Let's start with what happened actually on Thursday just as the president was leaving to go over to Europe. And that's what he
called a framework for something on his build back better plan. Not clear how that's going to develop what's going to turn into
law. But let's assume it was enacted just as it's proposed described by the White House. What would it do in macroeconomic
terms. What would it do to growth. What would it do to inflation. I don't think the effects are likely to be large in
the very short run. But I think over the medium term it'll be a positive for growth because it will expand the capacity of the
economy. And I think there might be some benefit in terms of inflation. I don't think it's likely to be large. I think there
are a number of important investments there including in the bipartisan infrastructure bill which will come along with it. I
think there are some movements to promote clean energy which ultimately I think can help
our economy. I think it's a very positive thing that it still is a significant increase in revenue that matches the increases in
expenditure. So I certainly hope that this bill will pass. It's far from perfect but I think it's a real
achievement and is in many ways one of the most significant pieces of economic legislation we've had. It might be the most
significant between the two bills piece of economic legislation we've had in the 21st century so far. So Larry you mentioned how
it's going to get paid for the proposals at least on taxes. And you saw at the very end they backed off of the so-called
billionaires DAX which is actually a proposed tax on the appreciation of assets held by people rather than income. They
now have sort of a surcharge on multimillionaires as they call them as well as a minimum corporate tax of 15 percent. Is that
as a matter of tax policy a more sensible way to go. I thought the millionaire's tax was not the right thing to do. I thought
the mark to market capital gains aspect was impracticable and I thought the general idea of targeting a few hundred people for a
special tax was something that didn't fit with my sense of the right values. Much better to have a broader base tax. Frankly
David what I think is disturbing is that in the way this bill is likely to pass it's not completely clear yet. Depending on what
happens to state and local taxation there will be a large number of people with incomes of say 8 or 9 million dollars who are
going to see their taxes go down. And I'm not sure that this was a time when people in the top tenth of a percent of the income
distribution top hundredth of a percent of the income distribution should be getting tax cuts. So I'm disappointed
that in a bill is passing only with Democratic support. We're not doing anything about top rate taxpayers until they get above
10 million dollars. We're not doing anything about capital gains. We're not doing anything about carried interest. We're
not doing anything about so-called stepped up basis in the state tax
issues. I think it's an odd thing for there not to have been more taxation on people who can afford to pay it without going
to the rather different stamp of signal singling out a few hundred people. So let's talk about the overall economy here.
We've got numbers out this week showing that growth was slowing as Bill expected but it slowed a bit more than we thought in the
third quarter in terms of GDP at the same time. Corpus continues to move up and we've talked about inflation a fair amount. You
were certainly in the news this week because actually on Sunday CNN played for Janet Yellen the treasury secretary. One of the
things you said on Wall Street week right here. She disagree with it and then you disagreed with her on Twitter. Take us into
that debate that you're having right now with the treasury secretary.
Look I have enormous respect for Secretary Yellen and I hope her judgments about inflation prove to be correct.
I have the view that we've got substantial risks right now. It seems to me that almost everyone is experiencing a shortage of
something. Almost every employer is having trouble finding workers. Those seem to me to be the conditions for inflation to
take a ratchet up from the 2 percent level we've been used to. And I think that. It's going to happen and it's going to happen
with an indefinite horizon unless somebody does something pretty strong to stop it or unless we have some kind of financial
accident. That's the position that I've been trying to make. I was glad to see Secretary Yellen recognize that
certainly out to the second half of next year. So that's almost a year from now. Nine months.
We're we're in agreement and expecting inflation well above 2 percent. I was very glad to see that. We'll see what happens
after that. Certainly a lot can happen both in terms of policy and in terms of the economy until then. But right now I see a
variety of things suggesting that inflation may accelerate starting from the tremendous shortage of labor that we're
dealing with which is I think what held the economy back in terms of the GDP growth figures. So let's talk about those two
things or both how long it's going to last into 2020 to end the shortage of labor because we've had a lot of earnings out this
week and we hear from CEO after CEO about problems in the supply chain in particular on labor. In fact we saw Amazon actually
disappoint the markets because they say they're going to have to spend a lot of money to get the people they need to deliver
things in Christmas. What is the importance of going into 2022 into the middle of 22 maybe even after that. How long does that
affect the economy. You know we'll have to see. We'll have to see at what rate.
Labor supply comes back. And if labor supply comes back when it comes back if it does we'll have to see how much that adds to
spending power. You know if more people start working then more people are going to be earning and more people are going to be
spending. And so in terms of the supply demand balance it may not get us ahead by that large margin. So my own view is to be
quite concerned that we're ratcheting up to a new kind of level of wage expectations. Larry finally as you know we've got a G 20
summit going on in Rome this weekend and then followed by the top 26 in Glasgow. What do you hope. What do you expect might
come out of that in concrete terms. On two fronts. One is the climate but the other one the things they have to address is
really vaccination and getting our arms around a pandemic globally. I hope we're going to see commitments on funding for
vaccines commitments on some kind of governance structure so that it's better managed the next time. And so we're focused on
preventing the next global pandemic. And I hope we're going to see substantial commitments where there is a meaningful prospect
of enforcement on the climate front. I'm not optimistic right now that we're going to see as much progress as I think future
historians will think we needed on either global health or vaccines. But let's see what. Life can always happen in the
course of these meetings. So let me be very concrete for a moment. When we talk about trying to keep it down to one point
five degrees centigrade do they need to come out of COP 26 with some specific commitments about A limiting the use of coal at
some date in the future. It would certainly be very helpful. Or they need to come out with some set of commitments on what
they're going to get done in terms of being able to take carbon out of the atmosphere. We are not currently on a credible
trajectory to anything like one point five. I think it would be a minor miracle if coming out of cop we were committed to such a
trajectory and the sand is running through the hourglass.