Jason Furman
Professor of the Practice of Economic Policy, Harvard Kennedy School

The Covid-19 pandemic continues to take a massive toll on the U.S. economy, causing widespread job loss and suffering. Congress and the Federal Reserve have moved quickly to respond with trillions of dollars of support, and the Democratic House last week passed another stimulus bill for a staggering $3 trillion. As governments around the world spend money to support businesses and workers, there is a critically important conversation to be had about how we spend that money and whether it is possible to not just get the economy back on its feet, but build a cleaner economy too and make investments today that will help to advance the clean energy transition. 

In this edition of Columbia Energy Exchange, host Jason Bordoff is joined by Jason Furman to hear about how the progressive economic policy community thinks about greening economic recovery. From an economic standpoint, what needs to be done to rebuild the economy, what are the criteria for smart stimulus policies, and how might other social objectives like climate change be considered through that lens.  

Jason is Professor of the Practice of Economic Policy at Harvard Kennedy School. He is also nonresident senior fellow at the Peterson Institute for International Economics. Previously, he served for eight years as a top economic advisor to President Obama, including as his chair of the Council of Economic Advisers. He also worked at the Brookings Institution, where he worked with Jason Bordoff, and was a Director of the Hamilton Project and Senior Fellow. He holds a Ph.D. in economics from Harvard University. 

transcript

[00:00:02]
Jason Bordoff:  Hello and welcome to Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University.  I’m Jason Bordoff.  Before we turn to our program this week, I want to take just a moment to say a word of thanks.  Each week you get to hear from me or my co-host Bill Loveless, but we don’t have credits rolling at the end of this show, and so what you don’t hear is the team effort that goes into putting this podcast together.  Two brilliant young women, Torre Lavelle and Genna Morton, help me with research, preparation, and the technology.  Jason Fitzgerald, our talented Audio Engineer, makes sure it sounds just right, especially important as we’ve shifted from doing these in person to doing them remotely.  And our exceptional Communications and Digital Media Director, Artealia Gilliard, helps me in build, develop the ideas, the themes, the guests.  I get to do the fun part, learn new things by asking questions of fascinating people.  But that would not be possible without their hard work, always but especially in these difficult times and I just want to say thank you.  

So now let’s get back to this week show, which is about what the COVID-19 pandemic is doing to the economy, and whether we cannot just rebuild, but rebuild smarter, better and cleaner.  The COVID-19 pandemic of course continues to take a massive toll on the U.S. economy, causing widespread job loss and suffering.  Congress and the Federal Reserve have moved quickly to respond with trillions of dollars of support, the Democratic House just last week passed another stimulus bill for a staggering $3 trillion.

As governments around the world spend money to support businesses and workers, there is a critically important conversation we also need to be having about how we spend that money and whether it is possible to not just get the economy back on its feet, but build a cleaner economy too and make investments today that will help to advance the clean energy transition.  I’ve heard a lot of discussions about this recently in the climate change community, I wanted to hear also that how the progressive economic policy community thinks about this.  From an economic standpoint, what needs to be done to rebuild the economy, what are the criteria for smart stimulus policies and how might other social objectives like climate change be considered through that lens.  

So I reached out to one of the best people I could think of to discuss all of this, my friend and former colleague Jason Furman.  Jason is Professor of Practice at the Harvard Kennedy School, a Nonresident Senior Fellow at the Peterson Institute for International Economics.  He previously served for eight years as a top economic advisor to President Obama, including as his Chair of the Council of Economic Advisers.  He was also at the Brookings Institution, where I also worked with him, where Jason was Director of the Hamilton Project and a Senior Fellow.  He holds a Ph.D. in economics from Harvard University.  

Jason Furman thanks for joining us on Columbia Energy Exchange, good to be with you, I appreciate your time.

[00:02:58]
Jason Furman:   Great to be with you.

[00:03:00]
Jason Bordoff:   So we have a lot to talk about, I kind of want to divide this conversation up and talk a little bit about helping our listeners understand what’s broadly happening with the state of the economy and government efforts to respond and then tie it, specifically which I know it’s not what your sort of day to day focus is as it is for lots of people listening to this podcast about what that might mean for efforts to address problems like climate change and investments in a clean energy economy.  So, to start with the former just we all see the horrendous jobs reports, unemployment numbers coming out, but just explain for our listeners what COVID-19 has done to the U.S. economy, how bad is this in an historical context, how should we think about that?

[00:03:41]
Jason Furman:   Yeah so, the virus as we can all see has ripped apart our economy, caused the largest fastest contraction in economic activity that we’ve ever seen, that’s happened not just in the United States, but around the world.  Later this year, I expect the -- some of the fastest economic growth that we’ve ever seen.  The problem is that fast economic growth may only get us halfway out of the hole that we’re in.  And it’s such a deep hole that if we get halfway out of that hole, we still have a long ways to go.

And there’s two types of dynamics in a business cycle, one is people finding their old job and going back to it, that can happen really quickly, the second is that job isn’t there for you, you need to go find a new one, maybe even you need to find a new one in a new industry, that takes a long time and it’s a long hard slog and that’s what I think we’re most likely in for after the initial rapid spurt of partial rebound.

[00:04:51]
Jason Bordoff:   And the recovery will happen that quickly presumably because the downturn happened that quickly and was intentional policy response, I mean this was done, this was not a problem that originated in the financial sector with problems to the economy, it was a -- somewhat healthy economy that was intentionally sort of put on ice and I guess the point is once you reverse that, you would think much of the problem is how much, but not all of, but much of that activity could bounce back.

[00:05:17]
Jason Furman:   Yeah, exactly.  And then that’s what you see with natural disasters.  Natural disasters tend not to have long lasting problems for economies and part of what we’ve had here is like a natural disaster and that part of it we’ll bounce back from quickly I would expect, but this natural disaster has hit every place in the world and the hurricane has battered over and over again for months, and that’s why, right now, if all the workers were called back from temporary furlough to their jobs, the unemployment rate would still be 9%.  And in some sense that 9% unemployment rate is the underlying optimistic version of where we get if everyone got a vaccine tomorrow.

[00:06:01]
Jason Bordoff:   So, can you tell me what you’re seeing in terms of that pace of recovery in other parts of the world, we’ve seen some countries like China start to reopen, does that tell us something about what we can expect here?

[00:06:13]
Jason Furman:   China had a larger economic contraction in its first quarter than the United States is likely to have even in the second quarter which will be our shutdown period, but they emerged from that with the virus much more under control than the United States looks at to emerge from its lockdown.  So China I think might have effectively made an investment where they paid even bigger cost upfront for more gains later on.  But even in China, economic activity is still greatly inhibited by the virus, there’s much less of the virus than there is here, but people are not going to restaurants, they’re not traveling and I don’t expect any of that to look remotely normal until there is a much better treatment or a vaccine.

[00:07:07]
Jason Bordoff:   And obviously some of our listeners will be particularly interested when all that means for energy demand, we’ve seen a historic collapse in oil use because people are not supposed to be traveling for the most part, have you -- I’m just curious if you’ve seen mobility statistics for China and if they tell us how quickly some of that transportation demand might come back.

[00:07:27]
Jason Furman:   Yeah, I mean you can look at Apple’s mobility statistics, which show how often people are looking for driving directions and in lots of places they went way down, by 40 or 50% and they’re still down about 30%, you see a similar pattern to that in China.  And what’s interesting at least in those mobility statistics is they’re not that different in countries like Korea, Singapore, Taiwan as they are in countries like the United States, the UK and Germany.  Even the places that are supposedly open people don’t seem to be particularly mobile right now.

[00:08:16]
Jason Bordoff:   And that, the estimates from the mainstream agencies like the International Energy Agency show that oil demand will be close to not all the way back, but out of 100 million barrels a day maybe two or three million barrels a day short of where it was before the virus by the end of the year, sounds like you think that may be optimistic.

[00:08:36]
Jason Furman:   Yeah, I don’t have a specific oil forecast, but my own economic forecast would be that economies are operating maybe about 5% below where they normally would be, maybe a bit more than that five to 10% at the end of the year and oil in this case would be operating even, less oil per unit of GDP at the end of the year so, yes I’d have something a lot larger than 3%.

[00:09:06]
Jason Bordoff:   Right --

[00:09:06]
Jason Furman:   On oil.

[00:09:07]
Jason Bordoff:   What -- can you -- so, just tell everyone what’s been done to date to respond to this economic collapse.  We’ve spent somewhere around $3 trillion and people have been following it to some extent and getting a sense for controversial recipients like the LA Lakers, but broadly speaking where has that money gone, in your view is it going to the right places and then what needs to come next?

[00:09:28] 
Jason Furman:  Yeah, no, I think more of it should have gone to the Celtics and less to the Lakers.  The --

[00:09:34]
Jason Bordoff:   You’re a New Yorker by the way, I know you’ve become a Boston sports fan, but you are a New Yorker.

[00:09:39]
Jason Furman:   I don’t -- that’s off the record that I was ever New Yorker, don’t tell people.  The fiscal response has been enormous in the United States, 12% of GDP, that’s four times larger than the fiscal response to any emergency, economic emergency, we’ve ever had, it’s smaller than World War II, larger than any economic emergency.  In the United States, it’s been about twice the size of the fiscal response that you’ve seen in Europe and Japan.  

And the money is partly going to do what it can, which is to fill the part of the hole in demand that the government can fill.  So if you’re unemployed, you’re getting unemployment insurance benefits that are about what you were getting when you were on the job, you’re getting an additional check, family of four, we’d get $3400, there was some, but not enough money for states in that legislation and so -- and there was money for especially small businesses and certain selected, large businesses like the airline industry.  And all of that is designed to solve the part of the problem we can solve, which is a reduction in demand due to people not having incomes.  

The problem is it can’t solve the reduction in demand, due to the fact that you’re terrified to go to a restaurant and it can’t solve supply, which is all the work that can’t get done, because people can’t go into work places and I don’t know that there is a good remedy for those two problems, other than tackling the virus itself.

[00:11:24]
Jason Bordoff:  And it sounds like what you were saying before, which is the hope is because this is temporary we don’t know how long, you want as many of those jobs to come back as possible so, I presume solvency for the businesses themselves is an important priority and that’s being addressed through both fiscal policy and then I guess what the Federal Reserve is doing as well.

[00:11:44]
Jason Furman:   Yeah, there is an extensive set of lending programs, some of them I think have been quite successful in the public market, if you’re Ford motor company and you issue bonds and you borrow money through bonds, you’re able to do that right now, in part because of the expectation that the Fed will be purchasing some of those bonds.  In terms of the lending programs, the paycheck protection plan, the one that’s gotten all the attention and notoriety is really more of a grant administered by the bank and that you don’t need to actually pay back the loan if you’ve brought back employees.  

The Fed will be standing up a so called main street lending program, I don’t expect the take up for it to be very high, because they’re making the criteria under which you get the loans very strict in an effort not to lose money, which I think is the wrong impulse right now, I think we should be willing to take risks and lose some money if needed for this broader sake of the economy.

[00:12:47] 
Jason Bordoff:   I don’t know if this is something you’ve looked at specifically, but I know there were some calls for them to modify the program a week or two ago to expand  the eligibility and people thought that might make it more accessible to some of the oil and gas companies that might otherwise go bankrupt, do you know if that in fact is true and, how much impact, what it might have in the oil sector?

Jason Furman:  Right, they definitely expanded the eligibility for the programs so, for example not requiring you to have a 100% of your employees which is ridiculous idea, I mean some of the worst hit companies, the loan might be the difference between having no employees and having half of your employees, that company should get a loan, they shouldn’t be penalized because they’ve lost a lot of business so, I think that type of change would help oil and gas, but still these are senior loans, the government is going to make sure it gets paid back first, and they pay back over three years.

Lot of these companies won’t be in a position to pay back in a year or two so, I think even if those would help some of the oil companies to have access and they may have, I don’t think anyone is going to have particularly great access to this lending facility unless there’s a much bigger change which would be that the government says they’re willing to lose money on the loans --

[00:14:03]
Jason Bordoff:   Yeah.

[00:14:03] 
Jason Furman:   -- and have some of them not be paid back.  

[00:14:06]
Jason Bordoff:   Is that, I mean it’s obviously it’s controversial about particular support for certain industries and oil and gas is one of those, on the one hand many of these companies were overleveraged in the first place, we want to make progress on climate, and over time use less oil and gas.  On the other hand, it is an industry that is also hit through not necessarily for some companies, any fault of its own, just because this broad policy response to shut down transport, how do you think about the right role for policy to help a sector like that?

[00:14:32] 
Jason Furman:   Yeah, I don’t -- I do think, I mean no fault of its own, the dry cleaner, definitely no fault of their own that my dry cleaner was not prepared for a pandemic.  Oil companies, this is a very extreme event, but they’ve been through a lot of ups and downs in oil prices so, in some sense I think they do need to be prepared for that.  And the second thing is that we have a bankruptcy system in the United States that works quite well and allows companies to continue to operate in the bankruptcy system.

Now if it gets too clogged with too many companies at once, that’s a problem.  If there’s no ability to get finance while you’re in bankruptcy that’s another problem, but I would prefer less to have an industry specific policy and more just let’s make credit available, let’s streamline bankruptcy procedures and any business that can get through this can, but there’s not one particular industry that we’re going to go out and support.

[00:15:35]
Jason Bordoff:   So I want to ask you about again sort of how you think about the right kind of government policy responses here and that will take us to into a discussion about how to think about other social policy objectives like the urgency of the climate crisis.  So the phrase stimulus gets used kind of generally and broadly to mean government spending, but it has a particular meaning, I think in the Keynesian sense and how -- what does that mean to you, how is that different from disaster relief, recovery, longer term investment and what -- how do you think about what fiscal policy should be doing in response to a crisis of this kind?

[00:16:12]
Jason Furman:   In very broad terms the most important priority are the things that if you don’t do them now and you wait six months, it’s a complete disaster and broadly speaking, money for people, loans for businesses would be, my watchwords.  Money for people through the unemployment insurance system, through checks, through what have you, and businesses, loans on very generous terms.  If you wait six months for something like that, it’s a big problem.  And if your sole goal is to have more jobs in the economy in 2021 or 2022 then, more fiscal stimulus this year is the number one priority in achieving that goal.

And it is fiscal stimulus, some people say it’s just relief, it’s just helping families that would be otherwise in a hard time.  Well a family that would’ve been in a hard time, is a family that wasn’t going to spend money, because they couldn’t afford to spend money right now, by giving them money, we’re making it so they can afford to spend money, the difference between those two is fiscal stimulus.  That’s the number one priority though.  There is going to be, even if you do all that, I think very likely a jobs problem in 2021, 2022, 2023 and potentially beyond.  

And, infrastructure, green jobs, retraining programs, community colleges, all of those types of things will take a year or two in many cases to do anything for the economy.  But a year or two from now, I don’t think anyone is going to say why are we doing that, we don’t need to do that, I think that relief will be very welcome.  So I think that is a lower tier priority because if we take an extra six months to pass something like that, that’s not a complete disaster, but in so far as you can walk and chew gum, do the immediate emergency things, grants to people, loans to businesses on generous terms, and do the longer term reconstruction, where are the jobs going to come from, how are we going to prepare the people for the jobs.

[00:18:21] 
Jason Bordoff:  Well I guess that’s the question, can you walk and chew gum?  I mean you were much more closely involved obviously than I was, but I remember in the 2008, 09, financial crisis discussion of the criteria which stimulus had to meet and was often framed as I recall with timely, targeted, and temporary.  And that actually took off the table some things that took longer to put into effect, like investments in infrastructure, in the energy world that might be high speed rail or transmission lines for renewable energy.

This seems like you’re saying and you’ve wrote in Wall Street Journal early in this pandemic, the speed that you saw what was coming and how steep and dramatic this decline would be, the need for government to act quickly and get money out the door quickly, does that need to be the priority and does that maybe come at the expense or should it come at the expense as a matter of good policy of some of those longer term investments.

[00:19:14]  
Jason Furman:  Yeah, if you were doing a constrained optimization, state budgets fiscal years start on July 1st, most states start on July 1st, and with their large reduction in tax revenue and their balance budget requirements, if by July 1st you haven’t gotten them money, they are going to be laying off teachers, they are going to be laying off police officers, that would be a disaster in so many different ways.  And so, if talking about infrastructure or talking about climate change resulted in less money for states and localities in the next bill, I think that would be a big problem.  

If on the other hand, we could do both of these in parallel, that’s what I would be in favor of and one way to do that is to use the normal committee process in Congress, which is you have the leadership driving emergency measures, emergency measures are very short run, they’re like the ones we’ve done so far, the CARES Act.  And then separately you have the relevant committees develop their legislation, it’s not like they have something else to do right now, and pass it.

For example, the highway program, which also covers rail and transit, expires on September 30th.  Have the transportation committees in the House and Senate mark up bills, bring them to the floor, it’s not even necessarily a fiscal stimulus emergency measure, but it is all the more urgent, all the more important than it would otherwise have been because of the emergency that we’re in.

[00:20:55]
Jason Bordoff:  And just so I understand, is the way to think about that sort of  Rahm Emanuel famously saying never miss an opportunity to take advantage of a crisis, I’m getting the quote wrong, but you know the idea, that when the government is going to spend a couple of trillion dollars, let’s solve the problem, and not detract from it, not weaken the economic response, but as long as we have this political moment, when you can spend a bunch of money, let’s also make progress on some  other social objectives like climate, that’s sort of a political argument for doing it, but from your standpoint, from the matter of economic policy do you see economic benefits that would make sense for the purpose of economic recovery to making some of those longer term investment say in clean energy.

[00:21:39] 
Jason Furman:  Yeah, from an economic perspective absolutely, making infrastructure investments, clean energy investments and the like are more important today, than we would’ve thought about them before.  The way I think about them in terms of jobs, if an economy is at full employment, those types of programs aren’t creating any net jobs, because you’re already at full employment, so it’s more of this type of job, less of that type of job, and if you try to create too many jobs, the Fed will raise interest rates a little bit more and undo whatever you were going to do.  That’s in normal times that’s not the economics right now, the economics right now is you get in some sense the double benefit.

One is the standard Keynesian fiscal policy which you could dig a hole in the ground, fill the hole in the ground and you’ve created a job, you’ve created additional demand, and if that’s all you do, that’s worth it in an economy right now.  And then it’s a whole lot better than digging a hole and refilling a hole to have the person do something useful and beneficial from a social perspective in terms of cleaner energy in the like so yeah, I think the arguments are even stronger now than they were before.

[00:22:55]
Jason Bordoff:  And when people in the clean energy and climate world often look at policy priorities, I think there’s often an effort to measure job creation and that was something that happened in the Obama administration too.  It may or may not be the case that the things that are the most important to make progress on reducing emissions are necessarily the ones that lead to the greatest job creation, but it sounds like you’re saying because of where we’re going to be, say a year from now, which is a lower unemployment rate, but still a high one, and it sounds like you’re saying it’s going to take many years to work out of that hole, that actually measuring policy ideas by jobs created is sensible, a sensible thing to do, as by one of the metrics we should be thinking about right now.

[00:23:39]
Jason Furman:  I think it can be included, I wouldn’t place too much weight on it so, I would say go off and do whatever clean energy investment program you were going to do, but make it all the more urgent and important because one of the benefits of it as a whole, is that it’s going to help macro economically so, I wouldn’t try to craft it as a jobs plan, I’d craft it as a clean energy plan, and then make the very correct observation that it would help jobs.  In theory jobs normally shouldn’t be in a cost benefit analysis and right now where jobs are constrained and you might actually be adding net new jobs, they should be so, might be that one, pros and cons of two different thing shifted.  

But just to give an example, I think it matters more that we’re deploying and installing wind and solar than that we’re manufacturing the wind and solar in the United States, by the way there are lot of jobs, as you know better than I do, in deploying and installing wind and solar, but I rather that we’re getting the cheapest best wind and solar panels than caring precisely about where they’re made and so I think when you get too hung up on the jobs, you might end up being counterproductive to your climate goals, you might end up paying more for solar panels, have fewer of them, and just feel better about yourself because they’re stamped with made in America on them.

[00:25:12]
Jason Bordoff:  And that might apply to other things that I think particularly at a time when the cost of borrowing for the government is pretty cheap, if you’re thinking about investments that can pay back over long period of time, some of those will have high job numbers associated with them of an infrastructure, building things, weatherizing homes, installing solar panels.  Some like investments in clean energy innovation are indeed can pay enormous dividends over time, it may be harder to draw immediate employment benefits, but it sounds like you think given in the -- from an economic policy standpoint it is still a sensible thing to invest in those things, not only for the climate benefit, but from the standpoint of economic benefits as well.

[00:25:51]
Jason Furman:  Yeah, and just to put a number, the real interest rate that the government pays right now, that’s the interest rate adjusted for inflation is -0.5%.  What that means if you have an idea that is literally even slightly better than nothing, even actually slightly worse than nothing, you should go ahead and do that idea.  If your idea only has a negative rate of return of -0.1, I wouldn’t actually recommend it, but it still passes the hurdle rate on the government’s current borrowing cost and that does say by the way that investments that have a payoff 10 or 20 years from now that maybe didn’t make sense before, might make more sense now.  So, I think rather than the jobs, some of the time profile of the investment.

And by the way it’s very different now than when we did the Recovery Act in 2009, back then the real interest rate was 2%, it was a lot more costly for the government to borrow then, I mean not that costly, and we should’ve borrowed even more and spent even more, but the fiscal situation today is just -- is in the relevant sense, actually much better than the fiscal situation was in 2009.

[00:27:05]
Jason Bordoff:  Does that mean deficits don’t matter?

[00:27:09]
Jason Furman:  At some point, there’s some constraint, you run up against the productive capacity of the economy and you try to get pass that, you can get a lot of inflation at some point, you’re going to stabilize somewhere, but I don’t think deficits matter a whole lot at this current moment.

[00:27:26]
Jason Bordoff:  And what lessons, you mentioned the 2008, 09 experience, what lessons should we learn from the Recovery Act, ARRA, when we think about designing economic stimulus today and trying to marry it with other objectives like climate change.

[00:27:43]  
Jason Furman:  Start fast, make it big, but you need to stay at it.  Now for some things like unemployment insurance that means as long as we have a high unemployment rate we need expanded unemployment insurance.  For something like clean energy, it means if it spends out two years from now, that money will still be welcome.  I would rather that we take the time and design it right, it’s just a political point, I think frankly the -- it’s unlikely that we’re going to have a big clean energy stimulus plan that passes in the year 2020, the most likely scenario for something like that happens is that Joe Biden wins, and so, I would say, get ready because he’s going to have, if he’s elected President, one shot probably at major fiscal legislation with a 50 vote threshold in the Senate.  

And you’re going to need to get everything that’s really important into that and if you scramble and put it together in two weeks before that legislation, it’s going to be a bit of a mess so, take the time get it right now, but realize you may not be able to actually deploy it until, let’s say March or April of next year, when that one big Joe Biden fiscal bill comes together.  

[00:29:05]
Jason Bordoff:  And what -- I mean just giving advice to sort of the climate community that’s going to thinking about this, if -- it strikes me that to the extent things are framed as climate policies that may actually undermine their chance of passage in some bill like that so, if you’re thinking about both politics, but also what’s good economic policy and the range of options we just talked about in terms of clean energy tax credits, longer term investments in R&D or infrastructure, how would -- do you have a sense of what you would prioritize when it comes to an issue like clean energy?

[00:29:39]
Jason Furman:  I mean first of all there’s a, we’re going to need a highway bill, because the highway program expires on September 30th includes transit and rail.  And ideally we do a five year one, in the past we often we did a multiple set of short term extensions before we got to the longer one.  Trying to make sure that we’re incorporating in that considerations around the cost of carbon so, more transit, more encouraging of fees for highway travel and ideally that you’re paying for that highway plan with something that itself is good for energy, it’s good for congestion, and the like whether that’s a gas tax or even pay-as-you-drive insurance.

The -- on a separate clean energy bill, I’m not sure exactly what I would include in it, I mean as a card carrying economist I’m most excited about a carbon tax, more excited about that than anything that we’re doing with the money, but there’s a lot of investment that we need to do too, certainly would include a lot of speculative R&D that has a potentially large, but potentially longer term payoff not just the installing the technologies today type of things.  

[00:30:58]
Jason Bordoff:  Pay-as-you-drive insurance being an inside joke reference to when I worked for you a long time ago at the Brookings Institution and wrote up that policy idea, which still makes good sense.  But yeah, I ask the question I think that sometimes there could be a perceived or even real, often real tradeoff between the things that in the climate world deliver some of the near-term jobs benefits politically and the things that if you just say look at it through the lens of what delivers the greatest emissions bang for the buck, where we’re making the greatest dent in emissions, those don’t always line up with the things that, you might say, would also kind of check the boxes from the standpoint of the stimulative effect of the -- to the economy.

Just final question, because we wouldn’t want to keep -- we’re just about out of time, but can you step back and just talk more broadly beyond just climate about what this whole episode tells us about the state of the social safety net in the United States and where you think economic policy needs to go, like what is sort of revealed starkly by what we’re seeing now and how we’re responding to our crisis of this magnitude?

[00:32:10]
Jason Furman:  Yeah, it certainly reveals huge holes in the social safety net, I mean the holes that we knew about, but are in stark relief now.  When it comes to paid leave, the only countries in the world that don’t have it are Papua New Guinea, Suriname and the United States, that’s crazy and that’s something that was patched together with a temporary fix for the current moment, but need a permanent fix to that.  

There’s no nationally available paid sick days, there are 28 million people appear to have lost their employer sponsored health insurance and many of them are eligible for the Affordable Care Act, but too many of them are not so, there’s a social insurance problem.  Second issue is the U.S. economy has been bad at handling reallocation, moving people from one sector to another, retraining them, re-skilling them, helping them place into new jobs, that’s not the big problem today.  The problem today is there aren’t enough jobs, but two years from now, I think that will be a lot more of the problem.  

And making the types of investments, community colleges are one of the most effective, but making investments at a scale that you see in other countries I think will be help with that.  And then finally just the productive supply side of our economy, we’ve seen an increase in private investment, over the last many decades, where we’ve seen a big decline in public investment, whether that’s in R&D or in infrastructure and that’s both hurting our growth, but also going to put us in a worse position in terms of jobs as well.  So I think all of those structural problems, the social safety net, the training and retraining workers for jobs, and public investment are going to be all the more important after this episode.

[00:34:13]
Jason Bordoff:  And what’s been your kind of personal experience through this in reflections, have you been teaching remotely and how is that gone, will students come back in the fall, do we know what Harvard’s planning?

[00:34:23]
Jason Furman:  Yeah, I moved my class online after spring break and online education did offer some opportunities.  We didn’t have in person; we got a greater variety of guest lecturers who were willing to come in for half an hour on Zoom than would’ve been willing to fly all the way to Cambridge.  But there is no doubt, there’s no doubt that for many students it was an inferior experience, I don’t know what Harvard is planning for the fall, but if it is online, I know a lot of students have said they won’t want to come back for that, they would rather take time off, and it’s terrible, I don’t think there’s any good option here for universities to follow.

[00:35:06]
Jason Bordoff:  Yeah, we coped as well as we could, but it was certainly not the same experience for students and it’s a hugely uncertain time, of course what we do, we’re kind of fortunate in that, the work we do, is work we can do remotely unlike many people suffering the kind of economic harm you talked about, for the last half hour or so, so as we eluded to a minute ago, when I said I worked for you at Brookings, I had the chance to work with or for you at Brookings in the White House and have learned enormous amount over the years in the course of doing that and always have a chance to learn, when I’m spending time with you.  So thank you for making time to be with me, and all of our listeners today.  Jason Furman, I appreciate you being with us.

[00:35:45]
Jason Furman:  Great discussion, thank you.

[00:35:48]
Jason Bordoff:  And thanks to all of you for listening to this episode of Columbia Energy Exchange.  For more information about the Center on Global Energy Policy visit us online at energypolicy.columbia.edu or follow us on social media at @ColumbiaUEnergy.  I’m Jason Bordoff, thanks for listening.  We’ll see you next week.