>>> LET'S RETURN NOW TO THE PRESIDENTIAL ELECTION AND THE ECONOMY.

FROM INFLATION TO TARIFFS AND THE IMPACT OF IMMIGRATION.

WHICH WOULD EACH CANDIDATE APPROACH LOOK LIKE IN PRACTICE AND WHAT WOULD IT MEAN FOR THE AMERICAN PEOPLE?

WALTER ISAACSON SPOKE WITH --, CHIEF EXECUTIVE --.

>> A FEW MONTHS AGO WE THOUGHT WE MIGHT HAVE TO GET ABOVE 6% UNEMPLOYMENT BUT NOW, ON AND -- INFLATION SEEMS TO BECOME TAMED.

HOW DO WE PULL THAT OFF?

>> WE ARE IN BETTER SHAPE THAN I THOUGHT WE WOULD BE.

INFLATION IS STILL A BIT HIGHER THAN IT SHOULD BE BUT I HOPE IT IS PAINLESS TO GET THE REST OF THE WAY AND A LOT OF THIS IS A COMBINATION OF THE FED ACTING DECISIVELY AND GETTING A LITTLE BIT LUCKY AND HAVING JUST A CREDIBLE SYSTEM WHERE PEOPLE BELIEVE THERE WILL BE 2% INFLATION.

>> WHEN YOU LOOK BAD AT BACK AT IT WAS THIS INFLATION CAUSED BY OVERSPENDING OR WAS IT SUPPLY CHAIN AND OTHER ISSUES THAT WERE TRANSITORY?

>> IT IS BOTH.

SOME OF THE SPENDING ITSELF WAS TRANSITORY.

LARGE CHECKS WENT OUT TO PEOPLE IN 2020 AND 2021 AND NO ONE HAS GOTTEN CHECKS SINCE THEN AND ALSO THE BIG SUPPLY CHAIN PROBLEMS FADED AND SOLVED THEMSELVES AS WELL AND THE LABOR MARKET IS LOOSER.

THERE IS A HIGHER UNEMPLOYMENT RATE TODAY THAN WAS THE CASE TWO YEARS AGO.

>> BUT IN GENERAL WE HAVE INFLATION PRETTY WELL TAMED OR DOWN.

UNEMPLOYMENT IS DOWN AND THE STOCK MARKET IS WAY UP.

IT SEEMS GOOD BUT PEOPLE DON'T FEEL GOOD.

WHY IS THAT?

>> THE UNITED STATES ECONOMY IS THE ENVY OF THE WORLD.

THERE IS NO OTHER COUNTRY IN THE WORLD THAT WOULD RATHER NOT HAVE OUR INFLATION RATE AND INTEREST RATE AND UNEMPLOYMENT RATE THAN WE HAVE RIGHT NOW.

SOME OF THIS IS WE WENT THROUGH A TERRIBLE EXPERIENCE WITH INFLATION.

WHOEVER'S FAULT IT WAS, IT WAS BAD FOR PEOPLE.

IT WAS HARD FOR PEOPLE.

WE ARE ONLY DIGGING OUT FROM IT NOW AND WHEN PEOPLE SAY THE ECONOMY THEY MEAN SOMETHING MUCH BROADER.

THEY WERE THINGS THAT THEY ARE UPSET ABOUT THAT ARE NOT QUITE THE SAME.

>> BUT YOU LOOK AT ONE OF THE FACTORS, WHICH IS HOUSING COST AND THE NEWS THIS WEEK IS EXISTING HOME SALES IN THE UNITED STATES HAVE GONE DOWN MORE THAN ANY TIME IN THE PAST 40 YEARS.

THIS IS THE FIRST TIME WE HAVE HAD A DECLINE IN HOME SALES AND THAT SEEMS TO BE A PART OF THE AFFORDABILITY CRISIS.

>> IT IS NO ACCIDENT THAT HOUSING IS A BIG ISSUE .

HOUSE PRICES ARE UP QUITE A LOT AND AS YOU JUST SAID, THE SALES IS DOWN.

WE ARE NOT MAKING AS MANY HOUSES AS WE WOULD I DAILY BE MAKING.

THIS IS A BIGGER ISSUE TODAY THAN IT HAS BEEN FOR A LONG TIME.

>> YOU TEACH ECONOMICS 10 AT HARVARD AND EVERYBODY KNOWS THE LAWS OF SUPPLY AND DEMAND.

WHY ARE HOUSE PRICES AT A DIFFERENT LEVEL OF SUPPLY AND DEMAND?

>> SUPPLY AND DEMAND IS A BIG PART OF IT.

IN SOME OF THE PLACES THAT PEOPLE MOST WANT TO LIVE, WHICH IS A LOT OF THE COASTAL CITIES, IT IS HARD TO BUILD.

YOU CAN'T BUILD AS HIGH AND MAYBE YOU NEED EXTRA PARKING SPACES OR EXTRA PERMITS.

PLACES LIKE --INCLUDING MINNEAPOLIS THAT HAVE MADE IT EASIER TO BUILD --THEY HAVE NOT SEEING THE HUGE INCREASE IN RENTS.

SUPPLY IS A BIG PART OF THE ANSWER AND A LOT OF THAT >> WHEN YOU SAY SUPPLY REFLECTING LOCAL CHOICES, IS AT THE COST OF CONSTRUCTION OR THAT WE HAVE TOO MUCH NOT IN MY BACKYARD TYPE REGULATION AND TOO MANY BUILDING CODE REGULATIONS AND IT GETS TOO COMPLICATED TO BUILD AFFORDABLE HOUSING?

>> A LITTLE BIT ON THE COST SIDE.

SOME, WE MAKE IT WITH MANY FEWER PEOPLE WHERE THERE ARE ENORMOUS PRODUCTIVITY INCREASES.

TO MAKE A HOUSE WILL BE ABOUT THE SAME AND TOOLS WILL -- SO ON THE COST SIDE THERE IS EFFICIENCIES THAT WE HAVE NOT HAD AND MAYBE THINGS LIKE MORE PREFABRICATED HOMES OR -- FOR AFFORDABLE HOUSING COULD PLAY A ROLE BUT THE BIG THING IS THE NOT IN MY BACKYARD.

THE GOVERNMENT CREATING CONSTRAINTS.

>> WHAT CONSTRAINTS WOULD YOU TAKE OFF IF YOU WERE THE HOUSINGS ARE.

>> IN CAMBRIDGE CITY COUNCIL IS DOING TERRIFIC REFORM .

THEY ARE GOING TO HOPEFULLY MAKE IT SO YOU CAN BUILD UP TO SIX STORIES ANYWHERE IN THE CITY AND YOU CAN BUILD MULTIFAMILY HOUSING.

IF YOU BELIEVE BUILD 10 OR MORE UNITS 20% OF IT WILL NEED TO BE AFFORDABLE AND THEY WILL GET RID OF ROLES LIKE SETBACKS AND THE LIKE AND I HOPE WE DO THAT IN CAMBRIDGE AND GET MORE HOUSES THAT ARE AFFORDABLE AND MORE PEOPLE CAN COME LIVE HERE.

>> KAMALA HARRIS HAS A VERY DETAILED PLAN FOR HOUSING IN AMERICA AND EVEN I GOT CONFUSED.

$25,000 CREDIT HERE FOR FIRST- TIME HOMEBUYERS AND YOU HAVE TO FIGURE OUT WHO IS A FIRST-TIME HOMEBUYER THEN IT GOES UP IN DIFFERENT WAYS.

DO YOU THINK THAT PLAN IS TOO COMPLEX?

>> I THINK THE CORE MOTIVATION IS WE NEED 3 MILLION HOUSES AND I AGREE WITH THAT.

SHE HAS A $40 BILLION FUND TO GIVE INCENTIVES TO CITIES ACROSS THE COUNTRY TO DO WHAT HOPEFULLY CAMBRIDGE IS DOING RIGHT NOW.

ALL OF THE DIFFERENT TAX CREDITS I AGREE WITH.

I THINK THEY ARE QUITE COMPLICATED AND SOME CAN BE COUNTERPRODUCTIVE IF THEY RAISE DEMAND TOO MUCH.

THEY COULD INCREASE PRICES AND NOT LOWER THEM.

>> GIVE ME AN EXAMPLE OF ONE OF HER SUGGESTIONS THAT COULD BE COUNTERPRODUCTIVE?

>> I THINK THAT FIRST TIME BUYER CREDIT WOULD BE GREAT.

YOU ARE HANDING MONEY TO HOMEOWNERS AND NOT HOMEBUYERS AND EVERYONE IN THE COUNTRY CAN USE MONEY AND I AM NOT AGAINST THAT THAT WE HAVE A LARGE BUDGET DEFICIT AND SCARCE RESOURCES.

I THINK THEY ARE POORLY SPENT .

IT IS JUST NOT SOMETHING THAT WE CAN AFFORD GIVEN THE PRIORITIES.

>> I WAS LOOKING AT THE TRUMP POLICY ON HOUSING AND IT WAS NOT VERY SPECIFIC LIKE KAMALA HARRIS BUT PART OF IT WAS JUST GET IMMIGRANTS OUT OF THE COUNTRY.

SEND THEM OUT AND THAT WILL OPEN UP HOUSING.

DOES THAT MAKE SENSE?

OR ARE THERE PROPOSALS FROM THE TRUMP SIDE THAT ARE REASONABLE?

>> I HAVE NOT HEARD ANYTHING FROM TRUMP ON HOUSING OTHER THAN THE ASSERTION OF IMMIGRANTS.

WHEN YOU HAVE IMMIGRANTS IT DOES DRIVE UP HOUSE PRICES BUT IMMIGRANTS ALSO PLAY A ROLE IN THE BUILDING INDUSTRY AND CONSTRUCTING HOUSES.

OVERALL, EVEN IF IT WAS THE CASE THAT EXPELLING IMMIGRANTS WOULD LOWER THE HOUSE PRICES, IT WOULD ONLY LOWER THEM BY A WOULD BE AT AN UNACCEPTABLE COST.

>> IMMIGRATION AND WHAT TO DO ABOUT IMMIGRANTS AND ASYLUM SEEKERS AND UNDOCUMENTED WORKERS IS A HUGE ISSUE.

PRETTY MUCH DRIVING A LOT OF THIS.

YOU WROTE THAT IMMIGRATION IS ACTUALLY ONE OF THE REASONS WE HAVE HAD A STRONG ECONOMIC PERFORMANCE.

EXPLAINED THAT.

>> WE HAVE HAD 3% GROWTH AND WE HAVE HAD TONS AND TONS OF JOBS EVERY MONTH.

THAT WOULD NOT HAVE HAPPENED WITHOUT THIS BIG INFLUX OF IMMIGRANTS.

THE REASON IS THAT THE AMERICAN POPULATION WOULD BE SHRINKING WERE IT NOT FOR IMMIGRATION BECAUSE OF THE FERTILITY RATE BEING BELOW THE REPLACEMENT RATE AND BECAUSE THE POPULATION IS AGING AND MORE PEOPLE ARE RETIRING.

WE ARE AN ECONOMY THAT BENEFITS FROM IMMIGRANTS AND WE ALL RELY ON THEM THAT I DO NOT THINK IT IS AN IDEAL SYSTEM THAT YOU ARE RELYING ON SOMETHING AND NEED SOMETHING THAT YOU DON'T HAVE A FORMAL LEGAL PROCESS TO DO .

THERE IS A SET OF LAWS THAT IF THEY WERE FULLY ENFORCED THEY WOULD BE INHUMANE AND NOT ECONOMICAL BUT, NOT ENFORCING THE LAW IS NOT A GOOD ANSWER EITHER.

>> YOU HAVE WRITTEN ABOUT HOW IMMIGRATION IS HELPING TO PROPEL THE ECONOMY AND OF COURSE, DONALD TRUMP IS SAYING THAT IMMIGRANTS ARE TAKING YOUR JOBS.

IS IT TRUE THAT IMMIGRANTS ARE TAKING PEOPLES JOBS?

>> NO.

IF YOU LOOK AT THE EMPLOYMENT RATE FOR PEOPLE BETWEEN THE AGES OF 25 AND 54, AND THE REASON ECONOMISTS LIKE TO LOOK AT THEM, YOU MIGHT BE IN SCHOOL BELOW THAT SO WE LOOK AT 25-54 MEASURE THESE THINGS.

THEY EMPLOYMENT RATE IS A DECENT AMOUNT HIGHER THAN IT WAS BEFORE COVID .

IT IS THE HIGHEST IT HAS BEEN IN 25 YEARS SO IMMIGRANTS, IF ANYTHING MIGHT'VE BEEN CREATING JOBS BY INCREASING DEMAND AND WORKING WELL TOGETHER AND THE LIKE.

WE HAVE A VERY HIGH EMPLOYMENT RATE RIGHT NOW AND WE MIGHT BE WORSE WITHOUT IMMIGRANTS.

>> THE OTHER BIG ECONOMIC ISSUE IS THE GREAT DIVIDE BETWEEN TRUMP WHO SEEMS TO LIKE TERRORISTS ALMOST FOR THEIR OWN SAKE.

NOT JUST AS A WEAPON TO TRY TO PROTECT SMALL SEGMENTS OF THE ECONOMY BUT THINKING TARIFFS ARE GENERALLY GOOD.

I THINK HE IS RIGHT TO SAY THAT HARRIS IS PART OF THE MAINLINE CONSENSUS THAT FREE TRADE IS GOOD.

DO YOU THINK WE HAVE TO RETHINK OUR RESISTANCE THAT THE A RESISTANCE TO TERRORISTS?

>> I DON'T THINK WE HAVE TO THINK RETHINK IT MUCH AT ALL.

THERE ARE ASPECTS OF THE INTERNATIONAL SYSTEM THAT YOU NEED TO DEAL WITH IN A TARGETED AND FOCUSED WAY.

TARIFFS MIGHT BE PART OF THE ANSWER BUT MORE BROADLY WHEN WE TALK ABOUT BUYING STUFF FROM AUSTRALIA, GERMANY, THE MAJORITY OF WHAT WE BUY FROM CHINA, THE BENEFITS OF FREE TRADE ARE THAT YOU GET BETTER VARIETY AND LOWER PRICES FOR CONSUMERS AND YOU END UP WITH MORE EXPORTS AND MORE HIGHER PAID JOBS IN THE EXPORT SECTOR AND I AM NOT SURE HOW MUCH WE NEED IN TERMS OF MANUFACTURING BEYOND A DEFENSE BASE BUT TERRORISTS ACTUALLY HAVE NOT HELP MANUFACTURING JOBS BECAUSE IF YOU PUT A TARIFF ON STEEL YOU MIGHT HELP SOME STEELWORKERS BUT THEN YOU HURT AUTOWORKERS BECAUSE IT MAKES AMERICAN CARS MORE EXPENSIVE.

WE CANNOT SELL AS MANY OF THEM AROUND THE WORLD SO TERRORISTS ARE JUST A TERRIBLE WAY TO PROTECT MANUFACTURING JOBS AND A LOT OF THEM HAVE INTERMEDIATE INPUTS THEMSELF .

>> A LITTLE BIT OF PUSHBACK .

EVEN ECONOMISTS LIKE DAVID -- TALK ABOUT THE CHINA SHOCK THAT WE LOST HALF 1 MILLION MANUFACTURING JOBS WHEN WE BROUGHT CHINA INTO THE WT L. MAYBE IN THEORY TARIFFS ARE BAD AND FREE TRADE MAKES SENSE THAT, TO A GUY IN A FACTORY THAT IS NOW GONE, ISN'T THAT A BLOW TO OUR ECONOMY?

>> THERE IS A STUDY ABOUT THE CHINA SHOP.

THERE IS A STUDY THAT USES THE SAME TECHNIQUE BY A GREAT TRADE ECONOMISTS AND HE FOUND A SIMILAR NUMBER OF JOBS WERE CREATED IN EXPORTING SO WHAT YOU SEE IS THAT CHINA, AND MOSTLY CHINESE GROWTH THAT WAS MATTERED HERE, THEY CREATED JOBS IN SOME AREAS AND LOST THEM IN OTHERS AND WHAT DOES THAT ON A BIGGER SCALE IS TECHNOLOGY.

ALL OF THE TIME TECHNOLOGY IS DESTROYING SOME JOBS AND IF WE KEPT THE WORLD FROZEN THE WAY IT WAS 15 YEARS AGO OR 100 YEARS AGO, WE WOULD BE MUCH POORER.

WE NEED TO THINK SERIOUSLY ABOUT WHAT WE CAN DO TO HELP PEOPLE BUT, IF THE ANSWER IS TARIFFS, YOU WILL END UP HELPING SOME JOBS AND HURTING OTHER JOBS AND THAT WILL BE A NEGATIVE.

>> ONE OF THE OTHER PROPOSALS THAT VICE PRESIDENT HARRIS HAS MADE IS A WEALTH TAX AND IT HAS NOT BEEN TOTALLY CLEAR HOW THAT WOULD BE DONE .

IF YOU TAX UNREALIZED CAPITAL GAINS.

HOW WOULD YOU STRUCTURE A WEALTH TAX?

OR WOULD YOU JUST SAY IT IS A BAD IDEA?

>> I THINK THERE IS ROOM TO RAISE HIGH TAXES ON HIGH INCOME HOUSEHOLDS BUT THERE IS A LIMITED AMOUNT OF ROOM.

THERE ARE NOT OF ENOUGH TAXES THAT WE COULD RAISE TO PAY FOR EVERYTHING THAT HARRIS WOULD LIKE TO DO AND EVERY DEMOCRATIC PARTY WOULD LIKE TO DO.

BUT THERE IS SOME MONEY THERE.

THE EASIEST THINGS ARE RAISING THE TAX RATE ON CAPITAL GAINS AND PLUGGING UP SOME OF THE LOOPHOLES LIKE THE WAY THAT PEOPLE PAY THEMSELVES THROUGH PASS-THROUGH ENTITIES TO GET A LOWER TAX RATE.

I THINK THERE IS SOME MERIT AND IT IS WORTH CONSIDERING BUT THERE ARE A LOT OF PLACES YOU CAN GO BEFORE YOU GET TO THAT.

>> ONE OF DONALD TRUMP'S IDEAS FOR DEALING WITH THE DEFICIT IS REALLY A SLASHING OF THE FEDERAL GOVERNMENT AND GETTING RID OF THE --DEPARTMENT.

HE HAS TALKED TO ELON MUSK WHO IS USED TO FIRING 85% OF THE WORKFORCE AT HIS COMPANIES WHEN THINGS HAVE GOTTEN TO FLABBY.

DO YOU THINK IT MAKES SENSE TO SEE WHAT WE CAN DO WHAT THE PRESIDENT IN OUR CHENA -- ARGENTINA IS DOING?

>> I DON'T THINK HIS APPROACH TO THAT WILL WORK AND IF IT DID WORK I THINK THE CONSEQUENCES WOULD BE TERRIBLE.

MOST OF OUR GOVERNMENT SPENDING IS ON THINGS LIKE HEALTHCARE AND SOCIAL SECURITY AND HE HAS BASICALLY TAKEN ALL OF THAT OFF THE TABLE SO HE IS STARTING NEED TO GO.

THERE IS FRAUD, WASTE, AND ABUSE IN GOVERNMENT AND IT IS HARD TO TACKLE THAT WITHOUT GETTING TO WHAT A LOT OF PEOPLE CARE ABOUT.

EDUCATION, RESEARCH AND DEVELOPMENT, MEDICAL RESEARCH.

THESE THINGS HAVE INCREDIBLY HIGH RETURNS AND IT WOULD BE A TRAGEDY TO SEE THEM --.

>> WHEN IT COMES TO FOREIGN POLICY THERE ARE A LOT OF PEOPLE IN THE TRUMP ADMINISTRATION THAT ACTED AS GUARDRAILS.

CHIEF OF STAFF JOHN KELLY AND MILLIE.

PEOPLE ARE WORRIED ABOUT IF THEY WERE TO BE GONE, THAT THE PEOPLE THAT PROVIDED SORT OF THE WHEELS OF STABILITY WOULD NOT BE THERE?

>> I AM VERY WORRIED.

FRIENDS OF MINE THAT ARE WILLING TO SERVE HIS ADMINISTRATION AND EVEN WITH HIS FIRST TERM, THE DIRECTION OF ECONOMIC APPOINTMENTS WENT TOWARDS ONES THAT WERE LESS CONSTRAINED ON THE RAW INSTINCTS OF TRUMP AND I AM AFRAID WE COULD SEE THE SAME THING ON THE ECONOMIC SIDE THIS TIME AROUND.

>> THANK YOU FOR JOINING US, JASON FURMAN .