Moneybeat: Office politics

MARY REICHARD, HOST: Next up on The World and Everything in It … the Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and adviser David Bahnsen. David heads up the wealth management firm The Bahnsen Group. He is here now. David, good morning.

DAVID BAHNSEN: Well, good morning, Nick. Good to be with you.

EICHER: It’s Monday morning … and that means full offices, at least for now, at the Small Business Administration …

Here’s the new head of the SBA … former Senator Kelly Loeffler.

KELLY LOEFFLER: Hi, everyone. It’s Kelly Loeffler. It’s my second day here at the SBA. I could not be more excited to be here.

So I thought l’d take a walk. And what I found is that exactly what’s been said is true. About 90 percent of our employees are working from home.

Well, that ends Monday with President Trump’s order to return to work. …

David, with President Trump’s order for federal employees to return to the office … and seeing that many private businesses have already done so … do you view this mandate as a genuine effort to boost productivity and reduce waste in government spending, or is it mainly a political statement?

BAHNSEN: No, I think it’s meaningful. Of course, I think it’s meaningful in the private sector, too.

If we’re going to pay governmental employees to do some work, then they should go to work. One of the things that Kelly (Loeffler) did in that video is point out that her particular governmental agency is the Small Business Administration.

So I would like to know of all these small businesses they serve, how many of them have a bunch of people not working. See, the fact of the matter is most of these businesses have gone back to work a long, long time ago. That the governmental employees—DOGE’s estimate that 92% were not going back to work—that’s a completely unacceptable metric.

Again, if there’s certain government employees that want to take retirement, want to leave, if they’re going to be cut out because they aren’t producing, that’s a different story. But those that want to stay and have a job and get paid for a job, they need to go do their job.

EICHER: Some of our listeners have shared personal experiences where DOGE’s cost-cutting measures seem to have led to indiscriminate layoffs. How do you differentiate between necessary efficiency-driven terminations and unjust workforce reductions, and what should be the criteria for these decisions?

BAHNSEN: You know, Nick, this issue about DOGE and terminations and retirement offers, it’s very important that we look at things by different category because offering people eight months of pay to leave is very different from termination.

Some people are being let go for cause, and I’m sure that there are some government employees out there who have worked hard and are losing their job—and those are unfortunate circumstances.

You know, we know those things happen in the private sector from time to time. They don’t happen very often, but they can happen in the public sector, too. That includes what is essentially right now a RIF. Sometimes companies go in and have to do what’s called a RIF, where for financial reasons, they have to let 10% percent or 15% of workers go …

EICHER: RIF, reduction in force …

BAHNSEN: … yeah, a reduction in force, that’s right. It’s a very difficult thing on a human level, but we understand it is unfortunately part of what takes place at times—and people find new work. They find new opportunities, sometimes better opportunities.

So I don’t say it without compassion for those who are going through it, but that is not the majority of what’s happening. The majority of it is an offer being made of people that they can take eight months of pay to go away. In some cases, there is wast and push back.

Look, I’m very happy to criticize some of the things that have happened, okay? I think that what they did with, for example, the prosecutor who had conscience objections to the dropping of the Eric Adams case, I think that was very problematic.

But when you’re talking about the bulk of the work DOGE is doing—and none of us is privy to all of the specifics—I’m very confident that they’re mostly trying to eliminate waste. Those things, unfortunately, have to be done in a government that’s spending $2 trillion more than it brings in.

EICHER: David, what are your thoughts on the “DOGE dividend” proposal—where a portion of government savings is returned to taxpayers? Looks like you’re ready to jump on in …

BAHNSEN: Sometimes I wish our listeners could see the video so they could just get my answer from my facial expressions instead of instead of what I’m about to say. (Laughter.)

I’m always for the idea of taxpayers receiving money back, paying less taxes, things like that. That is not what we are talking about here.

I want to make this analogy that I presented on Fox the other day because it is a pretty good analogy: Say your credit-card company accidentally charges you $5,000 for something they weren’t supposed to and you uncover it later, and they send you a check for $5,000. You don’t say, “well, hey, I’m gonna leave the debt there and I’m gonna deposit the $5,000.” All that means is you basically took a cash advance on the credit card, okay?

If we uncover money with DOGE that was from inefficiency, that gives us the opportunity to reduce the money we’re leaving in debt for our children and our grandchildren. No entity with $36 trillion of national debt—when we’re talking about money raised from uncovering inefficiency that helped create the $36 trillion of debt, alright?—we’re not talking about our taxpayer money and it’s a refund owed.

It isn’t that we paid in more than we owed on an individual basis. This DOGE dividend is obviously a political idea to put cash in people’s pockets, to make them feel good. My critique is not that it’s inflationary. It isn’t creating new money supply. It would create more demand than there is new supply. And so you’ll live with higher prices, yes, but that’s not the inflationary critique.

The critique is it belongs to the creditors.

Reduce the debt is the responsible thing to do, which is what they said they were creating Doge for.

EICHER: You know … I’m more of a voice inflections than facial expressions kind of guy … and I must congratulate you for matching the face with the voice. Perfect.

BAHNSEN: (Laughter) Well, thank you. (Laughter)

EICHER: Well, before we go, speaking of inflation and inflation expectations, David, could you elaborate on your discussion from Dividend Café on the differences between core inflation and headline inflation? … especially in light of oil price fluctuations and housing supply issues.

BAHNSEN: Yeah, you know, I think there’s been times in the past that we’ve discussed why there’s a difference between core inflation and headline inflation. Headline includes all components of the price level, and core strips out energy and food.

What I tried to lay out in Dividend Café is that there’s monetary inflation that raises the whole price level when the money supply goes up more than the supply of goods and services. But in the case of oil, oftentimes gas prices go up and it has nothing to do with monetary inflation—it often has to do with all kinds of geopolitical things and supply shocks.

(There’s various commodity complexities that can exist, you know, for example cocoa over the last, you know, eight months. People are aware of the bird flu ramifications with egg prices. So yes, the price of eggs inflated meaning went higher, but that wasn’t from inflation.)

With oil, I think it’s been incredibly stable for a little while. It’s gone up into the $80s; it’s come down to the mid-$60s. It stayed right around the $70 level since the big spike that had happened in 2022. But, you know, there are things that affect oil prices with Iran either getting taken off the global market, or being put back on the global market as under the Biden administration, unfortunately, that happened.

The Russia-Ukraine War had implications in 2022 and an end to the war maybe could end up having implications. But OPEC+, which Russia is a member of, they’re kind of holding their production down.

My point is that oil prices are really important to how people feel about prices. What you’re paying at the gas pump, especially people that have long commutes to work, is a big part of what they spend money on.

Middle-class people and lower-income people, it’s sometimes one of their biggest expenditures outside of their rent or their mortgage. But that’s really not the same as the inflation level, and we have to understand housing prices have a supply component. Oil is complicated. That’s the stuff we got to be thinking about here. It’s going to affect markets in a different way. It’s going to affect the economy in a different way.

EICHER: David Bahnsen, founder, managing partner, and chief investment officer of The Bahnsen Group. David writes at dividendcafe.com and regularly for WORLD Opinions. David, thanks! Have a great week!

BAHNSEN: Well, thanks so much, Nick, great to be with you.

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