Ron Klain is the White House Chief of Staff under President Joe Biden. He served in the two previous Democratic White House administrations that included his role as President Obama's Ebola Response Director.
Robert Wolf worked in the Obama administration, serving on the Economic Recovery Advisory Board, the Council on Jobs and Competitiveness and the Export Council. He is fonder of 32 Advisors, an investment firm holding company, and was previously CEO of UBS Americas.
MODERATOR
SPEAKER
Ron Klain
White House Chief of Staff under President Joe Biden
Robert Wolf
Founder
32 Advisors
TIMESTAMPS
EPISODE TRANSCRIPT
Robert Wolf: (00:06)
Ron, this is truly an honor to interview you, especially during such incredibly challenging times at the White House, and throughout the globe. As you know, a few years ago, the SALT Conference had the honor of hosting then Private Citizen, and now POTUS, and your boss, President Biden. So, before I begin, on behalf of SALT and its founder, Anthony Scaramucci, we want to thank you. We're going to cover a few topics, but the thousands of attendees today watching live and streaming are mainly from financial services. So, we're going to start with the economy.
Robert Wolf: (00:44)
Ron, we've seen over the last three months, over 700,000 monthly job gains. I mean, really remarkable numbers. There continues to be a large number of unemployed, but what's amazing, and really for one of the first times, we have actually more jobs available than those unemployed, almost 10 million now. The GOP gladly says, "You're just way too generous. You're paying people to stay home," whereas the administration often talks about, "This is mainly COVID-related, childcare, elder care, healthcare," and just the change that's taken place in a post-pandemic world. So, I'd like to ask you, how do you close the gap and how do you see it?
Ron Klain: (01:32)
Well, first of all, Robert, thank you very much for having me. I appreciate being invited to speak to the attendees at the SALT Conference. It's always a great opportunity to get our message out and to answer some questions, and always great to be with you-
Robert Wolf: (01:43)
Thank you.
Ron Klain: (01:44)
... even if virtually, Robert. Look, I think we've gone through a difficult year here, as we've transitioned from a pandemic year to hopefully getting back closer to normal. The three months before Joe Biden became president, the economy created 50,000 jobs a month. The past few months, as you noted, it's been 700,000 jobs. And so, we're making a lot of progress, but I think the transition from a shutdown, shuttered economy to a fully open, reopened, moving economy is going to have some fits and starts, and is going to have some adjustments and some kind of growing pains, if you will. And so, that's what we're seeing, I think, with all these open jobs not yet filled.
Ron Klain: (02:24)
In terms of the generosity of unemployment benefits, well, however people see that, what we know is this fact: those extended unemployment benefits ended last week. So, right now, there's no one in America getting the extra $300 a week, no one in America who were in that group of what we call Pandemic Unemployment Assistance, big economy workers who weren't otherwise eligible for unemployment who got unemployment because of special benefits. No one in the group anymore who's getting the super-extended unemployment, the additional 49 weeks on top of the 26 weeks. So, those programs have now come to an end, and I think you're going to see more and more of those jobs filled, but I think what we have to do is finish the work of going back from pandemic to normal.
Ron Klain: (03:10)
That means getting people the childcare they need. I think we had a big moment the past couple of weeks as school started to reopen, sometimes for the first time. I think New York City was the first day today. The students were back in school in 18 months. So, our lives as a country, our lives as a society, were badly disrupted in 2020, and we had a bungled response to the pandemic. And so, I think this year as we've gotten people vaccinated, we're getting people back to work, the unemployment rate's down to 5.2%, created a lot of jobs, I think you're going to continue to see that transition back to more economic normalcy, as the year continues to unfold.
Robert Wolf: (03:46)
Well, that brings us, and we're going to go into childcare and elder care, but I think the next question I want to discuss is infrastructure. I am someone, and you know this, that would like it to pass tomorrow. My guess is there's a lot of people in the White House that would like to pass it tomorrow. It's a 550 billion bipartisan bill. President Biden is the president about bipartisanship. He touts it all the time, it was one of the reasons I think the nation elected him. That being said, we're at this impasse. Why aren't we passing it today when unions support it, businesses support it, polling supports it? What are we waiting for?
Ron Klain: (04:31)
Well, look, I think it's working its way through the legislative process, like everything else. We haven't made this kind of investment in infrastructure since the 1950s. So, we're talking about a lot of investments that are decades overdue, and we'd all like the legislative process to work lickety-split. I think we're on the verge of breaking, as I said, a 50-year, 60-year, 70-year deadlock, and finally getting a bipartisan infrastructure bill. I hope it passes in the next few weeks and gets to the president's desk. I think the thing we should be remarking is not that it's going so slow but really, by historical standards, it's a lot of progress very, very quickly.
Ron Klain: (05:06)
It has been bipartisan as you noted, Robert. It addresses very traditional forms of infrastructure, long overdue investments in roads, in bridges, and highways, those sorts of things, but also some new infrastructure. It really gives a chance to connect every single American to high-speed internet. It replaces all the lead pipes that still bring leaded water to too many of our schools, childcare centers, too many homes. It's a record investment in electric charging stations for electric vehicles, so we can really move into the clean energy economy. So, we're very excited about that bipartisan infrastructure plan. We're looking forward to it passing [crosstalk 00:05:42].
Robert Wolf: (05:42)
I'm always smiling, because I actually testified, I think it was 2009 or '10 on infrastructure. So in a way, I'm saying to myself, I think you made a good point. It's actually September 29th possibly, it may pass the legislative action, but I would say it's so long overdue. You guys have been at the forefront. It's something that I think I've heard President Biden talk about so often. I would say the anxiousness is every second, that people really are saying this, and we're going to talk about climate action, when you talked about kind of the changes being made.
Robert Wolf: (06:22)
I'll give you kind of the pass on, okay, infrastructure's around the corner. The one that seems a little less around the corner, and maybe in some ways, as if not more important, because it really impacts what I would say, the social agenda of Build Back Better, President Biden's main plan, which is really the reconciliation package, which is three and a half trillion. It's healthcare, it's elder care, it's childcare, it's climate action. From where I sit, it feels like it won't be north of two trillion, and I know that a lot of the Progressives want to tie it to the infrastructure bill. So one, do you think the infrastructure can pass without it? And number two, if it ends up being around two trillion, will that be big enough to get what you need to get done on the most important priorities?
Ron Klain: (07:19)
Well, first of all, we want both these bills on the president's desk, and that's how the president laid it out when he stood before Congress and the country in April and laid out, and the joint session of Congress has plans for what we called then the American Jobs Plan and the American Families Plan. The Jobs Plan has kind of morphed into the bipartisan infrastructure bill. The Families Plan is now the reconciliation bill, or what we like to call Build Back Better, because no one really likes the word "reconciliation bill." And so, we're making progress on both these things. It's a very bold, big agenda, and again, I think the amazing thing is Congress has moved as much of it as quickly as it has. We're only in the eighth month of Joe Biden's presidency, and here we are kind of in the final stages of getting both these bills to the president's desk. I think it's a great credit to everyone who's been working on it.
Ron Klain: (08:05)
And so, I think that in terms of the size of the Build Back Better Plan, I know the president's endorsed, and his plan was about a $3.5 trillion gross cost. It's always important. I always hate these numbers because the truth is, the cost of the Build Back Better Plan is zero, because we have proposed a way to pay for every single penny of spending in that plan, with a penny of revenue increases. Now, four years ago, people talked about Donald Trump's tax plan as a $1.7 trillion plan, but that was the net cost. It actually was a six or $7 trillion tax cut with five or $6 trillion of offset, so they talked about the net cost of that plan. Well, the net cost of Build Back Better is zero, because we can pay for every penny of those investments.
Robert Wolf: (08:46)
And we're going to talk, Ron, about the pay-fors. That's the next question.
Ron Klain: (08:49)
Okay.
Robert Wolf: (08:50)
And I did not show it to you, but that is the next question. But before I get to the pay-fors, I don't want to make this a Senator Sanders versus Senator Manchin debate here. I'd rather much hear what your view is. But you need 50 votes.
Ron Klain: (09:06)
Yes.
Robert Wolf: (09:06)
And so, it certainly feels like we won't see a $3.5 trillion package. So my question is a little more narrow. If it was a narrower plan, which I know is not the preference, what are the few most important priorities that you see that the president wouldn't sign without them?
Ron Klain: (09:27)
Well, look, I think the important thing is to make sure we meet the moment on the key items. Maybe they have to be cut down in size, maybe. Maybe they have to be shortened in duration, maybe. I'm not going to sit here and negotiate it out at the SALT Conference. This is what we're going to do here over the next few weeks with members of the House and Senate. But what is really critical is we have a big childcare problem in our country. We were talking a little bit before about the mismatch between jobs and workers, and we know one reason we have millions of people sitting on the sidelines in the economy, is they don't have affordable childcare, particularly at a time of great disruption and change, people moving, all these things. They don't have affordable childcare. We know we have other people sitting on the sidelines because they don't have elder care to take care of elderly parents, or maybe a disabled child or something like that. They need in-home care services.
Ron Klain: (10:12)
You go down the line. And so, we think about this as an investment, not just in people and social spending, but in economic growth, job creation, and doing the things we need to do to really build long-term growth. Now, the other thing I'll say is what are the must-haves? Another big must-have here certainly is climate change. Joe Biden ran, he said there were four crises he was going to deal with, COVID, the economy, climate change, and racism. Climate change is at the center of the agenda, and the Build Back Better Plan is a critical opportunity to make investments in combating climate change, and building jobs and creating a clean energy economy. That's absolutely central to us, it's got to be part of the mix here.
Robert Wolf: (10:48)
I want you to talk about taxes, but before I go there, that let's just talk about climate action. I mean, yes, it's great that you went into the Paris Accord, but forget what's happening globally. Let's just talk about the United States. The hurricanes, the floods. I mean, this has just been a brutal few months for this country, with respect to climate change and the impact it's having on everyone. What are the few things you think you can do that actually will be an agent of change?
Ron Klain: (11:20)
Yeah. Well, I absolutely agree. We've seen extreme weather, not just the things you mentioned. As you and I are having this conversation, the president right now is in Idaho at the National Wildfire Center. We have tremendous wildfires burning up the Western part of our country, another example of this extreme weather phenomenon that we're seeing. So what can we do about it? Well, we've got to move to a clean energy economy. We know doing that will be key to our international leadership. We know it will be key to our economic leadership. We know it's going to create a lot of jobs that can't be outsourced. We know it's going to make the planet healthier. And it means, first of all, working with industry. The president's had the CEOs of the big auto companies to the White House a couple times. He spent a lot of time on them developing new standards and new tools to convert our fleet over the coming years into an electric vehicle fleet. That's going to again, create a lot of jobs and make our economy stronger, and make our environment better. We also-
Robert Wolf: (12:12)
I think after that, GM actually made a pretty impressive announcement that they're going almost all electric vehicles over the next decade or something.
Ron Klain: (12:20)
Yeah, so we've had a lot of progress on that front, but we can't stop there. We also have to focus very much on power generation, making a lot of investments in expanding our use of solar and wind in particular, other alternative energy fuels. That's a big part of the money and the Build Back Better Plan, our tax credits to really help the further expansion of solar wind and other renewable energy. And so, we've got a bold, ambitious agenda on a number of fronts. As you said, it's both a domestic thing and an international thing. The president has a big international conference coming up at the end of this week with leaders around the world to continue to press the global approach here to fighting climate change, but we need to make the investments here at home that will create jobs that will get us on the right path.
Robert Wolf: (13:06)
So let's go back into the pay-fors. I know that President Biden, and you have said quite often, as well as Brian Deese, and all the people from the economic team, we're paying for everything. We have pay-fors, here they are. It's the global minimum tax, it's the corporate tax increasing, it's capital gains, and a lot of other tax reforms. It's taxing the wealthiest. So let's just be clear. Are we concerned about having Democrats be tagged as, "Oh, there they go again, tax and spend liberals," and if not, why?
Ron Klain: (13:45)
Well, so I'm not, because I think really what it's about is tax fairness. I mean, I know we have a lot of big economic interests in the SALT Conference, but let's be frank about it. Middle-class folks have paid taxes, they've paid their burden, and we've seen during the pandemic a lot of people at the top do extremely, extremely well. A lot of companies are doing well. We have the stock market essentially at record highs, we have corporate profits at record highs, and yet, the corporate tax rate is lower than it's ever been, frankly, lower at a level that... I remember when we did corporate tax, no one was really talking about 21%. I don't know how we wound up [crosstalk 00:14:18].
Robert Wolf: (14:17)
28 would've been a win.
Ron Klain: (14:19)
28 would've been a win. So that's what we're talking about. Were not talking about going back up to 35, our proposal's to go to 28, which I think at the time would've been seen as a very, very reasonable proposal, a very modest proposal. And so, that's the kind of thing we're talking about, I think a basic fairness. Secretary Yellen's done a great job working on this idea of a global minimum tax to try to avoid tax havens and companies escaping to different countries to deal with their tax burden. Putting that into our tax code makes a lot of sense.
Ron Klain: (14:48)
Raising the tax rate back to what it was when George Bush became president for the people, the top earners, we think makes a lot of sense. So these, I think are pretty reasonable provisions to kind of rebalance the tax code, to kind of get to a place where everyone's paying their fair share, the people at the top are still going to do extremely well. No one who makes under $400,000 a year will pay a penny in taxes more than they pay right now. That seems like a pretty fair way to do things.
Robert Wolf: (15:12)
I know my Republican friends will never admit it, but when you tout the idea of a minimum global tax and that there's 50 or 60 of the top Fortune 100 companies didn't pay any taxes, I know that they would support that on an up and down vote, they just would never admit that, but that's for a different conversation.
Ron Klain: (15:30)
Yeah, exactly. Exactly.
Robert Wolf: (15:31)
Ron, I want to move to COVID, because there's probably nothing that ties to the economy now more than the pandemic. We actually had you for one of our VIP sessions on April 2020 when you were a special guest, and we actually had you because of your experiences at that time being the Ebola Czar under the Obama administration. And to paraphrase you, you articulated that, I'm going to quote you, but "The opening will be more like a light dimmer than a light switch, and the two key variables we need to focus on are testing and vaccines." If we had that again today, where do you see us now? What are the most important variables? Just give us an idea of where you see us in this COVID environment.
Ron Klain: (16:17)
So look, I think that "the light dimmer, not the light switch," still is the right metaphor. And that's kind of some of the struggles we're seeing. On the one hand, as you said, we started off with a conversation about job creation. On the other hand, we know we have supply chain disruption that's creating production problems, all kinds of problems. A lot of that supply chain disruption traces back to the pandemic itself. These oddities in the economy, rental car companies that sold off all their rental cars-
Robert Wolf: (16:45)
Unbelievable.
Ron Klain: (16:45)
... during the pandemic, because, obviously, people weren't renting them, and now they need to go out and buy cars, and because they're buying cars or too few cars. So, this is part of this kind of dimmer switch thing. As we turn back on, we're seeing all these things that need to be worked out. A shortage of semiconductor chips, of course, that's wreaking havoc across a lot of different industries, but also just basic hitches in the supply chain. We had built an incredibly efficient economy with a lot of just-in-time inventory, just-in-time supply chains, maybe a little too efficient, but whatever it was, once it got kind of blown up with the pandemic, it's taking a while to work all that back out, get that all in place. Same thing with, of course, the labor markets, and as I said before, people who now lack childcare, people whose schools were closed until this week.
Ron Klain: (17:33)
So that's all kind of part of the readjustment, but fundamentally, what we need to do is get the rate of COVID down, right? That's the most important thing, I think-
Robert Wolf: (17:41)
Do you think-
Ron Klain: (17:42)
... in terms of economic growth and where we go from here, and that's what the plan the president announced last week to increase the vaccination rate, to help the people who are vaccinated with booster shots, to take steps to help small businesses. Again, all these things, that's part of kind of moving us forward from where we are now.
Robert Wolf: (17:59)
And we're going to talk about the requirement, but do you think that the nation understood the idea of the dimmer versus the light switch? I know that July 4th, we were all excited, and then Delta variant, and then 100 million people are not vaccinated, and all of a sudden, it speeds up and then it starts going through the bumps. Should we have expected that it wasn't just going to have this exuberant reopening?
Ron Klain: (18:22)
Look, I think human nature is to kind of hope for the best and hope that we could turn a corner quickly. That's that's just who we are, that's just, I think humanity. But the reality is you look at these epidemics throughout history, you look at particularly something this big, truly, a pandemic hitting every corner of the globe, you have manufacturers in the country, "Why is my plant shut down? My plant's shut down," because COVID's bad someplace on the other side of the planet, where a critical element of my production was assembled, where I have a supply chain. Companies probably who didn't even know where their supply chains fully reached and extended, they're now learning about COVID outbreaks in other parts of the world and things like that. So, this has been a real test. I think we are getting back to normal. I think things are coming along, certainly. We've made a lot of progress on employment, a lot of progress on economic growth, but we have more work to do about the pandemic.
Robert Wolf: (19:13)
Well, let's talk about where I think you guys have done an amazing job, and I have to admit, I'm a little confused at the other side right now, but last week, the president took incredibly bold steps on the vaccine requirement, what going to happen with the federal employees, the private sector, the healthcare sector, the education sector. I have to admit, I'm confused because you have red state governors, you know what they're calling him, but then they have their own immunization requirements for kids going to school. So we have so many different narratives coming out that people are confused, and in some ways, it feels like it's stalling our success. Two things. One, how do we square the circle and get people to know vaccines are important to take, and take it, and it makes everyone better? And then number two, what is the legal argument you have with the requirements that the president announced last week?
Ron Klain: (20:15)
Well, first of all, I hope everyone understands the vaccine is safe and effective. One reason the president held on these measures until now, is we waited until the FDA gave its final license to the Pfizer vaccine. The Pfizer vaccine is fully licensed permanently. We obviously have emergency use for other vaccines. The vaccines have been taken by billions of people around the world. Tens of millions of people, 175 million people in the United States are fully vaccinated. So the proof, this isn't some assertion, everyone can see this in their own lives around them that the vaccine is safe, effective. We also spent a lot of time, Robert, as you know, over the course of the spring, building out an unprecedented distribution network. 90% of Americans live less than five minutes from a place where they can go get a shot without an appointment-
Robert Wolf: (21:04)
It's incredible.
Ron Klain: (21:04)
... and without waiting, and it's free. So it's basically ubiquitous, it's free, it's well-proven, now we need to finish the job. Now, not withstanding all that, the problem is we only have about 64%, 65% of the adults in this country fully vaccinated. So we've got basically a third left that aren't vaccinated. 75 million or so eligible people haven't even gotten the first shot. And so, the steps the president announced last week were an effort to try to boost that number up. You look at countries where that number is up around 80%, not 65%, these countries have a much more normal way of life than we have right now. That's where we need to get to.
Ron Klain: (21:43)
And so, the steps the president announced, I think were all based on his strong legal authority to make the members of the Armed Forces get vaccinated. They live in barracks, they live in close proximity. We don't want COVID outbreaks in our Armed Forces. Who could possibly want that? The federal government pays for Medicare, Medicaid, having the medical facilities that get those benefits, have their staffs be vaccinated. You should be able to go into a hospital if you're sick, and have confidence that the people treating you are not giving you COVID. Okay? That seems like a very reasonable thing. And same thing with the announcement the president made last week about Head Start. Our youngest kids can't be vaccinated. Their caregivers should be vaccinated to lessen the risk to our youth.
Robert Wolf: (22:25)
But Ron, how about the private sector aspect, where it seems is the most pushback?
Ron Klain: (22:30)
Look, the private sector, first, let's be clear what the president announced is a requirement that for large employers, a hundred and up, their workforces either have to be vaccinated or tested. And so, first of all, I don't really understand the philosophical objection to being tested once a week. I don't really understand anyone's right to show up at work at a large workplace and say, "You can't know if I have COVID or not." That seems like a very odd right to me.
Ron Klain: (22:54)
In terms of the president's legal authority, that's going to be done through the Occupational Safety and Health Administration, OSHA, [inaudible 00:23:00] says to workplaces every day in this country, "You're going to work on a construction site, you got to wear a hard hat. You're going to work around noxious chemicals, you got to wear a mask that protects you from noxious chemicals." So saying that in a large workplace where consumers are coming in and out, where you got a lot of other people working there, those people either need to be vaccinated or tested, and COVID-free, it seems like a reasonable way to keep those workplaces safe in the middle of a pandemic.
Robert Wolf: (23:24)
So Ron, one more question, and then I just want to end with some of your priorities. This is kind of, I thought was very impressive what Justin Wolfers, the Economics Professor from University of Michigan, and I'm going to paraphrase him, said, "He's viewing Biden's vaccine mandate as the cheapest and most powerful economic stimulus ever enacted. COVID is a tax, a tax on all in-person interactions, and vaccinations is a tax cut. More jobs equal a bigger tax cut." I know we keep harping on vaccines equals economic growth, but that seems like such a clear message to me. How do we get that a message across, so the 64% goes to 85%, we go to our goal of herd immunity? But how do we get this economic vaccination message more clear that people just say, "Yes, that makes sense to me?"
Ron Klain: (24:26)
Well, Robert, I hope that this conversation and other things get that message out. I also saw that Goldman Sachs today said that the president's vaccine requirements might create, I read it briefly, but I think something like three million more jobs because of people being less fearful in the service sector. So I think there's a lot of evidence that our economic growth will be stimulated tremendously by getting more people vaccinated, by lessening the fear and anxiety that consumers have about spread of the virus, by lessening the absenteeism from workers who get sick from the virus, and by obviously, lessening the burden on our healthcare system from the unvaccinated that they're placing, and the impacts that has on our healthcare system. So it makes economic sense, it makes healthcare sense, it makes sense in every single way. That's why the president did what he did last week.
Robert Wolf: (25:11)
And who would've thought it's a tax cut?
Ron Klain: (25:14)
And who would've thought it's a tax cut? You bet.
Robert Wolf: (25:17)
So last question. I mean, we could talk about civil rights, voting rights, Afghanistan, China, trade, so many issues that literally are on your desk on a daily basis. What do you see away from COVID and the economy, which is kind of a strange thing to say, away from COVID and economy, but what do you see as the few key priorities of 2022 that we're not thinking about today?
Ron Klain: (25:47)
Well, I think voting rights is very important. I don't know about not thinking about it, I hope people are thinking about it, but it's certainly a very important priority that needs to be addressed this year. I think we need to continue the work on police reform and criminal justice reform that's been talked about and the Congress has been working on, we need to kind of get to the finish line on that. As we alluded to before, climate change remains a very, very high priority, both on the domestic front, the international front, as we build towards Glasgow near the end of the year as a critical milestone in terms of combating climate change.
Ron Klain: (26:21)
And so, those are critical things. I hope we get some action on immigration reform inside the reconciliation package. We need to do more work there to make our system a more fair system, more rational system, and fix what's broken in our immigration system. We obviously have tens of thousands of evacuees coming here from Afghanistan. We're going to get them settled appropriately, we're going to have to get them into their new lives here in the United States, and we're going to need a lot of help from state and local governments, but also from the private sector to help these people find jobs, help these people move on with their lives. Many of these people, many of these men and women fought alongside our troops or assisted our troops in other ways in Afghanistan, and they're now coming to our country, they're coming to a new country. There is a large Afghan-American community that's going to help them resettle, but we need broad social help to help these people begin their new lives.
Ron Klain: (27:12)
So I think all those things and many more. I'm sure I'm forgetting many things. Obviously trade, China, we could go down the line, a lot of priorities here, but for us fundamentally, those four key priorities, the economy, COVID, climate change, combating racism, those are the four key pillars for us this year and probably on into next year.
Robert Wolf: (27:30)
Well, listen, Ron, we truly appreciate your time. I mean, more importantly, I just want to thank you on behalf of our entire country. You have done an amazing job, what I think is really being one of the most transparent chief of staffs in White House that we've seen in years. And so, I just want to thank you for that, and thank you for thinking about us.
Ron Klain: (27:51)
Well, thank you for having me, Robert. Thanks for all you do and your public advocacy, and thanks for having me here at the SALT Conference.
Robert Wolf: (27:57)
Thank you very much.
Ron Klain: (27:59)
Take care.