Treasury Secretary Joins the Good Government Show

00:00:00:04 – 00:00:03:59
David Martin
This is the good government show.

00:00:04:04 – 00:00:18:39
Janet Yellen
I’m not concerned about the level of the debt, but I am concerned about the trajectory that the debt has been on and where it’s headed.

00:00:18:44 – 00:00:26:12
Janet Yellen
We don’t want to be in a situation where the market is imposing discipline.

00:00:26:17 – 00:00:35:05
Janet Yellen
It’s a good thing for our economy long term to have an independent central bank.

00:00:35:09 – 00:00:43:04
Janet Yellen
I have thoroughly enjoyed my career in public service.

00:00:43:09 – 00:00:51:28
Janet Yellen
Adequately funding government agencies so they can perform is necessary for good government.

00:00:51:32 – 00:01:11:50
David Martin
Today, you’re in for an incredible conversation with one of the world’s leading economists. Janet Yellen is the former secretary of the Treasury, former chair of the Federal Reserve and former white House economic advisor. She joins the show today. It’s a really in-depth conversation about economics and how government and economics can and should work together, but also apart. Welcome to the Good Government show.

00:01:11:53 – 00:01:28:21
David Martin
First, help us share the message of good government by liking us and sharing us where we are. In your favorite social media. Make sure to leave a comment and join our good Government show community. Check out our website for the link. Janet Yellen served as Treasury secretary under President Joe Biden. Before that, she served as chair of the Federal Reserve.

00:01:28:23 – 00:01:48:19
David Martin
Before that, she was an economic advisor to president Bill Clinton, an impressive record of public service. She’s also the first woman to have her signature on American currency. Texture. Wallet. Have a look. You probably have her name on half your bills right now. I met her when she received the Elliot Richardson Prize for Excellence in Public Service from the National Academy of Public Administration.

00:01:48:22 – 00:02:09:13
David Martin
She kindly accepted my invitation to appear in the show. We talked about the need for a truly independent Federal Reserve and why it matters. I think I understood most of what she said, but I told her up front, I’m far from an economist. We discussed the job of being Treasury secretary, and now the proper stewardship of America’s economy affects the rest of the world with a long career in public service.

00:02:09:16 – 00:02:23:08
David Martin
We talked about the people she’s worked with and why public service matters. And since she’s from Brooklyn Bay Ridge, we had to talk about pizza. Enough for me. Coming up, former Secretary of the Treasury Janet Yellen.

00:02:23:13 – 00:02:46:56
David Martin
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00:02:46:57 – 00:02:58:20
David Martin
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00:02:58:25 – 00:03:26:26
David Martin
After you get done with this episode, hear more good government stories with our friends at How to Really Run a City for memories, Kasim Reed of Atlanta and Michael Nutter of Philadelphia, and their co-host, journalist and author Larry Platt. Talk with guests and other mayors about how to really get stuff done in cities around the nation. Check them out where you’re listening now or through their nonprofit news site, The Philadelphia Citizen.

00:03:26:30 – 00:03:45:41
David Martin
Welcome to the Good Government show. I am so happy to have with me Janet Yellen, landmark economist on so many levels. You have a very impressive resume, but I’m going to start with what I think is the most important question first. The first time you opened your wallet and you saw your name on a dollar bill, what was your reaction?

00:03:45:41 – 00:03:46:27
David Martin
What did you think?

00:03:46:29 – 00:04:20:53
Janet Yellen
I was really excited about it. I felt very honored. It’s something that people pay attention to. It’s a symbol of our country. And our money plays an important role in the United States and globally. And so I felt genuinely honored to be able to see my signature there. And I hopefully it stands for credible global base. For the United States, it’s a symbol of our role in global markets.

00:04:20:56 – 00:04:32:14
David Martin
I have no idea how this works. Do they bring you a dollar bill when your name is on it for the first time and bring it by the office? Or did you, like open your wallet one day and get it in change? Go! Oh, look at that, here I am.

00:04:32:17 – 00:04:47:59
Janet Yellen
Well, I actually made a trip to the Bureau of Engraving and Printing in Texas, where the money is printed, and I watched the first bills coming off the press and got to press the button.

00:04:48:01 – 00:04:48:35
David Martin
Oh.

00:04:48:40 – 00:05:19:33
Janet Yellen
And in fact, there are two signatures on the currency, and it took a very long time for them to print money with my signature, because the treasurer of the United States also signs the currency, and it took a long time before she was appointed. She was head of a Native American tribe, and in our case, our two signatures with the first time to women it ever appeared on the currency.

00:05:19:33 – 00:05:29:42
Janet Yellen
But we went together. So the first bills being printed and signed some copies of the bills and got some samples for ourselves.

00:05:29:57 – 00:05:36:54
David Martin
Well, I looked in my wallet just before we started talking. And about half of my money has your signature on it, so.

00:05:36:58 – 00:05:38:01
Janet Yellen
That’s fantastic.

00:05:38:03 – 00:06:00:11
David Martin
It is fantastic. You’re the first person I’ve ever talked to that had their signature on my money. So nice to talk to you. So, Treasury Secretary, the first woman chair of the Fed Reserve Council of Economic Advisers. I guess I want to start with the kind of the basics, really. Let’s start with Treasury Secretary. Madam Secretary, what is the role of the Treasury secretary?

00:06:00:14 – 00:06:14:00
David Martin
And like, you know, like how do you explain to people, you know, especially people who aren’t as familiar with government and economics as you like, what is the role of the job? What is the job day in, day out? What’s the mission?

00:06:14:01 – 00:06:49:35
Janet Yellen
Well, the Treasury manages the country’s finances. Treasury pays the government’s bills. Virtually all of the government’s payments are routed through Treasury. And so think of it as our government’s checkbook that’s managed by Treasury. On top of that, the United States has borrowed extensively in order to be able to finance spending that over decades has exceeded what we taken in revenue.

00:06:49:40 – 00:07:27:40
Janet Yellen
And so we now have $40 trillion in outstanding government debt. And Treasury is also charged with managing that debt, issuing new debt, rolling over existing debt as it comes to paying for the debt. So paying the interest on the debt. But more broadly, Treasury is concerned with the functioning of the economy and the financial system, and we manage international economic relations with countries all around the world.

00:07:27:47 – 00:08:03:11
Janet Yellen
We manage sanctions, which are a key tool that the government now uses to impose costs on countries or individuals who we think threaten our national security. We have bureaus of the Treasury. The Internal Revenue Service is a bureau of the Treasury. It’s by far the largest piece with Iran, 75,000 employees. So we’re charged with collecting the nation’s taxes, enforcing the tax laws.

00:08:03:11 – 00:08:25:10
Janet Yellen
And more broadly, the Treasury secretary provides input to the president and his administration on economic policy matters broadly. So it’s a large agency with around 100,000 people, and it’s really involved in all aspects of economic and financial policy.

00:08:25:12 – 00:08:37:33
David Martin
You brought this up and this was something I wanted to get to, but since you just brought it up, we’ll jump right into this. America’s national debt hit $40 trillion recently, $40 trillion. Are you concerned?

00:08:37:36 – 00:09:14:29
Janet Yellen
I’m not concerned about the level of the debt, but I am concerned about the trajectory that the debt has been on and where it’s headed if we don’t take action to deal with deficits. So 40 trillion is obviously a huge number. Almost 10 trillion of that is debt within the government. For example, debt that’s been issued by one part of the government to another, whether Social Security or the hospital Medicare fund.

00:09:14:29 – 00:09:49:12
Janet Yellen
But the debt outstanding with the public is just over $30 trillion. That’s the same size as the economy. So the ratio of debt to the output of our economy is now around 100%. That’s a pretty high number. For several decades, interest rates in the United States were extremely low. And so when I ask whether or not it’s necessary to be concerned, what I look at first and foremost is the interest burden on the debt.

00:09:49:17 – 00:10:48:30
Janet Yellen
And until pretty recently post-pandemic, that did burden that interest burden on the debt was not high. It wasn’t worrisome at all. Although more recently, interest rates have risen and the interest burden on the debt is becoming important and a serious drag. But if you look at what’s happened to tax revenue, and with long known for decades that we would have an aging population, that Social Security, Medicare, Medicaid payments would be rising over time is a share of GDP, with always known that deficits would likely increase over time, unless we were careful to make sure that revenues rose in line with these expanded social insurance payments.

00:10:48:30 – 00:11:25:06
Janet Yellen
And now we have a deficit that’s almost 6% of GDP. And we’ve had deficits that large in the past, but only during wartime or deep recessions when the economy is weak and then tax payments plummet. We have neither of those conditions now. And deficits are very high. And this really worries me because it can become a kind of explosive spiral that the ratio of debt to GDP is rising over time.

00:11:25:16 – 00:12:11:55
Janet Yellen
Holders of our debt require higher and higher interest payments to be willing to absorb that level of debt. Higher interest payments worsen the underlying deficits in less something is done, and this can be an explosive path. And regrettably, that’s the path we’re on now, in my view, largely because we’ve had tax cuts that have largely benefited upper income groups, the rich and corporations, and we really need to make sure that our revenues grow in line with social expenditures, and to look carefully at them and look for ways to account there as well.

00:12:11:56 – 00:12:26:38
David Martin
I think I understand most of what you said. I am far from an economist, as I’ve said many times, and I was an English major for a reason. What is a good government solution to what you see as the challenge that we’re facing now with the unequal balance?

00:12:26:39 – 00:12:56:54
Janet Yellen
So a good government solution is that politicians would recognize that it’s necessary to bite the bullet and do some things that people are not going to be happy about. This isn’t politically easy to deal with this problem. I strongly doubt that you’re going to see politicians on either side of the aisle run on proposing measures to deal with this.

00:12:56:56 – 00:13:22:33
Janet Yellen
People don’t like higher taxes, and they don’t want to see cuts in important social programs they rely on, like Medicare and Social Security. So politically, it’s it’s difficult. The last politician I can remember who proposed tough medicine to deal with this problem was Walter Mondale. And he was handling defeated.

00:13:22:35 – 00:13:23:16
David Martin
He did not win.

00:13:23:16 – 00:14:13:23
Janet Yellen
Since then, both Republicans and Democrats have largely avoided making this an issue in elections. Instead, they say we’ll cut taxes or will raise spending. So I would say that solutions to this have to be bipartisan. This can’t be solely Partizan thing. And when we’ve had successful attacks on deficit reduction, they have received bipartisan support. I was at the Council of Economic Advisors in 1997, and President Clinton and Newt Gingrich shook hands after some very contentious years and decided they would balance the budget.

00:14:13:23 – 00:14:36:12
Janet Yellen
And they reached an agreement. It was bipartisan, supported on both sides of the aisle. It didn’t have, you know, purely pain in it. Each side got some things that were valuable to them, but they did agree on cuts that imposed some pain and succeeded in balancing the budget.

00:14:36:14 – 00:14:44:09
David Martin
That was a rather contentious time as well. I mean, it was the rise of the Tea Party. It was. They were certainly two opposite camps, but they were able to come together.

00:14:44:11 – 00:15:19:19
Janet Yellen
Yes. And sometimes there are budget rules that or the looming when the country is approaching a debt ceiling, a law that says once a given level of the debt has been reached, no more debt can be issued. This is a law that Congress passed that periodically brings the government, and we spend a huge amount of time preparing for this Treasury, potentially to the brink of default.

00:15:19:19 – 00:16:01:09
Janet Yellen
Because we have deficits, we have to continue paying for them by increasing the outstanding debt. With the debt ceiling looming, sometimes agreements have been made, and we had this in 2023 that there was a package that reduced the projected debt by about $1 trillion. But this is very difficult sometimes appointing a bipartisan commission, Congress and the president agreeing that whatever recommendations they make will be taken up as a package and voted on by Congress.

00:16:01:11 – 00:16:34:53
Janet Yellen
You know, if this isn’t done, if there isn’t a political process that’s successful in dealing with the debt, eventually the market begins to speak and to say, we’re worried about the fiscal trajectory and we’re becoming uncomfortable buying the amount of debt the government wants to issue. And in recent weeks, we have seen a substantial increase in rates on long term debt 30 year, ten year, 20 year US debt issuance.

00:16:34:53 – 00:16:55:59
Janet Yellen
And in fact, my successor has intervened in the market to try to bring down long term rates, not successfully, because he really hasn’t proposed anything that will deal with the underlying problem. But we don’t want to be in a situation where the market is imposing discipline.

00:16:56:01 – 00:17:15:57
David Martin
So you brought this up a little while ago, and I wanted to ask you about it. You were the chair of the Fed Reserve. There’s been a lot of discussion about and pressure from the white House to lower interest rates. I’ve read a couple of things that you said. And what are your thoughts on political pressure to manipulate rates or to change rates?

00:17:15:57 – 00:17:19:36
David Martin
Is this good government and or is it dangerous?

00:17:19:38 – 00:18:02:02
Janet Yellen
It’s dangerous and it’s not good government. If there’s one thing that almost all economists agree on, and that is understood not only in the United States but around the globe, is that macroeconomic performance is much better and inflation is consistently lower when central banks have independence to set monetary policy, that means basically setting interest rates and their path over time to achieve objectives, one of which in every country is low inflation.

00:18:02:02 – 00:18:38:38
Janet Yellen
In the United States, the fed is charged with two objectives low inflation or price stability and maximum employment. And Congress purposely left the Federal Reserve free to decide how best to do that. Sometimes the two objectives are in conflict and tough decisions have to be made, but normally they’re not in conflict. And the fed has established a good record of achieving these objectives.

00:18:38:38 – 00:19:35:59
Janet Yellen
It’s supported by Congress. The Federal Reserve reports to Congress has to account for how it’s managing monetary policy. And look, you know, the president of the United States has a right, if he wishes to weigh in, as any American citizen does, on what is the proper path of monetary policy for a very long time, going back at least to the Clinton administration, earlier, presidents have understood that it would be better for the country and even for them politically, to respect the independence of the fed, not to comment on monetary policy, or try to browbeat or push the Federal Reserve to set interest rates in a way that they think best.

00:19:36:03 – 00:20:06:54
Janet Yellen
You know, clearly there’s a conflict. And this has been true in many countries between the political needs of an administration of president or a prime minister who are worried about both the debt. And, you know, now our interest payments are $1 trillion a year. President Trump has said it’s important to him to set interest rates to lower that interest burden.

00:20:06:59 – 00:20:33:10
Janet Yellen
When that’s done, that is really a central bank succumbing to that pressure to help a government pay interest on its debt. That is the story of high inflation or hyperinflation in every country that’s ever experienced it. Ultimately, it undermines the economy and, you know, leads to very difficult economic circumstances.

00:20:33:10 – 00:20:36:26
David Martin
I think I read you called that something you hear from a banana republic?

00:20:36:29 – 00:20:59:49
Janet Yellen
Yes. That’s what that’s exactly what you see in banana republics is a government that wants to spend, doesn’t want to tax, or is unable to tax. Finds it hard to issue debt and then says, well, how can I finance this spending? Oh, I have a central bank down the block and I’ll get them to print money and buy this debt.

00:20:59:49 – 00:21:27:37
Janet Yellen
And this is the story in every country of how you end up with higher hyperinflation. So, you know, it can involve tough choices. People don’t like high interest rates. Politicians wisely decided let the fed be responsible for that. These are political decisions that are hard to make. It’s a good thing for our economy long term to have an independent central bank.

00:21:27:37 – 00:21:48:36
Janet Yellen
And President Trump has taken steps to not only express his views on monetary policy, but to try to stuff the fed with appointees who will carry out the policies that he thinks best. And this is truly dangerous.

00:21:48:39 – 00:21:49:34
David Martin
And not good government.

00:21:49:36 – 00:21:55:29
Janet Yellen
That is not good government. And it’s it’s actually it’s it’s frightening.

00:21:55:31 – 00:22:13:53
David Martin
Well, I want to ask you this. How important is public confidence in an independent Federal Reserve and an independent government economic policy, either in actual thought or deed? How important is that to good government that the idea is that it is independent?

00:22:13:54 – 00:23:01:03
Janet Yellen
It’s critically important to good government. I mean, the US dollar is the world’s reserve currency, and it is used in 90% of all transactions involving countries with two different currencies that have nothing to do with the dollar. International transactions go through the dollar or typically denominated in dollars. We have the deepest and most liquid capital markets. U.S. Treasury securities are the bedrock security in the global financial system, and this enables the United States to borrow internationally at exceptionally low interest rates.

00:23:01:03 – 00:23:33:23
Janet Yellen
It’s called the exorbitant privilege, and it is a substantial benefit to the United States. So the role of the dollar in financial markets relies on the credibility of the government in managing the dollar. People don’t want to hold huge quantity of assets denominated in a currency that may depreciate, where the value of the bonds may fall in price.

00:23:33:23 – 00:24:09:18
Janet Yellen
So good macroeconomic management is the underpinning of the role of the dollar. You know, it’s the underpinning of good economic performance in the United States, but also critically to the global role of the dollar. So to see a president who is threatening the independence of the fed, he’s threatened to bring criminal charges against the fed chair, obviously, because the fed chair is not sitting, has not set interest rates.

00:24:09:21 – 00:24:48:35
Janet Yellen
I’m talking about Chair Powell, not sure Powell successor, but to constantly criticize him and then threaten him with criminal action that is blatantly political. He’s now his threatened to remove a governor, one of the seven governors of the fed for cause, which is something that has never been tested in the entire history of the fed. What is cause and you know, I dare say that what he’s accused this governor of is probably not valid in very minor.

00:24:48:37 – 00:25:12:53
David Martin
Well, you’ve spent a long time in public service. I think you’ve been associated with the Fed Reserve for 14 years as a governor and as chair. You know, we call ourselves on the good government show the voice of public service. What would you tell someone about working for the federal government and being involved in public service, when you know you can make a lot more money working for Wall Street or doing something else?

00:25:12:55 – 00:25:17:43
David Martin
I mean, what would you tell someone about a career in public service based on your career and what you’re seeing today?

00:25:17:45 – 00:26:11:40
Janet Yellen
Well, I have thoroughly enjoyed my career in public service, and I have had the pleasure and privilege of working with an astoundingly talented and committed group of individuals who have chosen to dedicate their careers to public service, and I would encourage people to do so because it’s an opportunity to address problems that are critical to the well-being of Americans and people around the globe, and the tasks that I’ve had the opportunity to deal with are exceptionally important, critical to national welfare.

00:26:11:47 – 00:27:00:32
Janet Yellen
And the people that I’ve worked with are immensely talented and really committed to good government, committed to wanting to make a difference, and work with other people who are similarly motivated. It’s been the privilege of my life to get to work with such talented people, and in ways that are not at all political, but to take good data, good analysis, scientific understanding, and to try to work with teams of people who are analyzing the policy options and the trade offs to make the best possible decisions to advance welfare in so many different areas.

00:27:00:37 – 00:27:08:43
Janet Yellen
I thoroughly enjoyed my service at the fed over these 14 years and also with Treasury.

00:27:08:46 – 00:27:23:40
David Martin
There’s a whole series of questions I want to ask you that I ask everyone and I want to get to those. But before I do that, there is one more question I wanted to ask you. And you’re just talking about this. You flew to Ukraine during the war and you met with President Zelensky. What’s he like?

00:27:23:42 – 00:28:10:11
Janet Yellen
Well, you know, we’ve had many opportunities to see what a committed and talented individual President Zelensky is. He’s someone I and most of the world admire for his courage and for what he’s been able to do to protect Ukrainian democracy. I was immensely impressed with him and felt it was a privilege to be able to meet with him and the people around him who I mean every day, show us their courage and their willingness to bear a great deal of pain to protect their society and its democracy.

00:28:10:13 – 00:28:11:52
David Martin
He is a comedian though. Was he funny?

00:28:11:54 – 00:28:17:46
Janet Yellen
No, it really was a serious conversation. He was a comedian.

00:28:17:49 – 00:28:19:34
Janet Yellen
But I haven’t seen that side.

00:28:19:42 – 00:28:30:46
David Martin
All right, all right. Well, I do have some questions I want to get to. We’ll try to get to as many as you have time for. We’re going to do that in just a moment.

00:28:30:50 – 00:28:56:08
Narrator
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00:28:56:11 – 00:29:00:51
Narrator
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00:29:00:56 – 00:29:18:48
David Martin
Want to hear more about good government? Check out another show I host leading Iowa Good Government in Iowa cities. I host the show with Brad Kavanagh, mayor of Dubuque, Iowa and the immediate past president of the Iowa League of Cities. Together, we talked to leaders in Iowa cities. We talk about what works and what good government looks like in Iowa.

00:29:18:50 – 00:29:26:14
David Martin
Join us right here. We’re listening. Now that’s leading Iowa, good government in Iowa cities.

00:29:26:18 – 00:29:36:20
David Martin
So we have a questionnaire that I ask lots of people. I have never asked a Treasury secretary any of these questions. So I’m looking forward to getting some of your answers. What is good government? Define it. What is it?

00:29:36:23 – 00:30:26:12
Janet Yellen
What is good government? I mean, to me, good government is a set of institutions and organizations that are competently, professionally carrying out a set of policies and operations that are critical to the performance of our society and economy, that are the right ones for government to be doing. There’s a lot that we entrust to the private sector. For most commercial activity, we rely on the private sector to produce, to figure out how to how to do so in ways that are profitable and contribute to society.

00:30:26:15 – 00:31:23:02
Janet Yellen
But whether it’s defense, social insurance, managing the public debt, there are activities that we really need government to manage. And we have a government in the United States that has built an enormous amount of expertise. It’s an asset of our country to have government agencies filled with knowledgeable individuals who devoted their careers to performing a set of functions, and the State Department and Treasury and the Transportation Department at HUD, all the government agencies that are able to help our economy perform well and act with integrity and credibility.

00:31:23:07 – 00:31:53:07
Janet Yellen
Wholesome sells to the highest professional and ethical standards. And I have certainly seen that if the fed just a very capable set of individuals and at Treasury and these are people who every day, whether it’s at the IRS, collecting tax revenue and enforcing our tax laws or in our sanctions unit, helping advance the best interest of our country.

00:31:53:10 – 00:32:02:59
David Martin
If people are frustrated with government, if they don’t like what they see, what should they do? And you know, it’s easier at the local level than it is the federal level. But what can people do?

00:32:03:02 – 00:32:35:55
Janet Yellen
Well, I think people should be demanding good government and trying to understand in areas where they see government is failing, trying to understand how that’s happened and to address the problems. For example, if the IRS there was a period during the pandemic when your chances if you called to ask a question about taxes, your chances of getting that call answered were extremely low.

00:32:36:00 – 00:33:09:05
Janet Yellen
Around 15% of calls were being answered, and people were immensely frustrated. In local level, people complain all the time about departments of motor vehicles in bureaucracy. Well, why is that? Well, we realized that and this was a major priority of mine and of the Biden administration. We realized that Congress had chronically underfunded the Internal Revenue Service so that it could barely function.

00:33:09:07 – 00:33:55:57
Janet Yellen
Not only was customer service inadequate, but also we weren’t coming close to enforcing our tax laws and collecting the taxes that are due under those laws. We talked earlier about deficit reduction. It’s estimated that almost $700 billion a year in taxes go uncollected because enforcement is insufficient, and the IRS doesn’t have adequate resources to enforce it. And we succeeded in the Biden administration in getting $80 billion over ten years in mandatory funding to the Internal Revenue Service to try to fix these problems.

00:33:55:57 – 00:34:25:15
Janet Yellen
That was not money really being spent and adding to the deficit. That was money that was reducing the deficit. All of that money has now been repealed, and Elon Musk came in and cut the Internal Revenue Service by 25%. So adequately funding government agencies so they can perform is necessary for good government. But also we have a government that’s tied up in bureaucracy.

00:34:25:17 – 00:35:03:15
Janet Yellen
People are frustrated. You know, for example, Treasury has to write the rules governing taxes. The Inflation Reduction Act was passed in, I guess, 2023. It had a whole variety of climate related incentives, tax incentives. Over the first year and a half, Treasury wrote 1800 pages of regulations about who is and who isn’t eligible for these tax credits. People look at that and say, this is crazy, 1800 pages.

00:35:03:15 – 00:35:42:20
Janet Yellen
You can’t make heads or tails of it. And I think people feel that way about many parts of the government, that immense amounts of red tape. And I think they’re it’s really necessary to ask, how did that happen? And I think that’s a result of the underlying political process in which Democrats, Republicans, liberals, conservatives haven’t trusted one another, and they’ve passed a series of laws meant to ensure that the other side couldn’t use regulations in ways that their side would regard as adverse as recline.

00:35:42:20 – 00:36:10:25
Janet Yellen
Wrote an excellent book recently called Abundance the Details how all of this affects housing, an important example more the local level than the national level. But the same thing is true. To build a housing project with environmental impact statements and requirements and the like, things get really slowed down. And I don’t think this is the fault of the agencies themselves.

00:36:10:25 – 00:36:18:58
Janet Yellen
It’s the fault of a contentious political process that has resulted in gridlock for many agencies.

00:36:18:58 – 00:36:23:26
David Martin
Well, I had I had Danny Werfel on the former head of the IRS, probably someone you know well.

00:36:23:27 – 00:36:24:51
Janet Yellen
Oh, yes, of course you point.

00:36:25:00 – 00:36:42:35
David Martin
And and he was great and I, he was a good guy to talk to. And I came away with it with an appreciation for the IRS. So so I think you’re together there. So let me ask you this. What drew you to public service? You had a long career in academia. What drew you to public service and what kept you in public service?

00:36:42:38 – 00:36:46:54
David Martin
You could have done a lot of other things and made a lot of more money in a lot of places. But why did you stay?

00:36:46:57 – 00:36:47:25
Janet Yellen
Well.

00:36:47:28 – 00:37:34:13
Janet Yellen
To me, the most important thing is finding something that I can do that makes me want to get up every day, go to work, and inspires me to want to keep at it. And that’s a feeling that I’m tackling something that is genuinely important and will make a difference to the lives of people. And being part of an organization where I feel other people are similarly motivated, where I really like the people I’m working with, feels that they’re good people who are acting with integrity and commitment to a mission that they feel passionate about.

00:37:34:13 – 00:38:09:25
Janet Yellen
And I found that all of that and more in government, it’s something I wanted to do ultimately. Economics, it’s not just something, you know, it is intellectually interesting in its own right, and that’s part of what attracted me to it. But it makes an important difference. Good economic policy to the lives of everyone into people’s well-being. And I always wanted to have an opportunity to participate in the process of making economic policy.

00:38:09:25 – 00:38:47:28
Janet Yellen
So it was something I aspired to during all the time that I was in academia. And it tied in with my research, which was particularly about unemployment and labor markets were particularly motivated. Me was situations like the Great Depression, where you had long periods in which large numbers of people were out of work and can support themselves. And I felt that economics really could contribute to minimizing such periods toward addressing and shortening them, making them less intense.

00:38:47:30 – 00:39:16:36
Janet Yellen
That this is something that occurs in essentially capitalistic economies and can be addressed. And the tools to address that are monetary and fiscal policy. I thought as an academic, well, lots of academics say go to work as an economist at the Council of Economic Advisers for a year or two. They take a break from academia and do something like that.

00:39:16:36 – 00:39:19:02
Janet Yellen
And I thought that was what I would do.

00:39:19:04 – 00:39:21:16
David Martin
But you got a little sidetracked.

00:39:21:16 – 00:39:22:16
Janet Yellen
I guess, you know, and.

00:39:22:16 – 00:39:29:30
Janet Yellen
I loved it. And, you know, I really enjoyed it and have had have gone back and back for more and.

00:39:29:30 – 00:39:31:32
David Martin
More to who inspires you? Do you have a political.

00:39:31:32 – 00:39:33:06
Janet Yellen
Hero, a political hero?

00:39:33:08 – 00:39:34:32
Janet Yellen
I have an economic hero.

00:39:34:35 – 00:39:35:13
David Martin
Who is that?

00:39:35:13 – 00:40:11:18
Janet Yellen
James Tobin, who was a Nobel Prize winning economist who was essentially a Keynesian economist. He came of age during the Great Depression and was a scholar of Keynesian economics. He served on the Kennedy’s Council of Economic Advisers, professor at Yale. And I went to Yale. He inspired me, and I studied. I studied with him, and he was really passionate about applying economic policy to improve social welfare.

00:40:11:32 – 00:40:16:35
Janet Yellen
You know, he is the person who really motivated my studies. Nick.

00:40:16:39 – 00:40:25:48
David Martin
So you served on the Council of Economic Advisers, the Fed Reserve, and you were Treasury Secretary. What would you like people to know about government that they don’t know?

00:40:26:00 – 00:40:26:34
Janet Yellen
You know.

00:40:26:48 – 00:41:28:06
Janet Yellen
There’s been so much criticism of government and so many attempts, especially in recent years, to portray government as just filled with waste, fraud and abuse. Spending money that doesn’t benefit society and filled with people who were lazy and knowledgeable and hearing things like that is tremendously disturbing to me, because I know that that is not what our government is or has been, and that we’re immensely fortunate as a nation to have a government that is function very well and filled with remarkable people who, when you start to look at their contributions in detail and you know they’re working like the partnership for Public Service that give awards every year to individuals in government who have

00:41:28:06 – 00:41:55:55
Janet Yellen
made contributions. And you listen to the stories of the contributions made by diligent public servants who really know their stuff, what they have protected society from. You realize that this is an asset or nation should value, and I would like to see people stop demeaning the contributions of the incredible people who work in government.

00:41:55:57 – 00:42:16:08
David Martin
Well, that’s how we bet we at the National Academy for Public Administration. You are the Elliot Richardson Award winner. So, you know, that is another example we hear on the Good Government show. We we hope we are telling a good story and helping to restore people’s trust in government. I hope we’re doing a good job. What else can we do?

00:42:16:11 – 00:42:16:37
Janet Yellen
Well.

00:42:16:37 – 00:42:47:59
Janet Yellen
I think we’re seeing what happens now when government fails and we undermine its functioning. And this is a bad way to come to the realization that government is important and makes a contribution. But maybe now enough really bad things are happening to our country that people will realize this was the wrong, wrong direction and we need a capable government and need to rebuild it.

00:42:48:01 – 00:42:59:13
David Martin
So this is a question I ask many mayors. You are not a mayor, but you are from Brooklyn Bay Ridge. I’m in Brooklyn. Can you get good pizza out in California where you are? And do you have a favorite dish?

00:42:59:18 – 00:43:00:51
Janet Yellen
Absolutely.

00:43:00:56 – 00:43:25:45
Janet Yellen
We have lots of small establishments that make distinguished pizza. It’s one close to where I live that makes absolutely excellent, excellent pizza. And yeah, well, you know, I did grow up in Brooklyn and it’s famous for its very authentic Italian pizza. And I joined it. But it’s good out here too in California.

00:43:25:47 – 00:43:31:28
David Martin
All right. Good. Well, come on back. We’ll go to gates and told her we’ll sit down. We’ll have we’ll have a longer conversation. How’s that sound?

00:43:31:32 – 00:43:31:47
Janet Yellen
Good.

00:43:31:49 – 00:43:51:26
David Martin
Gauge. And told gauge and told her the classic downtown Brooklyn restaurant. So this is the good government show. And we like to talk about good government. And we’ve certainly talked about a lot of good government. And your thoughts about that. Is there a good government project that you’re really excited about, something that you’re really proud of, of something that you did in your term as on the fed or as Treasury Secretary?

00:43:51:29 – 00:43:52:12
Janet Yellen
Well, so.

00:43:52:12 – 00:44:27:15
Janet Yellen
Said I think we implemented monetary policy during extremely difficult times, especially following the financial crisis. The fed faced conditions that we thought were we would never see after the Great Depression, in which interest rates were lowered as low as they can go, which is zero where we now know slightly negative in some countries. And still more stimulus was needed to put people back to work on.

00:44:27:17 – 00:45:04:32
Janet Yellen
Employment was extremely high, and I feel very proud of the work that the Federal Reserve did to try to restore full employment in the economy and get our nation back on track. It took a long time, but a lot of creativity went into it. There were so many different things we did at Treasury. We’ve already talked about the Internal Revenue Service and the work we did to try to enable that to be a more effective agency, and one that better serves the interests and needs of taxpayers.

00:45:04:32 – 00:45:48:39
Janet Yellen
But there were so many different things we did. One of the things that I feel proud of is that we led international negotiations to try to create a global tax treaty that would enable countries to tax corporations and have them contribute toward the revenue that’s needed to fund our government. Would it happen globally over decades? Is the companies were able to move their operations globally to whatever country offered the lowest tax rates.

00:45:48:51 – 00:46:05:09
Janet Yellen
And so over time, over decades, corporate tax rates fell as one country after the next decided we’ve got a match or beat other countries that are attracting multinational corporations.

00:46:05:09 – 00:46:10:11
David Martin
So this level, the playing field, it didn’t let companies kind of cheat on their taxes. Correct.

00:46:10:13 – 00:46:10:54
Janet Yellen
Well, I.

00:46:10:54 – 00:46:12:35
Janet Yellen
Don’t know that I would say cheat.

00:46:12:35 – 00:46:14:23
Janet Yellen
On the taxes, certainly.

00:46:14:23 – 00:46:15:44
Janet Yellen
Save on their taxes.

00:46:15:47 – 00:46:16:39
David Martin
Right.

00:46:16:44 – 00:46:18:03
Janet Yellen
Yes, sure.

00:46:18:08 – 00:46:52:44
Janet Yellen
Companies capital is footloose and can go to the places that offer the lowest the lowest tax burden. And they did that. And we got to the point where almost all of the burden of taxation is falling on workers and very little of it on capital, and especially at a time when labor share of the pie is declining and the richer getting richer and inequality is increasing, it’s really important that corporations and the wealthy pay their fair share of taxes.

00:46:52:44 – 00:47:24:38
Janet Yellen
So putting an end to this international tax competition was a very important project. And Treasury, during the time that I let it, worked extremely hard to devise a tax treaty that could bring on countries globally and find a way to punish countries that wanted to say, fine, it’s all right for all the rest of you to hold hands and raise tax rates, corporate tax rates together.

00:47:24:38 – 00:47:41:01
Janet Yellen
But we want to be a low tax nation, you know, a place where companies can come and have low taxes. And we devise such a treaty. And we got 137 countries to agree to be part.

00:47:41:01 – 00:47:41:15
Janet Yellen
Of it.

00:47:41:17 – 00:47:42:29
David Martin
Wow, that’s impressive. 100 and.

00:47:42:29 – 00:47:43:11
Janet Yellen
37 that.

00:47:43:19 – 00:48:15:19
Janet Yellen
That was a really substantial global effort. The actual text of the treaty and some of the negotiations took place through the OECD, which is an international organization based in Paris. But we led the charge to make progress on this. And the only thing I regret is that where is roughly half of the countries that signed on to this have already raised taxes on corporations and put this in place.

00:48:15:20 – 00:48:49:28
Janet Yellen
President Trump and the Republicans refused to enact this in the United States and have threatened retaliatory actions against any country that try to discipline the United States. And we’re the most important home of multinationals in the globe. And really, without US participation, which I never imagined that the United States itself would be a holdout from this. This will not succeed globally.

00:48:49:28 – 00:48:58:10
Janet Yellen
So I feel very proud of the work that we did, and extremely unhappy about its fate over the last several years.

00:48:58:13 – 00:49:08:07
David Martin
Well, the work that you did does sound like good government and good international government, and 137 countries must have had some, some serious negotiating. So well done on that. Madam Secretary.

00:49:08:10 – 00:49:08:34
Janet Yellen
Thank you.

00:49:08:36 – 00:49:09:57
Janet Yellen
What in negotiations?

00:49:09:58 – 00:49:17:21
David Martin
Well, like I said, we are we are trying here in the good Government show to highlight good government and around the nation and now around the world. So thank you for.

00:49:17:24 – 00:49:18:16
Janet Yellen
That pleasure.

00:49:18:19 – 00:49:29:07
David Martin
Janet Yellen, it has been a pleasure talking with you. Thank you so much for coming on the Good Government Show. Well done. And continue the good work you do as an economist respected around the world. Thanks for coming on.

00:49:29:09 – 00:49:32:23
Janet Yellen
Thanks so much for inviting me. Enjoyed our conversation.

00:49:32:28 – 00:49:32:59
Janet Yellen
Thank you.

00:49:33:01 – 00:49:36:32
David Martin
Thank you.

00:49:36:37 – 00:49:58:04
David Martin
The Good Government Institute has a new partner, the Charles F Kettering Foundation. I really like their podcast, The Context, and I bet you will too. They have a new series called Democracy Under Construction. The show is hosted by historian Alex Lovett, and he looks back at the first 250 years of U.S. history. Alex digs into the moments that have pushed us towards an inclusive democracy.

00:49:58:07 – 00:50:05:09
David Martin
You can find it where you’re listening right now, or visit Kettering and give them a follow.

00:50:05:14 – 00:50:25:10
David Martin
What if Lincoln hadn’t been shot? What if World War One hadn’t happened? Jim Ludlow, Good Government Show executive producer, explores both those ideas in two books in Lincoln Beyond the Bullet. He imagines that Lincoln lives, and while cousins, he imagines what would have happened if three kings, all cousins, hadn’t blundered their way into war. What if. Think about it.

00:50:25:12 – 00:50:32:58
David Martin
Go to Good Gub Institute and order a copy.

00:50:33:02 – 00:51:02:10
David Martin
I hope you were as impressed as I was with the former Secretary of the Treasury, Janet Yellen. I thought she was excellent at breaking down really complicated economic policy. And to be honest, bringing it down to my level. A few things you said are worth mentioning again. Secretary Jones said, quote, presidents have understood that it would be better for the country and even for them politically to respect the independence of the fed, not to comment on monetary policy, or try to browbeat or push the Federal Reserve to send interest rates in a way they think is best.

00:51:02:13 – 00:51:24:57
David Martin
I’ll let that comment stand on its own. She also said adequately funding government agencies that they can perform is necessary for good government. She was talking about the IRS and the funding increases so they could collect more of the taxes. Do. That’s true of all government agencies. At the end of the conversation, she mentioned a global minimum tax and impressive program that level the playing field with 137 countries agreeing.

00:51:24:59 – 00:51:48:24
David Martin
That’s very good government worldwide. Well, that’s our show. Thanks for listening. Please like us and share us with your friends and review us right here where you’re listening, and check out our website. Good government show for extras. Help us keep telling stories of good government in action everywhere. Join us again for another episode right here. I’m Dave Martin and this is the Good Government show.

00:51:48:29 – 00:52:26:20
David Martin
The Good Government Show is produced by the Good Government Institute, a nonprofit organization promoting civic engagement and civic education. All donations to the show help promote trust in government. You can donate at Good Govt Institute. That’s good govt institute. Executive producers are Jim Ludlow, Dave Martin that’s me and David Snyder. Jason Stershic is our editor and producer. Join us again to hear good stories about our government right here on The Good Government Show.

00:52:26:24 – 00:52:29:27
Narrator
This podcast is part of the democracy Group.

**This transcription was created using digital tools and has not been edited by a live person. We apologize for any discrepancies or errors.