July 20, 2021: Brian Deese on President Biden's economic record, six months in

Brian Deese, the President's top economic advisor, spoke with Yahoo Finance's Andy Serwer on the President's accomplishments, the latest on the infrastructure talks, and how he thinks companies should address the labor shortage.

Video Transcript

ANDY SERWER: I'm here with Brian Deese, director of the National Economic Council and President Biden's chief economic advisor. Brian, nice to see you.

BRIAN DEESE: It's great to be here.

ANDY SERWER: President Biden recently looked back at his first six months in office, and noted that, quote, capitalism is alive and very well, touting some of the record numbers. But how much of a threat is vaccine hesitancy and the delta variant to these economic gains, Brian?

BRIAN DEESE: Well, if you take a step back six months in, it's just striking how much progress we've made. 3 million jobs created. That's double the pace of the period prior to that. The rate of growth in 2021 doubled as a result of the actions that we have taken. And you're seeing across America optimism about the future of the country and the future of the economy hitting record highs.

But at the same time, we can't stay-- we can't get complacent. We've always known and the president has always focused on the fact that our-- the pandemic and the economy are inextricably intertwined. It's why we focused so much on getting a vaccination program stood up and oriented. And we've seen record, historic success on that front. But it's also why we need to stay vigilant now.

And so you heard the president, as part of looking back over six months, reinforce just how important it is for those who have yet to be vaccinated to get vaccinated, and for us to continue this focus around the country, in every community of the country. So you're going to continue to see the president do that. But let's make no mistake, we've made extraordinary progress and we've got real, durable momentum in the economy now.

ANDY SERWER: Another interesting thing the president recently said is that he doesn't look to the stock market for indications of the state of the economy, which is in pretty clear contrast with the previous administration. How do you take into account, though, the ups and downs of the market, like today's drop, and overall growth as you plan policies?

BRIAN DEESE: Well, President Biden has always had a distinct view of the economy, which is that we all do better as a country if growth comes from the bottom up and the middle out. And what that means is, if you look at working people across the country, if they do better, they have more job opportunities, their wages are increasing, it's going to mean the entire economy does better, including people at the top. So when that's your focus, what you're focused on is are there jobs for the people who want them, are those jobs paying more, and is there more innovation and more economic opportunity across the country.

We'll see the market go up and go down. I would note that, over the course of this period, we've seen the stock market hit record highs, even with some of the fluctuations, recent fluctuations, including today. But the core objective of the Biden economy is to have that kind of strong, durable growth that gives middle class families more ability to breathe, more economic opportunity. And we're starting to see that. We're starting to see a change in paradigm, certainly from the last administration. But this recovery is starting to show some signs of what it looks like when we have an economy where that growth is coming, and is broadly shared.

ANDY SERWER: Let me switch over and ask you about infrastructure, Brian. What's the latest on the negotiations there? Should investors expect the bipartisan framework going to get done before Congress heads out for the August recess?

BRIAN DEESE: That's definitely our goal. We're making a lot of progress. There's still some issues, but we are making a lot of progress, and we're going to bring this to a head. We have been debating infrastructure as a country for way too long. Infrastructure week has gone on for a long time, and now, we really have an opportunity to bring this to a head.

And like everything in the congressional process, those last pieces are always challenging, but we have a clear agreement. The president shook hands with a group of 10 senators, Republicans and Democrats, in the Oval Office. And he is prepared and excited to honor that agreement and sign that package into law.

And you know, these are things that we really need, and to unlock the productive capacity of our economy, make our highway systems work better, make our ports and airports work better so we can bring goods to market, so that we can keep prices affordable going forward, get broadband to all Americans so we can unleash innovation and allow more small businesses, more innovators around the country to actually contribute to our economy. So these are investments that make a lot of sense. We really can't afford not to make them. And we're certainly hopeful and expect that we're going to make progress here in the very near future.

ANDY SERWER: What do you make of the increased IRS enforcement dropping out of the bipartisan framework? Are you confident the team will be able to find a way to pay for everything?

BRIAN DEESE: Well, this was part of the agreement that the president struck with those lawmakers, Republican and Democrat. And to be clear, this is a provision that doesn't increase taxes on anybody, any corporation or any high-income individual. It just makes sure that people pay the taxes that they are owed. So this is something the president feels strongly about. You look at economists across the board, and they would say this is not only a no-brainer from a policy perspective, but would generate much needed revenue.

So that was part of the deal that the president struck. We are working to try to find some other alternatives, if it's something that Republicans can't move forward on. But we need to get this done as a country. We need to make sure that our tax system works, and that people have trust and faith, that people actually pay the taxes that they're owed, and just because of wealth and privilege, you don't get to operate in a different tax system than everybody else.

ANDY SERWER: Should Medicare drug price and negotiating powers be included in the reconciliation bill?

BRIAN DEESE: That's an issue that the president has consistently argued we need to make progress on. There's no reason why Medicare shouldn't use its pricing power to negotiate for better outcomes. It's better for our nation's seniors. They can get lower drug costs. It's better for our nation's financing, because we're not having to pay exorbitant prices. And by the way, when Medicare has that ability, it actually is going to drive prices down across the board. So we think it's the kind of thing that makes a lot of sense. And there's a lot of support for doing this. It's been talked about for a long time, but like infrastructure, we're hopeful that now is the time where we actually stop talking about it, and actually get it done.

ANDY SERWER: A couple questions about the overall economic situation. What have conversations about inflation been like in recent days in the building behind you? You highlighted the role of things like cars in driving some of the recent spikes. What gives you confidence that it will just be transitory?

BRIAN DEESE: If you look at the composition of price increases over the last three months, what you see is a small share of the components that go into measuring the price indexes are driving a very large share of the increases. So you mentioned cars. It's not just that we have a global problem with supply of semiconductors, but we also-- we saw things like rental car companies in the US sold off their fleets last year, and are now are trying to catch up with the demand we're seeing in the economy. So there's increased pressure.

We expect those things to work themselves out. They're not permanent changes to the structure of our economy. Same with airline prices, hotel prices. We're seeing them come back as demand comes back. But in many cases, not even to the levels of the pre-pandemic economy.

So those are the categories that you would expect you were going to see some significant movement as the economy comes back. So this is something that, along with almost every economic variable, we pay a lot of close attention to, we study and we look forward to. And we recognize that, when consumers see price increases, they notice, but we think that the data certainly indicates that much of what's going on here is these temporary factors that we anticipate will not persist.

ANDY SERWER: And what about labor shortages, Brian? You know, people are seeing these all over the place, employers are. Is there anything the administration can do about it, or it's just a matter of companies paying workers more?

BRIAN DEESE: Well, we have to remember that we are recovering from a historic pandemic. And so there are a number of issues that people who want to re-enter the workforce have to grapple with. The first is the pandemic and the disease. They want to make sure that they feel safe. And as we move forward in vaccinating more of the country, we're seeing more people have that comfort.

A second is child care and school for-- particularly for parents of school-age kids. Do they have the support system in place so that they can go and they can participate fully in the workforce? Getting schools open. That's why this has been such a focus of the administration and the president, is providing the resources to actually get schools open safely, get child care centers open safely.

And we have also seen that we are in a market where there are a lot of job openings. That's a good thing for workers. They have more options. And one of the things that employers can do in that context is pay a fair wage, provide benefits. And we've seen, anecdotally, a lot of employers who have said, you know what, when I raised my wages, I've seen a lot of people come and raise their hand for that work.

So you know, this is a combination of things. We have to recognize that we are coming out of a truly unique pandemic. And at the same time, if worker-- if businesses pay a fair wage, if they offer benefits, we're confident that they're going to find workers when they need them.

ANDY SERWER: Last question, Brian. You have a unique perspective here in that you served in the Obama administration. How do the challenges of the last six months in the Biden administration compare to early on in Obama's presidency, when the US also faced big economic challenges?

BRIAN DEESE: Well, every economic crisis is unique. And early in the Obama administration, we were dealing with a financial crisis that hit at the core of individuals' balance sheets because of the core housing crisis and the decline in prices. So as a result, the challenges there of trying to reinstill trust and reinstill the confidence at the individual household balance sheet level was really paramount.

Here, we have a pandemic crisis. The kinds of things we just discussed about people's hesitance to return to the workforce and safe working conditions, those are unique. And as a result, that's why you've seen the president prioritize an all-out national vaccination effort, and to surge support to families and businesses, to schools, to child care centers to reflect the unique realities of this crisis.

But the good news six months in is that we are in a very different place economically. We're growing jobs at a historic pace. Our economy is growing at a historic place. Unemployment claims are falling at a historic pace. So we've got a lot of momentum, and we just need to seize that, continue that, continue these policies, and finish the job of, as President Biden says, building back better, putting that economic strategy in place for the long term.