It is just coming in right now. The federal reserve announced half a point. That was not the most expected. 48 days to the election, great news for the economy. Critics said it could not happen, but our policies a little policies are lowering costs and creating jobs. As a republican nominee plans to raise your grocery prices. How can a family of four that, like cheerios? i haven't seen cheerios in a long time. And nancy pelosi on the state of the race and the maga threats in the house. And growing calls for center in the senate as a hate crime hearing flies off the rails. You do not support hamas. I oppose you should hide your head in a bag. When all in starts right now. Good evening from new york. I am chris hayes. We are so back. This afternoon federal reserve chair jerome powell took the stage to announce the feds first cut in interest rates since 2020 and the beginning of the pandemic recession and it was a big one. A half percent interest rate reduction to stimulate borrowing and to boost the job market. An acknowledgment that inflation has been tamed without a recession or high unemployment. In other words the landing has been soft and america has beaten back the nearly unprecedented economic challenges of the global pandemic and the ensuing disruption to the economy. It is huge news. It is also proof the biden economic recovery has been truly nothing short of miraculous, especially given the mass he inherited from donald trump and that he outperformed every other country on earth. Trump, like so many republicans before him, enjoyed a pulling advantage with voters. That may be changing. Multiple national and swing state polls in recent weeks suggesting vice president kamala harris is closing the gap and possibly leading trump. Harris has probably been helped by trump's inability to even feign caring about the expenses of regular americans, like childcare. As he proved earlier this month with that rambling answer to a direct question at the economic club in new york. It was word salad, but with one really under noticed but toxic ingredient that deserves much more ingredient more attention. If you win in november can you commit to prioritizing legislation to make childcare affordable and if so, what specific piece of legislation will you advance? child care, child care. You know, something, you have to have it. In this country you have to have it, but when you talk about those numbers compared to the kind of numbers i'm talking about by taxing foreign nations at levels they are not used to, but they will get used to it very quickly and it is not going to stop them from doing business with us, but they will have a very substantial tax when they send product into our country. We will be taking in trillions of dollars and as much as childcare is talked about as being expensive, it is, relatively speaking, not very expensive compared to the numbers we will be taking in. Trump very obviously has no idea what he is talking about. Clearly has no plan for childcare. Childcare is childcare. But there is something in that answer that truly is a plan and it is something he has both serious about and obsessed with. Okay, listen to this. Donald trump's central economic policy platform in this campaign is to raise taxes by trillions and trillions of dollars. He just said it. Taxes that will be paid primarily by you, working people in the form of a sales tax on imported goods. That is his magic bullet, his obsession. An enormous, trillion dollar sales tax on imported goods, except that is not what he calls it. He calls it a tariff and donald trump loves tariffs. It was a point he made repeatedly last night, including when he was asked again about bringing costs down for everyday americans. How are you going to bring down the cost of food and groceries? our farmers are being decimated. They are being absolutely, absolutely decimated. And you know, one of the reasons is we allow a lot of foreign product into our country. We will have to be a little bit like other countries. We are going to let our farmers go to work. Tariffs are the greatest thing ever invented. I will say it is sort of disturbing a guy who is already president who has a degree from wharton business school doesn't actually seem to understand the first thing about how tariffs work. What he is trying to do is sell them at as this free lunch. To him it is the perfect ponzi scheme. You just make the other countries pay more to sell stuff in america. Problem solved. That is not how it works. When a car gets imported from overseas and a tariff gets paid on it, that added cost gets passed on to you, the consumer. The honda kit sedan might've caused $25,000 before the tariff and now it will cost $28,000. You will pay it and you could make an argument on why that might be good policy for other reasons, helping domestic car production. What you cannot do absolutely is argue with a straight face that the tariff makes cars cheaper. No, it does the opposite. You pay more for the car because you pay the tax. Trump says tariffs will generate trillions of dollars and maybe they will. That is trillions of dollars more you will pay for imported goods, so producers can pay the government. A tariff is a tax on you. That is not just me saying that, that is the very conservative economists at the pro trump heritage foundation in a 2019 paper criticizing them president trump's tariffs, titled do no harm, tariffs and quotas hurt the homeland. Many people believe that when tariffs are imposed on a country, that country bears the costs. However, that is not the case. When a government collects revenues from tariffs, it is collecting it from its own citizens. Not from the citizens of the country upon whose goods tariffs were imposed. Thank you, heritage. Yes, as insane as it sounds, trump has already imposed tariffs as president and they raised cost for americans, a point made earlier this year by david stockman, a republican x congressman who ran the office of management and budget under ronald reagan and was known as the father of reaganomics. He said trump's tariffs helped drive the inflation that hurt everyone over the past half decade. He basically decided i am going to levy a huge tariff on imports coming in from china. It averages, you know, about 20% on $360 billion of imports. That is $75 billion or so per year of taxes on consumers. To be clear those tariffs don't just cost consumers, they can also hurt producers. Remember when trump was president he sold tariffs on crops as a way to help farmers. We will protect farmers with tariffs on imported grain. Instead, what happened? those tariffs sparked a trade war with china, which promptly stopped buying american agricultural exports, ruining many u. S. Farmers and forcing the trump administration to keep them afloat with enormous subsidy payments. As hallie jackson reported in 2018. Reporter: before he farmed this land in eastern nebraska, his dad did and his dad before that, but these days it is tougher to turn a profit. We need these tariffs to end sooner than later. Reporter: those tariffs put in place by president trump triggered a trade war. The longer this goes on it makes it that much harder. Costs on our end seem to be going up all the time. Reporter: now it is farmers, producers of soybeans, dairy, cotton and more, getting an assist from the trump administration as the president helps people his own policies hurt. A new, temporary $12 billion program is set to launch around a bidet, meant to offset the estimated $11 billion in losses farmers face. In fairness to trump those tariffs, like all taxes, do raise revenue. His did raise billions of dollars, almost all of which, 92%, the trump administration had to spend bailing out the farmers whose business was decimated by said tariffs. When all was said and done the trump subsidies to farmers amounted to more than the u. S. Spends to maintain its arsenal of nuclear weapons. More than the budget of the state department or nasa. So get this, trump's answer to cutting your household or childcare expenses is to do a lot more tariffs. I mean, last night a woman asked him how are you going to lower my grocery prices? and trump's response in short is i'm going to raise taxes on groceries. It is the very definition of crazy. Doing the same thing expecting different results. What is even crazier is no matter how many economists across the political spectrum say this is a recipe for disaster, no matter how many politicians oppose the idea, trump can impose tariffs unilaterally as president without congress. He does not need a bill from them. That is what he did the first time with the trade war with china and the insanity of what he is proposing, trillions and trillions of dollars in new tariffs, is not really being grappled with by the media. It is being called out by vice president kamala harris. My opponent has a plan that i call the trump sales tax, which would be a 20% tax on everyday goods that you rely on to get through the month. Economists have said that that trump sales tax would actually result, for middleclass families, in about $4000 more per year because of his policies and his ideas about what should be middleclass people paying for tax cuts for billionaires. President trump i will give you two minutes. First of all i have no sales tax. That is an incorrect statement. She knows that. We are doing tariffs on other countries. No, no, no, that's the thing. It's the same thing. The tariff is a sales tax on you. Donald trump, i don't think, understands his own economic plan, a plan that republican economists say is a sales tax on americans. A plan that turned farmers into welfare recipients the first time around. But if he is elected, no one can stop him from making the same mistakes all over again. Paul krugman is a nobel prize winning economist and distinguished professor. He is also a new york times opinion columnist and the least and recently wrote about trump and the tariff debate. It is so great to have you for a little bit of econ 101. I would not describe myself as a free trader and yet, can you just explain the basics of how a tariff works and who pays for it? basically a tariff is a sales tax. It is a tax on sales of goods. It happens to be goods that are imported from foreign countries, but it is the same thing. If you impose the tax on sales of cars from car dealers, you would expect they would pass that on to car buyers. If you impose a tax on stuff we are buying from china, you expect that to be passed on to consumers. There is nothing magic about it. Basically nothing changes if the sellers happen to be foreign and it is really weird. There is no constituency even as far as i can tell for the kinds of things trump is proposing. He has a bee in his bonnet about wanting to tax foreigners and he has this magical belief that he can somehow raise trillions of dollars from other countries without them doing anything. Without even raising prices, let alone retaliating. Remember it is a big world out there. The united states is not the sole economic superpower. The european union is about the size we are. China is about the size. You think you can do this and you will not get what happened last time, which is retaliation against u. S. Exports. It is the most bizarre thing and as you say it is a quirk of the way we have the law on trade that allows presidents a great deal of discretion setting tariffs, based upon the belief that congress would be dominated by special interests, but the president would be sensible, responsible people taking into account u. S. Interests in the world. Now we've got donald trump. That's a great point. The legal authority is wide ranging and the theory is tariffs are classic winner and loser corrupt capture sort of things. I'm the congressman from north carolina and i don't want imported tobacco. So everyone has their own thing they want to protect and you quickly have real corrupt kind of transactional politics, but now you've got the guy who is the most corrupt ever, saying i'm going to unilaterally have trillions and trillions of dollars of this. Yeah, congress basically originally agreed to the way the trade laws are written, to the presidential authority, to protect itself against itself. This was basically congress saying, look, if you let us write the tariffs line by line, then every single special interest group will get a line on its behalf. So please let's give the president the authority to negotiate trade deals and we have a single upanddown vote, but all of this presumes that the president is going to act responsibly. That the president is going to help preserve the global trading system, which by the way the united states created. We basically wrote these rules, partly because we thought that among other things, not just the trade was good for prosperity, but that it was good for world peace. Now we have a president who is, i don't know. I can't even figure out where he is getting this from. This is something where he seems to have made something up and gone searching for somebody, anybody that will tell him what isn't true actually is true. This is not just economic theory. We have evidence and practice. I talked about the trade war over agricultural goods. The washing machine tariff of 2019, quoted from the new york times when trump slapped tariffs on washing machines. The new tariffs also raise prices for drivers largely because manufacturers use the tariffs as an opportunity to raise prices on things not affected by tariffs. Meaning a boost to the cost of things and boosted profits because it gave pricing power to the manufacturers to jack up prices. Yeah, although a funny thing is that a lot of other companies, not so much washing machines, but the other tariffs that trump put on steel, those are things that are inputs to other things. Actually they raised cost and most estimates say the trump tariffs ended up reducing the number of manufacturing jobs, because what they did to raise costs was more important than what they did to protect some manufacturers from foreign competition. It is hard. It is like you could hardly do worse than the particular combination of stuff, but he wants to do it all over again. On an enormous scale. What he did was select tariffs on certain parts of our imports. Pretty much china. Now he's talking about as he says, the whole u. S. Economy. 10, maybe 20% tariffs. These numbers are being pulled out of thin air or maybe someplace lower and you know, but still, we are now talking about stuff that is really huge and would, among other things, it would become a freeforall globally. I think this is one thing that hasn't really entered the debate, but as an old teacher of mine once said, if the u. S. Starts slapping on tariffs, the retaliation is a big problem, but an even bigger problem is emulation. Once we start doing it, everybody starts doing it and it is really distractive. Paul krugman, great to have you on for this. Thank you so much. Thank you. Is donald trump about divorce a government shutdown because of his theory? nancy pelosi on the maga theory and much more ahead. Ah you're helping them with savings, right? () i wish i had someone like evan when i started. Somebody just got their first debit card! ice cream on you? ooo, tacos! i got you. Wait hold on, don't you owe me money? what?! your money is a part of your communi