Austan Goolsbee, Professor of Economics at the University of Chicago Booth School of Business and former Chairman of the Council of Economic Advisers under Obama joins Yahoo Finance with his take on the 2020 Presidential election.
JULIE HYMAN: We have all been talking about what happens to stimulus given the outcome of this election. But first I'll ask you, how you feeling when we're looking at the latest? You just heard Jon talking about awaiting these few states. What is the Biden, what are you feeling like? What's the Biden camp feeling like in terms of the prospects here?
AUSTAN GOOLSBEE: Well, I'm not, I don't 100% know what the campaign is feeling. I, like many people, I know I'm very tired from staying up late waiting for these counts. I think the, who's named the president is obviously most important. What then happens on the second stage with the Senate, It looks like it will probably be Republican control. That makes a huge difference, as we'll describe, of what you expect to happen on economic policy.
But even there we have these little flurries of uncertainty that if the races in Georgia end up going to two runoffs, then it's still theoretically possible that the Democrats could take control of the Senate. So I think we're just in this mode of sit and wait. And while you're waiting, hope you don't get the coronavirus.
BRIAN SOZZI: Austan, what's the one big economic policy you think a President Biden Joe Biden could get through if you do have that divided government?
AUSTAN GOOLSBEE: Well, part of that depends on what attitude Mitch McConnell and the Republicans in the Senate are going to take. Most of the Democrats I know say, well, we already know that he's just going to do what he did to Obama. If so, then the space of common ground is maybe smaller. But I think A, on coronavirus rescue and relief, I actually think that there's going to be a lot of common ground there. Even matters like money to the states and the cities. Red states are dying too. I mean, everybody, all the states are getting crushed from the economic decline.
So I think there probably is some space in that that they could agree on. And I still think that several of the aspects of the Biden plan are historically bipartisan in nature. Emphasis on infrastructure, emphasis on energy, emphasis on health care. Those don't have to be purely confrontational. I mean, the last four five years we've gotten into a very confrontational mindset on those. But there is an older history where some of those were bipartisan.
MYLES UDLAND: And thinking about some of those issues, Austan, when you look out towards the next decade, even through another stimulus package, we're still a long way to go with this recovery to get back to the labor market that we were enjoying before the pandemic. I mean, those are the kinds of steps that you think a Biden administration would need to take in terms of programs to pursue to bring the economy back, or at least a labor market back to where it was.
AUSTAN GOOLSBEE: I absolutely do. I think that the Biden administration, and they kind of outlined that as they were going along in Build Back Better of how important. It would be to try to get it back to where, not just to where we were before, but back onto the growth path we were on before. That's still in this space of, we don't know what will happen. Because we don't know whether the, if Joe Biden becomes the president and if Republicans take the Senate, is Mitch McConnell's attitude going to be purely Dr. No. No, no, no, I won't approve anything?
Or are they going to be open to reaching some common ground if they were reached out to? I think that space of getting the labor market back, when you see the kinds of continuing and new unemployment claims that we saw this morning, where we've still got many hundreds of thousands of people losing their job for the first time this week, that suggests we might not get back to where we were before four years unless we take some more action. Hopefully, that will be a motivator.
JULIE HYMAN: Hopefully, Austan, but it hasn't seemed to be enough of a motivator thus far. When we, everybody is trying.
AUSTAN GOOLSBEE: True.
JULIE HYMAN: --to [INAUDIBLE] about what's going to happen.
AUSTAN GOOLSBEE: The only thing I'll say about this is, it is Congress's and the president's fault in one sense. But in a different way, if you look at the history of our economic policymaking, we never get anything done right before an election. So I was not surprised. I was saying for a long, for several months, I didn't think they'd be able to reach agreement before the election, just because it's just too intensely partisan at that moment. So now maybe if we can get resolution to this election, we can put that part behind us.
JULIE HYMAN: So let's say then, that there will be some kind of agreement. I mean, obviously, the Democrats want larger rather than smaller in terms of a stimulus. What's the minimum size a stimulus can be to still be effective? Or is anything better than nothing?
AUSTAN GOOLSBEE: Well, I mean, the first thing I'd say is, I don't really consider this stimulus. I really think that what we're talking about here is rescue and relief. It's not about trying to jumpstart the economy. It's not going to jumpstart the economy. We're just trying to keep people from getting evicted, keep food on their table, keep businesses from shutting down.
The answer to what's the minimum size depends critically on two things. The first and most important of which is, are we going to get control of the spread of the disease? I mean, the disease is running rampant out of control. If that happens, the number's got to be in the trillions. I mean, the CARES Act goes for a limited duration and is in the trillions. And that's what it costs to keep the economy afloat if you're not going to control the virus.
If we can get control of virus, then the question of what's a minimum size depends on how long do we have to stave this off for. Till we get a vaccine, till we get some other treatments. And so there, like I said, if we're going, if we're measuring the time in six months to a year increments, the cost is in the trillions, we know that. That's the run rate.