What Democrats Can Do Now to Lower Costs

Affordability was THE defining issue of this election. We have to work to make health care, housing, and groceries more affordable. A South Carolina where a family can afford to fill up a gas tank, put groceries on the table, and get the child care they need. We must unrig this economic system and only benefits the top 1%. So, now that this happened? Overnight, a blue wave crashing through Republican strongholds. What should Democrats do with their win? I'm Natasha Seren, and I'm an economist and professor at Yale. I used to work in the Treasury Department with Secretary Janet Yellen. And I'm joined today by Elizabeth Wilkins. She is the president and CEO of Roosevelt Forward, a progressive advocacy organization, and my former colleague in the Biden administration. We agree about a lot about economic policy and live our lives thinking about it. We also disagree some. And so, I wanted to invite Elizabeth here for a conversation about the historic midterms we've just lived through and what comes next. Welcome, Elizabeth. Thanks so much for having me. Thanks for being here. So, I guess where I want to start is very simply, how are you feeling this morning? We are having this conversation on Wednesday right after the midterms. How's it going? It's a pretty good feeling. You know, just like on a personal level, I worked on the 2008 Obama campaign for like a year and a half. So, lots of blood, sweat, and tears. And I remember the dream of winning in Texas, of winning in Georgia. And to see this morning, the country wake up to this idea that like there really is people power. And it is all over this country and it is ready for not only not bad, but for something good is really exciting. I also feel that way. I feel like, and I'm nervous almost to say it, but I feel like this election marks the end of the Trump era in our politics. And if that's true, it raises like really deep and important questions about what comes next. And I think, you know, we're going to spend the next few years grappling with the answer to that question. But the fact that we even get to have that conversation now feels so remarkable. And it feels so decisively remarkable, you know, they're saying like blue wave, forget blue wave, like blue tsunami that we all got to experience last night. Like I, yeah, there are a few moments in your life when you're a political junkie like we are that you get to watch and you're like this actually happened. And last night was one of those nights totally absolutely I'm pretty excited. So I guess we're going to see the new Congress in January. Democrats have both the House and the Senate. If you were giving Kim Jeffries or Chuck Schumer advice at this moment, how would you think that they should think about what policy should look like over the course of the next few years? Well, I think Natasha something you just said, which gave me a little bit of like anxiety, but also excitement. Kind of answers the question for me when you said this feels like it could be the end of the Trump era. You know, I think that's only true if we make it so, you know, like last night was one moment, it was an opportunity. But I think we now need to prove to people that life would feel truly different if we had somebody else in charge. So if I was sitting in Congress today or in January, I would be saying, what are my major tools for showing what would be different. I have oversight powers and I have legislative powers, right? And I would say, how can I use both of those to start that drum beat. So on the oversight side. And I got to say, I think we have to show people not in the abstract, but concretely like if I am struggling with costs. And more than that, and you've said this really eloquently, I'm not just struggling with costs, but I'm struggling with insecurity, with economic precarity, with sort of a feeling of lack of agency and control in my life. How can you use both your oversight and your legislative powers to demonstrate that that could feel different. So I'll just give one example. And if I were advising folks on how to use oversight powers, I would say, let's not spend the next two years just investigating the Trump administration. Let's say people are really upset about healthcare costs and they're really, really mad at health insurance companies. Let's bring health insurance CEOs in and ask them about prior authorization, ask them about self-dealing, ask them about hospital charges, et cetera, ask, ask the pharmaceuticals about drug prices. Like this is the moment for a democratic majority to show that they are willing to take on powerful interests to lower costs and make life better for people. And you can think about that across a whole bunch of different industries that are directly impacting whether people feel like they can afford their groceries, their healthcare, their housing, and whether people feel like they have control in their lives. Yeah, that resonates very deeply with me, particularly this focus on healthcare, which is a place where Americans right now are in the open enrollment period. If they're among the 160 million Americans who get their healthcare provided by their employer, they are seeing costs go up this year by 10%. Those are the highest increases that we've seen at any moment over the course of the last two decades. And so the explosion of healthcare costs and the fact that this has become like a really significant part of what I think this crisis of economic precarity is really about right because people feel like they are one bad health shock away from potentially being on the brink. And it's not just that their healthcare is very expensive. It is also that it is laid in with bureaucratic red tape that make it hard to get services that make it hard to get the type of care that we all deserve. And so I think there are really deep questions about what one should do about that. I'm very sympathetic to this idea about thinking more about antitrust, thinking more about oversight and accountability of some of these industries, particularly there's really interesting evidence about private equity in healthcare, where you have seen as a result of PE ownership of different types of health providers, which is increased by something like 2000% over the course of the last few decades. You're seeing in nursing homes worse outcomes for patients. So I am super sympathetic with like trying to figure out what to do here. And it seems like incredibly first order for me. And we're also confronting the fact that Americans as a result of the reconciliation bill that Trump passed last summer, you are in a moment where people are millions of people are uninsured as a result of those types of policy decisions that were made. So with like all of those things to be addressed, I guess again, the question of prioritization comes up, which is like, what should we do? And particularly what do you use the next couple of years to do? Because I don't think it's just these are messaging bills and all of that. This is agenda setting for what a future democratic administration could aspire to do and what they are going to focus on. Absolutely. And I would say, prioritization is super important. Healthcare as an overall priority has to be like number one. And I do think we kind of have to do both things at once. It will not be enough just to restore the cuts. If what we do is we say to Americans, the best we can do is what has been happening to you for the decade before Trump. We will have lost this moment. And I mean, knock on all of what I think that we can walk in to come at the same time is not to say we shouldn't undo the cuts. No, just to be clear, that's table stakes. Like that is table stakes. We can't leave people who are in pain immediately right now hanging out to dry. But we also can't that that be the sort of ceiling on our ambitions. And I think you put it really eloquently. There are two things going on. One is that we have markets that are broken and that costs are going up. And then another thing is people are so angry that they are treated so poorly by the institutions that they need so badly for their health care. Right. And I just think you have to do both of these things at the same time. And the prioritization comes in. Are we going to spend a whole bunch of time trying to do impeachment? Are we going to spend a whole time a bunch of time trying to do policy that has to do with looking backwards, or we're going to spend a good amount of our time on health care on AI companies on energy prices and energy costs. And so to me, thinking about a two track where you're on one track saying what does it look like to make sure that your insurance company can't also own the pharmacy benefit manager and also own the provider and also own the pharmacy is one. And then there's a real debate to be had about what does it mean for us to do real structural reform in the marketplace. And I think if we take a lesson from last night is that we have to meet the ambition of the American people with the ambition of our policy proposals. I think that I totally agree with you. And yet I think it is hard. And it's hard for the following reason. I think that that question about ambition and structural reform is really at the heart of it and health care is a very good illustration of exactly those types of challenges. Because I almost think there are two different types of policy approaches you might be interested in pursuing. want my colleague, Zach Cooper, at you. Yale, who's an economist, has started a version of what he's calling like the 1% project in healthcare. And what that is, is it's like gradual incrementalism to bring down healthcare costs, you know. So it's ideas like, if you, it turns out that if kids are fall birthdays, they're much more likely to get flu vaccines because they can get them at their annual checkup. And otherwise, as a parent, I totally understand why this would be, it's just hard to make it to that other appointment. And if you can get kids vaccinated, you can actually save about $500 million in doctor's visits you don't need or your visits you don't need as a result of that policy change. That's relatively minor. And if you add up all of these like gradual things, Zach's point is that there's actually a lot of money to be had in healthcare cost savings as a result of those types of approaches. There's like a different type of approach, which is I think a bit, your version of like meeting the ambition of the moment, which is like what we need is we need to talk seriously about Medicare for all. We need to talk seriously about the idea that the health system is fundamentally broken and that we kind of have to rip out the guts rather than trying to on the margins make the system work a little bit better. As an economist, I'm, you won't surprise you, I tend to be drawn to incremental approaches not because I don't like the idea of ambitious approaches, but because I think that, you know, the health system is really complicated. We talk about it as if it's one thing. It's like the veterans health system and the state health systems and the federal health system and the hospitals and it's just like there are many different parts. And I feel like there's actually a lot of low hanging fruit to be had in like doing the parts a lot better than we're doing them today. But maybe that strikes you as not ambitious enough. Well, I actually would maybe put it a different way. I'll tell you a slightly different thing that I worry about, which is, and this is true of health care and this is true of a lot of other areas in the economy. We do truly need structural reform, but that takes time. Tons of time, yeah. And people have been waiting for a long time. And I don't think we can say to people, you can't make next month's premium bills. Yeah. Don't worry. Or wait a decade. Exactly. So, I don't think of it as incrementalism, but I do think we need a policy strategy that says what kinds of down payments that are achievable today and can be felt today, should we focus on in the effort to build up to a bigger structural reform in the future. And so what I think about is what are the smaller but impactful things that we can do now that are directionally correct for the kind of structural change that we want to see in the future. So, I'll give you an example within the health care context. When I was at the Federal Trade Commission under Lena Khan, we saw a problem where pharmaceutical companies would file with the FDA kind of these, it's called filing in the orange book. These lists of patents for medicine and it would sort of, it's sort of like a patent protection scheme, an extra patent protection scheme. And they're a whole lot extra, because they don't have enough, yes, exactly, right? And we saw a whole bunch of filings that looked kind of bogus, right? But that we're increasing the patent protection life of a bunch of drugs or that were protections for things that shouldn't have been there in the first place like devices. And so we started writing letters to companies to say like, you can't do this. And there's actually individual liability if you do this, are you sure you want to stand by this listing? And not only did we get a bunch of listings delisted, but just through our letters, we got three companies to say, do you know what? We were going after insulin devices. We will cap our insulin prices at $35 voluntarily, right? That was the kind of intervention that was immediate. People could see their insulin prices going down. It's not the structural reform that we need, right? But it builds the will to say, we need to go after drug pricing schemes. We need to go after market structures that aren't working. We will do something now on the way to doing something big later. And I think what I'm hearing you say is a version of like, walk, I think you've even said it like walk and Chugam at the same time, do the short term stuff, but also think longer term about the types of structural changes you really need to make. It is though interesting if you look at this midterm election, after cost of living issues and affordability, the like second big issue that was animating voters was corruption. We have just lived through this attack on our institutions, this change from like being a country that is governed by the rule of law to one that feels like it's governed by the rule of deals within proximity to this administration. And I just feel like there needs to be something done about that in part because we know that like corruption is a tax on the economy. It lowers growth. It makes it harder for the country to feel and the government to feel like it's really serving people. It feels like it's only serving the interests of the few who have kind of stolen it for themselves. So does that fit into this type of agenda setting and prioritization? I think it totally does and, you know, the suspect may be your first question about what should be done in the next two years. I think we have to understand corruption the way people understand it, which is not separate from the affordability agenda. There is a direct tie between the capture of our democratic institutions and whether or not they can respond to the needs that people are expressing. That's the narrative we have to tell and we also have to show not tell that we are actually willing to do something about it, right? Part of the problem is that people feel as if the system is rigged. Most people don't actually differentiate between political leaders and corporate leaders. They sort of think like those are all them leaders. They're all leaders. They're all be elite in it for themselves, exactly, and they're not in it for me. And so there is a real need to demonstrate that political leaders are actually willing to differentiate themselves and go after the forces that are capturing government. So, were I in the position of advising kind of what should an oversight agenda look like that has to do with corruption over the next two years? I would say I would have two buckets. One is a whole bunch of corruption oriented things that tie directly to people's pocketbook costs and their experience in the economy. So for example, just to go back to pharmaceutical companies, a bunch of pharmaceutical companies did some deals, got relief from tariffs, from the Trump administration. Then they turned around and raised drug prices. That relief didn't go to people. It went straight to the pockets of the corporations. I would investigate those deals. And then there's another bucket, which is, you know, this was the most expensive election in history between $11 and $12 billion spent around the country. The Times reporting is that the top 20 donors spent $2 billion just all by themselves. I think people get that. And so doing oversight that looks at very specifically what's going on with Elon Musk's corporate contracts with the government, or it looks very specifically at what's going on with the quid pro quo with the crypto industry, those are the folks that are pouring money into our elections and buying policy outcomes for themselves. And I think that the American people will get that. And that's sort of the drumbeat that we need to show. So I think I agree some, but also disagree some in both of these buckets. So I kind of want to dial in to both of them. One is this like, you know, I do agree. We need much more antitrust enforcement. We need to look at mergers like very deeply true and the work that you did at the FTC was like an important step in a right direction, but a step and much more needs to be done. I find some of the narrative around the corporations are greedy and they're profit maximizing for themselves and they've gotten greedier and that's why prices are high. Like I don't find it exceptionally compelling as like an economic argument in that like the corporations are profit maximizers that in some sense is what they are doing and actually like if they're corporations that are organized in the regular corporate structure, it's actually what they have to do, which is to operate in the interests of their shareholders. Whether or not certain rules exist or shouldn't exist with respect to how the government treats different types of industries and different corporations is like a really important first order question for us to grapple with. But I am it is less obvious to me that some of the narrative from a lot of people that I respect as policy thinkers that has had versions of like greed flashing is why prices are rising is really a compelling explanation for what has happened in the economy over the course of the last many years. And I'm kind of curious to get your reactions to that and also curious to get your reactions on this question about money and politics because I can tell a sort of different story about what we saw last night, which is Elon Musk literally moved to Texas and spent half a billion dollars on this election. And the result of it is that Texas is sending James Tallerico to the Senate and has elected a democratic governor. And so enough to say money in politics is good or like, yay, we should cheer the billions of dollars that are being spent by the very elite. But I feel like I need a bit more of a nuanced view about what money in politics is really doing. Because in some sense, like I'm thrilled about the strength of our institutions and the strength of our democracy that last night was kind of a repudiation that you can't just buy elections. And so spend all this money, have all this access. And yet like, not exactly able to drive the political outcomes. And so not that it's not a problem, but maybe like what is the problem precisely? And then what is the set of solutions that are going to effectuate change totally? So I will tell a slightly different story about two years ago and last night around money in politics, Sherrod Brown in Ohio, two years ago, got wiped off the map by tens of millions of dollars from the cryptocurrency industry, right? It was one of the biggest story in politics. And what did you see right after that election? You saw crypto industry pushed legislation passing in Congress. Now they kind of messed up their politics and they didn't end up getting everything they wanted. But right after that election, in particular, and big crypto spending around the country, you saw politicians all of a sudden afraid to go against the crypto industry and willing to work on reforms in the way that they wanted. I do agree. What is incredible about last night is that playbook didn't work for the first time. I don't actually take that as a sign that our political system and our institutions are strong. What I take that as is it took, as you said, a tsunami to overcome those forces. And we cannot squander this moment. This is the moment to change those dynamics and harden our institutions against those influence in the future. I find that really interesting. And I think there's like a really interesting question about like where political power sits. There's this great new book by some of my economist friends, Owen Zadar and Eric Swick, that's called The Everywhere Millionaire. And one of the feces of the book is that we're spending like too much time in our politics and our policy discourse, like talking about people like Elon Musk. And not enough time talking about a lot of sort of wear, wealth and power feels like it sits in our economy. And that actually tracks with my experience when I was in Washington, which is I've worked a lot with members of Congress on tax policy. And it always struck me that a lot of political power seemed to sit with like two sets of groups. It sat with community bankers and it sat with car dealers. And why is that? Not because like they're Elon Musk level donors to our political process, but because literally there is one in every district, right? And they are incredibly important. And as a result, they've created so many types of preferences within our tax code to essentially favor those types of industries and those types of everywhere millionaires in ways that I feel like are really corrosive to the system. And so as I try to think about like, what do you do about that? I feel like I want us to have like a broader conversation than here are the biggest donors in this midterm cycle or in the 28th cycle because it feels like it's a broader story about our politics and our policy making process than you can capture by those individuals if that makes sense. Yeah. I mean, look, I'd certainly true that there are certain individuals that are fun to beat up on because they're really good symbols of a thing that is wrong in our politics. But I agree with you in the sense that this is not an individual problem. It's a systemic one. In terms of tax policy, you're totally right. We should tax the wealthy. That is not going to be enough. So we really have to take on not only taxing the wealthy, but everybody who is in the, everybody who's in everywhere millionaire also needs to be brought much more into the tax pay. So at that, I think we could violently, violently agree on. And then I just want to go back to one other thing you said, which was really interesting, which was about concentrated corporate wealth and power more broadly and its economic affects. It is true. We have corporations that are designed and have to profit maximize. And you said something about making sure that we have rules of government that protect our institutions. What I would say is we should have rules of the economy that make sure that we drive innovation and growth towards real problems that real people face rather than towards financial engineering. Like we can change the rules of the road for government and we can also change the rules of the road for how corporations are organized and how they are incentivized to make their money. That's through the tax code. What kind of engineering does or doesn't bring them wealth? That can be through regulation. But the idea of within a capitalist system, driving corporate incentives towards innovation, entrepreneurship and growth rather than towards financial engineering, I think is both important and ties into this corruption question because at some point, no matter what rules you have to protect government, if there is enough wealth, it will find a way in. I actually just want to spend like a beat on what I think one of these like emerging conversations is likely to be in our politics and one of the takeaways from last night, which is artificial intelligence and what our posture towards it as a government is going. It's super important at this moment. It's going to be super important over the course of the next two years. And as you think about agenda setting and forward looking, one of the things that I personally would love to see from Democrats is an answer and I feel like this is actually animating like real concerns that real people have at this moment and a lot of what we saw last night with the data center moratoriums actually reflects that and so I wonder if you have like a thesis about what I named a lot of problems for you in this space, but like what one should do. I'm pretty sure if I had all the answers, somebody would pay me a lot of money right now. First of all, there is a lot of money, by the way, towards it in our politics, there is so much AI money flowing around from our sides. That is very true. Yeah, I just to plus one to your premise last night, data moratorium one like around the country. One count found at least 41 jurisdictions nationwide passed bands or restrictions on data center construction. I think this story is wild, but in the last week you saw the story about how Google is now saying to schools that if they don't want AI in schools, they're going to shut off their access to search. You know, the thing about AI right now in this moment is that it touches so much of what people want need and believe about their lives. It is economic charity. It is the sense that some kind of system is rigged. And then this sort of very deep personal sense of do I have control and agency over how I choose to raise my child, what they're exposed to and whether I can raise them with my values, like there is a really wide spectrum of what people are feeling. That's part of why it's so hard to think about what the right solutions are, right? So I think we need to do one like what are the what's the list of harms that we are actually worried about. And then what solutions are appropriate to those harms. I think we have a wealth of answers. This is a little bit of a present of professional hazard for me, but like do really like the New Deal legacy. It's one of the most creative regulatory moments in our history. I totally agree with that. I mean, we did all of these things with, I guess, a few principles in mind, which I think we could return to in thinking about regulating AI. One is controlling the concentration of power at the top. How much power is too much power in the in private markets vis-a-vis our government? The second is how do we build power and agency for people at the bottom? And then the third is how do we lay a foundation of security like social security underneath everybody? If we can figure out in our regulation of AI how to deploy those three values and say at the end of the day, we want democratic control. We want power and agency for people and we want economic security. We could think of what this AI moment could be in terms of like a new new deal for people. Well, I mean, I've been saying like I actually think about thinking about AI also as like a cost of living issue for people, right? And so, and corruption is a cost of living issue and health care is a cost of living issue and childcare and elder care and everything else that people are experiencing ranging from how they're interacting with the tariffs to how they're thinking about these questions about gas prices like these are all fundamental cost of living questions, which is why cost of living dominated the midterms, why it is going to dominate the 28 presidential. And I feel like some sort of framework like I've been saying you said new new deal, I've been saying a newer deal, just like some sort of framework that allows you to get at sort of the structural change that you need in the economy feels really important. The thing that makes me nervous about the fact that we need that is if you look at the new deal era and you're at Roosevelt, you spend a lot of time thinking about FDR's legacy, it wasn't quick fixes. And by the way, it wasn't even that all of the policy we got right at once, right? There was a lot of time to like innovate and think about like this structure for social security actually isn't doing what we want it to so we need to do this and you have the capacity to do that in a Congress that was willing to legislate in a way that like we just don't have at this moment. I worry that we, like, govern in these, like, two-year election cycles and something on the scale of a newer or a new, new deal, it just, like, requires you to be able to do more than that. Yeah. I, you know, I worry about the same thing. There's also just a communications thing, like, FDR had his fireside chats. Let us unite in banishing fear. We have provided the machinery to restore our financial system and it is up to you to support and make it work. It is your problem, my friend, your problem no less than it is mine. Together, we cannot fail. He didn't actually get us out of the depression until we went to war, right? And he got re-elected, even in the midst of some serious economic pain. Part of that is because he could narrate to the American people the forces that I'm up against, the kinds of changes that I want to make, they're not going to be here overnight. Here's what I'm doing for you. Here's how I'm fighting for you. When I have a loss, I'm going to explain it to you. We need to be unafraid to have that kind of communications relationship and to say, I'm not going to win every day, but I'm going to give you small proof points that I'm fighting for you on the way to these bigger structural changes. And then you're totally right about Congress, man. We got to do something about Congress needs to step up and do its job again, you know, like, it is meant to be trying to solve these big problems for folks. And it shouldn't be the role, just the executive, the way that we are seeing right now, frankly. And so we do have some real kind of like capacity and structure questions about what would make the institution of Congress able to move, again, the way that the American people want it to. A lot of podcasts and sometimes with things like book recommendations or shout outs. But since we are econwanks, I wanted to try something slightly different, which is what I am calling tentatively economics in the wild. So a econ story that struck you this week that is not midterm related. Since we got to do a bunch of that already, I'll give you mine first, the Dallas Cowboys cheerleaders. By the way, obsessed with, so I will do a shout out plug, obsessed with the Netflix show, America's sweethearts. But the Dallas Cowboys cheerleaders are actually sort of mobilizing and unionizing in an effort to make it such that they're able to collectively bargain for a bigger share of the pie that the Dallas Cowboys currently have, which their current share of the pie is basically non-existent. And so they are using this moment to unionize. That makes them by the way, only the second professional football cheerleading squad that has unionized. And I speculate that the reason that they're able to do this at this moment actually has a lot to do with the Netflix show because in the absence of it, you wouldn't have been able to have the capacity to do this because the team would have said there are thousands of girls trying out to be cheerleaders. And so if you have this posture with respect to the type of bargaining capacity you want, there are other people that are going to take these spots. And I think it's just a very interesting and important case study about worker power. You actually see it play out on the show as well as you have these young women who are remarkable athletes who are advocating for what is like really only fair with respect to the type of commitment that they're making to the organization. And I don't know. I think there's a lot of interesting policy discussions to be had about unionization. But in this case, I have to say I'm really excited for the Dallas Cowboys cheerleaders. Oh, I love that one. You know, I have to tell you, do you watch the show? I haven't watched the show. You got to watch the show. Fair. But be as a native Washingtonian and like a obligatory commander span, I couldn't possibly shout out anything having to do with the Cowboys, so I'm glad you brought it up and I didn't have to, but I am super, super excited about the cheerleaders unionizing. This isn't quite this week, but it just feels so in line with the vibes coming out of last night. I just think it was the the brewers versus the Dodgers leading up to the world series like was such an American story of the little guy beating the Goliath, but also it is a story about money in in sports, right? The reason that the Dodgers can have the players that they have is because of the way that the rules are structured in baseball. There isn't a salary cap. There is flexibility for teams to have more money, spend more money. And it means that that sets the rules for competition in baseball and what you can do. And so, you know, to me, watching the brewers win was not just the tried into American David versus Goliath, but it also said something about the choices we make when we structure markets, the kind of competition that we do or don't want to see. And I think America kind of told us, but kind of don't like that they're Goliaths like that. And maybe we should have different rules so that everybody can compete fairly. I am so proud of two econwongs who just did sports stories in this wrap up. So Elizabeth, thank you so much for being here today. I feel like we have many more such conversations to have in the next couple of years and beyond. So thank you. Thank you. [Music]