Episode 726: Terms of the Debate : Planet Money We made an audio glossary for the confusing economic jargon that came up during the first presidential debate.

Episode 726: Terms of the Debate

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One of the things that amazes me about political debates is that, on one hand, the candidates are trying to talk to all of America. They're trying to make this really big, simple, emotional case for themselves.


But then when you're watching the debates, they bust out all of these terms that I have never heard of. And everybody has to look them up online like OMB and TPP and repatriation and offshore profits - and the bragging one.


DONALD TRUMP: I have a tremendous income. And the reason I say that is not in a braggadocious way. It's because it's about time that this country had somebody running it that has an idea about money.

SMITH: See, it's all the pronunciation - braggadocios, braggadocios.

Sam Sanders, you've been to this man's rallies. Is this a term he uses a lot?

SAM SANDERS, BYLINE: This was the first time that we really heard Trump use that word. But the root of it, bragging...

SMITH: (Laughter).

SANDERS: ...Is a thing that he does a lot over the course of the campaign.

SMITH: In fact, maybe his picture's the definition.

SMITH: Yeah. You know, for him, his businesses are the best. His deal-making ability is the most amazing. He will make the best jobs, the best economy. Everything will be bigly.

SMITH: This is Sam Sanders, host of excellent, amazing, bigly NPR Politics podcast and host for this special post-presidential debate edition of PLANET MONEY.

Do the thing you do. I'm a huge fan.

SANDERS: Hey, y'all. It's the NPR PLANET MONEY podcast.

SMITH: (Laughter) I love it.

SANDERS: Today on the show, I have, in my hands, nine of the most confusing economic terms of the first presidential debate. And I'm challenging you - Robert, Stacey, the whole PLANET MONEY team - to explain them.

SMITH: It is a glossary in alphabetical order.

VANEK SMITH: From the R&B to the TPP.

SMITH: R&B is right next to TPP in the alphabet.

VANEK SMITH: (Laughter).

SANDERS: Yeah, you know me.

VANEK SMITH: (Laughter).


SANDERS: All right, all right, all right. We have handled braggadocious.

SMITH: That is No. 1. And we cannot say that word enough, braggadocious.

SANDERS: Braggadocious, braggadocious, braggadocious, braggadocious.

SMITH: So let's go to No. 2 in the glossary. I'll let you do it.

SANDERS: Yeah, No. 2 is carried interest. This one came up at Monday's debate. And it's interesting, Robert, because it's actually one of the rare things that Hillary Clinton and Donald Trump agree on, how much they hate this thing called carried interest.


TRUMP: I'm getting rid of the carried interest provision. And if you really look, it's not a tax - it's really not a great thing for the wealthy. It's a great thing for middle class. It's a great thing for companies to expand.

SMITH: I feel bad for those people who went out to get a beer, came back to their TV set and you're just like, what is he talking about, carried interest? So I'm going to explain this.

Both Trump and Clinton want to get rid of this loophole. It's essentially for the rich, and the loophole goes by the name carried interest or carried interest provision. And Sam, I'm going to give you a little word origin story that I got from Donald Marron. He's an economist at the Urban Institute.

DONALD MARRON: Carried interest comes back from the days of shipping, where you would give the captain of your ship 20 percent of the profit on selling the merchandise - right? And that gives the captain a really good incentive to get the ship from point A to point B. And it gives him an incentive to sell the cargo at a good price when he gets there.

SANDERS: Ah, so they had an interest in the things that they carried.

SMITH: Carried interest...


SMITH: ...You got it.

But when we say carried interest today, we're really referring to investment firms, which I guess are like modern-day ships. The managers of private equity firms, they take people's money to invest. They buy companies; they sell them. And then these managers, just like the old sea captains, they get a cut of the profits. They get their percentage, their carried interest. And it's essentially their paycheck - it's how they make their living - but this is the key part. They don't pay regular income taxes on this carried interest. They pay much lower investment-rate taxes.

VANEK SMITH: So both Trump and Clinton say that we should get rid of this loophole, this carried interest - that we should just tax rich managers like everybody else.

SANDERS: OK. No. 3, currency manipulation - this is usually combined in a sentence with another word - China.


TRUMP: You look at what China is doing to our country in terms of making our product. They're devaluing their currency, and there's nobody in our government to fight them.

SANDERS: Currency manipulation - that does not sound good.

VANEK SMITH: No, it sounds very bleak.

SANDERS: Nefarious.

VANEK SMITH: It does. It does sound nefarious.

Basically, though, all it is is for years China was accused of manipulating its currency, the yuan, so that it was artificially low compared to the dollar. And what that meant was that Chinese goods were cheaper when they sold in the U.S. And that made them very competitive for U.S. consumers, and it made it really hard for U.S. companies to compete. It was hard for them to have prices that would match the prices of Chinese goods. So that is the currency manipulation that people were talking about and were worried about for a really long time.

SANDERS: So is it still happening now? Because Trump talks about it all the time.

VANEK SMITH: Yeah, that's interesting because most people don't actually think that's happening at all anymore. In fact, if anything, the reverse is now true. China's been trying to kind of prop up the yuan, and that has made Chinese goods more expensive in the U.S. than they would otherwise be and has made U.S. goods cheaper in China than they would otherwise be.

SANDERS: All right. No. 4 - Robert, this is a word that I hear constantly on the campaign trail - manufacturing, as in...


HILLARY CLINTON: I want us to invest in your future. That means jobs and infrastructure in advanced manufacturing.

TRUMP: Well, the first thing you do is don't let the jobs leave. The companies are leaving. I could name - I mean there are thousands of them. They're leaving, and they're leaving in bigger numbers than ever.

SMITH: Now, obviously we all know what the word manufacturing means. It means a large facility to produce objects with machines. But an economist we know, Emily Oster from Brown, she pointed out that the way the candidates - both candidates - use the word manufacturing may mislead people.

EMILY OSTER: You would think everyone in America was in manufacturing. We either work in a factory making an air conditioner, or we work in a small business making draperies or, you know, our job has been - as a car manufacturer, has been shipped off to Mexico - that that is that only job that people have.

SMITH: And Oster says, you know, the vast majority of us don't make anything. We don't process anything. We don't run the machines to manufacture and process things. Only 9 percent of jobs in the U.S. are in manufacturing. Most of us do - they do what we're doing right now. I mean, they're podcasting. They're teaching. They work in health care. They work in retail. They're doing something for somebody else.

OSTER: Why not more discussion of improving jobs, wages, better schedules, etc., in the service sector? This is where most people work.

SANDERS: Well I have a theory about that, Robert.


SANDERS: Politics inherently is aspirational. We talk about - and our politicians talk about what we wish things were, not what they really are and so much about the days of manufacturing seem more American and simpler and hardier, you know. It's - so much of the service economy, we're still figuring out. And it's hard to explain, and it's different. And it doesn't feel as good as going to that good old factory job.

SMITH: You know, we were talking about that after the debate. You know as reporters, like, we fall into this, too, because, you know, we're fascinated with the closing of drive-ins and diners. Like, we always want to do these stories on farmers - we're sort of fixated on these disappearing parts of American culture.

SANDERS: Exactly. Like, you don't see campaign ads about the beauty and the American-ness of the emerging service economy. You just don't.

SMITH: Yeah, maybe they should stand the health care worker out in sort of a field of grain or as the sun is setting, and they could make it more romantic.

SANDERS: Outdoor hospital.

SMITH: (Laughter) Exactly right. Take us to number - what are we on?

SANDERS: No. 5...


SANDERS: Oh, hey.


VANEK SMITH: It's me, the North American Free Trade Agreement.

SANDERS: Yeah, so here's my thing with NAFTA. I have actually researched this a lot, and I hear it a lot when I'm on the road. The more I hear about it, the more I am confused.

VANEK SMITH: (Laughter) Yes. This is true. And this keeps coming up during the debate, and especially Donald Trump seemed to have very strong feelings about it.


TRUMP: NAFTA is the worst trade deal maybe ever signed anywhere but certainly ever signed in this country. And now you want..

VANEK SMITH: The worst deal ever - what?

SMITH: Ever...


SMITH: Anywhere. Back to the ancient Greeks, the ancient Romans - this includes the Trojan Horse, terrible deal.

SANDERS: Back to the garden of good and evil, Eve was like - y'all, NAFTA's bad.


VANEK SMITH: Right. Well, what NAFTA did was eliminate these protective taxes on goods from Canada and Mexico. So it made those things cheaper in the U.S., which made it harder for U.S. companies to compete, especially since labor costs are so much lower in Mexico. Still though, the worst deal ever sounded big. So I asked Michael Munger about this. He is an economist at Duke.

MICHAEL MUNGER: The claim that NAFTA was a bad deal is a very narrow view of what policy should do. So the thing that NAFTA mostly did was reduce the prices of products on both sides of the border.

VANEK SMITH: So that was really bad for some U.S. businesses because they couldn't compete with the price of goods from Mexico. The textile industry took a really big hit, but it was good for consumers. We could get stuff at a lower price.

SANDERS: Yeah. So I talked to my colleague Danielle Kurtzleben. She covers policy and data for NPR Politics. And I asked her about NAFTA. And she says the thing with this deal is that the good of it was hard to see. A lot of the things that you buy got cheaper because of NAFTA. But you didn't immediately tie that to a trade deal - right? But the bad of NAFTA, in people's eyes, was very visible, you know, that some factories and some jobs moved out of people's hometowns to other countries.

VANEK SMITH: Right. And in fact, the impact on jobs was not as big as a lot of people worried that it would be because our trade with Canada and Mexico, while significant, is still a really small part of the U.S. GDP.

SANDERS: OK. I'm going to take No. 6 all by myself. It'll be very quick. It's a kind of a pet peeve of mine, the TPP, the Trans-Pacific Partnership. I do know that you guys at PLANET MONEY have handled this one quite a bit. But I have a small bone to pick. Here's my thing with the way politicians talk about the TPP. It's always part of a larger riff about trade and how the U.S. is being crushed in trade and China this and TPP that. And they end up lumping TPP together with China.

But here's the thing - TPP does not involve China. It is a trade deal between the U.S. and 11 other nations, none of which is China. And the idea is that it gives those nations and the U.S. the upper hand in trade against China in the region. So that's it. You can hear more of PLANET MONEY talk about this, but done with my rant.

All right, where are we now?

VANEK SMITH: We are in the T's in our list.

SANDERS: Moving along.

VANEK SMITH: Yes, we are. And so let's let Hillary Clinton take the next term because she made up this joke about how to characterize Donald Trump's plan. It was a very memorable moment in the debate.


FORMER SEC OF STATE/DEM PRES CAND: I call it Trumped-up trickle-down because that's exactly what it would be.


VANEK SMITH: Classic zinger.

SANDERS: I did not like that. You can't say that 10 times fast.

VANEK SMITH: Trumped-up trickle-down.

SANDERS: Ten - we're not going to do it now.

VANEK SMITH: We can have got a Trumped-up trickle-down contest (laughter).

SANDERS: Trumped-up trickle-down, Trumped-up trickle-down, Trumped-up - nope. Nope.

VANEK SMITH: Yeah. So this was one of those moments it was, like, such a clear sort of, quote, unquote, "zinger." So we all kind of groaned when we were watching it. But Michael Munger, the economist from Duke, said this was his favorite moment in the debate.

MUNGER: It's both so hokey and yet her sort of smirk as she said it, there was a kind of pride of authorship. And the audience reacted well. And it did connect to Republican past. So the more I thought about it, the more I was taken by Trumped-up trickle-down economics.

VANEK SMITH: The Republican past, of course, was Ronald Reagan. He was a big champion of cutting taxes for the wealthy. This was called trickle-down economics by critics. And the idea is that if you cut taxes for the wealthy, the wealthy will take that money and they will spend it in all kinds of ways. They will buy cars and houses and boats. And they will hire landscapers and architects. And so that money will then trickle down throughout the whole economy.

And Mike Munger says Trump's plan, when it comes to taxes, is quite classic in that way. Trump wants to cut taxes for the wealthy and for businesses. And Hillary Clinton was very, very vocal about wanting to increase taxes for the wealthy.

SMITH: Now this is one of those perennial debates between Democrats and Republicans, whether trickle-down economics - or supply side, as the people who favor it call it - whether it actually works. Now massive tax cuts have not worked for previous Republican presidents. What does Mike Munger say about sort of Trump's trickle-down tax idea, Trumped-up trickle - that whole thing.

SANDERS: See - can't say it.

VANEK SMITH: Trumped-up turkel (ph) - oh.

SANDERS: (Laughter).

VANEK SMITH: Oh, no - I lost my own bet.

SANDERS: Told y'all.

VANEK SMITH: Well, Michael Munger is a libertarian, so he told me that he actually is not a big fan of either candidate. But he said this plan - that the trickle-down economics plan does work in certain ways and then also doesn't work in certain ways. So he says it just depends on where the rate of taxation is.

So for instance, he told me that income taxes in this country, in his opinion, are so low that if they got cut, it would actually not help the overall economy. But, he said, the corporate taxes, in his opinion, are quite high. They're 35 percent. And if those are cut, as Trump said he planned to do, he thought that actually would help the economy. It would trickle down through the rest of the economy and help to bring companies and jobs back into the U.S.

SANDERS: So for the next term, Robert, got to say Donald Trump uses lots of different words to speak highly of himself. There was one that I heard last night that you don't usually hear.


TRUMP: I'm extremely underleveraged.

SMITH: You've got to play it again - underleveraged.


TRUMP: I'm extremely under leveraged.

SANDERS: Extremely.

SMITH: It's so weird. It's so weird.

SANDERS: It is weird.

SMITH: Who says that? I mean, nobody, like, encounters somebody in the hallway and says oh, something's different about you. Did you change your hair? You know, you lose weight? Are you underleveraged in the debt department?

SANDERS: I was on the underleveraged cleanse diet.

SMITH: Well, you are looking very leverage-less, if I can say that.

SANDERS: Why, thank you.

SMITH: So we should say leverage means, simply, you have taken out a loan - maybe you've bought land or a business. And people who take on too much debt are called overleveraged. So I think, in Trump's mind, he's thinking - well, if over leveraged is bad, then underleveraged is good.

So essentially, Trump is saying I own so much stuff - so much stuff that I could take out so many more loans, but I choose not to do so. And it's funny because, like, when you hear him say this, you realize that Donald Trump spends a lot of time talking to other rich people. He spends a lot of time in boardrooms and on golf courses. And so, a lot of the debate is explained by this sort of management speak. There's this one moment, I think, jumped out to all of us here at PLANET MONEY. You'll hear Hillary Clinton first.


FORMER SEC OF STATE/DEM PRES CAND: Donald was one of the people who rooted for the housing crisis. He said, back in 2006 - gee, I hope it does collapse because then I can go in and buy some and make some money. Well, it did collapse.

TRUMP: That's called business, by the way.


SANDERS: So what he said right there - that's called business - one of the things that I've noticed about Donald Trump, following him over the last few months here and there, is that he fully believes that to get the deal you want, it's OK to say whatever you need to say. And so people will critique him and say, well, he contradicts himself. You know, he says this one day and then that the other. That's part of his plan. He relies on exaggeration and hyperbole and going there to get the deal that he wants. And he says that that will help him be a great deal-maker for the country.

SMITH: That's called business, Sam.

SANDERS: You know?

SMITH: All right. It's time for the last word in our debate glossary. And we're going to Donald Marron, the economist, do the honors. We asked him - was there any particular moment that stood out to you at the debate?

MARRON: Oh, well, you know, as a card-carrying economist, when Mr. Trump was accusing the Fed of being political, my ears obviously perked up at that point.


TRUMP: This Janet Yellen of the Fed - the Fed is doing political by keeping the interest rates at this level.

SMITH: This Janet Yellen, or, since it's last on the list - Yellen, comma, Janet - is the chair of the Federal Reserve. The Fed's job is to set interest rates, control the money supply. And Marron says Trump is leveling this incredibly serious charge at Yellen here. He's saying that the Fed is monkeying around with interest rates to try to sway the election.

SANDERS: And that's the thing that the Fed is not supposed to do at all. It's supposed to be independent to do what's best for the economy. And Marron says that's what Janet Yellen and the Fed are actually trying to do.

MARRON: So I don't see any evidence that the Fed is acting politically. You know, I think there's perfectly fair discussion to have about whether the Fed is pursuing the right policy. But I don't think for a minute one should view that through a political lens.

SMITH: You know, as we talked to economists for this show, I feel like you could feel them fighting between the two lenses. There's the political lens, but then there's the economic lens. And they were frustrated because the economic lens doesn't really make a lot of sense, what these candidates are saying. But you, Sam, like, you're an expert in the political lens.

SANDERS: Expert - that's sweet of you (laughter).

SMITH: Is it wrong to try and, like, take words and define them and say what they actually mean?

SANDERS: You know, so it is fine to geek out over these words...

SANDERS: And we are geeking out.

SANDERS: ...And really parse the definitions. But you got to understand, policy does not happen without politics, you know. So we need both working together to get anything done. So it's perfectly fine to stress over these words, but it's also totally fine to stress over the politics and the emotion of it all, too.


UNIDENTIFIED SINGER: (Singing) Devil feels closer on a night like this. When we grow older, I will reminisce.

SMITH: We are taking nominations for the PLANET MONEY dictionary. If there are other terms you want defined or questions you want answered, you should tweet at us. We're @planetmoney, or leave a comment on the Facebook page for this episode.

VANEK SMITH: Our show today was an all-hands-on-deck effort. So a lot of thanks to Elizabeth Kulas, Rhaina Cohen, Sally Helm, Alex Goldmark, Bryant Urstadt and the great Nick Fountain.

SMITH: And a special thanks to you, Sam Sanders from the NPR Politics podcast. This is an amazing podcast. You guys are so fast and so on the news. And there is this exciting sort of announcement that you're going to make about the end of the election.

SANDERS: Yes, a lot of big announcements. Of course, we're going to have special episodes for you after every debate between now and the election on top of our regular Thursday Weekly Roundups. But for the last two weeks of the election, we'll have an episode every single day. This is what we've been training for and working for for the last year and some months of this campaign season. We are going to finish so strong, you guys, and I want you to be there with us listening.

SMITH: Wait - who's going to host the podcast after those two weeks? You guys will be asleep for months.

SANDERS: I'm taking an island vacation, actually.

VANEK SMITH: Oh, good call.

SANDERS: Hey, hey.

SMITH: That's the NPR Politics podcast. And we're PLANET MONEY.

I'm Robert Smith.

VANEK SMITH: And I'm Stacey Vanek Smith.

VANEK SMITH: And I'm Sam Sanders. Thanks for listening.

VANEK SMITH: And by the way, you do look underleveraged.

SMITH: Oh, thank you so much.

VANEK SMITH: It's true.

SMITH: But I feel like when people say that, it means that all those times they didn't say anything, I was overleveraged.

VANEK SMITH: No, that's not it at all.

SMITH: It's true.

VANEK SMITH: You've never looked overleveraged to me once.

SMITH: (Laughter).

SANDERS: That's why you never talk about anybody else's...

SMITH: Debt load.


SMITH: Don't talk about the debt load.

VANEK SMITH: Don't talk about the debt load.

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