June 27, 2025 • 46 mins
This week, how will the United States' involvement in the Iran-Israel war affect markets and hopes for cooperation in the Middle East? And, an interview with the Director of the Congressional Budget Office on the agency's role in predicting the fiscal impact of the "Big Beautiful Bill." Plus, will President Trump’s "Gold Card" attract foreign investment to the US? Later, how Zohran Mamdani’s success in the New York City mayoral primary election tells the story of the shift within the Democratic party and what it means for business in the city.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:13):
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism. July four looms as the deadline for
the One Big Beautiful Bill, and Republicans are accusing the
Congressional Budget Office of overstating the price tag. We tell
you the story of the CBO, where it came from,
and how well it's done at predicting costs and benefits. Plus,
(00:35):
President Trump wants to help relieve some of the debt
burden by selling US residency through what he calls a
gold card. It turns out that an awful lot of
other countries have similar programs with mixed results. And the
stark economic choice New York City voters faced at the
polls this week what Zoron Mamdani's Democratic primary win could
(00:58):
mean for the home of Wall Street. But we start
with a story that dominated the news for much of
the week.
Speaker 2 (01:08):
The US military carried out massive precision strikes on the
three key nuclear facilities.
Speaker 3 (01:15):
Your bull decision to target Iran's nuclear facilities with the
awesome and righteous mind of the United States will change history.
Speaker 4 (01:24):
The world must not forget that it was the United
States switch in the midst of a process to forge
a diplomatic outcome, midstrade diplomacy.
Speaker 5 (01:34):
Just in the last few seconds or so, we're getting
President Trump announcing a twelve hour seas five between Iran
and Israel.
Speaker 4 (01:39):
We basically have two countries that have been fighting so
long and so hard that they don't know what they're doing.
Speaker 6 (01:47):
Are you interested in restarting negotiations with Iran?
Speaker 7 (01:50):
And if so, have they so?
Speaker 2 (01:52):
Our people marked, our cred answers, but our people are.
Speaker 8 (01:57):
Not.
Speaker 2 (01:58):
I'm not the way I look at they fought. The
war's done, and you know, I could get a statement
that they're not going to go nuclear. We're probably going
to ask for that, but they're not going to be
doing it. But they're not going to be doing it anyway.
They've had it. They've had it.
Speaker 1 (02:14):
Whether or not Iran has had it. The question remains
how the conflict reshaped the landscape of politics and markets
in the Middle East. To help us find an answer,
we spoke with Karen Young, Senior fellow at the Middle
East Institute in Washington.
Speaker 9 (02:29):
I think we are in the midst of some major
transition in the region. We don't know in which directions
at what speed it will go, but I think mainly
This is a transition that will have to happen. Inside
of Iran, the government and the security apparatus is extremely weakened.
They've been delegitimized in the eyes of their own people
(02:49):
in terms of their ability to defend them. The President
of Iran had to ask for Israel's permission to fly
out of the country. That just gives you a little
bit of a picture of the control the IDEF had
over Iran's airspace. And we don't know right now the
extent of you know, where the highly enriched uranium that
(03:11):
Iran has stockpiled where it is.
Speaker 1 (03:14):
One of the big stories has been the Golf States,
Saudi Arabia and the Golf States and the investment into
there and their economic development. What possible ratifications could what
we've seen in Israel, Iran and with the United States
have on Saudi Arabia and the Golf States.
Speaker 9 (03:30):
So the economic transformation that's happening in Saudi Arabia really
sends Mohammed bin Salman and his father, King Salmon, came
to power in twenty fifteen. Has been this idea of
Vision twenty thirty of opening up the economy, trying to
increase foreign direct investment, encouraging women's participation in the economy,
and opening up new sectors, particularly tourism, as well as
(03:51):
you know, new energy renewables, perhaps green hydrogen, a whole
lot of sports, investment, entertainment.
Speaker 7 (03:59):
None of those.
Speaker 9 (03:59):
Things work if we see a region where there are
ballistic missiles falling from the sky. So the missiles that
Iran sent into Doha to hit Thalu Daid Base as
a retaliation against the United States, I think for the
entire Golf Cooperation Council was a moment of real terror
(04:20):
and fear, even though it was pre communicated and was
not targeting the Katries themselves. It's just not something that
goes along with having the World Cup or having major
tourist destinations that will sit in people's memories for a
long time.
Speaker 1 (04:39):
Investors like stability predictability. There has been a lot of
instability because of the relationship between Israel and Iran, fear
of Iran developing nuclear weapons. What are the prospects that actually,
over the longer term, this will bring stability to the
region rather than instability the region If in fact Iran
(04:59):
is substantial weakened.
Speaker 9 (05:01):
Iran is weakened, but Iran can still lash out. And
that's why the location and the state of their stockpile
almost nine hundred pounds of highly enriched uranium. We need
to know where it is and we need to know
it's in safe hands. More and more Iran now has
a motive to weaponize, which maybe they truly did not
(05:22):
have before it.
Speaker 1 (05:23):
And finally, we don't know, as you said, exactly how
this will play out in Iran, but it seems like
one possibility is some turmoil within Iran about leadership. There's
a lot of speculation about that. If in fact, there
is that turmoil and it's not clear who's in charge
for some protracted period of time, what does that mean
for the region.
Speaker 9 (05:43):
I think that's the worst case scenario for the region,
particularly if we get rival military factions or breakoffs from
the IRGC, competing commanders so to speak. We're definitely not
there yet. There is still very much a command and
control system still in place in Iran. We have the
Supreme leader, we have the clerical leadership, we have the
(06:04):
elected leadership, and we have the military leadership, and those
are still intact, though particularly within the IERGC commanders and
the military structure, they have been decimated of a lot
of people killed, but they're still very much in control
of their armed forces. So do we see factions breaking off?
(06:25):
Do we see some sort of exiting the country and
taking riches with them, or taking materials with them and
living to fight another day, forming up with militias in
Iraq trying to enter into Syria and destabilize Syria further.
I think those are all possibilities that we have to consider.
Speaker 1 (06:44):
Unless you're a defense contractor. War is never good for business.
But what President Trump calls his twelve day war involving Israel, Iran,
and ultimately the United States had remarkable little effect on markets,
apart from a short term spike in oil price. Is
We asked our special contributor, Larry Summers of Harvard why.
Speaker 8 (07:05):
David, It's something I've noticed over long periods of time.
Geopolitics are much less significant for markets than geopolitical people
think that they should be, whether it's events in the
Taiwan Straits or events with respect in North Korea and
what happens in South Korea. Markets have a life of
(07:30):
their own, driven by longer term assessments and less responsive
to even very dramatic short term events. So I think
this is just something we should all be used to.
It's a version of my observation about events ultimately being
(07:51):
less important than trends. I think on top of that,
you have the reality that it sure doesn't look like
oil is as important to the global economy as used
to be, that imported oil is much less important to
(08:11):
the US economy than it used to be. And there's
a sense that there's some excess capacity around, particularly in
Saudi Arabia, that might cover any sets of gaps. So
I think it's all of that. It's also the fact
(08:32):
that a larger fraction of the market is tech stocks
than once used to be the case, and they are
relatively impervious to these developments.
Speaker 1 (08:44):
One of the long term trends that may happen, we
have one data point or two at this point, but
one trend is somewhat more assertive the United States more
than we thought originally with President Trump, with his getting
involved in Iran, even the visit to NATO and his
apparent shift in his position. If in fact the United
States is relatively more assertive on the international stage as less,
(09:07):
does that have potential raleifications for economics as well as
for markets.
Speaker 8 (09:11):
I mean It depends on what the form that US
assertiveness takes. I had been concerned about a growing US isolationism,
that an outward looking United States could be a very
important stabilizing force in the world, and I continue to
believe that. So I think a sense of the US
(09:33):
as being willing to be a security guaranteur is a
potentially significant positive.
Speaker 1 (09:43):
Coming up. Everybody likes to complain about Congressional Budget Office
estimates of the costs and benefits of big legislation. We
take a look at its track record.
Speaker 6 (09:53):
You're listening to Bloomberg Wall Street Week with David Weston
from Bloomberg Radio. This is Bloomberg Wall Street Week with
David Weston from Bloomberg Radio.
Speaker 1 (10:13):
This is a story about trust. Trust that Congress has
some sense of the consequences of major economic legislation before
it votes on it. In the United States, a statute
puts that trust in the Congressional Budget Office. Bloomberg Economics
editor Michael McKee brings us the tale of the CBO
and its track record in making those predictions.
Speaker 10 (10:36):
Sometimes our numbers are welcome, and sometimes they're inconvenient.
Speaker 11 (10:43):
Philip Swaegel has held the Congressional Budget office since twenty nineteen,
after stints at the US Treasury Department under President George W.
Bush during the financial crisis and teaching international economic policy
at the University of Maryland. The fact is a lot
of his job in methods are not up to him.
They're dictated by legislation, including the Congressional Budget Act of
(11:05):
nineteen seventy four.
Speaker 10 (11:07):
The cost testaments we do of legislation are based on
the legislative text and they're measured against current law. So,
for example, the reconciliation legislation that we're evaluating now, we
evaluate that against current law, in which there's certain provisions
of the twenty seventeen Tax Act that expire, and that's
(11:28):
by statute, and we understand that some policymakers prefer to
look at it on a current policy basis. Their view
is that they meant for the twenty seventeen Tax Act
to continue to be permanent, and they like to evaluate
the cost against that baseline. And that's a legitimate way
to look at it, and we can provide that information
(11:49):
if they want. Is just not the standard way that
we do things.
Speaker 12 (11:53):
The history of the CBO is it was born out
of this growth of peacetime deficits that happened in the
nineteen seventies. And the reason why that is relevant is
what CBO is sort of statutorily required to do. What
it was created to do is to provide these cost
estimates to policy makers about the likely impacts of different
(12:16):
policy proposals on what the budgetary outlook is going to
look like for the country. And so the precise mechanics
of how they do that do they give you one
year cost estimate or what is now convention a sort
of ten year budget window horizon that's changed over time.
But the idea of setting up this organization and kind
(12:37):
of empowering them to do the important work of being
able to keep score about what deficits are going to
look like because of choices that federal policy makers are
making is something that is very much in keeping with
what their mission is.
Speaker 11 (12:52):
That's Natasha Sarin, president of the Yale Budget Lab. Once
the CBO gets the best grip it can on the
country's costs and tax policies, it has to do the
math on future estimates, and not just once. There are
two other important concepts here, static and dynamic.
Speaker 10 (13:09):
No, that's right, So the static estimate or we sometimes
call it. The conventional estimate assumes that the economy is
not affected by legislation. So, for example, there's a big
tax component of the reconciliation legislation being considered now, and
big enough that one would expect the tax cut to
affect the economy. We think it would lead to a
(13:30):
larger economy with more people working. By convention, that's not
in our static estimate, and that's what we've already put out.
But now we're working on a dynamic estimate in which
we look at the legislation, we look at the effect
on the economy, and then we look at the feedback
from the change in the economy back to the budget.
(13:50):
And so that provides more information, it just takes longer
for us to do.
Speaker 11 (13:55):
It's where CBO scoring meets legislation that things get especially
tricky first, because predicting America's economic future a decade in
advance is just plain hard.
Speaker 12 (14:05):
In theory, I'm just going to raise the tax rate
by one percentage point, and I'm going to have the
impact at least in one year. I'll then scale it
by ten and that'll tell me what the budget window
looks like. Even something that seems that easy is actually
more complicated. People are going to make different choices about
the extent to which they decide to participate in the
labor force and accumulate labor income as a result of
(14:27):
that tax shift. They might also make different choices, particularly
in industries like in finance, where you can be in
an industry where you might receive carried interest instead of
receiving labor market income has a different tax treatment. And
so these scorekeepers have like a really difficult task before
them as they try to do this type of analysis.
(14:50):
And that is a super difficult task to do when
they're trying to work as quickly as they are, just
given the speed at which things like the reconciliation process
invariables are moving.
Speaker 11 (15:01):
Forecasting economic outcomes is hard enough in the most stable times.
But then of course there's responding to politics.
Speaker 10 (15:08):
Any bill that's marked up by a committee, we produce
a cost estimate that's by statute. Then there's reports that
are requested of US. For example, earlier this month in June,
we provided policymakers with information on the revenues raised by
the tariffs that President Trump has put in place since
his inauguration of the second term that was requested by
(15:31):
a group of senators.
Speaker 11 (15:33):
Well, sometimes it seems the requests you get come with
a political bias.
Speaker 13 (15:36):
What do you do?
Speaker 4 (15:37):
Then?
Speaker 10 (15:38):
That is just part of life in Washington, and we
are here to support members. We have no opinion on
what the right legislation is. We're just trying to give
them the analysis. We're focused on the legislation, so anything
within the four corners of the legislative text that we evaluate.
But of course the president is doing many other things.
(15:58):
He's changed tariffs and that raises a considerable amount of revenue.
He's changed immigration in the United States, and he's changing
regulations and other aspects of the economy. We will eventually
provide information on the economic and budgetary impacts of those.
It's not part of our evaluation of the reconciliation legislation.
(16:20):
I just saw the New York Times, the Washington Post
all have articles making use of that distributional analysis, which,
of course the members of Congress who asked us the
question understood that it would get that kind of attention.
Speaker 12 (16:33):
An important thing to understand and something that I've observed
as I've watched not just this reconciliation debate play out,
but this kind of tenor always takes place when CBO
is producing estimates of legislation. There are totally understandable critiques
that come and totally understandable frustrations with where CBO lands.
(16:55):
And that's not a partisan thing. It happens. Democrats have frustrations,
Republicans have frustrations. The thing that people sometimes miss, though,
is that a lot of the choices that CBO is
making that are being critiqued aren't actually choices that they
have any control over. So, in the context of this legislation,
something like having the baseline that they're measuring against be
(17:18):
what is current law, which is that the Trump tax
cuts are slated to expire at the end of the year,
and so their extension is judged against that expiration. That's
not a choice CBO is making. That's something that they
are sort of mandated to do.
Speaker 11 (17:34):
Okay, As Yogi Berra said, making predictions is hard, especially
about the future. The administration has strongly criticized CBO for
underestimating growth in twenty twenty two when it analyzed the
twenty seventeen Tax Cut and Jobs Act.
Speaker 10 (17:49):
When I look at our performance, I try to understand
the context of the performance and that one SoundBite. It's
sometimes the one point five trillion dollar miss I feel
like that's deeply misleading because it's almost as if someone
who says that is implying that somehow the twenty seventeen
Tax Act is what caused the high inflation or what
(18:11):
caused the immigration surge. And obviously you know that's not plausible,
and so I just don't think it's fair to think
that CBO in twenty eighteen could have predicted the pandemic,
the inflation, the immigration QI and all that.
Speaker 11 (18:27):
Do you get mad when members of Congress use the
CBO as the whipping boy?
Speaker 10 (18:33):
No, I don't don't. I certainly don't get mad. I
understand it. I understand the political process. CBO is next
to the political process. We're not part of it, but
we certainly understand it.
Speaker 11 (18:43):
Well, you have something like two hundred and seventy analysts
here working for you. How do they feel about the
criticism they get?
Speaker 10 (18:51):
I mean, you know, no one likes to be criticized.
No one likes the White House Press Secretary attacking you
or the president on truth social but that is part
of the political process.
Speaker 11 (19:04):
Has this been sort of an unusually chaotic period. I
can just imagine the guys who are working on tariffs
doing all their maths and coming up with a number,
and then the President changes is by.
Speaker 10 (19:14):
The tariffs has been an area of policy that is
just changing, and we do our best to keep up
with it. Members of Congress want to know, and so
we routinely provide members of Congress with information on the
budget impacts of the tariffs and the numbers that we've
given most recently earlier in June, we waited until the
(19:36):
tariffs has stabilized. They're very high tariffs on China, and
those came down and that's the moment at which we
did the analysis. Now since then there were actually subsequent changes,
but they were much smaller. It makes it hard, but
we do our best.
Speaker 11 (19:50):
Are you ever wrong?
Speaker 10 (19:51):
I start by saying, we're human and you just have
to have a humility that we will do our best. Inevitably,
we will get things wrong. Back in two thousand and nine,
in twenty ten, when President Obama was putting forward the
Affordable Care Act eventually called Obamacare, CBO expected that the
(20:14):
mandate provision in that legislation will be very impactful. That
the mandate on individuals and on businesses would lead to
a large increase in people gaining health insurance, and it
turned out that just wasn't the case. CBO looked at
the experience of Massachusetts and the Commonwealth had a mandate,
and in Massachusetts it was very impactful, but it turned
(20:37):
out it just wasn't the case for the rest of
the country. We have since gone back and evaluated what
happened and published a report on the mandate, and now
we've taken on board the different analysis in our healthcare projections.
When we get things wrong, we need to analyze it,
understand it, and adjust. I've been director for just over
(20:59):
six years, since June of twenty nineteen, but I own
every mistake CBO has ever made.
Speaker 11 (21:07):
Errors Aside, the CBO's estimates have value that stretches far
beyond the beltwigh Wall Street pays close attention to what
Swegel's team says about growth and deficit expectations in an
effort to better understand what it all means for markets
and especially bonds. Priya Misra is a portfolio manager for
JP Morgan.
Speaker 13 (21:25):
We look at their focus so they tend to judge
and come up with the cost of any legislation but
they give you the assumptions extremely transparent. We will look
at their growth assumptions, the inflation assumption, their interstrate assumptions.
So we absolutely look at the CBO number as a
I would say, a baseline for what the deficit will
look like, what legislation is going to do to the deficit,
(21:47):
and then we think about things that the CBO may
not be incorporating by law that we would want to
incorporate as we think about the impact.
Speaker 2 (21:54):
Well, it's so beautiful to say.
Speaker 11 (21:56):
With President Trump's one Big Beautiful Bill moving through Congress,
CBO projections are under scrutiny.
Speaker 7 (22:02):
I think the scoring you and I have talked about
it quite a bit. It's Washington style scoring and it's
not real world scoring.
Speaker 11 (22:11):
The new CBO assumptions on the Big Beautiful Bill, what do.
Speaker 1 (22:14):
You think of that?
Speaker 13 (22:15):
I think it looks pretty fair and it's in line
with a lot of the other estimates. Our estimate was
closer to three trillion. You're getting two point eight from
the dynamic CBO score. We do give more weight to
the dynamic score from the CBO where they try and
incorporate what would the legislation do to growth and inflation?
And interest rates, and they try and incorporate that sort
of dynamic workings of the economy. But whether it's Joint
(22:38):
Committee for Taxation or the Center for Responsible Budget, you're
hearing these estimates of between two point eight from the
CBO three three and a half as the estimate over
the next ten years.
Speaker 1 (22:51):
Next, putting a price tag on citizenship or at least residency,
we take a look at President Trump's proposal to get
the deficit down by selling gold cards and how similar
programs have worked around the world.
Speaker 6 (23:04):
You're listening to Bloomberg Wall Street Week with David Weston
from Bloomberg Radio. You're listening to Bloomberg Wall Street Week
with David Weston from Bloomberg Radio.
Speaker 1 (23:21):
This is a story about the price of citizenship, or
at least the price tag we want to put on it.
For years, countries around the world have offered citizenship or
residency to those willing to put up the cash. President
Trump has a new proposal for the United States, and
as so often with the President, it involves his favorite color.
Speaker 4 (23:44):
Five million for five million. Analysis could be used. That
was the first of the cards, and you know where
that card is old. It's the gold cut the Trump
Card gold cut.
Speaker 1 (23:59):
There me President Trump's proposal to create a US gold
card isn't really new. Since eighteen eighty two, the United
States has charged immigrants and admission fee for coming to
the country, starting at fifty cents a person, raising it
to four dollars in nineteen oh seven. Today, the US
already has a special visa program for those able to
(24:21):
make substantial investments. Substantial as in eight hundred thousand dollars.
Speaker 5 (24:26):
The US has had a golden visa program since the
early nineteen nineties. It comes in the form of EB five,
and it's been traditionally used to build big real estate
projects in the US. Now so even places like Hudson
Yards in New York City has been funded through this
sort of program.
Speaker 1 (24:42):
Kristin Zurik is an assistant professor at the London School
of Economics, where she has studied what is known as
investment immigration. The revived push in the US parallels other
countries experimenting with golden visas and passports.
Speaker 5 (24:56):
They're actually much more common than most people think, so
for thinking about the golden passport programs so citizenship, there's
over twenty countries with legal provisions that enable this and
there's about a dozen that regularly approve people through their programs.
For thinking about the residents. The golden visa programs, they're all.
Speaker 10 (25:13):
Over the place.
Speaker 5 (25:13):
You can find them in just about sixty countries five territories,
even in places like the US in half of the
EU member states.
Speaker 1 (25:22):
The programs vary according to how much money is required,
whether it's an investment in the country and what kind
of investment or just a fee paid to the government,
and by the way, whether the immigrant only gets to
reside in the country or actually becomes a citizen.
Speaker 5 (25:37):
Golden passports are sometimes also known as citizenship by investment,
So these are programs where you donate to a government
or invest in a country, and in pretty short order,
and sometimes without even ever going to the country, you
become a citizen. It's a little bit different to a
golden visa program, where you get not citizenship in the country,
(25:58):
but residents in the country.
Speaker 1 (26:01):
Whatever form these programs take, the goal is always the same,
growing the economy of the host country, and the smaller
the country, the more of a difference they can make.
Investment immigration programs account for up to half of the
GDP of the island nations of Dominica, Saint Kitts, and
Saint Lucia.
Speaker 5 (26:19):
So usually the idea is to bring investments into the country. Now,
if we're talking about very very small states, and usually
they're the ones who are doing the citizenship programs, the
amount of money that a government can bring in through
these programs can be absolutely enormous. So some countries see
well over thirty percent of GDP coming in through these programs. Now,
(26:41):
if you're thinking about the Golden Visa programs where you're
just getting residents, we're often talking about much bigger economies.
In terms of what countries get out of it will
be more targeted if we're looking at those investments.
Speaker 1 (26:53):
But that's where the math doesn't always add up. One
immigrants investing can be one local citizen's outing out, as
in real estate. Take Spain for example.
Speaker 5 (27:04):
We've seen Spain shut its program down, Ireland shred its
program down, the UK shut its program down. If you're
only approving a couple hundred you know, people per year,
a huntry one hundred applications per year, is it really
worth it to keep on the books given the potential
risks involved.
Speaker 1 (27:20):
Spain's scramble for investment began after the European debt crisis
of two thousand and nine. Since the start of its
program in twenty thirteen, Spain granted more than fifteen thousand
visas tied to real estate investment. From twenty sixteen to
twenty twenty three. The program generated ten billion dollars in investments,
but that also helped drive up property values. Spain shut
(27:43):
down its program as of April, but even as countries
like Spain have cut back, others like New Zealand are
ramping up.
Speaker 3 (27:50):
We've had about two hundred people apply, which is about
one hundred and fifty more than applied in the previous
two years, so it's becoming more and more popular.
Speaker 1 (27:59):
Stuart Nash is a former Minister of Economic Development in
New Zealand and is now a principle in Nash Kelly,
which works to attract high net worth individuals to the country.
Speaker 3 (28:09):
What are the requirements, Yeah, so there are two categories.
We've got the growth category and you've got to invest
five million kiwi, which is about three million US. And
then we've got one called the balance category, which you've
got to invest ten million kiwi, which are going is
about six million US. You've got to do that over
six months. For the growth category, it's got to be
(28:30):
in managed funds or companies. The balance category it's a
little wider. You can do bonds, you can do equities.
You can also do managed funds and businesses as well. So,
you know, we really get at Nash Kelly that if
you're sitting in America, you're looking at New Zealand, it
looks like this oasis that you want to go to.
You've read about it. Kiwis are really friendly. You know
about the golf courses, you know about the environment, but
(28:50):
you don't know much about the investment ecsystem. So it's
a little bit of a risk.
Speaker 1 (28:54):
When you put together your program in New Zealand, did
you go to school as it were on some of
the other programs and say we don't want to do that,
We're going to structure it this way instead.
Speaker 3 (29:03):
Yeah, very much so. So you're in Portugal, I think
you only have to invest two hundred thousand dollars. It's
not a lot of money. In New Zealand, we decided that,
you know, we want the people who can drive success,
who have been successful. The European Court of Justice is
just rule. The multi Golden visa illegal because it's bringing
in they think or has the potential to bring in
a whole lot of dirty money. We didn't want that
(29:25):
in New Zealand. Hence the reason why the high level
of integrity to prove that the money you're investing in
New Zealand has come from legitimate means. We didn't want
this to be a back door for criminal money coming.
Speaker 1 (29:34):
In the cost of granting residency to the wrong people.
As Nash puts, it is just one of the things
countries have to take into account in determining whether investment
immigration is worth it.
Speaker 5 (29:45):
There can be a lot of concerns about foreignurse coming
in xenophobic sentiments. You know, you can find them across
the world in various measures as well, So governments have
to balance what they think are appropriate trade offs in
terms of how many foreigners do we want to allow
in the country, because sometimes you can have people who
(30:05):
have a lot of money, but maybe they gained it
through nefarious means, or maybe you know, there could be
shady things in the background. So making sure that these
are the people you want to let in is also
a very important decision to make.
Speaker 1 (30:19):
Screening out undesirable candidates for immigration may help make sure
the right people are admitted and that their money is
going into the right projects, but it also can get
in the way, as it does for the current US program.
According to Alex Norosta, vice president for Economic and Social
Policy Studies at Cato Institute.
Speaker 14 (30:37):
So the EB five is a portion of the employment
based Green Card in the United States. There are ten
thousand of these visa set aside for EB five every year.
What we've seen in recent years is basically about five
thousand of those are taken up by actual investors. It
costs at least eight hundred thousand dollars or around eight
hundred thousand dollars to make an investment in the US,
(30:58):
it has to create a certain number of jobs. The
EB five system has not worked well, and the primary
reason is exactly what you said, which is it's an
incredibly complicated visa. It's very burdensome to work through. So
it's really suffered under this incredible burden of red tape
that just keeps piling on decade after decade in the
(31:19):
United States.
Speaker 1 (31:20):
President Trump's gold card idea would cut through much of
this by simply putting a price tag on admission into
the country.
Speaker 14 (31:27):
We don't know all the details at President Trump's gold
card proposal. It hasn't been passed into law by Congress,
and he doesn't have the legal authority to issue green
cards based on this. But as far as we know
the details, it would be selling lawful permanent residency also
known as a green card, and exchange for a five
million dollar fee pay to the US government. This is
(31:48):
a fee pay. This is not an investment. This is
not an investment that these foreigners would get to own
in the United States. But it is a straight up
fee pay to the United States government of five million dollars.
Speaker 1 (32:00):
Truce Congress were to adopt this approach and pass legislation
so it was legal. Could it make a material difference
to the debt or the deficit of the United States.
Speaker 14 (32:09):
It's very unlikely that selling gold cards like this would
make a material large difference to the US deficit or
US spending.
Speaker 7 (32:17):
For one, the price is way too high.
Speaker 1 (32:19):
But Neurasta does think that the President may be onto
something creating a market for US admission and letting Adam
Smith do the rest, something suggested some time ago by
Nobel Prize winning economist Gary Becker.
Speaker 14 (32:32):
Our fiscal problems go far beyond what can be resolved
by selling a gold card. However, the price were a
lot lower. If the price we was, say like one
hundred thousand dollars or two hundred thousand dollars, I think
you could see a large increase in a number of
wealthier immigrants coming to the United States to settle. That
would produce extra economic activity here that the government attacks,
(32:55):
and there would be a huge increase in visa fees
paid to the US government. So I think ironically the
only way that we could actually make a difference in
the deficit through such a scheme would be by lowering
the price dramatically.
Speaker 1 (33:08):
If you had total control and could design any system
that you wanted, what would it look like.
Speaker 14 (33:14):
I probably go back to the nineteenth century and make
it just incredibly easy for people to come to the
United States lawfully, so long as they aren't a criminal
or a national security threat or a sick. But if
I have to charge a price, if I have to
have a restriction on the number of immigrants coming to
the US, I would charge a price. I would sell visas.
This is sort of economics.
Speaker 7 (33:35):
One oh one.
Speaker 14 (33:36):
If you have scarcity of a gooder service. That gooder
service can be efficiently allocated only through the pricing mechanism,
only by charging a price, and only by allocating those
visas to those who are willing to.
Speaker 7 (33:49):
Pay the price.
Speaker 14 (33:50):
So charging a price for a visa is a very
good way to allocate them to people who really want it.
Speaker 1 (33:56):
How do we make sure we get the right people.
Speaker 14 (33:57):
In So what a pricing system does is an internalizes
the cost and benefits of these decisions to the people
who actually make them, and as a result, we're going
to get a much better mix of people selected by
the market economy who can do much better here in
the United States than those who could be selected by Congress.
Speaker 1 (34:17):
Neurosta says that a market based system could even help
address the country's struggles with illegal immigration by providing a
legal path.
Speaker 14 (34:24):
A market based system would undermine illegal immigration into the
United States because they would give an avenue for even
low skilled immigrants like illegal immigrants, to come here lawfully. Currently,
what we see is that illegal immigrants pay upwards of
ten thousand dollars in smuggling fees to come to the
United States, and they don't even have a guaranteed way
to stay. So it's a highly risky investment. If instead
(34:48):
those individuals could borrow money, or could get loans from
their family members, or could otherwise save up wages in
their own country, then they can buy one of these
green cards come to the United States. They don't have
to come illegally. You actually have a goalpost where if
they make a certain amount of money in their home
country they could afford to buy one of these visas
and come here. It would really undermine the black market,
(35:09):
It would undermine human smuggling, It would destroy those markets,
and it would allow a way for even low and
mid skilled workers to be able to come here. Because ultimately,
it's just a price, It's just amount of money. You
and I know we're not super wealthy individuals in the US,
but we can borrow money for economic activities. I think
that banking systems throughout the world, the financial institutions would
(35:29):
be falling over themselves head over heels to give loans
to these individuals to buy green cards that come to
the United States to be able to work. Because the
returns on them are so high, these people would be
willing and able to repay them. There are enormous market
and profit opportunities for them. This is something that would
be a boon to the US financial system, to the
(35:50):
workers involved, and to the US economy at large.
Speaker 1 (35:54):
Coming up the battle for the economic soul of New
York City, we take a look at the dramatic prescriptions
of Zoran Mamdani, the apparent winner of Tuesday's Democratic primary
that's next on Wall Street Week. This is a story
(36:19):
about socialism, or at least democratic socialism, striking close to
Wall Street. New Yorkers went to the polls this week
to choose the Democratic nominee for mayor, which traditionally has
determined who will win in November, and New York State
Assemblyman Zoran Mamdani, a self styled democratic socialist, came out
the winner over former Governor Andrew Cuomo. Catherine Wilde has
(36:42):
served as President and CEO of Partnership for New York
since twenty eleven. She takes us through what mister Mumdani's
decidedly progressive economic policies could mean.
Speaker 15 (36:54):
Zorn Mandani is a very charismatic, thirty three year old
young man who has been an assemblyman for less than
four years and is somebody who from the business community standpoint,
came out of nowhere. He latched onto the issue that
is the biggest one in our city and in America,
(37:14):
which is financial insecurity. Ninety percent of the people in
New York are not sure they can continue to afford
to live here. We are the most expensive city in America,
the third most expensive city in the world. So there's
a disconnect between the winner of New York's Democratic primary
for mayor and much of the business and real estate community.
Speaker 1 (37:37):
Let's talk about some of the policies, as you mentioned,
tax the rich, including both income tax and i think
property tax.
Speaker 15 (37:44):
As well, and corporate taxes and.
Speaker 1 (37:46):
Corporate taxes as well, a lot of free things given
for the less fortunate among us. What the likelihood that
he actually would be able to implement those as opposed
to just talk about them.
Speaker 15 (37:56):
Mamdanni's position on all these issues is more government spending,
which honestly has been the position of generally of Democratic
candidates for a while. Right now, we're facing a situation
release in New York where our economy is stronger than ever,
(38:17):
where a trillion dollar economy, four point eight million jobs.
We're in good shape from an economic standpoint. Our tax
revenues are very strong, but there is coming down the
pike some reckoning. The federal government is cutting a number
of the programs we depend on. Local tax base, even
as strong as New York cannot support large federal cuts.
Speaker 1 (38:42):
Well, we're here right now. This is good for Greenwich,
this is good for Florida, this is good for Texas.
What is the real risk that some of the mobile
rich will use their mobility.
Speaker 15 (38:52):
We certainly are in a much more competitive situation in
New York historically than we were in the past because
again of our high cost environment, not just the cost
of living, but the cost of doing business here. There's
a twenty percent premium at least on salaries for employees
to maintain a lifestyle in New York as opposed to
(39:13):
what they could achieve in Tennessee, or Florida or wherever,
even New Jersey. So we are in a competitive situation.
We are at risk of losing business and jobs we have.
Our economy, fortunately has been very innovative and has grown
(39:37):
while we have outsourced jobs to other places. Jobs, administrative
jobs in the financial industry, back office jobs have been
leaving New York for forty years, but we've replaced them
with high paying technical and other jobs. The question now
is where's the breaking point. Certainly the high tax rate
(40:02):
is a big contributor, and I have to mention in
twenty eighteen, we lost something that was a tremendous asset
for New York, which was federal deductibility of state and
local taxes known as salt deductibility. When we lost that, everybody,
all the taxpayers that really support the city, their taxes
(40:24):
went up substantially in twenty eighteen.
Speaker 1 (40:27):
Do you think what's playing out in New York City
actually gives some indication of where the Democratic Party may
be heading.
Speaker 15 (40:32):
It's very fragmented, and so I'm not sure about the
role of parties in the future of our democracy. This
election was organized and driven in large part by a
relatively small group of the Democratic Socialists. It's a group
(40:53):
that I kind of trace back their power to occupy
Wall Street of almost twenty years ago. Oh, and so
I think we may be going through a similar kind
of transformation where we're seeing communities step up and say
our traditional organizations, political or otherwise are not doing for
(41:14):
us what we need done. We are feeling increasingly left
out any of the benefits we expect and the opportunities
we expect as Americans. We're priced out of the housing market.
I mean in New York our median rents are about
four thousand dollars a month. Who can afford that? The employers,
If you ask them what's the hardest thing about recruiting
(41:35):
new talent to the city, they'll say it's the rents.
They can't find an apartment. So these are the issues
that have been zeroed in on, particularly by all the candidates. Honestly,
these are the issues in our campaign, all the candidates.
But the most compelling solutions came from the socials. And
(42:01):
Mamdannie claims and I my door was knocked on in
Bay Ridge, Brooklyn, which is a purple neighborhood at best.
Mamdanni claims to have fifty thousand volunteers. The Democratic Socialists
organized this, so we're not talking about a situation where
he was delivered this by the Democratic Party.
Speaker 7 (42:21):
Quite the opposite.
Speaker 1 (42:23):
Whatever, mister Mumdani's primary victory in New York City this
week ends up, meaning this is not the first time
that a large city has turned to progressive policies. Harvard
economist Ed Glazer has made a study of American cities
over the years, and he's found structural factors that bring
such policies to the fore.
Speaker 16 (42:43):
I think about the sort of you know, the great
challenge of cities is that there's a bent in natural
progressive element cities, mostly because cities tend to attract a
significant number of relatively poor people. And that's not because
cities are bad for poor people. It's actually because cities
are good for poor people because you have better social services,
because you have the ability to get around without a
(43:04):
car for every adult, and so you have this built
in kind of progressive thing. And yet if cities veer
too much towards this sort of progressive urge, they risk
inducing the firms to leave. They risk inducing the businesses
to go somewhere else, to relocate, to suburbanize, to leave
for a lower cost country, and of course they induce
(43:27):
the wealthy to want to leave as well, because the
fundamental essence of a city is geographic mobility, is the
fact that this is a smaller geographic unit. It's not
like the United States, where people are relatively fixed.
Speaker 1 (43:40):
Has socialism ever worked where we have a candidate mister
rham Donnie who says he is a democratic socialist. Has
socialism ever worked in any city you know.
Speaker 16 (43:49):
I kind of think Soewer socialism was pretty successful. So
the key mayor is Daniel Webster Hone, who is mayor
twenty four years mayor of Milwaukee, just absolutely amazing. He's
one of the prime examples of what's called Sewer socialism,
which was incredibly pragmatic socialism. Right, so this is very
far away from the sort of you know, European coffee
(44:13):
house kind of socialism, but it's a socialism that's determined
to figure out how to provide ordinary services for poor people.
He was mayor for twenty four years, and he was
really one of the great mayors. Now he was checked
in perhaps his most destructive impulses by the city council,
and so there were things that he wanted to do
in terms of turning an electric company into a public
(44:35):
company and so forth.
Speaker 7 (44:36):
It was stopped.
Speaker 16 (44:37):
But by and large he was focused on the basics
of city government. I think this makes a larger point, right,
It's not that a mayor needs to put the interests
of the rich.
Speaker 7 (44:47):
First, but the mayor has to balance two things.
Speaker 16 (44:50):
But it requires a level of progressivism that's just vastly
more pragmatic and vastly more focused on the nuts and
bolts of government than I think most of what we
see around us today, what.
Speaker 1 (45:01):
You identify is exactly what's being discussed in New York
City right now. We have mister Rondani who is putting
forward proposals for the less fortunate, things like free transportation
and freezing rent and taxing the wealthy much much more.
And on the other side, you say, boy, the wealthy
are mobile, and they will become mobile if you do that.
Does history prove that out? Will you lose the wealthy?
Speaker 7 (45:25):
The wealthy certainly are mobile.
Speaker 16 (45:26):
There is a healthy economics debate about how elastic the
mobile are and how quickly they move out. But certainly
people respond to incentives, and it seems to me that
this is a maximally risky moment for New York City
to be trying an experiment of hyper taxing the hyper rich.
Speaker 1 (45:44):
From your experience having studied cities in the United States
over the years, how much difference can a mayor make
in the economic fortunes of a city.
Speaker 16 (45:54):
Well, it's very hard to turn around a city that
is suffering from enormous headwinds. And there are sometimes when
a city is thriving so well that even the worst
mayor can do little harm. But if a city is
on the edge, it really matters. And I think New
York City right now is not a city in which
(46:15):
success is foreordained, and it's a city in which failure
can be avoided.
Speaker 7 (46:20):
So I think in this case it really does matter.
Speaker 1 (46:24):
That does it?
Speaker 16 (46:25):
For us?
Speaker 1 (46:25):
Here at Wall Street Week, I'm David Weston. See you
next week for more stories of capitalism.
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism. July four looms as the deadline for
the One Big Beautiful Bill, and Republicans are accusing the
Congressional Budget Office of overstating the price tag. We tell
you the story of the CBO, where it came from,
and how well it's done at predicting costs and benefits. Plus,
(00:35):
President Trump wants to help relieve some of the debt
burden by selling US residency through what he calls a
gold card. It turns out that an awful lot of
other countries have similar programs with mixed results. And the
stark economic choice New York City voters faced at the
polls this week what Zoron Mamdani's Democratic primary win could
(00:58):
mean for the home of Wall Street. But we start
with a story that dominated the news for much of
the week.
Speaker 2 (01:08):
The US military carried out massive precision strikes on the
three key nuclear facilities.
Speaker 3 (01:15):
Your bull decision to target Iran's nuclear facilities with the
awesome and righteous mind of the United States will change history.
Speaker 4 (01:24):
The world must not forget that it was the United
States switch in the midst of a process to forge
a diplomatic outcome, midstrade diplomacy.
Speaker 5 (01:34):
Just in the last few seconds or so, we're getting
President Trump announcing a twelve hour seas five between Iran
and Israel.
Speaker 4 (01:39):
We basically have two countries that have been fighting so
long and so hard that they don't know what they're doing.
Speaker 6 (01:47):
Are you interested in restarting negotiations with Iran?
Speaker 7 (01:50):
And if so, have they so?
Speaker 2 (01:52):
Our people marked, our cred answers, but our people are.
Speaker 8 (01:57):
Not.
Speaker 2 (01:58):
I'm not the way I look at they fought. The
war's done, and you know, I could get a statement
that they're not going to go nuclear. We're probably going
to ask for that, but they're not going to be
doing it. But they're not going to be doing it anyway.
They've had it. They've had it.
Speaker 1 (02:14):
Whether or not Iran has had it. The question remains
how the conflict reshaped the landscape of politics and markets
in the Middle East. To help us find an answer,
we spoke with Karen Young, Senior fellow at the Middle
East Institute in Washington.
Speaker 9 (02:29):
I think we are in the midst of some major
transition in the region. We don't know in which directions
at what speed it will go, but I think mainly
This is a transition that will have to happen. Inside
of Iran, the government and the security apparatus is extremely weakened.
They've been delegitimized in the eyes of their own people
(02:49):
in terms of their ability to defend them. The President
of Iran had to ask for Israel's permission to fly
out of the country. That just gives you a little
bit of a picture of the control the IDEF had
over Iran's airspace. And we don't know right now the
extent of you know, where the highly enriched uranium that
(03:11):
Iran has stockpiled where it is.
Speaker 1 (03:14):
One of the big stories has been the Golf States,
Saudi Arabia and the Golf States and the investment into
there and their economic development. What possible ratifications could what
we've seen in Israel, Iran and with the United States
have on Saudi Arabia and the Golf States.
Speaker 9 (03:30):
So the economic transformation that's happening in Saudi Arabia really
sends Mohammed bin Salman and his father, King Salmon, came
to power in twenty fifteen. Has been this idea of
Vision twenty thirty of opening up the economy, trying to
increase foreign direct investment, encouraging women's participation in the economy,
and opening up new sectors, particularly tourism, as well as
(03:51):
you know, new energy renewables, perhaps green hydrogen, a whole
lot of sports, investment, entertainment.
Speaker 7 (03:59):
None of those.
Speaker 9 (03:59):
Things work if we see a region where there are
ballistic missiles falling from the sky. So the missiles that
Iran sent into Doha to hit Thalu Daid Base as
a retaliation against the United States, I think for the
entire Golf Cooperation Council was a moment of real terror
(04:20):
and fear, even though it was pre communicated and was
not targeting the Katries themselves. It's just not something that
goes along with having the World Cup or having major
tourist destinations that will sit in people's memories for a
long time.
Speaker 1 (04:39):
Investors like stability predictability. There has been a lot of
instability because of the relationship between Israel and Iran, fear
of Iran developing nuclear weapons. What are the prospects that actually,
over the longer term, this will bring stability to the
region rather than instability the region If in fact Iran
(04:59):
is substantial weakened.
Speaker 9 (05:01):
Iran is weakened, but Iran can still lash out. And
that's why the location and the state of their stockpile
almost nine hundred pounds of highly enriched uranium. We need
to know where it is and we need to know
it's in safe hands. More and more Iran now has
a motive to weaponize, which maybe they truly did not
(05:22):
have before it.
Speaker 1 (05:23):
And finally, we don't know, as you said, exactly how
this will play out in Iran, but it seems like
one possibility is some turmoil within Iran about leadership. There's
a lot of speculation about that. If in fact, there
is that turmoil and it's not clear who's in charge
for some protracted period of time, what does that mean
for the region.
Speaker 9 (05:43):
I think that's the worst case scenario for the region,
particularly if we get rival military factions or breakoffs from
the IRGC, competing commanders so to speak. We're definitely not
there yet. There is still very much a command and
control system still in place in Iran. We have the
Supreme leader, we have the clerical leadership, we have the
(06:04):
elected leadership, and we have the military leadership, and those
are still intact, though particularly within the IERGC commanders and
the military structure, they have been decimated of a lot
of people killed, but they're still very much in control
of their armed forces. So do we see factions breaking off?
(06:25):
Do we see some sort of exiting the country and
taking riches with them, or taking materials with them and
living to fight another day, forming up with militias in
Iraq trying to enter into Syria and destabilize Syria further.
I think those are all possibilities that we have to consider.
Speaker 1 (06:44):
Unless you're a defense contractor. War is never good for business.
But what President Trump calls his twelve day war involving Israel, Iran,
and ultimately the United States had remarkable little effect on markets,
apart from a short term spike in oil price. Is
We asked our special contributor, Larry Summers of Harvard why.
Speaker 8 (07:05):
David, It's something I've noticed over long periods of time.
Geopolitics are much less significant for markets than geopolitical people
think that they should be, whether it's events in the
Taiwan Straits or events with respect in North Korea and
what happens in South Korea. Markets have a life of
(07:30):
their own, driven by longer term assessments and less responsive
to even very dramatic short term events. So I think
this is just something we should all be used to.
It's a version of my observation about events ultimately being
(07:51):
less important than trends. I think on top of that,
you have the reality that it sure doesn't look like
oil is as important to the global economy as used
to be, that imported oil is much less important to
(08:11):
the US economy than it used to be. And there's
a sense that there's some excess capacity around, particularly in
Saudi Arabia, that might cover any sets of gaps. So
I think it's all of that. It's also the fact
(08:32):
that a larger fraction of the market is tech stocks
than once used to be the case, and they are
relatively impervious to these developments.
Speaker 1 (08:44):
One of the long term trends that may happen, we
have one data point or two at this point, but
one trend is somewhat more assertive the United States more
than we thought originally with President Trump, with his getting
involved in Iran, even the visit to NATO and his
apparent shift in his position. If in fact the United
States is relatively more assertive on the international stage as less,
(09:07):
does that have potential raleifications for economics as well as
for markets.
Speaker 8 (09:11):
I mean It depends on what the form that US
assertiveness takes. I had been concerned about a growing US isolationism,
that an outward looking United States could be a very
important stabilizing force in the world, and I continue to
believe that. So I think a sense of the US
(09:33):
as being willing to be a security guaranteur is a
potentially significant positive.
Speaker 1 (09:43):
Coming up. Everybody likes to complain about Congressional Budget Office
estimates of the costs and benefits of big legislation. We
take a look at its track record.
Speaker 6 (09:53):
You're listening to Bloomberg Wall Street Week with David Weston
from Bloomberg Radio. This is Bloomberg Wall Street Week with
David Weston from Bloomberg Radio.
Speaker 1 (10:13):
This is a story about trust. Trust that Congress has
some sense of the consequences of major economic legislation before
it votes on it. In the United States, a statute
puts that trust in the Congressional Budget Office. Bloomberg Economics
editor Michael McKee brings us the tale of the CBO
and its track record in making those predictions.
Speaker 10 (10:36):
Sometimes our numbers are welcome, and sometimes they're inconvenient.
Speaker 11 (10:43):
Philip Swaegel has held the Congressional Budget office since twenty nineteen,
after stints at the US Treasury Department under President George W.
Bush during the financial crisis and teaching international economic policy
at the University of Maryland. The fact is a lot
of his job in methods are not up to him.
They're dictated by legislation, including the Congressional Budget Act of
(11:05):
nineteen seventy four.
Speaker 10 (11:07):
The cost testaments we do of legislation are based on
the legislative text and they're measured against current law. So,
for example, the reconciliation legislation that we're evaluating now, we
evaluate that against current law, in which there's certain provisions
of the twenty seventeen Tax Act that expire, and that's
(11:28):
by statute, and we understand that some policymakers prefer to
look at it on a current policy basis. Their view
is that they meant for the twenty seventeen Tax Act
to continue to be permanent, and they like to evaluate
the cost against that baseline. And that's a legitimate way
to look at it, and we can provide that information
(11:49):
if they want. Is just not the standard way that
we do things.
Speaker 12 (11:53):
The history of the CBO is it was born out
of this growth of peacetime deficits that happened in the
nineteen seventies. And the reason why that is relevant is
what CBO is sort of statutorily required to do. What
it was created to do is to provide these cost
estimates to policy makers about the likely impacts of different
(12:16):
policy proposals on what the budgetary outlook is going to
look like for the country. And so the precise mechanics
of how they do that do they give you one
year cost estimate or what is now convention a sort
of ten year budget window horizon that's changed over time.
But the idea of setting up this organization and kind
(12:37):
of empowering them to do the important work of being
able to keep score about what deficits are going to
look like because of choices that federal policy makers are
making is something that is very much in keeping with
what their mission is.
Speaker 11 (12:52):
That's Natasha Sarin, president of the Yale Budget Lab. Once
the CBO gets the best grip it can on the
country's costs and tax policies, it has to do the
math on future estimates, and not just once. There are
two other important concepts here, static and dynamic.
Speaker 10 (13:09):
No, that's right, So the static estimate or we sometimes
call it. The conventional estimate assumes that the economy is
not affected by legislation. So, for example, there's a big
tax component of the reconciliation legislation being considered now, and
big enough that one would expect the tax cut to
affect the economy. We think it would lead to a
(13:30):
larger economy with more people working. By convention, that's not
in our static estimate, and that's what we've already put out.
But now we're working on a dynamic estimate in which
we look at the legislation, we look at the effect
on the economy, and then we look at the feedback
from the change in the economy back to the budget.
(13:50):
And so that provides more information, it just takes longer
for us to do.
Speaker 11 (13:55):
It's where CBO scoring meets legislation that things get especially
tricky first, because predicting America's economic future a decade in
advance is just plain hard.
Speaker 12 (14:05):
In theory, I'm just going to raise the tax rate
by one percentage point, and I'm going to have the
impact at least in one year. I'll then scale it
by ten and that'll tell me what the budget window
looks like. Even something that seems that easy is actually
more complicated. People are going to make different choices about
the extent to which they decide to participate in the
labor force and accumulate labor income as a result of
(14:27):
that tax shift. They might also make different choices, particularly
in industries like in finance, where you can be in
an industry where you might receive carried interest instead of
receiving labor market income has a different tax treatment. And
so these scorekeepers have like a really difficult task before
them as they try to do this type of analysis.
(14:50):
And that is a super difficult task to do when
they're trying to work as quickly as they are, just
given the speed at which things like the reconciliation process
invariables are moving.
Speaker 11 (15:01):
Forecasting economic outcomes is hard enough in the most stable times.
But then of course there's responding to politics.
Speaker 10 (15:08):
Any bill that's marked up by a committee, we produce
a cost estimate that's by statute. Then there's reports that
are requested of US. For example, earlier this month in June,
we provided policymakers with information on the revenues raised by
the tariffs that President Trump has put in place since
his inauguration of the second term that was requested by
(15:31):
a group of senators.
Speaker 11 (15:33):
Well, sometimes it seems the requests you get come with
a political bias.
Speaker 13 (15:36):
What do you do?
Speaker 4 (15:37):
Then?
Speaker 10 (15:38):
That is just part of life in Washington, and we
are here to support members. We have no opinion on
what the right legislation is. We're just trying to give
them the analysis. We're focused on the legislation, so anything
within the four corners of the legislative text that we evaluate.
But of course the president is doing many other things.
(15:58):
He's changed tariffs and that raises a considerable amount of revenue.
He's changed immigration in the United States, and he's changing
regulations and other aspects of the economy. We will eventually
provide information on the economic and budgetary impacts of those.
It's not part of our evaluation of the reconciliation legislation.
(16:20):
I just saw the New York Times, the Washington Post
all have articles making use of that distributional analysis, which,
of course the members of Congress who asked us the
question understood that it would get that kind of attention.
Speaker 12 (16:33):
An important thing to understand and something that I've observed
as I've watched not just this reconciliation debate play out,
but this kind of tenor always takes place when CBO
is producing estimates of legislation. There are totally understandable critiques
that come and totally understandable frustrations with where CBO lands.
(16:55):
And that's not a partisan thing. It happens. Democrats have frustrations,
Republicans have frustrations. The thing that people sometimes miss, though,
is that a lot of the choices that CBO is
making that are being critiqued aren't actually choices that they
have any control over. So, in the context of this legislation,
something like having the baseline that they're measuring against be
(17:18):
what is current law, which is that the Trump tax
cuts are slated to expire at the end of the year,
and so their extension is judged against that expiration. That's
not a choice CBO is making. That's something that they
are sort of mandated to do.
Speaker 11 (17:34):
Okay, As Yogi Berra said, making predictions is hard, especially
about the future. The administration has strongly criticized CBO for
underestimating growth in twenty twenty two when it analyzed the
twenty seventeen Tax Cut and Jobs Act.
Speaker 10 (17:49):
When I look at our performance, I try to understand
the context of the performance and that one SoundBite. It's
sometimes the one point five trillion dollar miss I feel
like that's deeply misleading because it's almost as if someone
who says that is implying that somehow the twenty seventeen
Tax Act is what caused the high inflation or what
(18:11):
caused the immigration surge. And obviously you know that's not plausible,
and so I just don't think it's fair to think
that CBO in twenty eighteen could have predicted the pandemic,
the inflation, the immigration QI and all that.
Speaker 11 (18:27):
Do you get mad when members of Congress use the
CBO as the whipping boy?
Speaker 10 (18:33):
No, I don't don't. I certainly don't get mad. I
understand it. I understand the political process. CBO is next
to the political process. We're not part of it, but
we certainly understand it.
Speaker 11 (18:43):
Well, you have something like two hundred and seventy analysts
here working for you. How do they feel about the
criticism they get?
Speaker 10 (18:51):
I mean, you know, no one likes to be criticized.
No one likes the White House Press Secretary attacking you
or the president on truth social but that is part
of the political process.
Speaker 11 (19:04):
Has this been sort of an unusually chaotic period. I
can just imagine the guys who are working on tariffs
doing all their maths and coming up with a number,
and then the President changes is by.
Speaker 10 (19:14):
The tariffs has been an area of policy that is
just changing, and we do our best to keep up
with it. Members of Congress want to know, and so
we routinely provide members of Congress with information on the
budget impacts of the tariffs and the numbers that we've
given most recently earlier in June, we waited until the
(19:36):
tariffs has stabilized. They're very high tariffs on China, and
those came down and that's the moment at which we
did the analysis. Now since then there were actually subsequent changes,
but they were much smaller. It makes it hard, but
we do our best.
Speaker 11 (19:50):
Are you ever wrong?
Speaker 10 (19:51):
I start by saying, we're human and you just have
to have a humility that we will do our best. Inevitably,
we will get things wrong. Back in two thousand and nine,
in twenty ten, when President Obama was putting forward the
Affordable Care Act eventually called Obamacare, CBO expected that the
(20:14):
mandate provision in that legislation will be very impactful. That
the mandate on individuals and on businesses would lead to
a large increase in people gaining health insurance, and it
turned out that just wasn't the case. CBO looked at
the experience of Massachusetts and the Commonwealth had a mandate,
and in Massachusetts it was very impactful, but it turned
(20:37):
out it just wasn't the case for the rest of
the country. We have since gone back and evaluated what
happened and published a report on the mandate, and now
we've taken on board the different analysis in our healthcare projections.
When we get things wrong, we need to analyze it,
understand it, and adjust. I've been director for just over
(20:59):
six years, since June of twenty nineteen, but I own
every mistake CBO has ever made.
Speaker 11 (21:07):
Errors Aside, the CBO's estimates have value that stretches far
beyond the beltwigh Wall Street pays close attention to what
Swegel's team says about growth and deficit expectations in an
effort to better understand what it all means for markets
and especially bonds. Priya Misra is a portfolio manager for
JP Morgan.
Speaker 13 (21:25):
We look at their focus so they tend to judge
and come up with the cost of any legislation but
they give you the assumptions extremely transparent. We will look
at their growth assumptions, the inflation assumption, their interstrate assumptions.
So we absolutely look at the CBO number as a
I would say, a baseline for what the deficit will
look like, what legislation is going to do to the deficit,
(21:47):
and then we think about things that the CBO may
not be incorporating by law that we would want to
incorporate as we think about the impact.
Speaker 2 (21:54):
Well, it's so beautiful to say.
Speaker 11 (21:56):
With President Trump's one Big Beautiful Bill moving through Congress,
CBO projections are under scrutiny.
Speaker 7 (22:02):
I think the scoring you and I have talked about
it quite a bit. It's Washington style scoring and it's
not real world scoring.
Speaker 11 (22:11):
The new CBO assumptions on the Big Beautiful Bill, what do.
Speaker 1 (22:14):
You think of that?
Speaker 13 (22:15):
I think it looks pretty fair and it's in line
with a lot of the other estimates. Our estimate was
closer to three trillion. You're getting two point eight from
the dynamic CBO score. We do give more weight to
the dynamic score from the CBO where they try and
incorporate what would the legislation do to growth and inflation?
And interest rates, and they try and incorporate that sort
of dynamic workings of the economy. But whether it's Joint
(22:38):
Committee for Taxation or the Center for Responsible Budget, you're
hearing these estimates of between two point eight from the
CBO three three and a half as the estimate over
the next ten years.
Speaker 1 (22:51):
Next, putting a price tag on citizenship or at least residency,
we take a look at President Trump's proposal to get
the deficit down by selling gold cards and how similar
programs have worked around the world.
Speaker 6 (23:04):
You're listening to Bloomberg Wall Street Week with David Weston
from Bloomberg Radio. You're listening to Bloomberg Wall Street Week
with David Weston from Bloomberg Radio.
Speaker 1 (23:21):
This is a story about the price of citizenship, or
at least the price tag we want to put on it.
For years, countries around the world have offered citizenship or
residency to those willing to put up the cash. President
Trump has a new proposal for the United States, and
as so often with the President, it involves his favorite color.
Speaker 4 (23:44):
Five million for five million. Analysis could be used. That
was the first of the cards, and you know where
that card is old. It's the gold cut the Trump
Card gold cut.
Speaker 1 (23:59):
There me President Trump's proposal to create a US gold
card isn't really new. Since eighteen eighty two, the United
States has charged immigrants and admission fee for coming to
the country, starting at fifty cents a person, raising it
to four dollars in nineteen oh seven. Today, the US
already has a special visa program for those able to
(24:21):
make substantial investments. Substantial as in eight hundred thousand dollars.
Speaker 5 (24:26):
The US has had a golden visa program since the
early nineteen nineties. It comes in the form of EB five,
and it's been traditionally used to build big real estate
projects in the US. Now so even places like Hudson
Yards in New York City has been funded through this
sort of program.
Speaker 1 (24:42):
Kristin Zurik is an assistant professor at the London School
of Economics, where she has studied what is known as
investment immigration. The revived push in the US parallels other
countries experimenting with golden visas and passports.
Speaker 5 (24:56):
They're actually much more common than most people think, so
for thinking about the golden passport programs so citizenship, there's
over twenty countries with legal provisions that enable this and
there's about a dozen that regularly approve people through their programs.
For thinking about the residents. The golden visa programs, they're all.
Speaker 10 (25:13):
Over the place.
Speaker 5 (25:13):
You can find them in just about sixty countries five territories,
even in places like the US in half of the
EU member states.
Speaker 1 (25:22):
The programs vary according to how much money is required,
whether it's an investment in the country and what kind
of investment or just a fee paid to the government,
and by the way, whether the immigrant only gets to
reside in the country or actually becomes a citizen.
Speaker 5 (25:37):
Golden passports are sometimes also known as citizenship by investment,
So these are programs where you donate to a government
or invest in a country, and in pretty short order,
and sometimes without even ever going to the country, you
become a citizen. It's a little bit different to a
golden visa program, where you get not citizenship in the country,
(25:58):
but residents in the country.
Speaker 1 (26:01):
Whatever form these programs take, the goal is always the same,
growing the economy of the host country, and the smaller
the country, the more of a difference they can make.
Investment immigration programs account for up to half of the
GDP of the island nations of Dominica, Saint Kitts, and
Saint Lucia.
Speaker 5 (26:19):
So usually the idea is to bring investments into the country. Now,
if we're talking about very very small states, and usually
they're the ones who are doing the citizenship programs, the
amount of money that a government can bring in through
these programs can be absolutely enormous. So some countries see
well over thirty percent of GDP coming in through these programs. Now,
(26:41):
if you're thinking about the Golden Visa programs where you're
just getting residents, we're often talking about much bigger economies.
In terms of what countries get out of it will
be more targeted if we're looking at those investments.
Speaker 1 (26:53):
But that's where the math doesn't always add up. One
immigrants investing can be one local citizen's outing out, as
in real estate. Take Spain for example.
Speaker 5 (27:04):
We've seen Spain shut its program down, Ireland shred its
program down, the UK shut its program down. If you're
only approving a couple hundred you know, people per year,
a huntry one hundred applications per year, is it really
worth it to keep on the books given the potential
risks involved.
Speaker 1 (27:20):
Spain's scramble for investment began after the European debt crisis
of two thousand and nine. Since the start of its
program in twenty thirteen, Spain granted more than fifteen thousand
visas tied to real estate investment. From twenty sixteen to
twenty twenty three. The program generated ten billion dollars in investments,
but that also helped drive up property values. Spain shut
(27:43):
down its program as of April, but even as countries
like Spain have cut back, others like New Zealand are
ramping up.
Speaker 3 (27:50):
We've had about two hundred people apply, which is about
one hundred and fifty more than applied in the previous
two years, so it's becoming more and more popular.
Speaker 1 (27:59):
Stuart Nash is a former Minister of Economic Development in
New Zealand and is now a principle in Nash Kelly,
which works to attract high net worth individuals to the country.
Speaker 3 (28:09):
What are the requirements, Yeah, so there are two categories.
We've got the growth category and you've got to invest
five million kiwi, which is about three million US. And
then we've got one called the balance category, which you've
got to invest ten million kiwi, which are going is
about six million US. You've got to do that over
six months. For the growth category, it's got to be
(28:30):
in managed funds or companies. The balance category it's a
little wider. You can do bonds, you can do equities.
You can also do managed funds and businesses as well. So,
you know, we really get at Nash Kelly that if
you're sitting in America, you're looking at New Zealand, it
looks like this oasis that you want to go to.
You've read about it. Kiwis are really friendly. You know
about the golf courses, you know about the environment, but
(28:50):
you don't know much about the investment ecsystem. So it's
a little bit of a risk.
Speaker 1 (28:54):
When you put together your program in New Zealand, did
you go to school as it were on some of
the other programs and say we don't want to do that,
We're going to structure it this way instead.
Speaker 3 (29:03):
Yeah, very much so. So you're in Portugal, I think
you only have to invest two hundred thousand dollars. It's
not a lot of money. In New Zealand, we decided that,
you know, we want the people who can drive success,
who have been successful. The European Court of Justice is
just rule. The multi Golden visa illegal because it's bringing
in they think or has the potential to bring in
a whole lot of dirty money. We didn't want that
(29:25):
in New Zealand. Hence the reason why the high level
of integrity to prove that the money you're investing in
New Zealand has come from legitimate means. We didn't want
this to be a back door for criminal money coming.
Speaker 1 (29:34):
In the cost of granting residency to the wrong people.
As Nash puts, it is just one of the things
countries have to take into account in determining whether investment
immigration is worth it.
Speaker 5 (29:45):
There can be a lot of concerns about foreignurse coming
in xenophobic sentiments. You know, you can find them across
the world in various measures as well, So governments have
to balance what they think are appropriate trade offs in
terms of how many foreigners do we want to allow
in the country, because sometimes you can have people who
(30:05):
have a lot of money, but maybe they gained it
through nefarious means, or maybe you know, there could be
shady things in the background. So making sure that these
are the people you want to let in is also
a very important decision to make.
Speaker 1 (30:19):
Screening out undesirable candidates for immigration may help make sure
the right people are admitted and that their money is
going into the right projects, but it also can get
in the way, as it does for the current US program.
According to Alex Norosta, vice president for Economic and Social
Policy Studies at Cato Institute.
Speaker 14 (30:37):
So the EB five is a portion of the employment
based Green Card in the United States. There are ten
thousand of these visa set aside for EB five every year.
What we've seen in recent years is basically about five
thousand of those are taken up by actual investors. It
costs at least eight hundred thousand dollars or around eight
hundred thousand dollars to make an investment in the US,
(30:58):
it has to create a certain number of jobs. The
EB five system has not worked well, and the primary
reason is exactly what you said, which is it's an
incredibly complicated visa. It's very burdensome to work through. So
it's really suffered under this incredible burden of red tape
that just keeps piling on decade after decade in the
(31:19):
United States.
Speaker 1 (31:20):
President Trump's gold card idea would cut through much of
this by simply putting a price tag on admission into
the country.
Speaker 14 (31:27):
We don't know all the details at President Trump's gold
card proposal. It hasn't been passed into law by Congress,
and he doesn't have the legal authority to issue green
cards based on this. But as far as we know
the details, it would be selling lawful permanent residency also
known as a green card, and exchange for a five
million dollar fee pay to the US government. This is
(31:48):
a fee pay. This is not an investment. This is
not an investment that these foreigners would get to own
in the United States. But it is a straight up
fee pay to the United States government of five million dollars.
Speaker 1 (32:00):
Truce Congress were to adopt this approach and pass legislation
so it was legal. Could it make a material difference
to the debt or the deficit of the United States.
Speaker 14 (32:09):
It's very unlikely that selling gold cards like this would
make a material large difference to the US deficit or
US spending.
Speaker 7 (32:17):
For one, the price is way too high.
Speaker 1 (32:19):
But Neurasta does think that the President may be onto
something creating a market for US admission and letting Adam
Smith do the rest, something suggested some time ago by
Nobel Prize winning economist Gary Becker.
Speaker 14 (32:32):
Our fiscal problems go far beyond what can be resolved
by selling a gold card. However, the price were a
lot lower. If the price we was, say like one
hundred thousand dollars or two hundred thousand dollars, I think
you could see a large increase in a number of
wealthier immigrants coming to the United States to settle. That
would produce extra economic activity here that the government attacks,
(32:55):
and there would be a huge increase in visa fees
paid to the US government. So I think ironically the
only way that we could actually make a difference in
the deficit through such a scheme would be by lowering
the price dramatically.
Speaker 1 (33:08):
If you had total control and could design any system
that you wanted, what would it look like.
Speaker 14 (33:14):
I probably go back to the nineteenth century and make
it just incredibly easy for people to come to the
United States lawfully, so long as they aren't a criminal
or a national security threat or a sick. But if
I have to charge a price, if I have to
have a restriction on the number of immigrants coming to
the US, I would charge a price. I would sell visas.
This is sort of economics.
Speaker 7 (33:35):
One oh one.
Speaker 14 (33:36):
If you have scarcity of a gooder service. That gooder
service can be efficiently allocated only through the pricing mechanism,
only by charging a price, and only by allocating those
visas to those who are willing to.
Speaker 7 (33:49):
Pay the price.
Speaker 14 (33:50):
So charging a price for a visa is a very
good way to allocate them to people who really want it.
Speaker 1 (33:56):
How do we make sure we get the right people.
Speaker 14 (33:57):
In So what a pricing system does is an internalizes
the cost and benefits of these decisions to the people
who actually make them, and as a result, we're going
to get a much better mix of people selected by
the market economy who can do much better here in
the United States than those who could be selected by Congress.
Speaker 1 (34:17):
Neurosta says that a market based system could even help
address the country's struggles with illegal immigration by providing a
legal path.
Speaker 14 (34:24):
A market based system would undermine illegal immigration into the
United States because they would give an avenue for even
low skilled immigrants like illegal immigrants, to come here lawfully. Currently,
what we see is that illegal immigrants pay upwards of
ten thousand dollars in smuggling fees to come to the
United States, and they don't even have a guaranteed way
to stay. So it's a highly risky investment. If instead
(34:48):
those individuals could borrow money, or could get loans from
their family members, or could otherwise save up wages in
their own country, then they can buy one of these
green cards come to the United States. They don't have
to come illegally. You actually have a goalpost where if
they make a certain amount of money in their home
country they could afford to buy one of these visas
and come here. It would really undermine the black market,
(35:09):
It would undermine human smuggling, It would destroy those markets,
and it would allow a way for even low and
mid skilled workers to be able to come here. Because ultimately,
it's just a price, It's just amount of money. You
and I know we're not super wealthy individuals in the US,
but we can borrow money for economic activities. I think
that banking systems throughout the world, the financial institutions would
(35:29):
be falling over themselves head over heels to give loans
to these individuals to buy green cards that come to
the United States to be able to work. Because the
returns on them are so high, these people would be
willing and able to repay them. There are enormous market
and profit opportunities for them. This is something that would
be a boon to the US financial system, to the
(35:50):
workers involved, and to the US economy at large.
Speaker 1 (35:54):
Coming up the battle for the economic soul of New
York City, we take a look at the dramatic prescriptions
of Zoran Mamdani, the apparent winner of Tuesday's Democratic primary
that's next on Wall Street Week. This is a story
(36:19):
about socialism, or at least democratic socialism, striking close to
Wall Street. New Yorkers went to the polls this week
to choose the Democratic nominee for mayor, which traditionally has
determined who will win in November, and New York State
Assemblyman Zoran Mamdani, a self styled democratic socialist, came out
the winner over former Governor Andrew Cuomo. Catherine Wilde has
(36:42):
served as President and CEO of Partnership for New York
since twenty eleven. She takes us through what mister Mumdani's
decidedly progressive economic policies could mean.
Speaker 15 (36:54):
Zorn Mandani is a very charismatic, thirty three year old
young man who has been an assemblyman for less than
four years and is somebody who from the business community standpoint,
came out of nowhere. He latched onto the issue that
is the biggest one in our city and in America,
(37:14):
which is financial insecurity. Ninety percent of the people in
New York are not sure they can continue to afford
to live here. We are the most expensive city in America,
the third most expensive city in the world. So there's
a disconnect between the winner of New York's Democratic primary
for mayor and much of the business and real estate community.
Speaker 1 (37:37):
Let's talk about some of the policies, as you mentioned,
tax the rich, including both income tax and i think
property tax.
Speaker 15 (37:44):
As well, and corporate taxes and.
Speaker 1 (37:46):
Corporate taxes as well, a lot of free things given
for the less fortunate among us. What the likelihood that
he actually would be able to implement those as opposed
to just talk about them.
Speaker 15 (37:56):
Mamdanni's position on all these issues is more government spending,
which honestly has been the position of generally of Democratic
candidates for a while. Right now, we're facing a situation
release in New York where our economy is stronger than ever,
(38:17):
where a trillion dollar economy, four point eight million jobs.
We're in good shape from an economic standpoint. Our tax
revenues are very strong, but there is coming down the
pike some reckoning. The federal government is cutting a number
of the programs we depend on. Local tax base, even
as strong as New York cannot support large federal cuts.
Speaker 1 (38:42):
Well, we're here right now. This is good for Greenwich,
this is good for Florida, this is good for Texas.
What is the real risk that some of the mobile
rich will use their mobility.
Speaker 15 (38:52):
We certainly are in a much more competitive situation in
New York historically than we were in the past because
again of our high cost environment, not just the cost
of living, but the cost of doing business here. There's
a twenty percent premium at least on salaries for employees
to maintain a lifestyle in New York as opposed to
(39:13):
what they could achieve in Tennessee, or Florida or wherever,
even New Jersey. So we are in a competitive situation.
We are at risk of losing business and jobs we have.
Our economy, fortunately has been very innovative and has grown
(39:37):
while we have outsourced jobs to other places. Jobs, administrative
jobs in the financial industry, back office jobs have been
leaving New York for forty years, but we've replaced them
with high paying technical and other jobs. The question now
is where's the breaking point. Certainly the high tax rate
(40:02):
is a big contributor, and I have to mention in
twenty eighteen, we lost something that was a tremendous asset
for New York, which was federal deductibility of state and
local taxes known as salt deductibility. When we lost that, everybody,
all the taxpayers that really support the city, their taxes
(40:24):
went up substantially in twenty eighteen.
Speaker 1 (40:27):
Do you think what's playing out in New York City
actually gives some indication of where the Democratic Party may
be heading.
Speaker 15 (40:32):
It's very fragmented, and so I'm not sure about the
role of parties in the future of our democracy. This
election was organized and driven in large part by a
relatively small group of the Democratic Socialists. It's a group
(40:53):
that I kind of trace back their power to occupy
Wall Street of almost twenty years ago. Oh, and so
I think we may be going through a similar kind
of transformation where we're seeing communities step up and say
our traditional organizations, political or otherwise are not doing for
(41:14):
us what we need done. We are feeling increasingly left
out any of the benefits we expect and the opportunities
we expect as Americans. We're priced out of the housing market.
I mean in New York our median rents are about
four thousand dollars a month. Who can afford that? The employers,
If you ask them what's the hardest thing about recruiting
(41:35):
new talent to the city, they'll say it's the rents.
They can't find an apartment. So these are the issues
that have been zeroed in on, particularly by all the candidates. Honestly,
these are the issues in our campaign, all the candidates.
But the most compelling solutions came from the socials. And
(42:01):
Mamdannie claims and I my door was knocked on in
Bay Ridge, Brooklyn, which is a purple neighborhood at best.
Mamdanni claims to have fifty thousand volunteers. The Democratic Socialists
organized this, so we're not talking about a situation where
he was delivered this by the Democratic Party.
Speaker 7 (42:21):
Quite the opposite.
Speaker 1 (42:23):
Whatever, mister Mumdani's primary victory in New York City this
week ends up, meaning this is not the first time
that a large city has turned to progressive policies. Harvard
economist Ed Glazer has made a study of American cities
over the years, and he's found structural factors that bring
such policies to the fore.
Speaker 16 (42:43):
I think about the sort of you know, the great
challenge of cities is that there's a bent in natural
progressive element cities, mostly because cities tend to attract a
significant number of relatively poor people. And that's not because
cities are bad for poor people. It's actually because cities
are good for poor people because you have better social services,
because you have the ability to get around without a
(43:04):
car for every adult, and so you have this built
in kind of progressive thing. And yet if cities veer
too much towards this sort of progressive urge, they risk
inducing the firms to leave. They risk inducing the businesses
to go somewhere else, to relocate, to suburbanize, to leave
for a lower cost country, and of course they induce
(43:27):
the wealthy to want to leave as well, because the
fundamental essence of a city is geographic mobility, is the
fact that this is a smaller geographic unit. It's not
like the United States, where people are relatively fixed.
Speaker 1 (43:40):
Has socialism ever worked where we have a candidate mister
rham Donnie who says he is a democratic socialist. Has
socialism ever worked in any city you know.
Speaker 16 (43:49):
I kind of think Soewer socialism was pretty successful. So
the key mayor is Daniel Webster Hone, who is mayor
twenty four years mayor of Milwaukee, just absolutely amazing. He's
one of the prime examples of what's called Sewer socialism,
which was incredibly pragmatic socialism. Right, so this is very
far away from the sort of you know, European coffee
(44:13):
house kind of socialism, but it's a socialism that's determined
to figure out how to provide ordinary services for poor people.
He was mayor for twenty four years, and he was
really one of the great mayors. Now he was checked
in perhaps his most destructive impulses by the city council,
and so there were things that he wanted to do
in terms of turning an electric company into a public
(44:35):
company and so forth.
Speaker 7 (44:36):
It was stopped.
Speaker 16 (44:37):
But by and large he was focused on the basics
of city government. I think this makes a larger point, right,
It's not that a mayor needs to put the interests
of the rich.
Speaker 7 (44:47):
First, but the mayor has to balance two things.
Speaker 16 (44:50):
But it requires a level of progressivism that's just vastly
more pragmatic and vastly more focused on the nuts and
bolts of government than I think most of what we
see around us today, what.
Speaker 1 (45:01):
You identify is exactly what's being discussed in New York
City right now. We have mister Rondani who is putting
forward proposals for the less fortunate, things like free transportation
and freezing rent and taxing the wealthy much much more.
And on the other side, you say, boy, the wealthy
are mobile, and they will become mobile if you do that.
Does history prove that out? Will you lose the wealthy?
Speaker 7 (45:25):
The wealthy certainly are mobile.
Speaker 16 (45:26):
There is a healthy economics debate about how elastic the
mobile are and how quickly they move out. But certainly
people respond to incentives, and it seems to me that
this is a maximally risky moment for New York City
to be trying an experiment of hyper taxing the hyper rich.
Speaker 1 (45:44):
From your experience having studied cities in the United States
over the years, how much difference can a mayor make
in the economic fortunes of a city.
Speaker 16 (45:54):
Well, it's very hard to turn around a city that
is suffering from enormous headwinds. And there are sometimes when
a city is thriving so well that even the worst
mayor can do little harm. But if a city is
on the edge, it really matters. And I think New
York City right now is not a city in which
(46:15):
success is foreordained, and it's a city in which failure
can be avoided.
Speaker 7 (46:20):
So I think in this case it really does matter.
Speaker 1 (46:24):
That does it?
Speaker 16 (46:25):
For us?
Speaker 1 (46:25):
Here at Wall Street Week, I'm David Weston. See you
next week for more stories of capitalism.
Popular Podcasts
Bookmarked by Reese's Book Club
Welcome to Bookmarked by Reese’s Book Club — the podcast where great stories, bold women, and irresistible conversations collide! Hosted by award-winning journalist Danielle Robay, each week new episodes balance thoughtful literary insight with the fervor of buzzy book trends, pop culture and more. Bookmarked brings together celebrities, tastemakers, influencers and authors from Reese's Book Club and beyond to share stories that transcend the page. Pull up a chair. You’re not just listening — you’re part of the conversation.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com