Megan Brown
Staff writer
Wednesday’s morning lecture opened with a broad question posed by the moderator: What is the current state of the United States’ economic system, and what are some core economic realities?
“Everything is great. Everything is going according to plan. There are no problems. Thank you all for coming,” joked Michael R. Strain.
Strain and Louise Sheiner, moderated by Chautauqua’s senior vice president for community relations and Chief Inclusion, Diversity, Equity and Accessibility Officer Amit Taneja, spoke on the state of the economy, people’s emotions around it and what to consider moving forward at 10:45 a.m. Wednesday in the Amphitheater. With the Big Beautiful Bill and President Donald Trump’s tariffs stirring conversations around the economy, Sheiner and Strain wanted to provide an accurate representation of the economy’s true state as part of the Chautauqua Lecture Series Week Four theme “The Future of the American Experiment — A Week in Partnership with American Enterprise Institute and Brookings Institution.”
Strain hails from AEI where he serves as the Arthur F. Burns Scholar in Political Economy and as the director of economic policy studies. His research areas focus on the U.S. economy and labor market, jobs and labor policy, and federal tax and budget policy. In early 2020, he published The American Dream Is Not Dead: (But Populism Could Kill It), and his recent publications reflect a similar idea to the title of the book.
Sheiner, Robert S. Kerr Senior Fellow in Economic Studies and policy director for the Hutchins Center on Fiscal and Monetary Policy at Brookings, held significant positions at the federal level in the late 1990s. She was appointed deputy assistant secretary for economic policy at the U.S. Department of the Treasury and worked as the senior staff economist for the Council of Economic Advisers.
After Strain’s opening tongue-in-cheek remark, he said polling data does not provide a straightforward picture.
“One reasonably consistent finding is that if you ask people, ‘How do you think things are going?’ They say pretty bad,” Strain said. “Then if you ask people, ‘How do you think you’re doing?’, they say pretty good.”
With that tension between the perceived economic state and people’s personal finances, Strain said the “enormous economic and cultural disruption,” from the 2008 financial crisis to the COVID-19 pandemic to post-pandemic inflation, further complicates a decisive statement about the economy.
While Strain painted a broad picture, Sheiner focused on the near-term, particularly on inflation post-pandemic. With the Federal Reserve working to fight inflation, Sheiner believed America was on its way to a successful soft landing, but the situation changed when Trump took office.
“The Fed is still worried about inflation, and we’re looking for inflation coming from the tariffs,” Sheiner said. “Now, the tariffs have been also done in such a way that they have created a lot of uncertainty.”
She referenced the first round of tariffs in April and the flip-flopping of placing and removing tariffs, which leaves a diagnosis of the economy in limbo.
Strain reiterated Sheiner’s description of the strongly negative reaction to inflation. He calculated his own finances and although prices increased, his house and retirement portfolio still were increasing.
“And yet,” Strain said, “when I would take my family to lunch on Saturday afternoon at a restaurant that we have been going to for years, and instead of $50, the bill was $70, I felt like somebody was punching me in the face, and taking a $20 bill out of my wallet and running away with it. I did not like that feeling. That’s the way that the American people reacted to inflation.”
While Strain acknowledged many factors have impacted inflation, he critiqued former President Joe Biden’s American Rescue Plan of 2021, which Strain believes was “an extremely reckless piece of fiscal policy.”
“This pushed the capacity of the economy to supply goods and services beyond its limit,” he said. “What followed from that was inflation.”
From this, Strain said that Democrats should learn to not take the economic views of the fringe party members on the far left.
“That’s not the right way to manage the economy,” he said. “Reality matters. There are political consequences to spending too much money.”
For Republicans, Strain said they should heed the reaction to Biden’s economic agenda as a warning, especially with the recent budget deficit increases in the Big Beautiful Bill, Trump’s trade war and immigration restrictions.
“The Trump Administration seems to have learned no lesson from the Biden Administration when it comes to how intolerant the American people are of prices going up due to government action,” he said.
Sheiner views the American Rescue Plan as people trying to learn from the government responses after the Great Depression. Because the fiscal response to the Great Depression was too small, recovery was “extremely slow.”
“What I am worried about (is) the next time we have a recession, we will boomerang,” she said. “… We don’t want to overlearn the lesson and say, ‘Oh, don’t do stuff during a recession.’ We should have a fiscal response. It’s important to try to make sure it’s right sized.”
To add to Strain’s point about the American Rescue Plan, Sheiner said the Fed should have boosted rates when it saw how much the bill was doing for the economy. With the increase in spending power from the Big Beautiful Bill, Sheiner wants the Fed to be careful with its response to avoid further inflation.
With the passing of the Big Beautiful Bill and other extenuating factors, Taneja asked what Sheiner and Strain view as the most significant barriers for upward mobility for Americans.
Strain doesn’t view the bill as creating the biggest barriers for upward mobility.
“Maybe we could just characterize or comment on the name of that bill,” he said, “and perhaps that’s an indication of how far we’ve come from seriousness that we actually call this the name of the law.”
Instead, Strain thinks the biggest barrier is education. While Strain believes the United States had some correct responses during the pandemic, keeping children out of classrooms was not one of them.
“If you’re an upper-income American and in 2020 you had a third grader, you’re probably able to help your child catch up. If you’re a lower-income American, it’s going to be much harder,” he said. “So not only is that going to be a barrier for their mobility, but it’s going to exacerbate inequality in upward mobility.”
Sheiner agreed that education does pose a barrier, but she believes that legislation in the Big Beautiful Bill will exacerbate education inequality.
“The types of spending that we do to help, particularly, poor families, poor children — whether it’s healthcare, education, housing, food stamps — has these very long-run beneficial effects,” she said. “It helps them get more education, helps their parents be less stressed out and be better parents.”
By addressing other factors, Sheiner said education can be more accessible.
“As a society, we need to do more to make it easier for lower-income families to live with less stress,” she said. “… and to allow parents more dignity to be good parents and not be so on the edge.”
Another Trump policy impacting Americans is tariffs, which Taneja said also impacts the nation’s relationships with its allies. Taneja brought up how some Canadian Chautauquans said they wouldn’t return to Chautauqua until “you fix your country,” and Taneja assured them his to-do list includes 1) ordering copy paper and 2) fixing the country.
Sheiner, also a Canadian, said the negative relationship with America’s allies is less about the tariffs and more about how the tariffs are being used as punishment. How much this will impact foreign relations in the future is still uncertain.
“Maybe if things change relatively quickly, if you fix our country tomorrow after you get the copy paper,” she said to Taneja, “or maybe in a year, in the next election, there’s a huge swing, or it could be clear that the Republicans are going to lose. If that happens, I think we can kind of get back the trust we had before, and people can say, ‘Oh, yeah, that’s a bad period, and we’re back.’ ”
Strain said that the United States and Canada has had a great relationship and between their businesses, institutions and people, that relationship could be maintained. However, if the tariffs are levied heavily, that could have a harmful impact on their relationship.
“Businesses will close that otherwise would have been able to stay open. People will change their purchasing habits,” he said. “It will be disruptive and hugely problematic.”
If the next president resets things, though, Strain said, the damage could be reversed.
When thinking of the next president, Taneja asked if the gender of America’s president, especially with the shift toward a desire for hypermasculine leadership, could impact how that president tries to remedy hurt relationships.
Both Strain and Sheiner said they didn’t see a president apologizing. In Sheiner’s opinion, because of the conservative backlash to America moving toward a more inclusive society, she also doesn’t view Americans electing a female president within the next decade.
Ultimately, with the current political turmoil, Taneja wanted to know where they both saw hope for the future of the American experiment.
Strain immediately pointed to Chautauqua.
“You all could be doing a lot of stuff today and this week, and you choose to be here because you are active citizens trying to understand what’s going on, trying to influence each other,” he said. “That’s a wonderful thing, and that’s the cornerstone of our democracy.”
Since America’s democracy is set up to have elections every two years, Strain believes citizens will turn to the ballot box to stand up for what isn’t working for them. Sheiner agrees that civil engagement is crucial. When she despairs or hears Trump say that he is running for a third term, she tries to view America in all its history.
“We have a long history of democracy. I don’t think you can destroy that overnight. When you think about certain countries where it was destroyed quickly, they didn’t have that strong, long formative part of their country of a democracy,” she said. “I do think that this is a period where we will look back and say that was a bad period. I’m hopeful from that perspective.”
