Obama on American politics and economy: the extended Vox conversation

Ezra Klein: So let's start with the economics. We are at a point where the

economy

is growing. We have very high business profits. We have a record stock market, and yet we haven't seen significant wage increases for the American people for decades. How have we gotten to a point where we can have high corporate profits and companies can do so well, but workers don't necessarily share in that prosperity? Barack Obama: Well, this has been a trend that has lasted at least three decades. And this was a major theme in my State of the Union address. Obviously we arrived at a time of enormous crisis, and the first task was to make sure that we didn't have a full-blown global economic crisis.

The steps we took, whether it was making sure the financial system was working: saving the auto industry, encouraging state and local spending. All of those things made a difference in boosting the

economy

, and then it's been a tough but steady road to the point where we're now growing at a solid pace and unemployment has fallen faster than at any time in recent years. 30 years. In a way, we are now back to the position where we can focus on what this long-term trend is, and that is that an increasing proportion of wealth and income is going to the highest positions, and to the upper class. middle class or people trying to enter the middle class, feeling increasingly pressured because their salaries have stagnated.

Now, there are a lot of reasons for this. Part of this has to do with technology and the elimination of entire job sectors – travel agents, bank tellers, many middle managers – due to the efficiency of the Internet and a paperless office. A lot of this has to do with globalization and the recovery of the rest of the world. After World War II, we simply had enormous structural advantages because our competitors had been devastated by war and we had also made investments that put us ahead of the curve, whether in education, infrastructure or research and development. And around the '70s and '80s and then accelerating beyond that, those advantages disappeared at the same time that, thanks to technologies, companies are becoming much more efficient and a final component of this is that workers had less and less influence due to changes in labor laws and the ability of capital to move and labor not to move.

You combine all those things and you put workers in a more difficult position. So our job now is to create additional tools that, first and foremost, ensure that everyone has a base of support to be able to succeed in a fast-moving economy. Whether it's health care surviving job loss, or making sure we have child care that allows a two-working family to thrive while still caring for their children. Have a certain base in terms of salaries, through the minimum wage. So that's a set of issues. A second set of questions then is: how do we ensure that everyone has the tools to succeed in an economy where they have to constantly adapt?

And how are they able to move up the value chain, essentially because they can work in professions with higher wages and higher skills, and were they able to compete for those jobs internationally? Then the third thing is to make sure that we have an economy that is productive. Now, if we do all of those things, then what I'm confident about is that we can continue to reduce the unemployment rate, increase the participation rate, and continue to grow and increase productivity. We're still going to have a broader, longer-term global question: How can we make sure the people at the top are doing enough of their share?

The winner-take-all aspect of this modern economy means that there are some people who simply control enormous amounts of wealth. We don't really mind their success, on the other hand, just as a practical matter, if we're going to pay for schools, roads, etc., and you know, fifty or eighty people have both a wealth of three billion, you know you're going to have problems. to make sure we are investing enough in the common good to move forward. So that's a long-term question. But right now, there are some very specific things we can do that can make a difference and help middle class families.

And that's why I called it middle-class economics. Ezra: To focus a little bit on that long-term question, does that put us in a long-term place where redistribution becomes, in some sense, a positive good in itself, that you have an economy or potentially you have the government? playing the role? The role is not to drive the engine of growth, which is what had to be done after the financial crisis, but to ensure that, as long as that engine of growth is running, it ensures that a sufficient amount of the profits are shared. and prosperity so that political support so that this fundamental economic model remains strong?

Obama: It's always been that way. I don't think that's completely new. The fact of the matter is that, relative to our post-war history, taxes now are neither particularly high nor particularly progressive compared to what they were, say, in the late 1950s or 1960s. And there has always been the notion that for a country to prosper, there are some things, as Lincoln says, that we can do better together than by ourselves. And whether it's building roads, establishing effective power grids, or ensuring that we have high-quality public education, that teachers are paid enough, the market is not going to cover those things.

And we have to do it together. Basic research falls into that category. So that's always been true. I think part of what has changed is that a lot of the burden of ensuring that the pie was shared widely took place before the government even got involved. If you had stronger unions, you had higher wages. If you had a corporate culture that felt a sense of place and commitment, so that the CEO was in Pittsburgh or Detroit and felt obligated, partly because of social pressure but partly because he felt a real affinity toward the community, to reinvest. in that community and be seen as a good corporate citizen.

Today what we have are quarterly earnings reports, CEO compensation levels that are directly tied to those quarterly earnings, we have international capital that demands short-term profit maximization. And so what happens is that a lot of the distributional issues that used to be addressed in the market through living wages or health care or defined benefit pension plans, all of those things get eliminated. And the average employee, the average worker, doesn't feel any benefit. So part of our job is what can the government do directly through tax policy? What we have proposed, for example, in terms of capital gains.

That would make a big difference in our ability to give a tax break to a working mother to care for her children. And that's smart policy, and there's no evidence that it harms the incentives of people at Google, Microsoft, or Uber not to invent what they invent or not provide the services they provide. It just means that instead of 20 billion dollars, maybe they have 18. Right? But it does mean that the mother can go to work without worrying that her child is not safe. We also have to focus on the front. Even before taxes are paid, are there ways to increase bargaining power and... ensure that an employee has some... measurable increases in income, wealth, and security as a result of an improving economy? .

And that's where issues like labor laws make a difference, that's where, for example, in shareholder meetings, and in trying to change the culture in terms of compensation at the corporate level. Those things could make a difference. And there have been some interesting

conversation

s globally about topics like inclusive capitalism and how we can make it work for everyone. Ezra: When you dig into that pre-tax portion, one thing you can find in salaries is healthcare costs. Obama: Yes. Ezra: And when you dig into health care costs, one thing you discover is that one of the main reasons Americans pay so much more is that when we go to a hospital, to an MRI, to a appendectomy, or even a bottle of cholesterol medication, cost much more for an American to buy than in Germany, Japan, Canada, or Great Britain.

Why do you think Americans pay much higher health care prices than other countries? Obama: Well, you know there are a lot of theories about this. But I think the evidence points to a couple of key factors. One is that we have a third-party system. We basically have a system where everyone gets their health insurance through their employers. Obviously, the Affordable Care Act, Obamacare, helps fill the gap for those who are not in that system. But those of us who have an insurer, we don't track it. And then the market becomes very opaque and very difficult to penetrate.

I think healthcare providers can charge without much fear of someone looking over their shoulder and asking: why does it cost so much? So that's part of it. That's one reason the Affordable Care Act has put a lot of attention into ensuring that uninsured people have peace of mind, and people who currently have insurance but could eventually lose it or have pre-existing conditions will have That, that is obviously the moral basis of what we did. But people haven't paid as much attention to the delivery system reforms that we're also trying to implement through the Affordable Care Act.

I cannot take credit for the four years of lowest health care inflation in fifty years, which we have seen since the passage of the Affordable Care Act. I think some of the trends were already on the way. But we are accelerating many reforms, for example. What do we do to make sure that instead of paying a hospital doctor simply to provide a service, we make sure that they are rewarded for a good outcome? Which may mean, in some cases, less testing or a less expensive generic drug, or simply making sure all your employees wash their hands to reduce the infection rate, or making sure hospitals are reimbursed when there is a rate. lower readmissions. , unlike when they are doing more things.

And I think using Medicare as a lever is creating an environment in healthcare where we can start to get better outcomes and reduce costs at the same time. There will still be those who argue that unless a single-payer system is achieved, all the efficiencies will never be achieved. There are certain areas, such as drugs, where the fact that Congress, and the Republican Party in particular, has not resisted allowing drug makers and Medicare to negotiate for the lowest price. The result is that we pay much more than we should. But if we pay four, five, six or eight percent more than other countries for the same results, I would be quite happy if we paid just two or three percent more.

Because that represents hundreds of billions of dollars and means we can do a lot with that money. Ezra: When you talk about Medicare as leverage, Medicare tends to pay much less per service than private insurers, by some margin. Before single payer, there is also the occasionally heard idea of ​​allowing private insurers to join with Medicare, with Medicaid, to jointly negotiate prices. Do you think it is a good idea? Obama: I think moving in the direction where consumers and others can have more power in the marketplace, particularly when it comes to drugs, makes a lot of sense.

Now you will hear from pharmaceutical companies that part of the reason other countries pay less for medicines is that they do not innovate. Basically, through our system, we subsidize innovation and other countries benefit. There's probably a little bit of truth in that, but when you look at the number of innovative drugs and the amount of money that pharmaceutical companies are now investing in research and where they're investing it, a lot of that money is actually in redesign, modestly, existing drugs in order to renew patents and maintain higher prices and greater profits. That's not entirely true... but there is something to that.

Therefore, a lot of savings could be achieved and at the same time ensure that our pharmaceutical industry is the best in the world and continues to make healthy profits. Ezra: To turn to

politics

a little bit, at this point, according to the polls, you are actually the most polarizing president since we started polling, but before you the recordIt was set by George W. Bush, and before George W. Bush the record. It was set by Bill Clinton. There seems to be something structural going on there in terms of partisan polarization and how it affects approval ratings and cooperation with presidents.

In your State of the Union you responded to critics who say the idea of ​​healing some of these divisions is naive or impossible. So when you welcome your successor into office, what would you tell him or her that is worth trying and that you think can still work and would reduce polarization? Obama: Well, there are a couple of things that, in my opinion, at least contribute to our

politics

being more polarized than people actually are. And I think most people just feel it in their daily lives. Everyone has a family member or a very good friend from high school who is on the opposite side of the political spectrum.

And yet, we still love them, right? Everyone goes to a football game, or watches their kids, trains, and sees parents who they think are wonderful people and then if they make a comment about politics they suddenly say, 'I can't believe you think that!' !' But a lot of this has to do with the fact that a) the Balkanization of the media means that we simply don't have a common place where we get common facts and a common view of the world like we did twenty or thirty years ago. And that continues to accelerate, you know, and I'm not the first to notice this, but you have the Fox News Rush Limbaugh people and then you have the MSNBC people and...

I don't know where Vox falls on that, but I guess you guys are for the nerdy brainiac types. But the point is that the technology that brings the world closer to us also allows us to narrow our point of view. That contributed to it. Gerrymandering contributes to this. There is no incentive for most members of Congress, at least on the House side, in congressional districts, to even bother trying to appeal. And a lot of this has to do with unlimited money. So people are absorbing a completely different reality when it comes to politics, although the way they live their lives and interact with each other is not as polarizing.

So my advice to a future president is to increasingly try to avoid traditional spaces that create divisions and try to find new spaces within these new media that are more outlandish and less predictable. You know, yesterday I did three interviews with YouTube stars who generally don't spend a lot of time talking about politics. And the reason we did it is because they're reaching viewers who don't want to be put into a particular camp, on the other hand, when you talk to them very specifically about college costs or about health care or about any other topic. things that affect their individual lives, it turns out that you can probably reach a pretty good consensus.

That doesn't ignore the fact that I would love to see some constitutional process that would allow us to regulate campaign spending like we used to, and maybe even improve it. I would love to see changes at the state level that reduce political gerrymandering. There are all kinds of structural things that I would like to see that I think would improve this, but, you know, there have been periods in the past where we have been quite polarized. I think there just weren't any polls. As I remember there was a whole civil war, that was a good example of polarization that occurred.

Ezra: Do you think that if we don't achieve some of those structural reforms, and more specifically if we continue down this path, in terms of where the parties are in Congress, that there will be ways to govern with polarization? It occurs to me that your argument when you took office, but before you, Bush was a "unifier, not a divider," and before him, Clinton, who was going to moderate and change the Democratic Party with his sort of Third Party approach Via, the latest A couple of presidents have come to power promising that the way they would do things is to reduce polarization.

Is there an argument or approach that can be taken to govern in the midst of polarization? Obama: A couple of observations. Number one is that in American history, even during the so-called golden age, where, you know, there were liberal Republicans and conservative Democrats and deals were being made in Congress. Generally speaking, important things were not done unless there was or had been a major crisis and/or there were large majorities of one party controlling Congress and a president of the same party. I mean, that's just been the story. There have been exceptions, but that has often been the case in terms of large muscle movements in the political system.

And you know, in my first two years in office, when I had a Democratic majority, a Democratic House and Senate, we were as productive as any time since Lyndon Johnson. And when most left, some things were blocked. Probably the only thing we could change without a constitutional amendment that would make a difference here would be eliminating the routine use of the filibuster in the Senate. Because I think that, yes, in an era in which the parties are more polarized, it almost guarantees greater stagnation and less clarity in terms of the parties' positions. There is nothing in the constitution that requires it.

The framers were pretty good at designing a house, a senate, two-year terms versus six years, and each state got two senators. There were plenty of things there to ensure that the majority didn't get out of control. The filibuster in this modern era probably simply takes it too far in the direction of a majority party being unable to govern effectively and advance its platform. And I think that's an area where we can make some improvements. Ezra: One of the powerful things that has happened as polarization has increased politically is that it has begun to structure other identities of people.

What interests me especially here is race. If you look at the polls on the OJ Simpson verdict or the Bernhard Goetz shooting in New York, you basically couldn't tell Republicans and Democrats apart. Now, if you look at the Zimmerman verdict or what's happening in Ferguson, opinion on racial issues is very divided by party. Are you worried about the fusion of a kind of racial and partisan identity? Obama: I don't worry about it because I don't think it's going to last. I am deeply concerned about the immediate consequences of mistrust between police and minority communities. I think there are things we can do to train our police force and make sure everyone is treated fairly.

And the task force I assigned after the Ferguson and New York cases aims to produce very specific tools so we can address it. But in the long term I am quite optimistic and the reason is that this country is becoming more and more a hodgepodge of people. Again, this is an example where things seem very polarized nationally and under the media spotlight, but when you go out into the communities, you know that one of the best things about being president is that you travel all over. the country, goes to Tennessee and turns out you have a huge Kurdish community.

And you go to a small town in Iowa and you see a Hasidic Jewish community, and then you see a group of black and white interracial couples running around with their kids. And this is in these small farming communities and you have Latinos in the classrooms when you visit the schools there. So people are becoming more comfortable with the diversity of this country, they are much more sophisticated both in the cultural differences and, more importantly, in the basic commonalities that we have. And you know the key is to make sure that our politics and our politicians tap into that better set of impulses rather than our most basic fears.

And my gut tells me, and I've seen it in my own career and you see it in general, a politician who plays on those fears in America, I don't think over time he's going to get much traction. Even, you know, it's not a perfect analogy, but if you think about how quickly the whole issue of the LGBT community and discrimination against gays and lesbians has changed. I think the Republican Party, even the most conservative, has much less ability to express discriminatory opinions than it did 10 years ago. And that is a source of optimism. It gives me hope.

Ezra: On Obamacare, something that members of your administration have always said, and I think you may have said, there's been a lot of talk about it being a good start, a platform to start building on. It is full of experiments, the idea is that there will be learning and there will be changes. There's been talk, now that we're in year two of open enrollment, what would you like to see if Congress was able to take a bill, modify it, improve it, change it, and build on that platform? What specifically did you want there originally or what have we learned since it went live?

How would you like to see it improved? Obama: Well, I'm not sure, Ezra, that we've been around enough years to know exactly what needs to be improved and where there are still gaps. It's been a year. So far the verdict is that this is working for many people. There are 10 million people enrolled, there are more people enrolled in expanded Medicaid coverage, healthcare inflation has been seen to remain low or even significantly lower than before the ACA was passed. past, satisfaction with insurance appears to be high. We have not seen major alterations in the medical system that many people had predicted.

So there are a lot of things that are working. Over time, I think we'll see if we can do more in reforming the delivery system, making sure we fill the gaps in those states that haven't expanded Medicaid. The big problem we have now with Obamacare is that it was designed to ensure that a subset of people qualified for Medicaid and that's how they were going to get coverage, and others were going to go to the exchanges because they had a little bit of a higher income. And because of the Roberts Court decision that we couldn't incentivize states to expand Medicaid in the way we had originally envisioned, there are a lot of really big states, there are tens of millions of people who can't get their Medicaid coverage.

And so there is this gap. And that's probably the biggest challenge for us. The good news is that, slowly, just like the original Medicaid program, you are starting to see the Republican governor and Republican state legislatures realize that we are cutting off our own noses to spite ourselves. We have an ideological objection to us helping our own constituents and our own health care systems. And you have to recognize that there are people like John Kasich in Ohio and Snyder in Michigan and now, more recently, the governor of Alaska and others who say, 'You know what's right.' Let’s go ahead and expand it.” So until that is resolved, I don't think we will fully know where there are still gaps in coverage and what else we need to do.

But I think so far, at least, the performance of the plans themselves, not the website in the first three months but the performance of the actual plans, has at least met and perhaps exceeded many people's expectations. The website, by the way, now works very well. Ezra: I'm going to go out and let Matt in. Thank you very much for taking the time, sir. Obama: Thank you, I really enjoyed it.