‘We Have Created the Scarcity on Purpose’

The economy is one of the biggest vulnerabilities for Democrats this election and, in particular, the issue of affordability. Many Americans blame the Biden administration for the past few years of high inflation, and housing costs have become a crisis in cities across the country. These are top concerns for voters, and the Democratic Party hasn’t articulated the clearest answer. But there are some Democrats working hard on this and trying to push the party in a new direction. Brian Schatz is the senior senator from Hawaii and an influential policy voice in the Democratic Party. And over the past few years, he’s had a political evolution — about why things are so expensive and the role the government should play to fix it. In this conversation, I talk with Senator Schatz about the role the Democratic Party has played in making the affordability crisis worse, the policies he thinks could make a dent and why it’s so hard for the party to change course. This episode contains strong language. Mentioned: “Americans still waiting on Biden broadband plan; rural high-speed internet stuck in Dems’ red tape” by Susan Ferrechio Book Recommendations: Walk, Ride, Paddle by Tim Kaine The Amen Effect by Sharon Brous Wounded Knee by Heather Cox Richardson Thoughts? Guest suggestions? Email us at [email protected]. You can find transcripts (posted midday) and more episodes of “The Ezra Klein Show” at nytimes.com/ezra-klein-podcast. Book recommendations from all our guests are listed at https://www.nytimes.com/article/ezra-klein-show-book-recs. This episode of “The Ezra Klein Show” was produced by Elias Isquith. Fact-checking by Kelsey Kudak. Our senior engineer is Jeff Geld, with additional mixing by Isaac Jones. Our senior editor is Claire Gordon. The show’s production team also includes Annie Galvin, Michelle Harris, Rollin Hu, Kristin Lin and Aman Sahota. Original music by Isaac Jones. Audience strategy by Kristina Samulewski and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie-Rose Strasser. And special thanks to Sophia Boyd, Efim Shapiro and Sonia Herrero.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:03Ezra Klein?

  From New York Times Opinion, this is the Ezra Klein Show.

• 0:23Ezra Klein?

  We've talked a lot on this show about the way Donald Trump has transformed the Republican Party on all kinds of issues: trade, foreign policy, immigration. He has challenged, even upended, the old consensus. And he did that by giving people a very different story about what was wrong in America, about why they were struggling. And to be clear, I think most of Trump's policies and many of his stories are quite bad and often false. But to give some credit to the Republicans, they are having these big internal policy debates, and the people coming up behind Trump are having even more of them. The role has changed, their party has changed, their voting base has changed, and so they need to change.

• 1:04Ezra Klein?

  On the Democratic side, you haven't seen as much change. That's normal for a party that is going to run an incumbent president again. There wasn't a presidential primary this year where different candidates hashed out their different visions in front of the voters. Biden himself has not been a strong messenger. Kamala Harris hasn't had much time to build out an agenda of her own. The Democratic Party's been unified the last few years, but they've been unified against Trump, against MAGA. It's not been in their communications, in the way they've run elections, primarily about their policy vision. But there are people who have been trying to change where the Democratic Party is. Brian Schatz is the senior senator from Hawaii. He's one of the Democrats in the Senate doing

• 1:45Ezra Klein?

  the most work on these issues. He's been a very influential policy voice, but over the last few years, his focus has changed. He's had a bit of a political evolution on the issues that matter most to voters, particularly affordability. As always, my email, ezra [email protected].

• 2:08Ezra Klein?

  Senator Brian Schatz, welcome to the show.

• 2:10Speaker 01

  Thanks for having me, Ezra.

• 2:11Ezra Klein?

  So I gotta ask, what's it been like to be a Democratic senator over the past month or two? Like, what's the emotional, intellectual experience of it been?

• 2:20Speaker 01

  I'm glad you started with the question as an emotional. Look, there's a saying in Hawaii that everything in Hawaii is political, except politics, which is personal. And that's what it felt like. This was deeply gut-wrenching. It was obviously politically difficult, even a strategic challenge for all of us. But more than anything, a lot of us really revere Joe Biden. Look, I got to the Senate for the specific reason to take action on climate. I was the lieutenant governor of the state of Hawaii, and we were doing good things on climate, but climate action has to be federal and then international. And so that's why I moved here. That's why I came to the Senate. And we were able to do this incredible work. And to be able to accomplish everything that we've accomplished together, and then to say, hey, thank you very much. We don't think you're our standard bearer anymore,

• 3:05Speaker 01

  is just deeply, deeply painful. But people have been underestimating Kamala Harris all along, and underestimating the pent-up demand of the anti-Trump coalition, which basically was just sitting there latent. I actually thought the algorithm wasn't going to permit us to feel hope anymore. And suddenly, the internet was like fun again, and Twitter was a little fun, and fundraising was going crazy, and people were making jokes. And so I always think the campaign that's having fun is the one that's likely to win. And we are definitely having fun now.

• 3:35Ezra Klein?

  How do you think about the light and dark side of high levels of partisan energy in politics? What this kind of overwhelming party enthusiasm can lead you to see and make possible, and also what it can lead you to miss?

• 3:48Speaker 01

  I don't know what it... I mean, it's hard for me to know what we're missing right now, because we've been missing the enthusiasm for so long that I'm just going to bask in it. And I think one of the things that I've been talking to colleagues about is like, we don't actually need to pivot from this moment of enthusiasm. We don't need to expect something bad to happen next. We will have... Dark days during the campaign, we'll have bad polling results during the campaign. But right now, we need to roll up some wins and some enthusiasm and some volunteers and some political infrastructure and some good vibes. Like, all of that makes us more resilient for whatever is to come. You know, my old buddy Neil Abercrombie, the former governor of Hawaii, said, "A movement is faith in strangers." And I feel like we now have a movement where we have faith in each other and like leftists

• 4:33Speaker 01

  and moderates and center-right people are going, "All right, if it's Kamala, let's roll."

• 4:37Ezra Klein?

  In coconuts, they believe. I'm gonna be honest, that was a bridge question, because one of the things I think Democrats haven't grappled with is when I look at polling, when I talk to people, even when I have tried to convince people about the good parts of the economy, the level of anger about prices, about affordability, feels to me like something Democrats have not fully faced up to. There's been a lot of effort to try to tell people it's not quite so, or it's getting better, but there is a real fury around the economy. It's something that you've begun to talk a lot more about over the past couple of years, and I'm curious about your evolution on this.

• 5:13Speaker 01

  Well, first of all, I think it's understandable, when you accomplish a bunch of things, that, you know, as Jeff Merkley likes to say, it's "run, govern, run," right? And that sounds lovely, but like, the fact is, we passed the biggest climate action in human history, and basically, nobody knows about it. And whether it's the biggest climate action we've ever taken, or the biggest investment in Native American communities that we've ever taken, it's true to say those are the biggest actions ever taken. It's also true to say that that's not enough. And if you are 19 or 23, like, you don't remember when you were a junior in high school and stuff was bad, and then we made marginal improvements that will eventually change things over the next eight to 10 years, you have more immediate needs.

• 5:54Speaker 01

  So I do think Kamala puts us in a better position to just talk about the future, and it's very, very challenging, I think, for Donald Trump and J.D. Vance to talk about the future at all.

• 6:03Ezra Klein?

  Let me show you how they're talking about this particular part of, if not the future, the past.

• 6:09Speaker 02

  Months ago, I heard some young family member observe that their parents' generation, the baby boomers, could afford to buy a home when they first entered the workforce. But I don't know, this person observed, if I'll ever be able to afford a home. The absurd cost of housing is the result of so many failures and it reveals so much about what's broken in Washington. I can tell you exactly how it happened. Wall Street barons crashed the economy and American builders went out of business. As tradesmen scrambled for jobs, houses stopped being built. The lack of good jobs, of course, led to stagnant wages. And then the Democrats flooded this country with millions of illegal

• 6:54Speaker 02

  aliens. So citizens had to compete with people who shouldn't even be here for precious housing. Joe Biden's inflation crisis, my friends, is really an affordability crisis. And many of the people that I grew up with can't afford to pay more for groceries, more for gas, more for rent, and that's exactly what Joe Biden's economy has given them.

• 7:21Ezra Klein?

  What do you think of that diagnosis?

• 7:23Speaker 01

  Well, I think there are parts of it that are pretty effective, right? He basically touches on what people are experiencing and then he goes straight to, you know, racism and xenophobia and a bunch of like right wing tropes. But I think your point is well made by that clip, which is to say, we don't really talk about the affordability crisis, not all of us, right? And we don't talk about struggling families because somehow we think that if we talk about people not being able to afford, for instance, prescription drugs, we are like duty bound, honor bound to talk about how we cap the price of insulin and did all these other wonderful things. But it's sort of like, yeah, that's great. Also, still not affordable, right? And so I don't think it's that hard for us to kind of live where people are, which is you are actually struggling to make ends meet. That is not

• 8:06Speaker 01

  imaginary. We are not going to talk you out of it. But I think all they do is scapegoat. And what we need to do is talk about solutions going forward.

• 8:15Ezra Klein?

  So the way he frames it there, which is, I think, something you see happen a lot in political history. There's scarcity of something, in this case, housing. And then he moves, as you say, to xenophobia, right? It's the undocumented immigrants who are the problem. But there is some problem here, right? There is some reason that not enough homes have been built. And that's been particularly bad in places Democrats have power. It's bad in Hawaii, where you're from. It's very bad in San Francisco, where Kamala Harris had the beginning of her political career. So what is your diagnosis? Like, what has happened in housing?

• 8:53Speaker 01

  Created the scarcity on purpose. We have elevated something called community engagement, but is not actually like objectively, community engagement. It's the ability for a few people who already have homes to hijack the whole process above the needs of the many. And so here we are stroking our chins, wondering how to alleviate the housing shortage. But we're actually making it nearly impossible for people to build anything. And I think the premise here is that we can have nice things. We can have enough of the things that we want. If you operate under the assumption that there will only be 100 homes built, it is not unreasonable to say, well, listen, I want 35 of the 100 homes to be capital A affordable.

• 9:37Speaker 01

  That's a totally reasonable progressive approach. But the truth is, if you require that, it's likely that zero homes will be built and nobody gets any housing.

• 9:49Ezra Klein?

  Something you're pointing out here is that there is an incumbents versus newcomers problem is one way to put it. I think Vance is weaponizing that that dynamic in a in a much darker way. But the problem in a lot of places is people move to a community. That community was a certain way when they moved there. They bought a home. And for a bunch of different reasons, they don't want a bunch of big apartment buildings going up next to them. Maybe they don't want it because they don't want people who live in affordable housing to live there. But they also might not want it because they like their views. They like their parking. They like the community small. It's not good for their housing prices. If they think that way, it's quiet, right? Some of it is politically malign. A lot of it is just

• 10:28Speaker 01

  Human nature.

• 10:29Ezra Klein?

  Human nature. It's also a dangerous thing for politicians to try to take on. You like the way things are. Here, I want to change it, right? You have a lot of power over your local community. I want to take some of that. When you're out making this argument, you've been very forthright about it. How do the people in Hawaii or the other people you're talking to respond?

• 10:46Speaker 01

  They forgive me for it, but they're not thrilled. I'm not, I'm serious. Like my, you know, look, my district, when I was in the state legislature, it was Makiki Manoa, sort of like by Punahou School, by the University of Hawaii, a very nice, beautiful suburb. And those are some of the folks that are most worried about what a deregulatory environment would look like in terms of their neighborhood. So. After the Hawaii legislature passed some pretty aggressive housing reforms this session, and I was one of the people strongly behind it. I tend not to weigh in with local issues, but make some exceptions. And I made an exception for housing. You know, I was at Safeway, and I was running into like, I'm not kidding, my base, people who contributed to my first campaign with 15 bucks, people who stood on the corner and waved with my sign, people

• 11:29Speaker 01

  with whom I went to high school, and they were not happy. I don't think it's unforgivable, but this is an uncomfortable conversation among friends, right? And that's one of the things that I think the progressive movement has to grapple with, is that there are a lot of communities that are 70-30 or 80-20 Biden, and are pro-immigrant, pro-LGBTQ, and certainly pro-choice and pro-climate action, and on housing, they're shitty. And I don't think that that can stand, because I think there's a generation of people who are progressive and who are struggling financially, and they are starting to figure out that it is their fellow so-called progressives that are preventing them from being able to make a living.

• 12:09Ezra Klein?

  I think there's a real deep tension on this inside progressivism, because it pits two values against each other. One is a procedural value for input. Progressives in many, many places, I come from California, we have a lot of this, have created a lot of places for input. There's a real feeling that in post-New Deal liberalism, we, we, the government, ran over particularly marginalized communities, but not only, right, was building freeways recklessly, was building them through parks. And the people, like, did not have any democratic input. And then, on the other hand, there's this other dimension I think you're getting at, which is being welcoming, right, being interested in opportunity, being interested

• 12:50Ezra Klein?

  in, I always call it the firefighter test. Can a firefighter who works and risks their life to keep a city from burning down, live in the city that they keep from burning down? How do those come into conflict, and how do they get unwound?

• 13:05Speaker 01

  I think the constituency for proceduralism is small but vocal. And it's not that there should be zero public input, but we're at the point, right? Where, I mean, I talk about this when it comes to housing in the state of Hawaii. We have extraordinary protections for natural and cultural resources, as we should. But there was a lot that was like one of the last standing bowling alleys in the primary urban center of Honolulu called Stadium Bowladrome. It was the old stadium that had turned into a boladrome, not an ecologically significant site, still subject to all the same environmental review that like some of our most precious places in the state of Hawaii were subject to. And I think most regular people are able to kind of go, if you're going to throw up

• 13:50Speaker 01

  a 10-story building with apartments surrounded by, by the way, other apartments, then you maybe don't need the same sort of environmental-cultural analysis that you would if you were building in coastal Maui. And when I make that argument, everybody nods. Now, who doesn't nod? The people who live adjacent to the Stadium Bowladrome. So I agree that there's this tension sort of superficially, but I actually think you can kind of puncture it by talking to regular people and then finding out that the proceduralists are like 11 people who just consistently show up.

• 14:22Ezra Klein?

  But the procedure is so profound here. I mean, the more I have dug in to a bunch of different places where the thing that Democrats said was going to happen and appropriated money for isn't happening, the more I've really recognized how procedural liberalism is. And I give credit here, Nicholas Bagley, the law professor who coined the term "the procedural fetish." You're a guy who is in politics because of your environmental commitments. In the Senate, you do a huge amount of work on climate. You're one of the key people there. And I find a lot of people in your place are starting to wonder, are these environmental bills, are they doing as much to stop clean energy as they are to stop fossil fuels?

• 15:05Ezra Klein?

  Are they doing more to stop clean energy as they are to stop fossil fuels? What's been your sort of... Intellectual evolution on like liberal proceduralism.

• 15:13Speaker 01

  It's been rapid and it's been sort of almost radical. It's a planetary emergency. We did pass the biggest climate action ever, but as you know, we need transmission and distribution, and that is going to be stopped by local communities and state governments and oppositional mayors and other NIMBYs. And what's really clear is that right wing groups and fossil funded groups are now funding the sort of so-called left wing proceduralists to stop good stuff from happening. And, you know, it was on one level, it was ever thus, and we had a wind issue on the island of Lanai. We couldn't get an inter-island cable to connect our state. But this is now like we are on the edge.

• 15:55Speaker 01

  We are on the precipice and we are going to have to make it easier to meet our clean energy goals. All of these environmental safeguards were about stopping bad stuff. And now the new progressive movement is not just about stopping bad stuff, it's about building good stuff. We're going to have to be the party of construction. We're going to have to be the party of financing things. We're going to have to be the party of breaking ground and not stopping the, you know, pave paradise and put up a parking lot.

• 16:22Ezra Klein?

  President Biden has always talked about a second term in terms of finishing the job. He still talks about the work he's going to do in office in the coming months as finishing the job. And to me, this feels very related, but in a very frustrating way. Couple of years ago, in some bills he all passed, there was a ton of money for rural broadband. Let me read you a story from the Washington Times. Quote, "Residents in rural America are eager to access high-speed internet under a $42.5 billion federal modernization program, but not a single home or business has been connected to new broadband networks nearly three years after President Biden signed the funding into law, and no project will break ground until sometime next year." And that is assuming things go well. The Times ends up blaming this after quoting some people on various requirements for obtaining

• 17:07Ezra Klein?

  the funds, climate change mandates, preferences for union workers, you know, that sort of things. I don't know if that is why, but I do often find this problem where something big gets passed and you check in on it a couple of years later, and actually people aren't benefiting from it. I always think about the stimulus under Obama, like how much we talked about high-speed rail and the smart grid and the rail is not high speed and the grid isn't all that smart. There's something here about the sort of follow-through on some of these big priorities that are exciting to people when they pass. And then like not that exciting when they're being slowly implemented. What's going on there?

• 17:42Speaker 01

  Well, I think you pointed out one of the failures that we have both governance wise and politically. I guess what I would say is that I don't think we just like administer harder, implement better. Obviously, we hope that all of the chief executives and implementing individuals are doing excellent work. But it's like, I think about the state historic preservation division of the state of Hawaii, right? The federal law says that you may consider something historic if it meets these criteria. In the state of Hawaii, the assumption is everything more than 50 years old is historic. Now, the problem is we just have old houses. And so now they're all potentially for state historic preservation division review.

• 18:25Speaker 01

  And so for like four years, everyone was like, we gotta get more bodies over there so they can process more applications. And I sort of raised my hand and said, those people who process those applications can definitely make three times that amount of money working for a private developer, which is why when we authorize all these new positions, nobody ever gets hired. Cause why would you make 70 if you can make 210? Okay. What I said was, there should just be fewer things on these people's pile. And so I'm wary of the like, we just have to have a laser focus on implementation. We have to clear the thicket here and we have to be unapologetic about clearing the thicket.

• 19:04Speaker 01

  And by the way, this one is both really good for results, but it also is quite attractive to like moderate, swingy voters who just want government to like kick ass and accomplish things. And they're really looking for like a effective mayor of the country. If you have an attitude that it is not just a question of the competency of the individuals administering the law, but like, maybe this law is too damn complicated. And I think part of the problem for Democrats is that we have programs and projects and line items and processes and bureaucracies that have. Nice titles and work on certain things when I think the solutions have to reach people. The COVID relief plan, there were lots of really good things in it.

• 19:46Speaker 01

  But the thing that resonated with people that I knew were the checks, right? And I was kind of anti UBI and anti-direct cash assistance because I did think it was like the Silicon Valley way to like wave a wand at the disintermediation of employment that they were causing. But I saw it impact people. And I gotta say, boy, fast really works. It works on policy, it works for people, and the politics works. And so it is an open question whether or not we should be parking money in certain administrative agencies. And then they do a notice of grant award, and then it goes to the so-and-so agency of the state government, and then they do a sub grant to it. And then, by the way, that's 36 months later, and then the recipient still has to go and do the thing, right?

• 20:31Speaker 01

  Which might be another two to five years. This just doesn't work anymore. And I think we should have the kind of impatience that regular people have, which is like, what the hell? I thought you did this thing, where's my stuff? And I don't think we have that impatience. I think we have this sense that we enact and then we take credit.

• 20:49Ezra Klein?

  And there's also, I mean, your point that just implementing harder is a way of denying what the trade-offs you're implementing really are. You're demanding more auditing, oversight, right? Report filling out. I mean, I've often called this everything-bagel liberalism. I've seen it at every level of government, so that's a-

• 21:09Speaker 01

  My only problem with your everything-bagel thing is, well, they're delicious. I want there to be a better example of you just keep adding stuff and then it doesn't taste good anymore.

• 21:16Ezra Klein?

  But it wouldn't be delicious if you started putting all the stuff on it, the raisins. Although, to be fair, it is an analogy from when Everything Everywhere All at Once was big.

• 21:25Speaker 01

  Yeah, okay.

• 21:25Ezra Klein?

  And there was like the everything-bagel that actually has everything on it, and it becomes a black hole that could destroy the entire world. No, not just chocolate chips, like everything, right? Have you never seen Everything Everywhere All at Once?

• 21:35Speaker 01

  I don't remember it very well.

• 21:36Ezra Klein?

  It's a great movie. Anyway, I take your point on it, but there is this problem. I see it at every level of liberal governance I report on, where somebody gets the ability to do something good. And then sort of other good ideas get layered on, right? Well, if we're going to do that, like, let's make sure there's a preference for people from marginalized communities. Let's make sure that the labor is from union shops. Let's make sure that we're using small contractors. Let's make sure that we have a climate plan. Let's make sure that they're giving money for local childcare. And it's all sort of good individually. But if you're implementing across that many goals simultaneously, it's going to be harder to run the thing. Oftentimes, you have a labor shortage. You don't have the kind of labor you're looking for. How do you think about those?

• 22:20Ezra Klein?

  Because there is a real reason to try to attach other good ideas onto what government is doing. And on the other hand, if government doesn't end up doing any of them, then the cost is greater than the reward.

• 22:30Speaker 01

  Yeah, I mean, I think, you know, you and I are in pretty vigorous agreement about this one. The city and county of Honolulu was considering an EV charger requirement on each new housing unit. And it was sort of like, developers were like, oh, that's five grand. So maybe that's cool for non-affordable units, but like, five grand a cost, let's say, 150 units, might be the total profit that a developer had, and therefore, they go, well, I can't do this anymore. Then what happens is, you're able to metabolize those requirements if you're building fancy housing. Because if the units are 5 million apiece, then five extra grand for an electric vehicle charging station is like a rounding error.

• 23:11Speaker 01

  But if the units are, if you had like 165 each, which would be very cheap in Honolulu, 170 just like breaks it. And so that was a good example of like, a very, very worthy goal that is like, consistent with my core values, that just didn't make any sense. And I remember being in the Hawaii Legislature on the Education Committee, and there was like a bike safety requirement for graduation, which sounds cool. Everybody should be able to ride a bike safely. And then there's also a swimming test requirement before graduation. And again, neither of those would I like necessarily personally want to vote no on, but there are like 30 of those. And then you have teachers and administrators and parents and kids who are like in the compliance business as opposed to in the education business.

• 24:22Ezra Klein?

  So what is remarkable to me about Biden's legislative record, about the legislative record of the Democrats alongside him, like you, is how atypically physical it is. I mean, Trump endlessly talked about infrastructure weeks that he never delivered. Biden has delivered what will be, should be, an infrastructure decade. But all the people around him, like the people who work on this off the record, they will chew your ear off about how hard it is to get these things built. And I've seen some of the moderates in Congress come up with nipping around the edges, procurement and permitting reform bills. But there's never been like, this is what the progressives think is necessary to get this all built as fast as it needs to be built. Why is that?

• 25:03Ezra Klein?

  Like, where's the sort of follow-up pieces and say, this is how we think we get it done?

• 25:09Speaker 01

  So it was interesting. I met with a couple of like, sort of, left think tanks in this particular space because when the so-called permitting reform negotiations started and stopped and started again, I was in the middle of a bunch of them. And it was very clear that our negotiating counterparts had a punch list presented to them from the American Petroleum Institute. Like, they know what they want.

• 25:30Ezra Klein?

  Your counterparts on the right, you mean, here?

• 25:32Speaker 01

  On the right, yes. But listen, you know, under President Obama, we lifted the oil export ban, which is not amazing policy, but we did it in exchange for extending for a long time the solar and wind tax credits. And what I did, and this is how I do this kind of analysis, is like, I went to the Department of Energy and said, well, how does this net out? Right? Like, I'll make a deal, but only if it's good for the climate. And they said, this is 90-10, good for the climate. You're going to have to swallow this thing, but it's basically a net positive. So we did it. My problem in negotiating on permitting reform? Is this is such a new conversation that even our think tanks weren't quite ready to even provide us ideas about what would actually work on permitting reform. We are in a different place now and we know specifically what we need in terms of,

• 26:17Speaker 01

  it gets technical, it's cost allocation and all the rest of it. But there is now clarity about what we need to demand if in case we do permitting reform.

• 26:26Ezra Klein?

  Get technical with me for a minute. This is a podcast where people will accept it. What are the couple of things that you think would have the biggest impact?

• 26:34Speaker 01

  We need the ability to do regional planning, right? You can't let a mayor or even a public service or a public utilities commission to have sort of total authority over citing of transmission lines and distribution lines. So that's number one. And so giving FERC, which is the federal agency, some authority if something is of national importance. And the other is you need to be able to allocate the cost of a transmission line across a bunch of users. And it's kind of very easy to characterize that as, hey, listen, I'm not using these electrons. Why are you charging me over here? And a public utilities commission that is in the pocket of fossil is in a position to stop that.

• 27:15Speaker 01

  So a lot of this is giving authority to the FERC to, if necessary, override the normal state decision making process.

• 27:23Ezra Klein?

  The thing I am hearing from people who have been involved in trying to roll out the IRA is that the two hardest problems are permitting and the utilities do not have business models and they control a lot of this that are amenable to building clean energy at the rate we would. They still make money from building big natural gas plants. Decentralized energy that goes into the grid can be a real problem for them. How do you think about that?

• 27:49Speaker 01

  Look, these guys are the incumbents and I guess there's a political theory of the case where we could dislodge them completely, but I'm not really sure how to effectuate that. I think it is better to cut them in on all of the profitability and let them transition with us. In Hawaii, what we did was decoupled the Hawaiian Electric Company's profitability from their gross electricity sales. If you're a publicly traded company, as you know, you have a fiduciary obligation to maximize profit. So fewer electrons means less profit. And so what we did was we bifurcated the question, that they would be guaranteed some minimum level of profitability because they're a regulated entity, but that they would not

• 28:33Speaker 01

  be penalized if the total number of electrons went down. And it did. And they went from among the most aggressively opposed to the Hawaii Clean Energy Initiative to our biggest cheerleaders. And it was 99 or something like that. I was in the state legislature. We had like a 7% clean energy portfolio standard that wasn't even mandatory. And now we are on track towards 100%. And the Hawaiian Electric Company and the local Chamber of Commerce and our tourist folks and the military, everybody is on board with the Clean Energy Initiative. But what unlocked all of that was, like you say, changing the business models. And I mean, my best analogy is when my predecessor and others were establishing, at the time,

• 29:17Speaker 01

  the biggest marine monument on the planet, Papahana Mokuakea. There were a bunch of tuna vessels based in Honolulu that were fishing in that area. And NOAA just bought them out. And it worked. They were perfectly happy, as long as they made money, to participate in a conservation effort. And I think that all these utilities, if we can show them a way towards profitability, they're in.

• 29:39Ezra Klein?

  I always think this is actually an underused strategy, that for some reason, we will allocate all kinds of money towards doing things that are in the public interest. But the fact is that particularly when you're building things in the real world, people next to those things are sometimes a loser in that, in the way people further away are not. And the idea that you would get compensated for that doesn't seem crazy to me, right? I mean, I'll use a San Francisco example or an LA example because this happened in both, but. In both cities, there are terrible homelessness problems. And so people want to build shelters. They want to build sites where people can get services. And the people who live near these proposed sites organize against it.

• 30:20Ezra Klein?

  And on the one hand, from a kind of progressive or principled stance, that's bad. On the other hand, the idea that it will lower their housing values, et cetera, is real. And what you very rarely hear anybody say is, well, we've allocated a lot of money to this. Like, we will cut these communities. It doesn't need to be a payment for being near a housing shelter, but there can be things built in the community. There are ways you can bring people into a project.

• 30:44Speaker 01

  Well, a good example is what the indigenous New Zealanders have done with geothermal energy.

• 30:50Ezra Klein?

  I don't know all that much about that.

• 30:52Speaker 01

  Maoris are participating in the utilization of geothermal energy, and it helps native people. There's now a conversation among native Hawaiians to say, hey, we should talk to our cousins in New Zealand about how they did it. So I just don't accept the premise that there's no way for all of us to benefit when we build things.

• 31:17Ezra Klein?

  Tell me about the issue that I know you run into a fair amount of just the decentralized federated nature of authority in America. I mean, across the domains we're talking about, housing, clean energy, but I could name a bunch more. A lot of the power is not at the federal level. What gets built? I've sat next to governors where they were saying to me, they're lamenting to me it's not even at their level, right? Like, the local planning board has power. Like, they, the governor, do not have power. How do you deal with the fact that there are these national and actually global issues? But on so much of this, the power is fractured down to the state level, down to the local level, down across a variety of

• 31:55Speaker 01

  Condominium

• 31:56Ezra Klein?

  local cities. Yeah, condominium boards. I mean, it's fractal, almost.

• 31:59Speaker 01

  Well, the way I look at this is, I guess, two things. First, I do whatever I can on federal policy. But second, you know, I have a voice. And to the extent that anyone listens to me, I think especially on housing and clean energy, I have some credibility as a progressive here. That I have to just say there is nothing progressive about stopping your neighbors from being able to live in the state of Hawaii. There's nothing progressive about forcing a firefighter to drive an hour and a half to where they work. And so I do think we have to actually change the politics of this. While we're working on the policy, like, look, I mean, I'm the chairman of the Transportation and Housing and Urban Development sort of money committee. And we've done some cool stuff and we have a hundred million dollar incentive program

• 32:43Speaker 01

  for counties to do basically yes in my backyard projects. So that's cool and that's important. But I think the most important thing we can do is create a movement of young progressives articulating that in my progressive future, in our collective progressive future, we're all going to live together. And in a Hawaii clean energy future, which is probably polls that I would say 85% in the state of Hawaii, you think you're not going to see a windmill? You think you're not going to see a solar farm? You think we're not going to do any geothermal? Like, we're a small place with 1.5 odd million people. And if we are going to house the people we care about, and if we are going to address the climate crisis, just talking about my state, we're going to see it. It can't all be someplace else.

• 33:27Speaker 01

  And I think one of the most important things I can do is just say that as much as I can, as unapologetically as I can. And one of the things that I think is encouraging is that, yeah, I've gotten pushback, but it hasn't been that ferocious. It hasn't been, you know, you've done the unforgivable. Because I do think in a lot of people's heart of hearts, they go, huh, he's probably right.

• 33:48Ezra Klein?

  Is it not that ferocious because it's not primarily built around the money, though? It's built around the communication? I mean, in your subcommittee, there is a lot of money, right? And across the broader US Congress and the presidency, there is a lot of money, particularly around transportation, right? And the states do rely a huge amount on grants and other kinds of guarantees from the federal government. Could more of that, should more of that be tied to these goals?

• 34:11Speaker 01

  Yes, absolutely. But I gotta, you know, listen, I think this is one of those things where... As your colleague Matt Iglesias talks about, like, there are certain things you want to keep the salience of the issue at like medium.

• 34:22Ezra Klein?

  Uh huh.

• 34:23Speaker 01

  And I don't want to polarize this issue, right? Especially YIMBY and housing. Like, we've got some really good conservative support. Now, they've got some other reasons for feeling strongly about housing, mostly because, you know, it's an article of faith for them that deregulation is good. But I want to keep that coalition together and not have it turn on some partisan question. So I am trying to push as fast as I can, both at the policy side and incentives and programs and projects. But I honestly think that if I'm going to make progress fast enough, that there have to be YIMBY mayors and council members and new members of Congress and members of the legislature and speakers of the House that are just like, you know what? I'm a left-wing, pro-building kind of politician.

• 35:05Ezra Klein?

  One thing you've said a couple of different times here is that you see this less as this set of policy changes, or there is a set of policy changes, and more as a sort of ideological shift, right? People need to begin thinking about things in a different way. And I started the conversation here talking about affordability. And something I've come to believe, and I'm curious if it resonates for you, is that on the left, people talk a lot about affordability, but what they think about is subsidy. The left is very comfortable, Democrats are very comfortable with how do we subsidize something, right? How do we give you vouchers for rent? How do we give you money to buy health insurance, Pell Grants? But affordability is a sort of mixture of how much people have to pay for something and then how much of the thing there is. And that the thing-

• 35:48Speaker 01

  Well, and the retail cost of it.

• 35:49Ezra Klein?

  And the retail cost of it, that is true too. But that supply side, right? That question of how much of the thing there is and what is keeping us from creating more of the thing? That feels to me like something where, like, the muscle, the sort of policy muscle of the Democratic Party is like not what one might wish.

• 36:06Speaker 01

  A hundred percent. And I think it's a couple of things. First of all, it's just habits, habits of the mind and habits of the political ecology of Washington and every other place. But I also think it's like this- First of all, no one wants to be characterized as some supply sider neoliberal, right? But the truth is, there are shortages.

• 36:23Ezra Klein?

  I mean, I'm okay with it.

• 36:24Speaker 01

  I mean, you're fine, yeah. But that's not a 50% plus one coalition, yeah, right?

• 36:28Ezra Klein?

  Yeah, I don't need to win elections in Pennsylvania.

• 36:30Speaker 01

  Yeah. But I think the truth is, there are shortages for various reasons. Sometimes the government creates a shortage. Sometimes a corporation is creating the shortage. And so, here we are, when big pharma comes up with something big that everybody wants, we say, "Why aren't you selling this to everybody?" Perfectly reasonable position. And here we are, we want more housing, and we don't demand that the builders build more housing, we demand that they build less. And one of the most high-impact accusations you can make of politicians almost anywhere, but particularly in the urban areas, is they are in the pocket of developers. And it's like, aren't these the people? I mean, listen, they want to make money, and some of them are bad, but aren't these the people building the thing we say we want? And so, I just think, we gotta get out of that mindset of scarcity.

• 37:15Speaker 01

  And I also think that for left-wing folks, we like to focus, understandably because we're compassionate, on those who are suffering and those who are experiencing scarcity. So, we operate under the assumption that if someone says, "Hey, there could be enough of this," it sounds like bullshit to us. It sounds like waving away of the problem. And so, my own judgment here is that, we need to tell people that they can have nice things, and we need to operate under the assumption that, whether it's housing, or clean energy in particular, or the affordability of prescription drugs, we need to look people in the eye and say, "All of these scarcities are created either by corporations, or by governments."

• 37:57Speaker 01

  And sometimes the solution is deregulatory, sometimes the solution is more aggressive regulation, sometimes the problem is not a big enough subsidy, sometimes the problem is that we're subsidizing the wrong thing. But the premise here is that we do get to have enough of the things that we say we want, and that the government should be working on that.

• 38:38Ezra Klein?

  So my friends who are supply-side neoliberals, much more than me, over at the Niskanen Institute, they call this cost-disease socialism. And their point is that a particular policy pathology, say that three times fast, in the Democratic Party is a tendency to subsidize what you are constraining the supply of, to pump money into something where you've made it hard to build a lot more of that thing, right? We put a lot of money into healthcare, but we don't make it easy to train or have more doctors immigrate. Energy has some of these dimensions. That there's this particular failure mode of putting money into something where you have not made it possible for then the market to give you a lot more of the thing for the new money.

• 39:17Speaker 01

  Yeah, that's right. The incentives for an individual legislator, like, we're still in a direct-mail mode for an individual statehouse race. And you can credibly say, "I put $65 million into the Hawaii Housing Finance Development Corporation for affordable housing, and I gave $9 million to the Institute for Human Services," and what? It all sounds good. So you can be like, "I'm working on housing." So the political incentive is to just throw a few dollars at the problem while it gets worse.

• 39:43Ezra Klein?

  Noah Smith, who's an economist and political writer, he calls this "Czechism," this tendency to declare victory based on how big the check is. I mean, that, in a way, brings us to the Yimby Act that you have with a colleague across the aisle. I was always interested in it because it's a big name for an act, right? The "Yes, in My Backyard" Act. It's not a very aggressive piece of policy, but it is a dashboard, right? It is an effort to try to create a different way of tracking what's going on here. Tell me a bit about why that's a good bill.

• 40:12Speaker 01

  Well, it basically asks that cities and counties and recipients of HUD funding report on what they're doing regarding deregulatory efforts on housing. And I agree with you. It's not going to transform the universe overnight, but it's a pretty important federal-level bill that's bipartisan. And I think it was marked up on the House side unanimously, or close to unanimously. And so I think this is a marker here. And we have an opportunity to, at least in the housing space, to find bipartisan agreement to just say like, "Hey, maybe we just shouldn't have housing shortages, right? Maybe a bunch of so-called greedy developers would be happy to build all the housing that people actually need." But we have created the shortage on housing.

• 40:57Speaker 01

  And it is lots of policy issues, you know, AI and lots of this stuff is so fraught and so challenging that I don't even know where I'm landing yet, right? Because it's evolving and we're going to just have to iterate this. Housing is not that damn complicated. We just need to make it easier to build it.

• 41:14Ezra Klein?

  A political mentor of mine, Mark Schmidt, he has a line I've always loved, which is it, it's not what you say about the issues, it's what the issues say about you. Donald Trump has like four policies, but they all say something very clear about him. You know, the big, we're going to tariff everything that comes into the country. That's about how he feels about other countries, right? So something very clear about him. I'm going to build a wall on the southern border, whether or not he will. So something very clear about how he feels about people coming in on the southern border. And so I want to circle this back to where we started. There's a reason I started with Harris and the Democratic effort to win back the White House this year, which is there needs to be something big Democrats can say on affordability. People are mad about inflation, they're mad about prices. At some point it is going to come up, what are you going to do about it?

• 41:59Ezra Klein?

  You all have been in power, this has gotten worse, why should we trust you again? What are some issues? What are some policies that they wouldn't solve the whole problem, but would reflect, in your view, Democrats communicating to the public that they understand there is a problem and are going to take this seriously?

• 42:17Speaker 01

  So I'll give you two examples, one's a little wonky and one's not. The first is a bill that I have on college affordability and it does two things that are kind of different than the just pure subsidy or free college or whatever. And it provides subsidies, but provides a match from state government. Because as you know, one of the reasons that universities and colleges have increased the net costs is not just the Pell Grants coming in and pushing the cost up, but also that legislatures have basically defunded their university, their flagship university systems. And so we have a system, we have a bill that would say, look, we're going to provide you subsidy, but only if state government does and only if you reduce the retail cost of college. So it incentivizes the university to drive down costs as opposed to, cool, 500 bucks

• 43:01Speaker 01

  more for me, now it's $500 more. So that's one thing. And I think that, look, that takes a bit to explain. But I actually think that Vice President Harris, she doesn't have to use this example, but I think it is a question of respect to the voters and the citizens who want to hear something new. I actually think that she has a window of maybe, you know, five to eight weeks where people are willing to kind of like, listen, listen, and take an hour and say, does she have new ideas? And I think that it is okay to say, the things that we've tried have been great, and they have ameliorated pain and made incremental progress, but here's a new one. And I think on college affordability, it's just plain as day that throwing more subsidy at colleges, they're just pocketing the money, in my opinion. So that's one.

• 43:45Speaker 01

  And then the other one is prescription drugs, because we did good stuff on prescription medicine. Like, for me, my father-in-law, like, actually personally benefited because we were subsidizing his prescription medicine because he just couldn't afford it. You know, he's on social security disability, he's in his 80s, he's blind, and there are a lot of people who were helped, but there are a lot of people who need more help, and I think that we should not be too clever to talk about, we did that, and we're going to do a hell of a lot more of that.

• 44:11Ezra Klein?

  I'm so glad you brought up drugs, which I was not expecting to get a chance to talk about, but this is a place where I, myself, am genuinely frustrated with Democrats. The one thing Donald Trump did well, in my view, like, one policy, which was Warp Speed, and it worked amazingly. And it, to me, it's such an amazing dream of a policy, that we created a speedrun to get the first mRNA vaccines ever developed and approved in record time, and then, when they came out, the cost was zero. The federal government footed the bill and helped clear the way, and then, when it came out, everybody could have it, like, perfect.

• 44:46Speaker 01

  Everybody got one.

• 44:47Ezra Klein?

  As good equity as there has ever been in, like, a newly-launched product in human history.

• 44:52Speaker 01

  And to your point, not a, like, sort of an income test, only four people get it, everybody gets it for free.

• 44:56Ezra Klein?

  Everybody gets it. Where are the other Warp Speeds, right? We know their other problem, where is the eight more Warp Speeds?

• 45:02Speaker 01

  Yeah, and it's a very smart idea, and I have a couple of staff, as you know, in back of me, they're taking notes. I like this idea. I'll also say specifically, as it relates to the FDA, that with AI... There's just going to be a throughput problem in terms of the FDA's ability to like process and vet and approve drugs safely as though it is 1977, right? There's just going to be too many things in the pipeline. So I agree with you, and I think that's a very smart area for innovation. I'm not sure Kamala can run on that. It's a little bit of an abstraction and a two cushion shot. But I agree very much that if you're talking about an abundance agenda, if you're talking about me being able to look my voters and other people in the eye and say, we're for you having nice things.

• 45:45Speaker 01

  We're for the government, not just claiming to do things, not just trying to do things, but actually doing things for you, then the government has to work at the speed at which people experience problems, not at the speed at which the, you know, general counsel of the Department of whatever can move.

• 45:59Ezra Klein?

  In a weird way, I do think one of the things that gives you credibility in politics is showing that you are creating friction with your traditional allies. And the places where Trump has been good on this are trade in his coalition. It was surprising to people to see the Teamsters president up there, right? I don't know if they're going to follow through with any good ideas about labor. I'm a little skeptical, but we'll see. And there has been some things around them and business that have actually, in my view, begun to, to make the economic populism a little bit more credible, not fully credible, but I'm more interested there than I was a couple of years ago. What are the places in the Democratic coalition that look like that? Where when you think of something where people should be honest and say, look, we have a problem here and we're going to have to have some hard conversations. Where should Democrats begin in showing they're not the exact same as they've always been

• 46:44Ezra Klein?

  on that?

• 46:45Speaker 01

  I think it's housing for sure. I think it's clean energy as well. I also think that there are a lot of parents out there who were pretty damn frustrated with state and local government, state and local school boards, as they were saying, hey, remote school literally doesn't work, right? There may be exceptions, maybe some kids, you know, thrived, but for the most part, it was terrible. It did not work. And because Democratic government was in charge and trying to be as safe as possible, I think we were late to come around to the idea that like, remote school was just a dog. It was a political shit sandwich and it was bad for kids and bad for people's trust in institutions.

• 47:28Speaker 01

  And I think we should be really crisp about that. I also think that because the so-called parent empowerment movement, you know, sort of the Yonkin stuff. Had this conservative valence that had to do with right wing politics, that there's a little bit of a hesitancy to jump fully into what are we going to do about kids on social media, right? But every parent that I meet wants there to be a federal law that does not permit kids 12 and under from being on social media at all. And I think some of our coalition members are very uncomfortable with that for understandable reasons. But I think those are some areas where the vice president could demonstrate some independence here and basically lose nothing.

• 48:11Ezra Klein?

  I think it's a good place to end. Always our final question, what are three books you'd recommend to the audience?

• 48:16Speaker 01

  Walk, Ride, Paddle is Tim Kaine's book about when he walked the Appalachian Trail, paddled the James River, and then did some other bike ride across Virginia.

• 48:26Ezra Klein?

  Tim Kaine, your Senate colleague?

• 48:28Speaker 01

  Tim Kaine, it's a very, yeah. It's a very fun book and he's just such a lovely man and he's such a, it's like a travel book, but it's, you know, it sort of intersperses what was happening at the time politically, including, you know, two impeachments and the rest of it. I just finished reading The Aman Effect by Rabbi Sharon Brous, which I loved. It's probably the first thing I've ever read by a rabbi. I'm sorry to my current and former rabbis. And I'm, I'm just finishing up a book by Heather Cox Richardson called Wounded Knee, and it's about Sioux and other tribes in the Dakotas.

• 48:59Ezra Klein?

  Senator Brian Schatz, thank you very much.

• 49:01Speaker 01

  Thank you.

• 49:13Ezra Klein?

  This episode of the Ezra Klein Show is produced by Elias Isquith. Fact checking by Kelsey Kudak. Our senior engineer is Jeff Geld with additional mixing by Aman Sahota. Our senior editor is Claire Gordon. The show's production team also includes Annie Galvin, Michelle Harris, Roland Hoog, and Kristen Lynn. We have original music by Isaac Jones, audience strategy by Kristina Cimuluski and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie Roethstrasser, and special thanks to Sophia Boyd, Afim Shapiro, and Sonia Herrera.