A Conversation With Elizabeth Warren

Hoping for a better future

I knew and admired Elizabeth Warren’s work long before she became a senator. Back in the day she was a law professor with a special interest in rising rates of personal bankrupcty. Her book The Two-Income Trap, about how the stresses of families trying to get their children into decent schools pushed many over the brink, was a revelation. So was her dissection of the role of consumer fraud in the financial crisis.

She has been remarkably effective since transitioning into a political and policy-making role, too. The Consumer Financial Protection Bureau, her brainchild, has been a huge success story — which is why Trump and Musk are trying to kill it.

She was able to make some time for me Thursday. Here’s our conversation; transcript follows:

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TRANSCRIPT: Paul Krugman in Conversation with Senator Elizabeth Warren - 4/3/25

Paul Krugman

So, hi there.

Elizabeth Warren

Hi, Paul.

Paul Krugman

It's been a much more exciting week in Washington than I would have liked it to be for this interview, because I'd like to talk about issues that are close to your heart. But first, reactions to Wednesday’s Rose Garden speech, the Trump tariff announcements.

Elizabeth Warren

So let me set the table just a little bit. I think that tariffs can be a useful tool in the economic toolbox. Right now in the United States, if you have a prescription filled, there’s a 9 out of 10 chance that it was manufactured overseas, probably in Asia, and that even if it was manufactured in India, most of the ingredients came from China.

You know, that's a pretty dangerous place for us to be. We get into some back and forth with China and all of a sudden there are no antibiotics for little kids with ear infections. So that can be a place where you put tariffs in place because you want to build a supply chain here in America. You're targeted about it, you know what you're trying to do, and you do it. You follow through and you make it stick.

Donald Trump's attempt at tariffs is just dumb. It's broad. It makes no sense. What do we gain by putting a big tariff on lumber from Canada, except that the cost of building a new house goes up?

Paul Krugman

Yeah.

Elizabeth Warren

And for me, it's more than the individual pieces, it's the chaos around it. First time you announce tariffs and then the market drops, so whoa, he rolls them back and it's like, they're playing red light, green light. And I think even now, a big chunk of the world doesn't know, is he serious about all of those tariffs? Some of those tariffs? None of those tariffs? And I don't know anybody who invests in an economy who says, “yeah, I'm definitely going to build a factory here in this town in Ohio, or I'm definitely going to start another branch of my business over here in Scottsdale, Arizona,” if you don't know what the environment looks like on what the cost of your materials may be or whether or not you'll have buyers overseas. So I think the tariffs themselves, I just don't think there's enough rhyme or reason to say that there's any coherence here, but I think the even scarier part and worst part for the economy is this uncertainty that it injects and there'll be a price for that for a long, long time to come.

Paul Krugman

Okay, let me just stay with the tariffs and budget and then we'll get on to your signature issues in a bit. So one of the things, the tariffs are being sold as being a cure for everything, Florax and the dessert topping, but they're being sold as a revenue source as part of this huge Republican tax cut plan. I guess I want to know what you think is actually going to happen and basically what are you and your colleagues trying to do to stop this thing.

Elizabeth Warren

Okay, so you talked about this week. This week ain't over yet. We've still got the next 36 hours where the Republicans are trying to advance their tax plan. And the heart of this tax plan is about $5 trillion in giveaways, mostly sucked up by millionaires, billionaires, and giant corporations, and paid for on the backs of seniors, little babies, public school students, veterans, and everybody who has pinned hopes on medical research for helping with problems their families are dealing with. This is one of those things that so many people across this country hate, the idea of giant tax cuts for a handful of billionaires paid for on the backs of ordinary folks. And so the Republicans are trying to run all these simultaneous games, hoping nobody will see it. So this is what Flood the Zone is all about. Why are they renaming the Gulf of Mexico? So you're not paying attention to tax cuts for billionaires.

Why does Donald Trump want to keep talking about revenues from tariffs? So he's got some counter to the notion that the Republicans are just about to expand the debt enormously in order to give away more to billionaires. Why do we have this sandstorm going on? Because what the Republicans want to do is so damned unpopular, they're trying to keep people from seeing it. And we're only halfway through the week.

Paul Krugman

So your view is that they're not really serious about believing that lots of revenue will come out of these tariffs. I can't make up my mind what they believe. But yeah, okay. There are also questions about legislative strategy. I mean there's this amazing effort to make three and a half trillion dollars or so of the tax cuts not cost anything.

Elizabeth Warren

Right, right. So this is the thing. The Republicans know that cutting taxes for billionaires is really unpopular. And I don't just mean with Democrats. I mean Democrats, Republicans, independents, libertarians, vegetarians, everybody hates this, except the billionaires and a handful of their suck-ups.

Paul Krugman

Right.

Elizabeth Warren

But what makes it more unpopular is to give those tax cuts and load it onto the national debt or cut other services that families depend on. So the Republicans are trying to ease this tax cut through. You may remember back in 2017, the way they tried to ease it through is, they said, “Totally these things will pay for themselves. They’ll pay for themselves because there'll be so much economic activity.” And I remember you blew the BS whistle on that and said they will not pay for themselves. Others said they would not pay for themselves. And lo and behold, they didn't pay for themselves, right? Instead, they just added to the debt. You get less revenue.

You go deeper into debt. It's not very fancy. So this time around, they're not trying that play because it didn't work. So they're trying a different play. They're saying because we have tax cuts in place—those tax cuts the Republicans put in place in 2017—those were eight years of tax cuts. They say, once you've done that, forever after those tax cuts are free. And you call it

“base budgeting.” It's just magic math.

I had a witness in front of me and the finance committee earlier, one of the other Trump nominees, and I just said, “So if you say that it won't cost anything, does that actually produce revenue?” And the guy stumbles around, but the answer is No, of course it doesn't. Math is actually still there. It's still real.

And these tax cuts, look at the latest Republican bill out of the Senate. They are actually aiming for $5 trillion in tax giveaways for these giant companies and billionaires.

Paul Krugman

Yeah. So I think that as I understand it, it's not just about hoodwinking people. There are legislative consequences, right? If you could say that this doesn't cost anything, it's weird, but we do have these sort of rules and reconciliation and all of that. And you can say the objective level of the debt doesn't matter at all but the legislative maneuvering does depend on whether you can get to pretend that just extending the previous tax cuts doesn't cost anything. So are they going to be able to pull this off? Is the parliamentarian going to allow them to do this?

Elizabeth Warren

I personally would just be deeply shocked if the parliamentarian would let them do it, because it undermines every other rule. It says the budget, the budget for the United States of America, can be passed with no real numbers in it. So, you not only don't have to tell the public what the damn thing costs, you don't even have to tell each other what the thing costs. If that's really so, then the whole game is afoot, and that’s whether Dems or Republicans are in charge.

Paul Krugman (10:00)

So then, even with the filibuster, it basically becomes just majority vote on everything. Okay. Wow. But is there a strategy? I mean, what if the parliamentarian rules in their favor, is there any plan? I mean, I don't know what you can give away, but is there any plan to try and slow down this juggernaut?

Elizabeth Warren

Yeah. So look, we've got two opportunities here. One is what happened last night. For everyone out there who's in despair because the Republicans won't grow a spine and stand up and just exercise the basic responsibilities of being a United States Senator or a United States representative. Last night was an important moment.

Paul, the Democrats put on the floor a bill. We kept it as narrow as possible and said, “We're not going to do those tariffs with Canada.” Right? And for the first time since Donald Trump was sworn in, four, count them, four Republicans broke with their party and came over and voted with the Democrats and actually passed the bill through the Senate.

So, I get it. It would have to go through the House. Donald Trump can veto it. But first crack in the wall. And you know where it comes from? It comes from shaming them about what they are doing to this country over the economy.

Paul Krugman

It’s a test.

Elizabeth Warren

And we're going to keep that up. We're going to talk about these tax breaks for billionaires and their magic math. There's a second thing we're going to do, and that is look back to 2017. You may remember they had the votes then as well. They had the House, the Senate, and Donald Trump was in the White House. And they handed out back then about $2 trillion in tax cuts to the billionaires and the giant corporations.

We lost the vote. We couldn't stop them. But we held their feet to the fire. That was their only legislative accomplishment. Remember, they didn't get anything else done. And not a single Republican ran on, “But I got the tax cuts through.” In other words, we got the word out. We told enough truth around this that it became the jet fuel for the 2018 blue wave and helped put Democrats in the White House, in control of the Senate, and in control of the House in 2020. So, whatever the vote is, we're gonna try to shame them on this vote and get enough Republicans to join us. But if we don't do that, we are not giving this thing away for free. We're gonna make them pay and pay and pay for it.

Paul Krugman

Okay. I get a little bit lost on all the continuing resolutions, debt ceiling and so on. But, how far are you and your colleagues willing to go to try and basically throw some sand in the wheels of the juggernaut? Or anyway, whatever it is we're talking about here.

Elizabeth Warren

Yeah, whatever is the right analogy here, we are willing to go literally as far as we possibly can, use every tool that we have available to us. We're going to be speaking for 25 hours on this bill because that is the legal maximum that we can do. We're going to make them vote and we're going to make them vote some more because that's what we call the voterama around this. That is our right in the minority on this. We're just gonna keep pumping it out there.

And actually, I'll give you an example of that. There are certain steps they have to go through to get this budget through. When they did part one last month, among the things we put on the floor is, we said, “Okay, you guys are putting together a budget. Could we just agree that anybody who makes more than $10 million a year in taxable income is not gonna get tax breaks under your new budget, special tax breaks, new tax breaks.” And all of the Republicans voted no. Democrats voted yes, Republicans voted no. So we said, “Okay, how about $100 million?” And they all voted no again. “How about $500 million? A half a billion dollars” Like bidding, right? And all the Republicans voted no. And we went to a billion and all the Republicans still voted no. Now, we couldn't change their votes, but what we could do is get them on the record, which is exactly what we did. We put it together in a little video and put it out. A million and a half people saw it, and put the pressure on the Republicans.

You know, there's a reason right now, Paul, that Republicans can't hold town halls. There's a reason they get chased down the hall. There's a reason they get stopped in parking lots, because they're trying to avoid their own constituents.

Paul Krugman

Yes.

Elizabeth Warren

Because what they are trying to do is wildly unpopular. So the fancy democratic strategy here is: tell the truth. Just tell loudly what it is these guys are trying to do. And either we shame them or we get them voted out of office.

Paul Krugman

Okay, but just to say, you're probably not able to stop much, but you can make it public and it's all sort of aimed for November of next year. I mean, some people will be disappointed at that.

Elizabeth Warren

That's not nothing, though. We're not giving it away for free. The other thing is, we've got other tools in the toolbox and we are trying to use that. We use every budget point of order. I know it's all this arcane stuff. But look, part of our job in the United States Senate is oversight. I write letters pretty much every single day, oversight letters. I ask the inspectors general to check out what Pete Hegseth is up to in this latest big security breach, ask the inspectors general to come in and use their tools, ask the GAO to use their tools, send oversight letters directly to companies that are doing business with different parts of the government. That's a part of our tools and we use them as best we can. And again, like I say, it's not perfect, but it's also not nothing.

Paul Krugman

Okay.

Elizabeth Warren

And because that's where we are. We don't have the votes that I wish we had, but we still have some power and we need to use it to the maximum.

Paul Krugman

Your signature contribution to the debate over policy and then in government has been consumer abuse, financial abuse. So first of all, I mean, what's the status of your baby, the Consumer Financial Protection Bureau? It's sort of closed but not? I'm confused about what's actually happening there.

Elizabeth Warren

Yeah, that means you're exactly in the right place. Confused about what's happening. So, just to remind everybody, we had all these consumer protection laws about ways you couldn't get cheated on credit cards and mortgage loans and so on that built up through the years throughout the 20th century and into the early 21st century. But they were scattered among seven different agencies. It was nobody's first job to enforce them. And that meant the subprime mortgage market was able to get a foothold. Most of those mortgages were illegal. They violated consumer protection laws, but there's nobody enforcing the law. So all that risk builds up in the system. It explodes. 10 million people lose their homes. And a big part of Dodd-Frank was to say, “That's a mistake we will not make again.”

Paul Krugman

So for listeners, Dodd-Frank was the financial reform legislation passed after the financial crisis and it was a landmark bill, although the thing that always worried me about it was that it's not mechanical. It's not like the FDIC where you've got a bank account and it's covered. But Dodd-Frank actually requires a little bit of continuing leadership, which always makes it a little fragile. But anyway, your big insight was to create an agency whose mission was this, not on the side they're supposed to do it. And it worked pretty well, right?

Elizabeth Warren (20:00)

Yeah, so we gathered up all of the laws, consumer protection laws. We actually didn't create much in the way of new ones. Put them with one agency, got the agency funded independently and said, “You guys now have the responsibility to enforce those laws.” And over the space of a dozen years, I love this, this little agency managed to recover more than 20 billion dollars in fraud, mostly from giant financial institutions. And here's the best part about it, Paul. They didn't just take it out in fines. They actually returned the money directly to the people who'd been cheated. And more than 200 million Americans got help because of the CFPB.

And so here we are. We've got this little agency that's doing exactly what it should. The big banks have hated it from the beginning. Why? Well, I can give you 20 billion reasons why, because the money came out of their pockets. They were making more money being able to squeeze people on the fraud. But the Republicans also hated it. I actually have a theory about why. And that is, because it's really a good demonstration that you can make government work for people.

Paul Krugman

Right.

Elizabeth Warren

You know, if you constantly are saying, ‘government's bad, government's stupid,’ take a look at the CFPB. Here they are on a very modest budget. They have managed to discover more than $20 billion in fraud and return the money directly to people. So that part's working. Donald Trump gets elected. His co-president, Elon Musk, goes after the CFPB with his chainsaw. And in fact, he so cleverly posts on X. “CFPB RIP.” He is the guy who will slay the CFPB. Now, let me just say that's illegal. Congress created the CFPB. Elon Musk or Donald Trump, neither one of them can destroy it on their own. They legally can't do that. But there's a little side story in this. Why is that one of Elon’s top targets?

Paul Krugman

Right. Okay.

Elizabeth Warren

So, take a look over at Elon and X. You remember X. He buys it, hemorrhages money. He's trying to figure out how to make it work. And so he announces he's going to do X Money. So he not only has all your tweets and posts and so on, he wants to do all of your financial transactions. Can you do those on a site like that? You can, but you know who your financial regulator will be to make sure you don't defraud people? Come on, take a guess.

Paul Krugman

So that was very specific. It was literally a conflict of interest or whatever. But okay, with CFPB, just plain abolishing the agency hasn't worked so far, but is anything happening or is it completely frozen?

Elizabeth Warren

So, they've nominated someone to run it, and that's still pending in the Senate. There has been a court order out of the DC courts to say, “You can't fire all these people.” They put a stay on all that and said, “You need to rehire the ones that you have fired.” But it's grinding its way through the courts. I mean, look Paul, we're in a place now with CFPB and Social Security and the Veterans Administration and the Department of Education where it's pretty clear that the Musk-Trump team is breaking the law, but the courts grind slowly. And firing people with a chainsaw works fast. So those two parts of how our system works are very much in conflict right now. But right now, CFPB is hanging in there.

Paul Krugman

Okay.

Elizabeth Warren

We don't have our financial cops on the beat, which means like, if there's anybody who's listening to this who has a checking account, a home mortgage, a student loan, a car loan, if they do payments on Venmo, any of those things, basically, Elon Musk and Donald Trump have held up big signs saying, “Scammers welcome, come cheat these folks.” And that's a real problem.

Paul Krugman

Alright. So, in the naughts, subprime was the big thing that people didn't understand. It could be abused. Where I'm sitting, I look at crypto and have the same feeling about it, but I know that this is not an entirely partisan divide. There are some Democrats who are relatively enthusiastic. Where are you on crypto regulation?

Elizabeth Warren (25:00)

I think people ought to be able to buy and sell what they want to be able to buy and sell. But with crypto right now, there are no protections that need to be there. So when use your credit card, when use your checking account, you've got a whole set of consumer protections that make sure you don't get cheated. We need that with crypto as well. Right now, if a money launderer, say somebody who is a drug trafficker or a terrorist or a human trafficker or is trying to evade sanctions, right now there are curbs in place every place else in the financial system. Checking accounts, credit cards, stock brokers, gold traders, diamond dealers, all of the other places, but not with crypto. And the third is blowing up the whole economy. There are regulations in place to keep banks from doing that, non-bank financial institutions, but we don't have those same things in place for crypto.

So my view around this is people want to buy and sell, that's fine. But we need to get those same curbs in place for crypto that are in place for every other part of our financial system. And here's the thing, Paul. Some people really want to do that. But there are a bunch of people who don't, who are making a lot of money off the system by not having those curbs in place.

Paul Krugman

Well, yeah.

Elizabeth Warren

They like the fact that there are no consumer protections. They like the fact that it can be used as it is right now. North Korea uses crypto to help finance their nuclear weapons program. Hamas uses crypto to finance their activities. They like the world where there are all the other regulated financial systems, but there is this one road where you can move billions of dollars of value back and forth without those curves. I just want to see the curves in place.

Paul Krugman

The subprime thing was, you could have said, “Well, if people want to take out subprime loans, they should be free to do that.” But our experience was that people didn't know what they were doing. Do you have any concern there? I worry about the crypto kiosks in supermarkets.

Elizabeth Warren

Of course. So, I was doing three buckets here. Yes, we need the consumer protection laws, you know? We just absolutely need those consumer protection laws. We need them on mortgages. We need them on credit cards. We need them on Venmo. We need them with stockbrokers and gold traders, and we need them with crypto. It should be a level playing field. There shouldn't be one part of our financial system where there's a difference. If you buy something on your Venmo account and you use dollars, there's certain protection against fraud. But if you use crypto, there's no protection at all. That's not a system that's good for consumers and frankly, not a system that's good for our economy because you put your finger on it. It's about cheating individuals.

Paul Krugman

Right. Yeah.

Elizabeth Warren

But when you cheat individuals, that starts building risk in the system overall. And that should be the lesson from 2008, that house by house by house, lousy mortgage by lousy mortgage by lousy mortgage, it wasn't just the damage to millions of families and individuals, it's that that kind of risk came together and it blew up the whole economy and resulted in a $700 billion bailout for the banks.

Paul Krugman

Well, turns out there are multiple ways to blow up an economy. We seem to be set to try several of them in the next few years, but anyway...

Elizabeth Warren

You know, I'm worried about that, Paul. I really am. The chaos factor that we see right now with the tariffs. But then part two, the financial deregulation that's going on, which lets this risk build up and crypto becomes a part of that. And the third is when you stop the investments in things like research, that are driving what 40% of our increases in productivity come out of, the kinds of investments we make here. You do those three things to an economy simultaneously? Those are big flags that this economy is really loading up on risk and headed for trouble.

Paul Krugman

Maybe that's a place to stop. Thank you for talking with me. May things not work out quite as badly as you and I both fear they will.

Elizabeth Warren

Yeah. Thank you, Paul.