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Okay, so I went to Disney for the first time, did Around the World at Epcot. There's like all these different countries. We ended up, of all places, eating poutine at Canada. It felt kind of... I don't like poutine. You don't like poutine? No, it's gross.
What is not to like? What is to like? It's like f***ing curded cheese. And french fries! Yeah, poutine's disgusting. And gravy! I mean, I like the fries, right, but like, I'm not a gravy guy, not a curded cheese guy, it's like f***ing gross. That's like insane. No, insane! I like every regional foodstuff except f***ing poutine. F***ing poutine.
Hello and welcome to the FiveThirtyEight Politics Podcast. I'm Galen Druk. Today is going to be something of a throwback episode. And that's because we're looking back at a couple of the most notable American political decisions of the 21st century. And we're going to talk about how they relate to today. That's because, first and foremost, today is the 20th anniversary of the invasion of Iraq.
The invasion was a divisive decision at the time, and since then, Americans have largely turned against it. So has that experience made the country more isolationist as a result? For example, as it stands today, the two leading contenders for the Republican presidential nomination do not view aiding Ukraine against Russia as in the U.S.'s vital national interests.
Second, we are in the middle of a banking crisis, the severity of which is yet to be determined. This month, we saw the second and third largest bank failures in American history, and concerns about other banks, large and small, remain. The federal government was quick to ensure that depositors would be made whole, even when deposits exceeded the insured $250,000 limit.
That has kicked off a debate over whether this is the second bank bailout this century. And of course, now there's been finger pointing over who is responsible for the failure of Silicon Valley and signature banks in the first place. We'll talk about what we know and possible political consequences. And here with me to kick things off, talking about the anniversary of the Iraq war, our editor-in-chief, Nate Silver. Hey, Nate. Hey, everybody.
Also here with us is senior elections analyst Jeffrey Skelly. Hey, Jeff. Hey, Galen. Happy Monday. Happy Monday, indeed. And later on in the show, our colleagues Sentul Nikar and Monica Potts are also going to be joining us to talk about the banks. Let me say two things before we dive into today's episode.
Episode one, just very briefly, I know that over the weekend, former President Trump said that he expects to be arrested in connection with an investigation into hush money he paid to Stormy Daniels this week. I don't have any inside information on whether or not that will actually happen, but rest assured that if it does, we will have an emergency podcast discussing it. But we're going to hold off on discussing that for now while we wait for more information.
And two is a reminder that we have a live show in New York City that's almost exactly a month away. It's going to be on April 19th at 730 at the Bell House. And the place to get tickets is 538.com slash live show. I'll say that one more time. We're going to have a live show in New York City on April 19th. It's going to be a lot of fun. So you should definitely get tickets. And the place where you get them is 538.com slash live show. We will see you there.
Okay, so Jeffrey, to help mark the 20th anniversary of the invasion of Iraq, you look back at public opinion then and now, and you wrote a piece that's up on the site today looking at Americans' views on Iraq in particular, and then American involvement in global affairs generally. Let's begin with the actual invasion. What did public opinion look like when the war began?
Well, right when the war began, it was very supportive. For instance, Pew Research Center has done a lot of polling over the years on this question. And so right after the invasion, when they first polled, 71% of Americans said that the US had made the right decision in sending military force to Iraq. Only 22% said it was the wrong decision.
That, within about a year, year and a half, had gotten much more 50-50, and part of that was you saw Democratic support for the conflict go from being around half of Democrats to 20-30.
15% in a lot of polls. And Republican support for the war was also sliding, but it was sliding at a much slower rate. And so fast forward to today and you have polls that will say, for instance, there was an APNORC poll recently from last year actually that found – I think it was 63% said it was the
It was not worth it to have gone into Iraq, and you had majorities of democrats and republicans even who said that. So that's sort of the trajectory of opinion on the Iraq war from start to now.
I think that the general consensus has been that in part because of that slide and because of the outcome of the war in Iraq and also in part the outcome of the war in Afghanistan, Americans have become more isolationist over the past 20 years and are less interested in, you know, at the very least using military force in other countries.
Is that true? I mean, is there a way to track that in the data? I mean, it feels true to me, like thinking about how hesitant politicians have been or relatively hesitant politicians have been to, you know, engage at least in the use of military force since then. But I don't know. Is there a way to actually judge this empirically?
Yeah, so I think it's difficult because a lot of times you're dealing with hypotheticals when you ask these questions. And in the case of the Ukraine conflict, for instance, we do see polling that says only a small percentage of Americans, I think, poll.
polls, like 25-ish percent in some of the polls that I looked at, said that they supported putting U.S. troops in Ukraine fighting Russians. And obviously, there's like other potential ramifications of U.S. forces actually directly fighting Russia with the number of nuclear weapons out there. So those considerations may have been on people's minds when they were answering it.
The other potential cases of using US military force are mostly hypotheticals. It's like, well, would you want to send troops to help defend a NATO ally if Russia invaded it? And we do see polling that says people are supportive in that case or at least a majority are supportive of sending US forces to aid an ally.
an ally in that situation, which obviously would be a really critical situation, or using like the US Navy to help fend off like a Chinese blockade of Taiwan. This is pulling that the Chicago Council on Global Affairs has done. And so people seem supportive in those instances.
But until you get into actually a real situation and the context of that particular conflict, I think it's rather hard to say how willing. But I do think on the larger sense of like how engaged Americans want the country to be in the world, I do think the polling tends to point to people –
somewhat consistently being more in favor of an active U.S. role than not. And obviously, how you word this question can matter a great deal. Yeah, okay. I want to dig into that a little bit more because there's some interesting data underneath that. But Nate, how do you think about the political legacy of the Iraq war in terms of how Americans think about America's place in the world and also how politicians talk about our involvement abroad? Yeah.
I mean, I'm not sure I have any hot takes in particular. I do think it was like an inflection point as far as appetite or eagerness for being involved in foreign conflicts. It's also shaped presidential races, right? I think Barack Obama beat Hillary Clinton in part because of her support for the Iraq war. Donald Trump went after the kind of Republican establishment based on their support of Iraq in part. And so, you know, it's kind of been pretty important. I'm happy, excuse me, that we're talking about it.
I'm curious, Jeffrey, how you square what Nate said with the data that points to this idea that public opinion on U.S. involvement in global affairs hasn't necessarily changed all that much since the invasion of Iraq. Because, you know, in addition to what Nate said about its impact on politics, it's also
I think also folks oftentimes point to the Iraq war and the 2008 financial crisis, which we will get into, as playing a significant role in declining trust of institutions amongst Americans. And in reading your piece, I saw you kind of come to this conclusion that when you ask the question broadly of Americans, do you think the U.S. should play a leading role in global affairs or focus more on things at home? The polling is pretty steady from like the 70s until now.
Despite everything that has happened, you know, during that 50 year period. So like what's going on? Is this just maybe like a bad way to actually gauge public opinion? Is that question too broad to actually get at the substance of how Americans feel?
I mean, I think it's possible that that would be a critique of that wording. But it's true that Gallup and the Chicago Council have found somewhat similar results over time where this consistently high for leading or a major role or an active role. Like there's consistent support there. Now, what that's going to mean to a person answering a poll is going to vary from person to person.
And I think the context of whatever is going on in that moment – experts I talked to talked about whatever the context is of the moment is going to be on their minds when they're saying that. But regardless of that context, whether the Iraq war is ongoing or the war in Afghanistan or the Ukraine conflict is going on.
you still get a relatively consistent range of responses, which would maybe back up the idea the poll has validity in that even through these very different times and contexts, you still get people saying things that the US should be active more than sort of staying out of things. Now, that doesn't necessarily mean, and I think this is an important point,
This basically gets to the idea that a lot of times the media and politicians and there's kind of a tendency to conflate foreign policy with military intervention. Those are not – they're not the same thing. An active foreign policy can include all sorts – using all sorts of tools at the US's disposal, international organizations, our allies, multilateralism to try to bring people to the table to get some goal that we want accomplished accomplished.
And the threat of military force is also one of those tools in the tool bag without necessarily using it. But for instance, like in other polling, Americans are supportive of having bases overseas in places like Germany and Japan. They're not bothered by that. They support it. And again, some of the hypotheticals we talked about, like they might be supportive of using US military force under certain circumstances. So I think
That to me suggests that Americans are still supportive of an active foreign policy, but active doesn't have to mean going and invading somebody, I think is an important aspect here. Wait, wait. Okay. So do you two think that it's fair to say that Americans are more isolationist today than they were in the early aughts? I think so, sure. I think in the sense of...
What complicates this is of course 9-11 and the lead up to the Iraq war where the Bush administration was making this very public case based on flawed intelligence as it turned out that we should invade Iraq. And they spent months building this case. So the idea that Americans were very supportive at the start of the Iraq war – of the Iraq war kind of makes sense. It's been laid out. Democrats were not particularly critical of it.
of the war. I mean, there were some who were, of course. It was like a wedge issue, right? Republicans were united and Democrats were divided. Yes, exactly. And so I think knowing that context and understanding why people were very supportive of the Iraq war is perfectly understandable. And so maybe people were a bit more supportive of an active role at that moment, because in the aftermath of 9-11 and the seeming threat of Iraq that we needed to
active in their minds meant military intervention of some kind and that they were supportive of that idea because of the perceived threat. It makes sense to me. Today, you would have to have a perceived threat at that level. And of course, we don't necessarily have that. And that's the hypothetical problem with trying to understand where Americans would sit. If they felt like there was a perceived threat or if another 9-11-esque event occurred,
Would there be more support for military intervention? Let's go get them kind of thing like in Afghanistan. And I think it's hard to say, but history would suggest, yeah, they probably would be more in favor in that sense. So it's like in one sense, Americans may be more hesitant about the idea of using military force, but you could very easy get into a situation where they'd be absolutely supportive of it. And so it's kind of hard to know.
Yeah. I mean, Nate, how do you react to that? This idea that the data points in the direction of things haven't necessarily changed all that much. I mean, you know, for one thing, things have gotten a lot more partisan now. Right. Was it like half of Democrats, Democratic senators supported the Iraq war resolution? Right.
You know, yeah, no, it's fair to say that if you had like a prompt, like a terrorist attack or attack on a foreign military base, that might revise things a little bit. But people are like are more skeptical like institutions in general. Right. Which is a very broad phenomenon across like all types of different sectors of institutions. So I think it would like you wouldn't have these like 75, 25 numbers like you had 20 years ago, I don't think for sure.
Yeah, I think to Nate's point about partisanship, for instance, it's not that surprising that Republican support for aiding Ukraine has maybe fallen at a faster level than it has among Democrats because it's an ongoing conflict where the Democratic president in office is supportive and then Republicans are split.
on the issue and that obviously the two leading Republican contenders for the presidency in 2024 have come out opposed. So it would sort of follow that Republicans, lay Republicans, Republicans out there in the world would have a diminishment in their support for it because a lot of people that they trust –
are saying that we shouldn't be doing this. And one of the things that's important here is like leadership matters on foreign policy and issue like this. It matters on any issue. Like people are going to follow leaders to some extent. They're not total sheep, but they will follow them. But foreign policy Americans know less about that than they do on many domestic issues of importance to them. So if you have sort of a divided Republican camp on how to address things like Ukraine and involvement in the world, you know,
The fact that you see sort of Republicans sliding on Ukraine is maybe not that shocking to get to the idea about partisanship and sort of that leading people. I think that's important. But you also see some of these partisan trends take hold before Ukraine really comes on the scene as an issue. I'm looking at a chart in your piece using data from the Chicago Council on Global Affairs.
And you see Republicans were historically, at least in the first decade of this century, more supportive of the U.S. being globally active. Then around 2014, you see the two parties flip. Democrats become more supportive of a globally active U.S. and Republicans become less supportive.
And at this point today, you know, Democrats are, I would say, more supportive of being globally active than Republicans were back at the beginning of the 2000s. And Republicans are less supportive of being globally active than Democrats were back in the early aughts. So they flipped. But then it's also even become more exacerbated. So.
I think there's a couple of stories we can tell, Jeff. One is, you know, the leaders of those two parties making arguments about isolationism or global involvement or whatever. The other question I had when I was looking at this chart is like, we've seen something of a realignment of the two parties. Is it the fact that like the people in the parties have actually changed? This kind of college educated voter who was historically Republican leaning has
who may, you know, rank supporting Ukraine much higher than lots of Americans is now in the Democratic Party, whereas they used to be in the Republican Party.
It's possible that that is a factor. I think I looked at some data the Chicago Council shared with me about education and support. Like people who are more educated tend to be more supportive of a more active US. That was true across both parties over time, the entire length of their time series basically. And I do think it is true the fact that you have more college-educated voters moving into the Democratic Party could be playing a role in this for sure.
At the same time, like party ID is pretty sticky in the sense that a lot of people who have one view of things politically are going to stick with that party most of the time. Now, some people clearly have moved.
In the Trump era, there were some shifts going on, but I don't think we can say that a huge chunk of the populace has actually switched parties. We're not talking huge percentages here. And I think it is worth noting that at the end of the day, like in Chicago Council's 2022 poll, that 60 – I think it was 68 percent of Democrats or 69 percent. I'll have it right in front of me right now – said that they supported an active US –
in global affairs and was like 55% of Republicans.
So like it's still a majority of Republicans saying that. So like this is not like the 75-25 case, which maybe that's where something like Ukraine aid might be headed. But this more top line general do you want an active US thing? The partisan divide is not massive. It is there and it has switched to your point and I thought that was really fascinating. And one of the more interesting trends kind of over time has been Democrats moving toward a more –
more supportive view of an active role for the US and Republicans becoming less so.
I want to talk about Ukraine specifically, but before we do that, there's one more trend that I wanted to hear you talk a little bit about, which is that around 2007, 2008, we see a lot more support across the board of concentrating on problems here at home as opposed to being active in world affairs when Pew Research frames it that way, sort of like one or the other. Should we focus more on abroad or should we focus more at home?
And that sort of sticks through, you know, 2014, 2015. But then you get to 2019 and there's a narrowing again where Americans are more supportive of being involved in global affairs and saying, no, we should focus on just what's going on at home to a less degree.
So what's happening there? Because it does seem like maybe there was it a fallout from the Iraq war? Was it a fallout from the, you know, bad economy? Like, where does where does that trend line come from?
Yeah, you know, it seemed to me that the – so to be clear, it's like in 2004, so very much like height of Iraq war time period and just after the November election actually. This poll was asked in December of 2004 by Pew Research. You have like 49 percent saying we should pay less attention to overseas stuff and concentrate on problems at home and 44 percent who say be active in world affairs. And then that gap grows and you have majorities, large majorities saying pay less attention to stuff overseas. Yeah.
And then it narrows again in 2017, 2019. And it's been close to 50-50 sort of in that period ever since. And I think that reflects the financial crisis because of the nature of that wording, concentrate on problems here at home. Well, what's like the biggest problem? When things aren't going well at home, it's usually the economy that's on people's minds. And
With the economy having improved and people being less worried about the economy and then also maybe the fact, getting back to the point that there have been consequences to the Iraq War. The Iraq War is further in the rearview mirror, and so people aren't as –
sort of maybe jaded by that. So that may – those to me were potential factors for why people became more sort of – or more split I guess instead of more one-sidedly in favor of paying less attention to stuff overseas. This is an example of like question wording mattering to me as well.
So now we get to a place today where we still see the majorities of Americans want the U.S. to take a leading role in global affairs. But underneath that top line number, there are some partisan disagreements with Republicans being less inclined to feel that way.
And we have a situation where, you know, Biden is taking a pretty clear position on supporting Ukraine as long as it takes and the leading Republican contenders for the nomination in 2024 disagreeing with that approach and saying that it's not in the U.S.'s vital interest.
How do we see, Nate, this issue in particular playing out? Is this now a wedge issue, but the shoe is on the other foot? Like, are Democrats united on this and Republicans are divided on this? Or do we see this becoming just a strictly 50-50, like Republicans are all against it and Democrats are all for it? I mean, with respect to Ukraine currently, yeah, it's kind of divided where Democrats are almost all in favor of our current policy and the GOP voters are becoming more skeptical, but not entirely skeptical yet.
You know, why that's happened is kind of an open question, I think. Most issues tend to polarize, right? If you give them enough time, people will find arguments or differentiate themselves from the other side. But yeah, I think, you know, if you're a Democrat and you hear DeSantis opposing U.S. involvement or indirect involvement, U.S. support for Ukraine...
I think that creates a general election liability potentially, even acknowledging that as this goes on, you'll probably see some shift of opinion. But I think you always have fights between trying to win a primary and that can hurt you in the general electorate for sure. How this plays out is also going to depend on things that are actually happening in that conflict and whether it's perceived to be successful. Obviously, some of that's also down to the way it's spun by the administration or by
Ukraine itself, depending on how the conflict's going.
Another factor that probably should mention though is how's the domestic economy doing? How's the domestic situation going? Because if the economy were to say worsen, talking about bank failures and if interest rates have to go up more and people become – money gets tighter and the economy starts to get worse, maybe people will be a bit more reticent about sending money overseas. Even in the grand scheme thing, it's not a lot of money, but
people will, it will be very easy to portray it as caring more about what's going on in Ukraine than what's going on at home. So like, that's a kind of an unknown factor as well to keep in mind. All right. Well, in the spirit of today, you've connected it to another 21st century crisis. And you've also given me the perfect pivot to the next segment. And some of our other colleagues are going to be joining us for that. So Jeff, thank you so much for joining us today. I really appreciate it. Sure thing. Thanks for having me.
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A little over a week ago, Silicon Valley Bank and Signature Bank failed in rapid succession after a run on deposits and the bank's inability to pay out customers. The federal government responded by quickly assuring that depositors would be made whole even in excess of the federally insured $250,000. And the vast majority of deposits at those two banks were in excess of that limit and so uninsured except for this government intervention.
That has kicked off a political debate over who is responsible for these banks' failures and how the government should respond. That also comes as there's still instability in global markets. Over the weekend, Swiss bank UBS acquired Credit Suisse in a bid to avoid the chaotic bankruptcy of one of the world's biggest investment banks. Joining us now to talk about all of this is senior political reporter Monica Potts. Hello, Monica.
Hello, Galen. And also here with us is editor Santul Narkar. Welcome to the podcast. Hey, Galen. So, Santul, kick us off. Why are numerous banks under so much stress right now?
There's a lot going on right now in the economy, a lot of uncertainty. As you know, for the last several years, we've been dealing with inflation. And so the Federal Reserve has been raising interest rates to combat inflation. What that has done is that it's created a lot of uncertainty about the future of the economy. It's created a lot of fears that we might be heading for a recession. And so sort of within that broader context, we can kind of understand why a lot of these depositors for these banks, we're not feeling great about.
about where their investments were heading. And so eventually this did lead to essentially Iran the banks because SVB had to raise the cash for their depositors to get the money.
And this has sort of created a larger trickle down within the economy. And so you're also now seeing kind of fear that these regulators are going to be instituting tougher regulations, cracking down on these banks that have been sort of been able to skate by without the requisite assets that they needed to have before the rollback of Dodd-Frank back in 2018. So all of these sort of have come together to create a really, really testy situation for regional banks.
Now, I want to be careful and say that this doesn't mean that we're going to see a collapse of the US financial system or going into a big global economic crisis or anything like that. But that sort of is at the core of a lot of the fears we're seeing right now. And I think we're not as unprepared as we were back in 2008, let's say. But there is definitely fears that this could spill over into the more real economy, should I say.
Right. I think that's sort of what the government was arguing when it decided to insure all of these depositors basically in excess of a quarter of a million dollars was, you know, like, OK, if small businesses can't access funds to pay payroll, then you have an issue where people are losing their jobs. And we could be facing issues in the economy, as you said, beyond sort of just the financial markets.
So this is a politics podcast, and I am sure that like Planet Money and the Econ podcast are going to do a lot of reporting on how raising interest rates can affect the assets that banks hold that they generally use to ensure that they can pay out their depositors. But in a situation like this, those assets become less valuable than they need to be in order to pay whatever. You know, let's talk a little bit about the politics of all of this. What are the arguments for and against this being seen as a bailout? Like,
did the government just bail out the banks again in less than 15 years?
even if you call it a bailout, which we have some early polling that which has explicitly stated this is a bailout and asked Americans their views on it. And most Americans seem to be broadly in support of the actions that the government has taken. Something like a recent YouGov poll conducted found that 64 percent of Americans are in favor of this bailout. And the question specifically said that the government is bailing out these SVB and some of these banks. But I think it's important to note that
That is just like a snapshot in time. And if you look back at 2008, early polling when the government was considering a similar bailout was pretty positive. And I think 57% of Americans supported bailout back in September of 2008, according to Pew poll. And a Gallup poll from around that time, similar results as well.
But going forward to about December 2008, that number had basically shifted. So you only had about 40% of Americans in support of that bailout. And then over the years, you've seen kind of more of a gradual erosion in support of that decision.
I believe a September or 2013 poll from Reuters and Ipsos found that only 22 percent of Americans supported that decision to bail out the banks. So I think there's the fact that a lot of the actions of federal regulators and banks are pretty opaque to most Americans. I think that's fairly fair to say, along with the Federal Reserve. But it's more about the effect on the real economy, which I think is if there's going to be one, it's going to take a
a while to set in. And that is what's going to affect Americans' perceptions, along with how the political messaging around it develops too. Yeah, I'm a little skeptical of some of that polling in the sense that like, I'm not sure that Americans are that informed or engaged with this issue, like it does for any issue-based question. Also, the question of wording can matter quite a bit. We've also seen the Republicans not demonize the ballot as much as they could. They kind of blamed it, oddly enough, on like,
wokeness somehow is like the GOP line, which seems like, uh, it seems like there are much better arguments to make potentially. But yeah, I, you know, I, I take that like a little bit at arm's length, I think.
So, Nate, are you saying that you think Americans do see this as a bailout and are potentially less supportive of it than that polling suggests? What are you saying? I mean, I think in part, it hasn't penetrated into mainstream discourse as much as my sense, right? So they might not have like terribly firm opinions about it. You could like ask people a question based on providing context clues in the wording of the question. But like,
It doesn't mean that you would have that be a robust opinion if the issue became like a point of debate, shall we say. Okay. All right, Monica, get in here. Bailout, no bailout, American response.
I think that Americans probably view it as a bell out, but I saw a poll that said 84% said taxpayers shouldn't pay. And at least for right now, that's what the Biden administration is saying is that it's contained within the banking system. They're trying to make the banks help shore up the banking system with a fund that they pay into and also by acquiring these smaller and mid-sized banks so that it doesn't require a taxpayer intervention. But just to go back to what Santul said, part of what we saw in 2008 was that these
The bailout was popular in the beginning because Americans didn't want the financial system to crash. They didn't want a second Great Depression, which is what it looked like in the kind of the beginning. But they also wanted banks to be more regulated so that they wouldn't cause this problem again. And they wanted people to be helped who were affected by this as well. And so I think to the extent that the administration can continue to make an argument that it's
preventing layoffs by helping these small businesses who were overexposed in this one bank or maybe had deposits in a lot of excess of the federally insured limit and that helping those customers
keeps the crisis from spreading to the broader economy, I think people will support it. I think that if it starts to feel like regular people aren't getting helped, but Wall Street is, then you'll start to see an erosion of that, which is really what happened after 2008. People felt that homeowners weren't protected. A lot of people lost their homes, but the banking system stayed secure and it was at the cost of Main Street. That's how a lot of people took the actions when the Great Recession started.
I think you're all getting at something important here, which is that framing really matters. And we saw, at least from a human perspective, there were a lot of consequences to the 2008 financial crisis. From a political perspective, careers were in some ways made and ruined.
in the aftermath of the financial crisis. I mean, think about the Occupy Wall Street movement leading to Bernie Sanders. Think about Elizabeth Warren's crusade against the banks and for regulation and consumer protection. You know, think about Bush's legacy and so on. Like, you know, the 2008 election in and of itself is probably very much a product of that fallout.
So, you know, who gets blamed, how these things get framed are very important and sort of like the narrative that builds publicly at this moment in time. Like who is getting blamed for this? I guess both. And you can answer this from like a political perspective of like how the different sides are trying to cast blame. Nate mentioned, you know, woke ideology or whatever, but there's a lot more that's being talked about here as well. Or from like a nuts and bolts perspective, like who is actually to blame publicly?
Yeah, I think it's really fascinating to see how the different parties have approached this issue and have, you know, assigned blame. On one hand, you have Democrats like Elizabeth Warren and Bernie Sanders assailing the Federal Reserve, even Chair Jerome Powell, and its regulators for not doing enough to take preventive measures to make sure that this didn't happen.
And there's also been a lot of retrospection over that rollback of Dodd-Frank regulations in 2018, a move that was supported by more than a dozen Democratic senators and some Democrats in the House as well. And then, as Nate mentioned, you have Republicans blaming so-called woke capital and banks for the crisis, which
which is a fairly basic accusation when you consider that SBB was led mainly by white male executives. But I think it is telling that both the Democratic Party and the Republican Party are pretty pot committed to their strategies when it comes to their messaging around this issue.
Yeah, I think that's right. And I think to some extent as well, it'll depend on how long it lasts and how far it reaches into the economy. Voters haven't been approving of Biden's, Biden's handling of the economy. And so this could feed into a narrative that Biden did a bad job on the economy when it, when it comes down to electing a new president in 2024. But if it's
pretty well contained and it's just a news blip that doesn't last very long. It's possible that people, voters especially, will forget about this when it's time to think about where to cast blame. It is also an issue where, you know, people who have a lot of money have a lot of influence on how both parties handle issues in banking and the economy in general, right? So it's like maybe not as effectively politicized or demonized as it could be, unless you are like a Bernie Sanders type who's like not in the mainstream of either party.
Yeah, I mean, the other argument that is pretty common here. So you see here, like the Democrats talking about regulation and so on. The other argument here is against the Fed, right? And sort of all of the stimulus spending, which is that the U.S. government under both Trump and Biden pumped gas.
trillions into the economy, the Federal Reserve made money so easily accessible that the two things, you know, in conjunction with supply shortages created inflation. And now the Federal Reserve is responding to that inflation that was at least in part caused by the Federal Reserve's own actions, plus the spending of the federal government and a lot of really easy, cheap money and stimulus, plus rapidly rising interest rates.
No, I think it is, but people focus on stupid shit.
People get really triggered by culture war stupid shit, which is not really high-stakes issues most of the time. If the G.O.P. had a focused predicament, we spent way too much money. As a result, interest rates are higher. As a result, your paycheck is effectively getting less every month and goods cost more in the grocery store. Inflation isn't an effective issue for the G.O.P., but it should be a higher priority. If I were running the G.O.P., I'd focus on that more.
Yeah, no, I agree. I mean, I think that the Federal Reserve has sort of become an easy target for members of both parties in some sense. But I think it's also important to realize that the actions and the policies that led to, I guess, like in this era of cheap money, they kind of predate the COVID economy in some ways. And so I think that there is, I think there's like the political reality of, you know, hey, we can say the Federal Reserve pumped in trillions of
trillions of dollars into the economy during the early days of the recession, which most people, I think at this point, kind of most economists would agree that like we needed to have some response on that level. But even before then, I think, you know, there was we're in a time of
fairly low interest rates. There's a lot of cheap money. And it was a great time to be a Silicon Valley investor. And those times have certainly changed because of inflation, because of what's happened with Silicon Valley Bank, which was partly the result of raising interest rates to combat an overheating economy. But I think that reality is far more complicated. And on the Democratic side, you also have
Some fairly, I would say, well-reasoned critiques of the fact that the Fed knew about the difficulties facing a lot of these regional banks, including SVB, well in advance of what happened. And perhaps they didn't act fast enough. But I think that's a much more complicated story than saying, hey, this one institution is responsible for this mess, or there's one party that's responsible for this mess.
Yeah, I think there's a lot of reporting saying that the Fed had a lot of warning signs, but maybe it was too late to avert a disaster with Silicon Valley Bank, especially. I also think, too, you know, as far as how this shakes out, the COVID pandemic was really an unusual situation. And I think that people were still learning the lesson from the Great Recession. You know, there was a lot of thought afterwards that the recession after the crash in 2008 wouldn't have been as bad if
Yeah.
We have a really involved federalist system that requires states to do the same things. And so the economy was affected by COVID in ways that we didn't anticipate. And it's easy to look back and find blame. But I think that how voters will carry that blame forward will depend a lot on what each party says that they're going to do in the future.
And I think that that's where I don't see a lot of messaging yet on how we're going to fix this in the future, what we as a party are going to do for you in the future. I think that we'll start to see that develop in the next few months.
Yeah. And I think it's also sort of jumping off of what Monica said. I think it's important to note that Americans' faith and confidence in banks is it's already like quite low. And so I think politically it is a very sort of sound strategy to hold banks accountable, to say that this is, you know, this is their fault. And I think that is sort of like easy pickings if you are a Democrat, if you are a Republican, too.
And I think there is a lot of truth to that messaging, too. But it's also the fact that a lot of the rollback and regulations, sort of like this long tail of the era of cheap money, if you want to call it that, has led us to this point. And that, I think, makes blame much more difficult to assign. Yeah, I mean, it's also, you know, we spend a lot of money on COVID-related stuff.
during the Trump presidency as well, right? It was like very similar to economic policy, which makes things a little bit trickier. I'm not sure I agree that the effects were so unpredictable. We would never spent that much money before, right? Just giving people cash. I think it probably was predictable. But again, between the fact that like, it's actually like a fairly bipartisan consensus in terms of what happened in the previous administration. And then the fact that like people focus again on stupid all the time instead of real economic issues makes argument harder than it probably should be in some abstract sense.
We just got done with a conversation with Jeffrey Skelly about how politics has changed a lot since the Iraq war. And I'm curious how politics has changed even since the financial crisis. You know, like originally Republicans were more interested in foreign involvements and Democrats were less interested. That has like exactly flipped in the 20 years since the invasion of Iraq.
Are there differences now within the two parties in terms of how they might respond to the financial crisis? Because in 2008, Republicans were still more maybe recognizable as,
The Chamber of Commerce Republicans, Republicans who had close relationships with business, that's not exactly the case anymore. You know, the more populist strain of the Republican Party has gotten a lot more power and influence in the time since. Like, how has that changed the politics of this?
So I think it's actually kind of an interesting point you made, Galen, because at least in that initial polling in 2008, when I was mentioning sort of the drop off in support for the bailouts, that drop off was much more significant among Republicans. And then even today, granted, we just have we have very limited polling about the state of things right now. But Republicans appear to be more opposed to the bailout than Democrats are.
And I don't know if that's like that points to some larger like institutional distrust, just generally like as a difference between Democrats and Republicans that goes back, like predates the Great Recession and obviously the SVB collapse. But I think those are two sort of surprising data points. I mean, keep in mind that the GOP is not truly a populist party in the sense of like there are lots of very, very wealthy people who support the GOP.
Peter Thiel, who was one of the first people to encourage investors to withdraw money from Silicon Valley Bank, is a Trump endorser. So, I mean, again, people are conflicted out here in provocative ways. Yeah, I was going to say that. You might see some difference rhetorically, but I don't see the Republican Party generally supporting regulations. And I think you still see Democrats arguing for more regulations. And it's almost the same players. You know, Elizabeth Warren, before she was a senator, was
well known for talking about the banking system in the United States. And she's still making the same cases that she was before. And so I think that I think it's much more similar than maybe what foreign policy differences have emerged in the last 20 years or so. All right. Well, it seems unfortunately like this story is not over. So we may come back to this in the future. But for today, thank you so much for joining me, Sintu, Monica and me.
Thanks. Thank you guys. Thanks for having me. My name is Galen Druk and Tony Chow is in the control room. You can get in touch by emailing us at podcasts at 538.com. You can also, of course, tweet at us with any questions or comments. If you're a fan of the show, leave us a rating or review in the Apple podcast store or tell someone about us. Thanks for listening and we will see you soon.
