most important policy response is it should be very
easy to start a business. It should be very low
tax to start a business. Should be very easy to
hire somebody. It should be as easy as ordering something
on Amazon to hire somebody.
Speaker 2 (15:02):
The paperwork to run your corporate compliance.
Speaker 3 (15:05):
These things need to be much much easier, so that
that ten year gap in between is shorter.
Speaker 2 (15:12):
Maybe it's a two year gap.
Speaker 1 (15:14):
So what specific jobs do you think are sort of
more at risk.
Speaker 3 (15:17):
Well, there was a started by Brookings recently that looked
at the kinds of jobs that they think are threatened,
and in a word, they're cubical jobs.
Speaker 2 (15:25):
So administrative paperwork, you know, the kinds of.
Speaker 3 (15:28):
Jobs that fill the bowels of big companies, hospitals, universities,
government workers. Obviously, those are the jobs that are on
the firing line. I think metaphorically was going to happen
with AI. If you've ever seen the movie Office Space, Yes,
that's exactly it. Okay, you have these soul crushing cubicle jobs,
those are all going to go, and they're going to
be replaced with blue collar jobs, physical labor jobs, jobs
(15:51):
where the value is that a human is doing it.
So to give an example, one hundred years ago, you
could replace bartenders with vending machines. That's what it didn't happen.
Why because people do not want to go to a
bar and log up to a vending machine. What's the point, right,
There's a ton of jobs. They have value because they
are performed by a human. Nobody wants no matter how
(16:14):
good the robot is. You do not want to watching
your kids, You don't want to babysitting your pets.
Speaker 2 (16:18):
You don't want doggy daycare done by robots.
Speaker 3 (16:20):
You know, therapists, nurses, almost the entirety of healthcare, patient
facing healthcare, people do not want that done by robots. So,
you know, you get a much richer society where you
have an explosion in trades because you know, if the
industry revolution took us from nine dollars a day to
two hundred dollars a day, AI could take us to
a lot more. Right, you'd be looking at Starbucks paying
(16:41):
two hundred thousand and night a year. You would get
a dramatic increase in jobs that today we think of
as low skill, low wage. But if the automation is coming,
if it is industrial revolution scale, those jobs pay much better.
Speaker 2 (16:56):
Now.
Speaker 3 (16:56):
I can say from experience, every blue collar job I've
had in my.
Speaker 2 (16:59):
Life and I had a bond.
Speaker 3 (17:00):
I had them in college, I had them when I
was young. I've enjoyed them much more than the cubical jobs.
So I think, frankly, when the smoke clears, future generations
will wonder why the heck people are worried about cubical
jobs going Good riddance. The new jobs will pay much better,
They'll be much more human.
Speaker 2 (17:18):
You actually get to interact with people.
Speaker 3 (17:20):
If you don't like interacting with people, then you can
hand make stuff because a much richer economy sustains that
as well.
Speaker 1 (17:27):
Yeah, it's the office space question.
Speaker 2 (17:28):
What exactly would you say you do here? That is
exactly it.
Speaker 3 (17:32):
And you know, if you take office space and you
apply AI to it, you can imagine the consultant coming
in not only asking what people to do, but knowing
that AI can do it for free.
Speaker 1 (17:43):
Then before we go, obviously the dreaded tax day has passed.
When the government steal us from us. This is also
the first UH tax day since the Big Beautiful Bill
had that impact refunds for America. You know, how does
that sort of impact the tax landscape for Americans.
Speaker 3 (18:05):
Yeah, so most of the impact of Big Beautiful was
preventing bad things from happening, right, which is that Trump's
first term tax cuts had a sunset on them in
order to get them through Congress.
Speaker 2 (18:17):
They were going to expire.
Speaker 3 (18:18):
If they had expired, that would have been catastrophic for
small business for job creation.
Speaker 2 (18:23):
So that's the main impact of them.
Speaker 3 (18:25):
He did add some elements to it though, he had
the no tax on tips on overtime so security payments,
which is effectively built in there as an extra deduction
for the elderly. Those together, they were you know, very popular.
Democrats shocked me by fighting them, but there you go.
Those collectively boosted tax refunds by about eleven percent, says
(18:47):
about thirty five hundred dollars a year per family. It's
about thirty billion above last year. Trump wanted much bigger cuts.
Of course, unfortunately Republicans have a very very thin majority,
so Rhinos effectively run the country for better or worse.
Speaker 2 (19:02):
And they're already talking.
Speaker 3 (19:03):
Johnson is talking about for next year, maybe trying or
for this year rather trying to do a reconciliation two
point zero.
Speaker 2 (19:09):
Whether they might stick in some new pieces in there.
Speaker 3 (19:12):
But again, until we have a conservative majority in the House,
which may not be for a while, you're unlikely to
see really big tax cuts.
Speaker 2 (19:20):
So it might be first time credits for home buyers.
Speaker 3 (19:23):
They might do something with Social Security, they might expand that,
maybe even a payroll tax pause of oil prices pay high.
Speaker 2 (19:30):
But I don't think that we're gonna get it.
Speaker 3 (19:31):
You know, we'll continue to get benefits from what was
in big beautiful tips over time.
Speaker 2 (19:37):
I don't think we're gonna get anything real big this year.
Speaker 1 (19:39):
Peter saint One, appreciate your time, Thanks so much for
breaking everything down. That was Peter saint One, the senior
economists at the Heritage Foundation's Row Institute. Appreciate him for
making the time to come on the show. Appreciate you
guys at home for listening every Tuesday and Thursday, but
you can listen throughout the week. Also want to think
John Cassio, my producer, for putting the show together.
Speaker 2 (19:58):
Until next time.
Welcome to the Truth with Lisa Booth, where we'll get
to the heart of the issues that matter to you. Today,
we're talking about all things economy.
Speaker 2 (00:07):
We just had tax Day.
Speaker 1 (00:08):
Where we just paid a bunch of money to the
federal government to go spender money or hard earned dollars
I guess on leering centers across the country. But it
was the first tax day since the Big Beautiful Bill,
so we'll talk about refunds. We'll talk about the impact
that that had for Americans. We're going to have this
conversation with Peter saint One. He is a senior economist
(00:30):
at Heritage's Row Institute.
Speaker 2 (00:32):
We're going to talk about that.
Speaker 1 (00:33):
We'll also talk about how the war in Iran, how
that's impacting costs, gas prices as well, and also even
though inflation has cooled, prices haven't gone down as much
as we would like them too. So why have those
prices remained so stubbornly Hi, We'll dig into that as well.
We'll talk about AI's impact on jobs as well and wages.
(00:56):
So a lot going on, a lot to cover. We're
going to dig into all things economy with Peter saint One.
Speaker 3 (01:06):
Well, Peter sat on.
Speaker 1 (01:07):
It's great to have you on the show first time on.
Obviously no shortage of news to cover these days, but
a lot in terms of the economy, So looking forward
to getting your outlook on everything.
Speaker 2 (01:17):
Yeah, thanks for having me on. You know, so we uh.
Speaker 1 (01:21):
Looking at what we've seen from Trump two point zero
so far. How would you assess the economy under President
Trump since he took office versus you know, what we
saw under the Biden administration.
Speaker 3 (01:34):
So Trump two point zero is following the same playbook
as Trump one point zero, and it's substantially similar to
the Reagan playbook, which is cut taxes, deregulate the.
Speaker 2 (01:46):
Twist that well and drill baby drill. The twist that
Trump has really put on it is a.
Speaker 3 (01:52):
Almost single minded focus on working class wage journers, so
that you know, with deportations with illegals, there's a big
economic angle to that, which is that illegals are not
immigrating with neurosurgeons or college professors for work. In fact,
they're raising the incomes for those people because the illegals
(02:14):
didn't bring any neurosurgeons with them, so you get a
shortage of neurosurgeons. You know, the whole line that illegals
fix labor shortages. No, you get the exact same labor shortage.
But now once you have is too many illiterate brick layers.
You don't have enough neurosurgeons, school teachers, you know, on
down the line line men's skilled trades. So what Trump's
(02:35):
been doing is getting rid of the people who drag
down the wages for blue collars.
Speaker 2 (02:40):
And you know, I think they've noticed that. They appreciate it.
Speaker 3 (02:44):
So the flying the ointment at the moment is really
what's happening with the war, which almost the entire impact.
Speaker 2 (02:51):
Of the war is oil prices. It's not actually the
war itself that matters.
Speaker 3 (02:55):
Like Bill Clinton bombed Iraq recreationally throughout the impact on
the economy what they're spending, yes, but what really matters
here's the oil prices.
Speaker 2 (03:06):
So those have driven all of the numbers off the charts.
Speaker 3 (03:09):
Inflation last month was up zero point nine percent, which
is annualized double digits.
Speaker 2 (03:13):
That's the worst of bide inflation.
Speaker 3 (03:16):
Now, what we're seeing, which I think is interesting, is
that companies are not raising prices in line with that.
So if you look outside of energy, we do not
have a spike in inflation.
Speaker 2 (03:27):
Since the war began.
Speaker 3 (03:28):
Essentially, companies seem to believe that the war is going
to be short and so they're not raising their prices.
They don't want to alienate customers. And in fact, if
you look at the stock market at this point, it's
actually above the S and P is above where it
was when the war started. So even though oil markets
say that, you know, we're very much in the thick
of the war, not of the worst.
Speaker 2 (03:48):
Of it, but it's still ongoing.
Speaker 3 (03:50):
Oil markets are worried about the strait of horror moves,
but stocks and business behavior, they seem to think that
the war is essentially wrapped up. If that's the case,
we go back to where we were before the war,
which was very strong growth. You know, the left likes
to talk about the week job market. Almost all of
that supposed week job market was government layoffs and deportations.
(04:14):
So both of those groups show up as jobs. Maybe
they shouldn't, but they are counted as jobs. That was
nearly the entire story in the so called week job market.
Speaker 2 (04:23):
If you look at GDP growth, productivity growth, that has
been absolutely on fire.
Speaker 3 (04:27):
Productivity growth was i want to say, four and a
half to five percent that's one of the best numbers
we've seen since the nineteen eighties, so very strong economy.
When the war wraps up, I think we're going to
get right back to it.
Speaker 1 (04:38):
Is that intentional with padding the jobs numbers under the
Bide administration with government employees and illegal immigrant.
Speaker 3 (04:47):
Yeah, I think part of its padding. I think most
of it is just that that is their base, right.
The base for Democrats are government workers. Government workers contribute
something like ninety two percent to Democrats, and illegal immigrants
who are the future voters, right, those are the replacement
voters again, something like ninety percent propensity to vote Democrat.
(05:07):
So it's a helpful bonus that, you know. Admitting however,
many million migrants he did, expanding government spending, expanding government employees,
those all pad the jobs numbers. But I think the
main reason they do it is that as their base.
Speaker 2 (05:22):
That makes sense.
Speaker 1 (05:24):
You know, when you look into like add the tariffs
into the mix, do you how do you see them?
Obviously you know there will be.
Speaker 2 (05:31):
Some that say it's.
Speaker 1 (05:33):
A tax and you know Americans, and that those costs
are passed down other states necessary to onshore jobs and
to rebuild or manufacturing base like how do you read
it and what's been the impact on the economy so far?
Speaker 3 (05:48):
Yeah, so pretty much any serious economists is going to
recognize that a tariff is a tax. It's a kind
to a sales tax that only goes on foreign important products.
So if you want a small government, then you don't
like tariffs. Having said, there are two things that Trump
is doing with his tariffs that I think are really useful.
One of them is putting pressure on other countries to
bring down their barriers.
Speaker 2 (06:09):
That has absolutely been happening.
Speaker 3 (06:11):
He's been going through one by one negotiating with Japan, Europe,
China and getting them to reduce their trade barriers. There
were a number of countries that reduce their barriers ninety
nine percent. So if you're achieving that, then your tariff
is actually improving things across the board. This is something
that small government people should love. The other benefit or
(06:32):
use of a tariff is to reshore production. Now, the
kicker on production is that if you're going to bring
factories to America, you have to lower taxes and you
have to reduce the red tape, especially environmental red tape.
Speaker 2 (06:46):
They're not going to come here.
Speaker 3 (06:47):
You know, if you just put tariffs on and you
don't improve the domestic business environment, then yes, you're just
punishing Americans.
Speaker 2 (06:54):
It's a bad idea.
Speaker 3 (06:55):
Countries in Africa, Latin America, they've done teriffs for decades
and they've failed it because they.
Speaker 2 (07:00):
Don't improve the business environment.
Speaker 3 (07:02):
Trump has been laser focused on that, the Big Beautiful Bill.
Most of the cuts in that have been for small business,
the corporate tax rate, the QBI passed through accelerated depreciation.
These are rocket fuel for investment, for creating jobs. Of course,
he's been doing everything he can to get rid of
red tape with not much help from a GOP Congress,
(07:24):
but he has absolutely been taking every single box to
improve the business environment. If you are doing that together
with these tariffs, then I mean we saw the results.
He's got something like four trillion dollars of investment lined
up incoming investment, things like there's one hundred billion dollar
chit factory out in Arizona from Taiwan Semiconductor. Those kinds
(07:46):
of things are coming in because of the tariffs. To
put that in perspective, one trillion of investment is worth
about one million jobs, right, So four trillion. You know,
Trump's variously talked higher. Numbers could be six, it could
be eight. Let them in cook on tariffs, and we
could be looking at millions of jobs coming in and
those are manufacturing jobs. That's exactly the category of workers
(08:09):
who've been suffering for forty years because they got sold
down the river in bad trade deals. You know, we
would get financial or Hollywood or software or pharma, and
then we would give away everything else. We would give
away all the blue collar jobs. So they're finally getting
something out of this.
Speaker 1 (08:24):
I got to say, you could cuit commercial break more.
With Peter on the other side, Americans, we hear that,
you know, inflation's cooling. Inflation is cooled, but they feel
like prices are just too high still. Is that just
permanent now or why haven't cost decreased more?
Speaker 2 (08:44):
What's behind all of that? Yeah, it's tricky.
Speaker 3 (08:47):
So before the war started, official inflation numbers was something
like two point four which is pretty tame true inflation,
which is a non government aggregator prices, and they look
at millions of prices, they said it was zero point
seven percent. Was the inflation we were running before the war.
That is about as low as it gets. In fact,
you can't go negative because the Federal Reserve will intervene
(09:08):
and start printing money because they're definitely afraid of deflation.
They shouldn't be, but anyway they are because they're a
counterfeiting cartel, so they will start printing money.
Speaker 2 (09:18):
Right.
Speaker 3 (09:18):
So the lesson here is even when zero points seven percent, right,
even when inflation was as low essentially as possible, the
central bank, people were still upset about it. The reason
is that voters have not accepted by inflation. They have
not accepted that the world change. They're not happy about it.
They don't want it to have changed. And so even
if you're running at zero point seven percent, you know,
(09:41):
Trump had a couple of misstaps early on where he
was talking about how, you know, inflation's a myth, you
know this is all now, that's not how people feel it. Right,
Even if you can explain to your blue in the
face that you know, with a central bank, you're never
going to actually get deflation, voters aren't gonna accept that.
And so the best you can do is what I
think Trump spends trying to do, which is just throw
(10:02):
the kitchen sink at it. Try to bring down house prices.
Medical care insurance just across the board. But voters are
going to remain upset about inflation for a while here
because they really don't accept what Biden did.
Speaker 2 (10:14):
You know, we'll see a new FED chair here soon.
What impact will that have? Kevin worsh was interesting.
Speaker 3 (10:22):
Trump had a couple of candidates who were seen as
easy money, meaning inflationary, and Kevin really surprised the market.
So once when he was announced, gold and silver crashed
I think several percent within minutes. And when gold and
silver crashed on a new FED chair, that says that
this is going to be a hard money guy, that
this is going to be a guy who keeps rates
relatively high. Normally you would expect slower growth, but you
(10:44):
would expect lower inflation from a hard money guide. The
iconic hard money fedchair is Paul Volker the nineteen eighties
under Reagan. But what's interesting is that if you look
behind that sort of instant market reaction, for about fifteen years,
Kevin Warsh has been talking about something that Robin Hood
monetary policy, which is where you lower rates for main
street so you can get loans out the door, businesses
(11:06):
can borrow, they can expand, so you lower rates now.
Normally that would drive inflation, but what he wants to
do is to cancel that inflation by selling off I
think it's seven or nine trillion dollars that the FED
is sitting on of assets that have bought up most
of it during COVID.
Speaker 2 (11:23):
So he wants to sell that stuff off.
Speaker 3 (11:25):
That's gonna hurt Wall Street because Wall Street owns most
of those assets, things like treasuries. So if you sell
some at racist or at lowers the price and everything else.
So his idea is lower rates to goose goose mom
and pops small business Main Street, but make Wall Street
pay for it. So he calls that Robin Hood monetary
policy that I don't think has changed since the war.
(11:49):
I think Kevin Warsh, like pretty much the rest of
the world, thinks that the war is going to be
over pretty soon. In fact, he's given speeches where he
thinks that there may be a lot more room to
do that because of AI, because artificial intelligence, because AI
is lowering costs so massively in some cases ninety five percent,
that there may actually be room to.
Speaker 2 (12:08):
Cut rates very very low. This is wonderful for small business,
it's wonderful for factories.
Speaker 3 (12:13):
Expanding, and he thinks that AI could soak up the inflation.
Speaker 1 (12:17):
How do you view AI's impacts here in the next
like five ten years on the economy in terms of jobs, wages, is,
et cetera.
Speaker 3 (12:27):
Yeah, so every you know, automation is nothing new. We've
had it for thousands of thousands of years. The ancient
Greeks worried about oxen pulling plows. They said, we were
going to have unemployed men. We'd have to start wars
to get rid of them. The Middle Ages worried about
water wheels and windmills. Okay, automation is very old. The
Industrial revolution, of course, and the universal pattern is this,
you get a short term.
Speaker 2 (12:48):
Dip in jobs.
Speaker 3 (12:49):
Because the jobs get replaced faster than the new ones
get created. So you do get this period of ten
or twenty years where it can get harder to find
a job, especially if you're young because you don't have
experience yet. But the other end of it, after that period,
so twenty years down the line, you get the exact
same number of jobs one for one replaced, and the
(13:10):
jobs pay much much better. So you know, if you
look at the industri Revolution, for example, it replaced physical
jobs Initially all.
Speaker 2 (13:19):
The farm laborers lost their jobs.
Speaker 3 (13:22):
But they then they went out and found other jobs, right,
because the automation itself made the economy much much larger,
So you got all kinds of new jobs that people
couldn't couldn't even imagine back then. So when the smoke cleared,
if you look today, for example, a house painter in
America makes about two hundred dollars a day. A house
painter in India makes about nine dollars a day, and
(13:44):
that's not even a full investor revolution right, India has electricity.
Speaker 2 (13:48):
Another example is babysitters.
Speaker 3 (13:50):
There was a study recently babysitters nation wide make twenty
to twenty five an hour. That is the lowest skill
job possible. Sixteen year olds can do that job competently.
So I think a lot of the AI dooms day
it's coming from the left. It's coming from the exact
same organizations who've been peddling global warming dooms day for
(14:10):
forty years. World economic form outfits like this, I think
they want to scare people with AI because they're trying
to install universal basic income so they can convert voters
into government workers.
Speaker 2 (14:21):
But if you look at thousands of years of automation.
Speaker 3 (14:25):
You know, if you just think about it logically, like
you know, a phishing pole is automation, right, you could
catch the fish by hand. Is it a good idea
to throw away the fishing pole? No, because fishing poles
make us richer, fishing trawlers make us richer. So I
think we're definitely going to have maybe a decade or
two where you're going to see elevated unemployment, especially for
young people.
Speaker 2 (14:44):
It could be two three points elevated. They're going to
have to get creative.
Speaker 3 (14:48):
The most important policy response is it should be very
easy to start a business. It should be very low
tax to start a business. Should be very easy to
hire somebody. It should be as easy as ordering something
on Amazon to hire somebody.
Speaker 2 (15:02):
The paperwork to run your corporate compliance.
Speaker 3 (15:05):
These things need to be much much easier, so that
that ten year gap in between is shorter.
Speaker 2 (15:12):
Maybe it's a two year gap.
Speaker 1 (15:14):
So what specific jobs do you think are sort of
more at risk.
Speaker 3 (15:17):
Well, there was a started by Brookings recently that looked
at the kinds of jobs that they think are threatened,
and in a word, they're cubical jobs.
Speaker 2 (15:25):
So administrative paperwork, you know, the kinds of.
Speaker 3 (15:28):
Jobs that fill the bowels of big companies, hospitals, universities,
government workers. Obviously, those are the jobs that are on
the firing line. I think metaphorically was going to happen
with AI. If you've ever seen the movie Office Space, Yes,
that's exactly it. Okay, you have these soul crushing cubicle jobs,
those are all going to go, and they're going to
be replaced with blue collar jobs, physical labor jobs, jobs
(15:51):
where the value is that a human is doing it.
So to give an example, one hundred years ago, you
could replace bartenders with vending machines. That's what it didn't happen.
Why because people do not want to go to a
bar and log up to a vending machine. What's the point, right,
There's a ton of jobs. They have value because they
are performed by a human. Nobody wants no matter how
(16:14):
good the robot is. You do not want to watching
your kids, You don't want to babysitting your pets.
Speaker 2 (16:18):
You don't want doggy daycare done by robots.
Speaker 3 (16:20):
You know, therapists, nurses, almost the entirety of healthcare, patient
facing healthcare, people do not want that done by robots. So,
you know, you get a much richer society where you
have an explosion in trades because you know, if the
industry revolution took us from nine dollars a day to
two hundred dollars a day, AI could take us to
a lot more. Right, you'd be looking at Starbucks paying
(16:41):
two hundred thousand and night a year. You would get
a dramatic increase in jobs that today we think of
as low skill, low wage. But if the automation is coming,
if it is industrial revolution scale, those jobs pay much better.
Speaker 2 (16:56):
Now.
Speaker 3 (16:56):
I can say from experience, every blue collar job I've
had in my.
Speaker 2 (16:59):
Life and I had a bond.
Speaker 3 (17:00):
I had them in college, I had them when I
was young. I've enjoyed them much more than the cubical jobs.
So I think, frankly, when the smoke clears, future generations
will wonder why the heck people are worried about cubical
jobs going Good riddance. The new jobs will pay much better,
They'll be much more human.
Speaker 2 (17:18):
You actually get to interact with people.
Speaker 3 (17:20):
If you don't like interacting with people, then you can
hand make stuff because a much richer economy sustains that
as well.
Speaker 1 (17:27):
Yeah, it's the office space question.
Speaker 2 (17:28):
What exactly would you say you do here? That is
exactly it.
Speaker 3 (17:32):
And you know, if you take office space and you
apply AI to it, you can imagine the consultant coming
in not only asking what people to do, but knowing
that AI can do it for free.
Speaker 1 (17:43):
Then before we go, obviously the dreaded tax day has passed.
When the government steal us from us. This is also
the first UH tax day since the Big Beautiful Bill
had that impact refunds for America. You know, how does
that sort of impact the tax landscape for Americans.
Speaker 3 (18:05):
Yeah, so most of the impact of Big Beautiful was
preventing bad things from happening, right, which is that Trump's
first term tax cuts had a sunset on them in
order to get them through Congress.
Speaker 2 (18:17):
They were going to expire.
Speaker 3 (18:18):
If they had expired, that would have been catastrophic for
small business for job creation.
Speaker 2 (18:23):
So that's the main impact of them.
Speaker 3 (18:25):
He did add some elements to it though, he had
the no tax on tips on overtime so security payments,
which is effectively built in there as an extra deduction
for the elderly. Those together, they were you know, very popular.
Democrats shocked me by fighting them, but there you go.
Those collectively boosted tax refunds by about eleven percent, says
(18:47):
about thirty five hundred dollars a year per family. It's
about thirty billion above last year. Trump wanted much bigger cuts.
Of course, unfortunately Republicans have a very very thin majority,
so Rhinos effectively run the country for better or worse.
Speaker 2 (19:02):
And they're already talking.
Speaker 3 (19:03):
Johnson is talking about for next year, maybe trying or
for this year rather trying to do a reconciliation two
point zero.
Speaker 2 (19:09):
Whether they might stick in some new pieces in there.
Speaker 3 (19:12):
But again, until we have a conservative majority in the House,
which may not be for a while, you're unlikely to
see really big tax cuts.
Speaker 2 (19:20):
So it might be first time credits for home buyers.
Speaker 3 (19:23):
They might do something with Social Security, they might expand that,
maybe even a payroll tax pause of oil prices pay high.
Speaker 2 (19:30):
But I don't think that we're gonna get it.
Speaker 3 (19:31):
You know, we'll continue to get benefits from what was
in big beautiful tips over time.
Speaker 2 (19:37):
I don't think we're gonna get anything real big this year.
Speaker 1 (19:39):
Peter saint One, appreciate your time, Thanks so much for
breaking everything down. That was Peter saint One, the senior
economists at the Heritage Foundation's Row Institute. Appreciate him for
making the time to come on the show. Appreciate you
guys at home for listening every Tuesday and Thursday, but
you can listen throughout the week. Also want to think
John Cassio, my producer, for putting the show together.
Speaker 2 (19:58):
Until next time.
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Buck Sexton
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