Talking With Ro Khanna

The progressive Democrat representing Silicon Valley on wealth, technology and more

Ro Khanna is one of the House’s most sophisticated members. He’s also a progressive Democrat representing Silicon Valley, which is … interesting in today’s political and economic environment. We talked about that, wealth concentration, AI and much more. Transcript follows.

TRANSCRIPT:
Paul Krugman in Conversation with Rep. Ro Khanna (D-CA)

(recorded 2/19/26)

Paul Krugman: Hi everyone. Very special guest this time. I’m privileged to have gotten Congressman Ro Khanna, you could say the representative for Cupertino who is a progressive Democrat, and right in the middle of a lot of important issues. Welcome. It’s great that you could take time out from your schedule to do this.

Ro Khanna: Thank you. It’s an honor to be on. I’ve been reading you since I was an undergraduate economics major at Chicago and, well, economics at Chicago seemed like math class. I appreciated that you could explain those ideas simply in ways ordinary people can understand.

Krugman: Well. Thank you. There’s a lot to cover, so let’s get right in. Let’s just turn to background. So you’re representing, in a way, the heart of both the cutting edge of technology and also, these days, the cutting edge or bleeding edge of a lot of things that are happening and not all of them good in U.S. politics. What’s it currently like to be a progressive Democrat representing Silicon Valley?

Khanna: It’s hard. My district and the surrounding area has a market cap of about $18 trillion dollars. Five companies worth over $1 trillion dollars. Apple, Google, Nvidia, Broadcom, Tesla. Almost one third of the stock market’s value is there. And yet there’s a lot of inequality, even in the district. You have people in East San Jose who are rent burdened, don’t have affordable housing, people without child care, who can’t afford childcare costs, or health care. And I have advocated for higher taxes on billionaires. That hasn’t gone over well. I have said that we need progressive capitalism, and there’s push back on some of that.

Krugman: Yeah. I want to get to tax proposals further on in this discussion, but, you’re trying to represent all the people in the district and not everybody is a billionaire tech bro. I mean, I lived there in the mid 90s for a couple of years and it was not uniformly prosperous even then and that still must be true.

Khanna: That’s one of the big misconceptions. There are a lot of billionaires and millionaires in and around my district, but there are a lot of other people who can’t afford rent, who are working class and even middle class and there are a lot more of them then there are tech billionaires. In fact, I lost one of my races for congress in 2014 to Mike Honda. And he said, “I knew I had you beat when you came out with all these tech leader endorsements and I had all the PTA leaders and there are a lot more PTA leaders than tech leaders.”

Krugman: Okay. Yeah. This is true. I mean, we still have a democracy for the time being. Even in greater San Jose, that’s what matters. So that’s great. And I guess even within the tech industry, at least from outside reports, there’s a big difference between the people at the top and a lot of the working stiff engineers who tend to be at least socially quite progressive, I believe.

Khanna: Absolutely. The reality is a lot of the engineers at some of these companies are uncomfortable with the massive inequality, with some of the algorithmic addictions that social media is causing, with the concern about AI and job loss and how that’s gonna affect working class Americans. So, there is a sense that some of these folks who clearly believed they were doing good are now more conflicted. They may stay at the tech companies because they’re supporting their families and they believe in the work, but they think that the Valley has become more ruthless from the times of Hewlett Packard or whathaveyou. There was more concern about local communities.

And one thing that’s interesting is how many of the tech leaders don’t know much about the local community. They don’t know the Silicon Valley Community Service Center research, or Second Harvest Food Bank. In the 70s, 80s, 90s, the tech leaders were very much part of the community. Now they’re global and are not as involved in the day to day of the community.

Krugman: That’s an interesting point. I didn’t think about that much. I mean, it’s a little bit like, you know, I live in New York, and often I’m not quite sure why super rich people even bother to live there. Because if you’re going to be driven around in a in a car with tinted windows, you might as well be in Abu Dhabi, right? If you’re not really part of the community. So, yeah. That’s really interesting. But you say that it wasn’t always that way. So it’s part of the way that things have changed.

Khanna: No, it wasn’t that way. There was more of a historical awareness about how much Silicon Valley had benefitted from public investment. There was an understanding that there’s been massive investments by Darpa, NSF. ImageNet, that was part of what led to the creation of AI, was funded by NSF (National Science Foundation). The digital project that led to Google was funded by the government. And I think that this next generation, what they call the PayPal mafia, doesn’t really understand or chooses to ignore a lot of that public investment and is more disconnected from the post-World War Two era, in comparison to Andy Grove or Bill Hewitt or David Packard.

Krugman: Okay. Just for listeners, PayPal Mafia. I know what you mean, but probably a lot of people don’t.

Khanna: Well, these are some of the early folks who funded Paypal. Elon Musk, Peter Thiel, Reed Hoffman was part of it, David Sacks. And a lot of them have extraordinary influence in Silicon Valley and in our politics. And they often come from a more libertarian perspective, a perspective that they know best. I mean, I was in a meeting this morning where one of the people said, well, “why do we even need a government? You know, let’s just allow the innovators to allocate capital.”

And they, you know, some of them have said in a different age “we would be conquerors, and we are the folks who best understand how to keep America ahead.” And so from their point of view, wealth concentration isn’t a bug, it’s a feature. They fundamentally believe they are better allocators of that capital than the democratic public and that they are entitled in some ways, based on their genius or their work ethic to lead.

Krugman: Gosh, I didn’t know that people were still talking like that. I thought that libertarian gloss had worn down a bit, but I guess people still talk like that, and you’re much closer to that industry than I am.

Khanna: I don’t know if you’ve ever read Ayn Rand. I read it in high school, but, if you read Fountainhead, there’s a character, Peter Keating who is kind of seen as a bumbling bureaucrat. And a lot of times when people are insulting me, they’ll say, “oh, he’s a Peter Keating character. He’s not a builder. He’s not a founder. He’s not adding value. He’s just one of those paper pushers that is talking about what a just society looks like.” This is not all of Silicon Valley, but it’s definitely a group of people who have disproportionate power in our country.

And I think it’s important to understand their worldview, because a lot of times people feel it’s just transactional. They’re doing this because they want deregulation on AI or they want deregulation in crypto. And in some sense, I wish it was just transactional. But it goes very much to a deeper worldview, of what they think is the right way to govern society. The type that Andrew Mellon had in the 1920s when he was Herbert Hoover’s Treasury Secretary, and he basically said, “The problem in the country is that there’s not enough working people. But there’s a group of people who are lazy and elites are the ones who should be involved in decision making.” And you see a replay of that in some of the folks in Silicon Valley.

Krugman: Yeah, that’s the classic, “liquidate the farmers, liquidate the workers.” But according to Herbert Hoover, that’s what Mellon told him. So, yeah. And by the way, for my sins I did read Ayn Rand in college, although I thought it was funny. My friends and I used to ironically quote passages from Atlas Shrugged to each other. It shows I probably wasn’t in the right spirit.

What you’re saying actually is in some ways, people like Thiel or Musk are idealists. They just have a view of the world, which is quite something. It’s not simple greed. Not to say the greed isn’t there, but it’s part of it.

Khanna: In some ways it’s more dangerous than greed, because it fundamentally assumes a superiority in making governing decisions. I don’t think they’ll tell you they’re necessarily better human beings, but they would say that they’re more capable of adding value to society. And it’s important to understand this mindset because they view themselves as builders and creators.

The other insult that they hurl my way is in some ways I’m a taker. I’m not building things. And this has gotten a great reception with the Trump administration. I mean, he’s surrounded himself with many of these folks.

Krugman: Okay. I want to talk about policy and policy adjacent issues. So you mentioned that there have been several big things that people thought were great and now there’s some conflicted views. And you and I talked, I think probably two years ago, something less than that. But we met up in New York and talked about, among other things, crypto. And I’ve been a huge crypto skeptic, and everybody knows that. But you were more hopeful. Where are you right now in terms of crypto and crypto regulation?

Khanna: Well, I’m certainly dismayed by what Trump has done with it. The meme coins, the World Liberty issue. I don’t know if you follow all of that.

Krugman: For sure.

Khanna: Well, unfortunately, you know, UAE basically facilitated a purchase with Trump’s own World Liberty stablecoin. And, then there was someone who accepted that money, who was pardoned because he’s accepting Trump’s stablecoin. The bottom line is that there’s quite a lot of evidence that you had someone from UAE, and a person who sought a pardon, basically, enrich the Trump family, to influence policy. And that, is a huge concern, something that we’ve called to investigate on the China committee.

More broadly, I believe that there’s got to be regulations on the speculation. And we can have the conversation about whether there’s a use case in terms of the efficient transfers of money overseas. People say that it reduces transaction costs. You obviously said you just disagree with that or don’t think it has unique value, but that’s something that people still maintain, that it has a use case of lowering transaction costs.

Krugman: Yeah. For what it’s worth, I hear better things about transactions with stablecoins than Bitcoin which is still incredibly difficult to use for anything real. Stablecoins are better, but they pose a bunch of other risks. You’ve been involved, at least somewhat with the attempts to bring stablecoins into the regulatory framework.

Khanna: Yes. And to have capital requirements for them. I mean, we obviously want to make sure that there’s capital requirements for those stablecoins and that you don’t have a run on stablecoin. Certainly you don’t want algorithmic stablecoins where they don’t have the deposits to back it up.

Krugman: Okay. Yeah. This could get way too involved to talk about this but it’s fascinating stuff. However, the radical developments are coming too fast to keep up. And I want to get to AI in a bit, but let’s talk about social media which, as you mentioned, some of the people in Silicon Valley, maybe not the people at the very top, but others are somewhat disturbed by. I should be more up on that than I am. But have you been at all trying to do something about social media? You know, a lot of people are worried about social media interactions. Now we’re worried about chatbots. But it’s kind of a starting entry point.

Khanna: Yeah. One, we need to repeal some of the section 230 immunity, especially for the amplification of violent content, of content that is edging people to commit violence or illegal activity. And if we did that, if we had that kind of change, you may see less of the algorithms that are getting the most sensational, outrageous, content that’s been created because of these platforms having blanket immunity.

Krugman: For listeners, section 230 is basically saying, “Hey, Meta or YouTube, they’re just platforms, and they bear no responsibility for what appears on them because people are just using them. They’re just a utility.” And of course, there’s lots of reasons to think that’s not a fair characterization. And particularly the algorithms. People may not quite know. Can you explain about the algorithm and why that’s a problem?

Khanna: Well, basically these engineers at these companies figure out based on people’s data what content they should send to those people, what content they should push on to their feeds. It’s like when you open up X or you open up Facebook, it’s not chronological. There’s a deliberate choice about what you’re getting. And, that is not neutral. A phone doesn’t direct some conversations to you. It’s just an actual neutral entity where two people talk. But these social media companies actually are making determinations.

Now, some of those determinations you would want. You know, search makes determinations. It’s not to say that every algorithm is inherently problematic, but what I believe is when you have algorithms that are pushing content that is either harmful for minors and kids or that is amplifying violence, or is amplifying blatant falsity with disregard of the truth, there should be some liability. And right now, these platforms have no liability.

Krugman: Yeah. I think a lot of us don’t pay enough attention to YouTube which is surprisingly powerful. I’m a heavy consumer of YouTube, but I have two rules. One is no politics ever, because that pollutes my algorithm. The other is no cute animals, which also pollutes my algorithm. So, yeah.

So this is a big deal, although it’s already been overtaken in the public imagination and the political sphere by AI. So, not that anybody really knows, but do you have a view about how big a deal AI is going to be economically? And then we can go on to policy for it.

Khanna: It seems like it’s going to be a big deal. I mean, obviously you have huge capital expenditure right now on data centers that is having an impact on the stock market and on growth numbers. There is genuine concern about the impact on young workers. In fact I think there was some paper from Stanford which showed that for young kids between 22 and 25, there’s 16% more unemployment if they were in jobs that could be affected by AI such as customer support and technology jobs and software jobs being the examples. So I think there’s a real concern about particularly entry level jobs and automation.

And then there are, of course, positives as well, in terms of the impact on finding cures to rare disease and cancer and developing energy sources in terms of making batteries more efficient. So, it seems to me transformative. And what matters is, how we deal with it. And I often say I’m neither an AI accelerationist nor am I an AI doomer, but I’m an AI democrat, meaning we should have democratic accountability for how we develop AI.

Krugman: Yeah. But you probably worry a little bit because you’re probably more sophisticated technically than 430 members of Congress. And you do wonder a little bit about who’s going to be doing this democratic accountability. But I guess that’s why, in principle, we have a government which hires experts.

But, what kinds of regulations would you be seeking on it? I mean, it’s still in its very early days, but what would you be looking to regulate?

Khanna: Well, first I would look at jobs. And I’d be curious of your thoughts on this. I mean, look, when you had the Industrial Revolution, from what I’ve read, that for 60 years you had Britain build enormous wealth, but you had massive inequality. And the working class wages didn’t go up. You didn’t have worker productivity increase. You had a lot of elimination of jobs. So my view is that we should err on the side of keeping human beings in the loop.

I believe that means, for example, we should have drivers on self-driving trucks for certainly a number of years to make sure that we don’t have mass displacement. We should, figure out how we steer AI to augment human workers as opposed to displacing them.

Looking at the tax code, which currently, incentivizes depreciation of hiring robots or digital tools versus hiring workers, I believe we need a big federal sort of program to hire young people, either in their communities doing childcare or elder care or teaching or building the community in infrastructure projects or coming in to the federal government for a few years to do science or biotech so that they can get experience if entry level jobs are being challenged.

But, you know, I think we need to really think about the jobs issue and the adoption issue of AI.

Krugman: That’s interesting. Those are actually very strong proposals. I mean, you’re not giving us legislative language here, but that’s not to say that we’re actually going to intervene to try and limit job displacement and provide maybe something like a job guarantee. That’s a very forward looking proposal. I mean, you’d have a hell of a time getting it enacted but that’s an impressive concept. That’s bolder than I was expecting. That’s a big deal.

Khanna: Well, you remember when we had elevator operators. We had them for a long time. I mean, I guess the question is: if efficiency is the sole metric, at all cost, in my view that comes at a cost to social cohesion. And it’s not like the private sector is perfectly efficient. And I just think that we want to adopt AI, but we want to adopt it in a way that doesn’t have mass displacement of jobs. And that gives workers some say in how they’re participating and has federal intervention in places where we can create some of these jobs.

Krugman: Okay. Yeah. I haven’t made any use of it myself, but when I talk to people who have, I think in some way, people like me look at ChatGPT and all of that and say, “oh, you know, this is producing garbage and it’s hallucinating.” But people who do stuff like coding are extremely impressed with what Claude and other programs can do. And this is a big deal.

Khanna: Right. But let me ask you one question, because John Maynard Keynes wrote that famous article about how we’d all be working 15 hour workweeks. He turned out to be wrong, at least up to now. But do you think AI is different than that? Or do you think we should have a humility about our ability to predict what would happen to the future of work?

Krugman: I mean, the interesting thing is, the rise in productivity that happened in sort of the 60 years after Keynes wrote “Economic Prospects for Our Grandchildren,” I think it was called, it was imagining a world where abundance, due to technological progress, would mean that people would no longer feel the need to work and greed would disappear because people had enough. And the actual progress, the development of productivity and technology was more or less in line with what he imagined.

But in fact, the real striking thing is more or less during my childhood, working hours stopped declining. We used to move to shorter and shorter workweeks and we sort of plateaued at 35 hours a week. And people have not taken out more leisure time, and people have not stopped being greedy because they have enough. And so in some ways, the problem was his view on human nature.

Khanna: Yeah, that’s interesting.

Krugman: What I would say you’re worried about, from an economist’s jargon point of view, is you’re worried that this technology is strongly capital biased.

Khanna: Right.

Krugman: Which is what we think happened during the Industrial Revolution. That for the first 60 or so years, it was strongly, “We’re going to build factories to have a reduced incentive to hire workers,” and that translated into falling or stagnant real wages. And that that could happen again.

Khanna: Exactly. And also, how do we get workers to have some share in this? What are people going to do to have good jobs? And then secondly, if you have AI increasing productivity, then how do we make sure workers either have a shorter workweek or have some share in the profits? And it’s not just going to the shareholders and the capital class.

Krugman: Wow. I mean, people like me tend to say, “oh, you know, we’ve heard these warnings before. Kurt Vonnegut predicted it in 1950 when he wrote Player Piano but it didn’t happen.” But if you go further back in history, it has happened. It might be that too much complacency is a real danger now. And, just to say, how much are you worried about the sort of existential threats? I think we’re already past when Skynet was supposed to kill everybody, but the idea that we’re really maybe creating monsters at some level. Are you paying any attention to that or do you just think that that’s a bit ridiculous?

Khanna: I think it’s a concern. I think the most immediate concern that I hear from people is, “What does this mean for my job? What does it mean for my kids? What does it mean for their economic prospects? Should they go to trade school? Should they go to college?” But it doesn’t strike me as farfetched to say that we should have a federal regulatory agency for AI, just like we have for nuclear technology or aviation safety. And we have something in the Commerce Department that under the Biden administration was becoming pretty robust. And then Trump came in there and he changed the name, actually, from “AI Safety” to basically “AI Innovation.” And he has not pursued this idea that there should be some third party verification for models. That there should be some safety checks.

I don’t know what the danger level is, but it seems to me prudent and reasonable that we would want some federal agency with third party verification to check on that.

Krugman: If I were to make a defense of the Trump administration, which is not something I’m in the habit of doing, but, I would say that, well, you know, we are in a competitive race with China on this. Are you concerned that America is going to fall behind if we get in the way of any of this?

Khanna: Well, first of all, we don’t want to model ourselves on China. I was just in China and one of the things that struck me is they have 18% youth unemployment. So, if we are totally indifferent to the social consequences, then perhaps look at China. But I don’t think that’s how we want our society in the United States.

The second point is that there are places where we should be the guarding our advantage, like our compute power, which will help separate us from China. We probably need to look at more open source models. I mean, the reason that, some of their Qwen and other AI is being adopted is because of open source. But I don’t think the answer to what’s leading the AI race is that we need to have massive displacement of American jobs or American workers, or we don’t need safety standards. I think there are other factors that can allow us to lead the AI race: compute power, or thinking about the right balance with open source, and making sure we have talent here.

You know, one third of the talent of AI is in China. I wouldn’t just have blanket restrictions on immigration. Those things seem to be more important in how we win the AI race. And it seems to me awfully convenient that people use the AI race to justify giving workers less or skirting regulations. And that’s been the age old argument from any debate. “We don’t need environmental standards. We don’t need labor standards. We’re going to lose.” It just seems to be repeating some of the same old arguments.

Krugman: Yeah. Technology changes, but the arguments don’t change much over the decades. I’ve been around for a while, but...

How is the mood about the state of Silicon Valley, the economic state? I mean, there’s a constant drumbeat of, “California is too expensive or too liberal” and it’s all going to move someplace. What are you hearing now? I mean, there was kind of a story about everything was going to move to Austin which sort of isn’t happening, but still.

Khanna: We have 37 times, I think, the venture capital as Austin. And you have Stanford, Berkeley, you have Santa Clara State, San Jose State, UCSF. You have Apple, Google, Nvidia, OpenAI, Tesla still mostly there. So much of the talent. I’m not complacent about Silicon Valley, but this idea that it’s all moving is just factually untrue.

You may have some billionaires who have moved out. But the big challenge in California is the housing costs. It’s the challenge for being working or middle class. We have one of the highest poverty rates when you factor in cost of living. And my concern in my district, at least, and for the state of California is, if you’re working class, if you’re middle class, how are you going to make it? Much more so then, are we going to lose the Silicon Valley economy.

Krugman: Okay. Maybe just pivot to that for a second. I mean, California’s taken some steps on housing, but, what would you be doing? Because it is crazy. I mean, San Francisco is, I guess, the worst. Or, the greater Bay Area is the worst in terms of housing. And it is a huge problem for, well, for everything, even for the technology cluster. What would you be doing that is not currently being done in terms of policy?

Khanna: We should build more housing. I think it starts with that. And we should be renovating more housing that exists for residential use, and we can have a federal government provide grants for cities that would actually have zoning reform, to build more. Elizabeth Warren had a proposal basically, to that end. It’s unfortunate we didn’t get into President Biden’s Build Back Better, but I think there should be a federal incentive. State incentives to build more. And we can talk about other issues.

But I personally am for some rent stabilization and I’d be curious. I know many economists disagree, but my view is, if you have a distorted market, which is that we don’t have enough supply, then you basically have landlords having an unfair advantage in a distorted market. And so we can be encouraging new building while still making sure that there is some rent cap on the disproportionate power landlords have because of the artificial constraints on building.

Krugman: Yeah, it’s tricky stuff. I mean, this is all very live for the Mamdani administration in New York City, with Mamdani saying, Let’s build more housing, but also let’s stabilize rents on some of the legacy stock. Which is not crazy, but, how do you pull that off? But it’s really interesting.

And you were basically for the federal government exerting discreet leverage through funding and so on to push for YIMBY, “Yes In My Back Yard,” policies at the local level.

Khanna: Yes. And I know it’s not a huge issue in the macro statistics, but this idea of private equity buying up single family homes, that also should not be subsidized. My understanding is we intentionally allowed that after the Great Recession because the property values had declined and we were fine with it. But it certainly seems no longer to be necessary and is aggravating in certain places where you have large institutional investors buying up single family homes.

Krugman: Yeah. It’s hard to make the numbers on that look really big, but, I mean, it’s not nothing. And it’s interesting. Have you read the sections on housing policy in Project 2025?

Khanna: A while back. I haven’t read it recently.

Krugman: It’s interesting. They’re all free market everything. No regulation except: we’re going to defend the rights of local communities to prevent housing construction. It’s really very odd that they’re all for deregulation and free money except NIMBYism is legitimized.

Khanna: I did not see that. That is so much opposed to what we need to do and frankly, opposed to some of the things that happened in Austin or Houston or places that did do housing building correctly.

Krugman: On the one hand, California has this reputation, largely because of housing, that’s it’s really unaffordable for middle class, working class people. And on the other hand, you have these enormous fortunes. And I want to get specifically to the California wealth tax proposal in a minute, but you’ve been paying a lot of attention to the issue of extreme wealth concentration. What would you say in general we should be doing about it?

Khanna: Here is, I think, what people find frustrating. In many developing countries, you often have a choice between economic growth and economic development; between making sure people have some equal stake, and making sure that the country is developing. Here we’re producing extraordinary wealth. We don’t have that dilemma that so many developing nations do, but we simply have not, as a matter of society, of values, chosen to make sure people have basic education and basic health care, and a decent option for housing to make it in our society. And I believe that our social contract is broken.

People look at this extraordinary wealth generation and they say, “Where is my stake? In fact, I could go work for one of these companies, these magnificent companies like Amazon as a warehouse worker or in delivery, and my life is not as great as even when someone was in manufacturing. And yet the companies are making trillions of dollars. So where is my stake in it?”

And in that context, I have said we need to have higher taxes on billionaires and multimillionaires so that we can fund the expansion of basically health care and education and childcare for every person. Now, I fundamentally believe that would also ultimately lead to more economic growth, because we’re investing in education and health care.

One paper I still remember from my undergraduate days was Gary Becker writing about paper and technology. And he said, in a technology age, the two biggest investments you can make are in a society’s education and society’s health. So, you know, I would argue it’s smart policy, but at the very least, it is something needed for social cohesion.

Krugman: Yeah. I talked with John Gruber recently about how much helping children is a highly effective and cheap policy. I mean, helping the elderly is also important. But children are cheap, and it takes so little to transform their lives in a way that benefits all of us. We’re not doing that. But what would you recommend as a general strategy to kind of limit or curb extreme wealth?

Khanna: Well, it’s broader than a wealth tax, though I support a wealth tax. But in preparation for this conversation, I actually read your interview with Professor Zucman who has been involved in this. And I think your point that a 1 or 2% wealth tax at a federal level isn’t going to curb billionaire influence on democracy was pretty accurate.

I mean, there are two discrete issues. One is, how do we get revenue to pay for preschool and childcare and expanding health care, which in my view, things like a wealth tax, or step up in basis on an estate tax, or tax and stock buybacks can do. Then there’s a broader issue, which is: you’ve got multi-billionaires putting in hundreds of millions of dollars to get people elected president, and then going and serving in the administration, buying up media, which they want to steer, threatening any member of Congress they disagree with on an issue, saying, “okay, we’ll just start a superPAC.” And how do we deal with the concentration of wealth’s alliance with power in a way that is distorting the voice of citizens in our democracy? And that’s a much deeper question.

I think it means we need to be looking at abolishing super PACs, even under Citizens United. Like, why is it that someone can only contribute $7,000 to me, which is constitutional even under Citizens United, but they can go and write $1 million check to the super PACs? Larry Lessig has been working on initiatives to say you should be able to limit the contributions to super PACs.

We need to have strong antitrust enforcement. We need to, empower citizen contributions to match the billionaires. We need to hopefully see more citizen movement candidates. But I think that’s a much deeper issue and a harder issue to solve then how do we fund a robust social safety net so that people get the chances I did in life, which is to go to a good public school and have basic health care and get loans to go get educated.

Krugman: Yeah, I can’t help mentioning when we were talking about the universities that help support Silicon Valley, that aside from Stanford, they were all public universities. Berkeley, San Jose... It’s amazing how much that libertarian paradise was built by publicly funded universities. And it’s not like Stanford is a standalone private institution without federal contracts either. So yeah, it’s quite something.

So this proposal, which I know you have been speaking favorably about, for a California, one time wealth levy. You want to talk about that and where you stand?

Khanna: Well, the reason I supported it was that 200,000 health care workers are going to lose their jobs in home care, in elder care, in nursing and nurses aides because of the cuts in Medicaid. 2 million Californians will lose their health care based on these cuts to health care services. And so there has to be some way of making up the revenue.

Now, I suppose many other states will just say, okay, that was Trump’s fault, and California could say that. But we have a lot of wealth generation. And I talked to Professor Zucman and Professor Saez and they said, “Look, billionaire wealth has grown 158% over the last three years. So having a one time tax to deal with health care is a reasonable proposal.”

There are parts of it I would have written differently. I don’t think you should be taxing voting shares. And, you know, there are parts of it that could have been better crafted because some of that has led to legitimate criticism. But overall, if the choice is between people losing health care and a one time tax on billionaires, I’m for the one time tax on billionaires.

Krugman: Ok, a lot of people would say you’re a radical leftist, but I don’t think it is. That’s actually no more radical left than the US during the Eisenhower years.

But anyway, yeah. It’s quite something. Just what do you think’s going to happen? I guess that wealth tax proposal first has to get put on the ballot, and it’s a bit of a longshot, isn’t it?

Khanna: It has to get put on the ballot, and that I think is hard. And then it would have enormous money against it if it is on the ballot. But in polls, I mean, I think 80, 85% of Democrats support it. The vast majority of independents support it. And even a third of Republicans support it.

There’s a question coming for the Democratic Party, which is, we have two ways to go, post this Trump moment. One is to say, look, we’re just not going to do his incredibly, damaging things. We’re not going to have a world of blanket tariffs used for retaliation. We’re not going to have ICE agents out there shooting American citizens and conducting raids without people’s due process. We’re not going to dismantle agencies without Congress. We’re not going to just reward our friends and punish enemies. But we’re not going to really make structural change. And I think that would be a big mistake.

My view is that we have to tackle the fundamental economic divides, the frustration people have had—both because of place based inequality, where they’re in towns where they don’t have good paying jobs and prosperity and, the rising cost of childcare and health care—and try for an agenda that is going to have economic transformation where people feel a stake in the American dream and economic independence.

And I believe that the younger generation of Democrats, are pushing for that kind of economic transformation that Bernie Sanders and Elizabeth Warren were probably the most visible spokespeople for.

Krugman: Okay. And I have to say, Elizabeth Warren is wonderful. Bernie Sanders is impressive. But it’s good to see somebody who isn’t quite their age taking the lead. So I’m glad to hear you in that position.

Okay. I’ve been, you know, tracking some of the news coverage. You have complained that you’re always ready to talk about AI and policy, and people want to talk about Epstein. Do you have anything to say about Epstein? Obviously, you’ve seen more than people like me can, but just any comments?

Khanna: It’s the age old story, that extreme wealth can corrupt. Put aside the people who actually went to the island or the ranch and abused these young girls or who watched as his people were abused. What saddens me is how many people felt that being part of this club, being part of this group I called the Epstein class, was sort of socially affirming. In fact, one of the former prince’s girlfriends said, “if you weren’t mentioned in the Epstein files, you were a loser.” Like you weren’t part of the IN club. And how they began to believe that the rules didn’t apply to them.

In some of these cases, it’s a story of human frailty. I don’t come at it on a moral sanctimonious note other than to say that when you have extreme wealth or privilege disconnected from rooted community, it doesn’t just harm people who are left out in that community. It may actually be corrupting for the people with that kind of extreme wealth. And the hope is that [the whole scandal] would move us towards a politics that sees the benefit of everyone in the country having a stake in the economic success, which we haven’t had.

Krugman: I have to say that I’ve been shocked, but somehow not surprised at some of the people who I either know slightly or who had orbits intersecting with mine, seeing their names appear. Because I do understand what you’re saying about the feeling that you’ve made it and you’re in this circle, and I can see how that worked, even though it’s horrifying. But it’s quite something.

Anything else that you’d like to bring up before we close this?

Khanna: I’ll ask you a final question. What is your view of the prospects, post-Trump, assuming that Democrats do succeed in getting back the House, the Senate, and have a chance at the presidency. As a student of American history, is there a possibility of doing economically transformative things, in the direction Biden was, though we weren’t able to get the votes? I mean, FDR and Lyndon Johnson obviously were the two very consequential presidents. But do you think that there could be that kind of a moment again for the country, or do you think it’s going to be very difficult?

Krugman: I mean, the economics say yes. One of the greatest discoveries of my life, in an old paper coauthored by Claudia Goldin, Nobel laureate and one of my favorite Nobel laureates. It said that the middle class society that I grew up in didn’t evolve. It was created basically over the course of a few years by FDR. And so we know that that can be done. It lasted for 30 or 40 years. But the political conditions to make that happen now? I don’t know. I mean, I guess we don’t preemptively surrender. We hope for it.

But wow. I think you and I are on the same wavelength here, which is that we do need some fundamental changes. It’s not enough to just get this one guy out of the White House, though that’s dearly to be desired. But it’s about how the conditions that brought him there will not go away unless we have a really big change in how we run this country.

Khanna: I couldn’t agree more.

Krugman: Well, thank you so much for talking. And what a moment this is. I’m glad I’m not in congress but I have to say, if we come out the other end of this, people like you will be a large part of the reason. Thank you so much.

Khanna: Thank you. I appreciate it.