WEBVTT - Rahm Emanuel’s Recipe for America is Getting ‘Back to Basics’ 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.240 --> 0:00:11.600 I believe the moment the American dream becomes unaffordable and 0:00:11.640 --> 0:00:14.760 inaccessible is exactly when our democracy becomes unstable. 0:00:23.840 --> 0:00:26.799 I'm Stephanie Flanders, head of Government and Economics at Bloomberg, 0:00:26.960 --> 0:00:29.479 and this is Trump Economics, the podcast that looks at 0:00:29.520 --> 0:00:32.800 the economic world of Donald Trump, how he's already shaped 0:00:32.800 --> 0:00:35.560 the global economy, what on earth is going to happen next? 0:00:38.200 --> 0:00:41.680 And this week it's a conversation with Rahm Emmanuel, a 0:00:41.760 --> 0:00:45.440 longtime Washington operator. He's also been White House chief of 0:00:45.479 --> 0:00:49.720 staff for Congressman mayor of Chicago, and President Biden's ambassador 0:00:49.800 --> 0:00:52.920 to Japan, and now, by all accounts, he's thinking about 0:00:53.000 --> 0:00:56.400 running for president. We're recording this on Thursday, the thirtieth 0:00:56.440 --> 0:00:58.840 of October, and any one of those parts of his 0:00:58.960 --> 0:01:01.640 resume would give me plenty of reason to have Ram 0:01:01.680 --> 0:01:03.960 and Manuel on the show. But I'm going to focus 0:01:04.000 --> 0:01:07.920 here on the alternative to Trumpanomics that the Democrats need 0:01:07.959 --> 0:01:10.440 to offer to have a chance of retaking power in 0:01:10.480 --> 0:01:13.399 the next few years. The root cause of the fraught 0:01:13.520 --> 0:01:17.360 state of American politics, Rahm says, is that the American 0:01:17.440 --> 0:01:20.720 dream has become unaffordable, out of reach for the majority 0:01:20.760 --> 0:01:24.440 of families. Democrats need to confront that head on, But 0:01:24.640 --> 0:01:26.880 how in a country that no longer seems to be 0:01:26.880 --> 0:01:31.360 able to countenance tax increases? For example? He also thinks 0:01:31.400 --> 0:01:34.880 President Trump's China policies have been costly and wrong. The 0:01:34.920 --> 0:01:37.920 President is now back from his Asia tour, but how 0:01:38.000 --> 0:01:41.120 exactly would the former ambassador to Japan have done things differently, 0:01:41.319 --> 0:01:43.920 especially now that China seems, if anything, to have gained 0:01:43.959 --> 0:01:49.640 the upper hand. So that's plenty, But given his very 0:01:49.640 --> 0:01:53.800 close association with Chicago, I also can't help wondering what 0:01:53.920 --> 0:01:56.760 Rama Manual thinks about the way that American cities have 0:01:56.840 --> 0:01:59.600 been thrust to the center of President Trump's efforts to 0:01:59.640 --> 0:02:03.960 pumme up Democrats, ordering troops to Portland, Los Angeles, Washington, 0:02:03.960 --> 0:02:07.000 and Chicago and threatening to withhold funding for New York, 0:02:07.040 --> 0:02:11.800 for example. Partly it's about stoking confusion and chaos in 0:02:11.880 --> 0:02:15.440 traditional Democratic strongholds, but there's a sense in which the 0:02:15.480 --> 0:02:19.519 President is also trying to weaponize a divide between rural 0:02:19.560 --> 0:02:22.840 and urban parts of America that's been building for a 0:02:22.880 --> 0:02:26.880 while and has not necessarily been good for Democrats. Rami 0:02:26.960 --> 0:02:30.240 Manuel I've talked far too much, but you can hear 0:02:30.280 --> 0:02:32.359 there's a lot I'd like to hear you talk about. 0:02:32.480 --> 0:02:33.959 Thank you for joining trump andomics. 0:02:34.440 --> 0:02:35.520 Well, thanks for having me. 0:02:41.760 --> 0:02:44.880 We will get onto your vision for an anti trumpnomics. 0:02:44.919 --> 0:02:48.280 You know, economic policies that can get Democrats elected. But 0:02:48.600 --> 0:02:51.440 first that issue about cities. I mean, Democrats have to 0:02:51.520 --> 0:02:55.280 navigate what President Trump is doing and threatening right now 0:02:55.320 --> 0:02:58.680 to do in American cities. What's the smart way to 0:02:58.720 --> 0:02:59.360 respond to that. 0:03:00.720 --> 0:03:03.560 Well, let me push back on one thing in that introduction. 0:03:03.680 --> 0:03:06.520 It's not about an anti Trump. Everything I'm trying to 0:03:06.520 --> 0:03:08.960 do is about being a pro American. Fair enough, it's 0:03:09.000 --> 0:03:11.680 a very different flavor. It's not just a critique. But 0:03:12.040 --> 0:03:14.840 I think the American people I don't I'm not usually 0:03:14.919 --> 0:03:17.880 a glass half full kind of guy, actually know what 0:03:17.880 --> 0:03:20.480 we're doing right now is fundamentally wrong to the future. 0:03:21.000 --> 0:03:23.040 I think if you think about twenty twenty eight in 0:03:23.080 --> 0:03:25.440 the presidential but also about what you want to do 0:03:25.520 --> 0:03:29.040 with it, this is about who can articulate about fighting 0:03:29.120 --> 0:03:31.600 for America, not just fighting against Trump. If you look 0:03:31.639 --> 0:03:34.840 at what I've talked about on education, housing, a national 0:03:34.880 --> 0:03:38.320 industrial policy, these are all about fighting for America not 0:03:38.400 --> 0:03:39.400 fighting against Trump. 0:03:39.680 --> 0:03:40.440 That's a fair point. 0:03:40.800 --> 0:03:44.600 B to the core question about cities. This is a 0:03:44.640 --> 0:03:48.600 political strategy as well as it is anything else. Now, look, 0:03:48.920 --> 0:03:51.200 there's both a good and a bad. Thirty of the 0:03:51.280 --> 0:03:55.000 largest metropolitan areas in America are seventy five percent of 0:03:55.040 --> 0:03:57.960 all your GDP. I used to joke as mayor of 0:03:57.960 --> 0:04:01.800 the City of Chicago, the metropolit the Chicago area is 0:04:01.880 --> 0:04:04.480 the twenty first largest economy in the world. We could 0:04:04.560 --> 0:04:07.000 join the g twenty. It's not that exciting. I've been 0:04:07.000 --> 0:04:09.560 to the meetings. I wouldn't go, but that's how big 0:04:09.640 --> 0:04:12.360 the Chicago economy is. Now. If you want to compete 0:04:12.440 --> 0:04:17.120 and win, you don't bash the economic engines of your country. 0:04:17.240 --> 0:04:20.800 The negative side of that is, well, there's a concentration 0:04:21.000 --> 0:04:24.640 of economic growth and possibility. It's also to concentrate it. 0:04:25.040 --> 0:04:27.599 This is an attempt which is all part of Donald 0:04:27.640 --> 0:04:31.720 Trump's strategy. It's reliant dealing with our common challenges, divisions 0:04:31.720 --> 0:04:33.800 and drive them. He said it, so you're not looking 0:04:33.800 --> 0:04:36.960 for me to interpret. Goes to a funeral for Charlie Kirk. 0:04:37.160 --> 0:04:41.239 I hate my enemies, goes to Iowa, says democrats hate America. 0:04:41.680 --> 0:04:43.280 You and I are doing this interview the same day 0:04:43.279 --> 0:04:45.040 that they announced that they're going to create a unit 0:04:45.120 --> 0:04:48.640 within the deal with civil disobedience in cities. So to me, 0:04:49.200 --> 0:04:52.400 this is about division, This is about his politics, and 0:04:52.440 --> 0:04:54.920 it has nothing to do with helping strengthen America. 0:04:55.120 --> 0:04:58.359 On the cities, certainly the leaders don't feel that what 0:04:58.400 --> 0:05:02.160 they needed was troops. But when there is a sort 0:05:02.200 --> 0:05:06.440 of lack of trust there that the president is taking 0:05:06.480 --> 0:05:11.880 advantage of that, when the big cities cry foul and 0:05:11.960 --> 0:05:14.200 say we need help with this, but we don't want 0:05:14.240 --> 0:05:16.320 help with that, there is a lack of sympathy out 0:05:16.360 --> 0:05:17.919 in the broader country. 0:05:18.680 --> 0:05:21.520 Well, I think I start from a different perspective. The 0:05:21.560 --> 0:05:26.279 American people prefer order versus disorder. Under Joe Biden, the 0:05:26.320 --> 0:05:30.120 disorder was an uncontrolled border that looked way out of 0:05:30.160 --> 0:05:32.479 control with people bring and the federal government looked like 0:05:32.520 --> 0:05:36.479 it didn't give a rats here. Donald Trump has moved 0:05:36.480 --> 0:05:39.719 the disorder from the border into himself. If you think 0:05:39.720 --> 0:05:41.680 for a moment, the American people who don't live in 0:05:41.760 --> 0:05:44.840 Chicago or don't live in Portland, like the fact that 0:05:44.880 --> 0:05:48.880 people are wearing chemical masks, shooting tear gas at fellow 0:05:48.960 --> 0:05:52.880 residents of the city of Chicago or Portland or I 0:05:52.920 --> 0:05:56.560 disagree with your political assessment. Now do I think over 0:05:56.560 --> 0:05:59.760 the last twenty years the urban elite have rubbed people's 0:05:59.800 --> 0:06:02.520 faith seeing that they are superior. Well, I've been talking 0:06:02.560 --> 0:06:05.520 about that for the last twenty years, and you all 0:06:05.520 --> 0:06:08.479 have finally caught up that we were walking around. I 0:06:08.480 --> 0:06:11.240 can't say it on your podcasts, but like that we 0:06:11.240 --> 0:06:16.360 were superior on a host of things economically and culturally, 0:06:16.839 --> 0:06:19.119 and we had a disdain for the way other people 0:06:19.160 --> 0:06:22.479 live their lives. That's a different issue. Then you have 0:06:22.560 --> 0:06:24.560 what's coming to you. Then we're we have every right 0:06:24.600 --> 0:06:25.520 to throw tear gas? 0:06:25.520 --> 0:06:25.760 Are you? 0:06:26.240 --> 0:06:28.480 And I would argue that's not Stephanie, work with the 0:06:28.520 --> 0:06:31.920 American people are I'll back that up with data. 0:06:31.400 --> 0:06:33.600 And just on a practical level. This is the last 0:06:33.640 --> 0:06:35.000 one on this. No one's going to listen to the 0:06:35.040 --> 0:06:38.719 economic prescriptions of the Democrats. If the president has succeeded 0:06:38.920 --> 0:06:42.479 in fostering the idea that there is a crisis on 0:06:42.560 --> 0:06:46.080 American streets, even if he has created that crisis, even 0:06:46.080 --> 0:06:50.240 if he's fermented that violence, if it's there, he could 0:06:50.279 --> 0:06:52.920 well be successful in sort of making people feel that 0:06:52.960 --> 0:06:55.039 there was a crisis that needed special measures. 0:06:55.080 --> 0:06:59.719 Quote unquote, let me get it this way, dear my view, 0:07:00.600 --> 0:07:04.760 Democrats hate what he's doing. Independent voters, swing voters, on 0:07:04.880 --> 0:07:09.120 affiliated voters by either party are uncomfortable with an untethered, 0:07:09.320 --> 0:07:13.280 unchecked Donald Trump. So the more that corporate America, the 0:07:13.320 --> 0:07:17.840 Supreme Courts, and the repose in Congress play complicit to this, 0:07:17.840 --> 0:07:19.880 this is not going to work. And I have enough 0:07:19.960 --> 0:07:22.760 data to show that that that's exactly what's happened in 0:07:22.840 --> 0:07:26.800 every election since twenty twenty four. All the skills and 0:07:26.840 --> 0:07:30.280 qualities that you think make Donald Trump appealing politically work 0:07:30.320 --> 0:07:31.520 against it in government. 0:07:31.680 --> 0:07:35.440 Okay, So the economic diagnosis that you would have that 0:07:35.480 --> 0:07:38.480 you think would be a winning strategy and indeed good 0:07:38.520 --> 0:07:41.559 for America in the next few years. Yeah, that comes 0:07:41.600 --> 0:07:44.440 to No, you're right when I say anti trumpenomics, I 0:07:44.560 --> 0:07:47.640 just mean it's just a neat phrase. I actually do mean, 0:07:47.800 --> 0:07:50.720 what's a better economic strategy, what's your diagnosis, what's your 0:07:50.720 --> 0:07:51.360 cure everything? 0:07:51.760 --> 0:07:53.280 I'm being a jerk, that's all right. 0:07:53.320 --> 0:07:55.840 Your reputation, your reputation precedes you. 0:07:56.760 --> 0:07:59.000 Yeah, But the new thing is I'm aware now that 0:07:59.000 --> 0:07:59.480 I'm okay. 0:07:59.880 --> 0:08:01.800 The first step that's at least the first step. 0:08:01.960 --> 0:08:05.640 Well one is I believe the moment the American Dream 0:08:05.680 --> 0:08:10.040 becomes unaffordable and inaccessible is exactly when our democracy becomes unstable. 0:08:10.880 --> 0:08:13.360 It's not a coincidence. That is housing gets out of reach, 0:08:13.960 --> 0:08:17.200 college education gets out of reach. People aren't saving for 0:08:17.240 --> 0:08:20.640 their retirement, their one illness away from Chapter eleven bankruptcy, 0:08:20.680 --> 0:08:23.200 and only ten percent of the American people have access 0:08:23.200 --> 0:08:25.280 to it or their kids have access to the American dream. 0:08:25.320 --> 0:08:27.640 Where you associate with the American dream is when you 0:08:27.720 --> 0:08:30.400 have all the politics of resentment and instability in the 0:08:30.400 --> 0:08:34.679 political system. So to me, both good economics as well 0:08:34.679 --> 0:08:38.000 as good politics restore the confidence and the accessibility of 0:08:38.000 --> 0:08:41.199 the American Dream. Starts with home ownership. I would just 0:08:41.240 --> 0:08:44.880 say this upfront, and Amy and I became empty nesters. 0:08:44.920 --> 0:08:48.959 The idea that we can get a mortgage for retirement 0:08:48.960 --> 0:08:52.839 home is insane. You have young families trying to start 0:08:52.840 --> 0:08:54.720 off on the American Dream. They can't get a down 0:08:54.760 --> 0:08:58.200 payment or a mortgage for their first home, and I, 0:08:58.320 --> 0:09:01.160 in my position in life, get a mortgage deduction, which 0:09:01.160 --> 0:09:04.160 means other people are covering my butt. This is crazy, 0:09:04.559 --> 0:09:06.719 and there's things you can do along the way. I've 0:09:06.720 --> 0:09:10.959 worked on on healthcare, I've worked on retirement security as 0:09:11.040 --> 0:09:12.679 mayor of the City of Chicago. If you've got to 0:09:12.720 --> 0:09:15.880 be average, we made community college free. Seventy five percent 0:09:15.880 --> 0:09:17.120 of the kids that took it with a first in 0:09:17.120 --> 0:09:18.640 their family now and to finish high school, but to 0:09:18.679 --> 0:09:20.760 go to college. To me, there's a serious of things 0:09:20.800 --> 0:09:24.280 you could do where the building blocks of the American 0:09:24.360 --> 0:09:28.080 dream become affordable again. Over the last thirty years. It 0:09:28.080 --> 0:09:30.840 did not happen over Tunald Trump. All of us accepted it. 0:09:31.280 --> 0:09:35.640 The ladder got pulled up. Everything from home ownership to 0:09:35.720 --> 0:09:39.360 college education, to retirement security, to healthcare. The ladder got 0:09:39.400 --> 0:09:41.800 pulled up, and we were comfortable as long as our 0:09:41.880 --> 0:09:44.840 kids were comfortable. And everybody has a right to be 0:09:44.960 --> 0:09:48.520 pissed off. And as I jokingly say, paranoid people have 0:09:48.640 --> 0:09:52.400 enemies too. This system is rigged against your success. You're 0:09:52.400 --> 0:09:55.200 not paranoid. And I've spent a good time in my 0:09:55.320 --> 0:09:58.240 career trying to undrig the system. I'm now for rigging 0:09:58.280 --> 0:10:00.880 it on. Behalf of the family that work hard, play 0:10:00.920 --> 0:10:04.199 by the rules. Number two. This is a passion of mine. 0:10:04.240 --> 0:10:05.760 But I happen to think It's also true if you 0:10:05.840 --> 0:10:09.439 go back through the five great periods of economic growth 0:10:09.440 --> 0:10:13.640 in American history, there's one constant education reform and education 0:10:13.920 --> 0:10:19.240 accessibility Langrand College's GI bill universal high school education. The 0:10:19.280 --> 0:10:21.480 idea that we got a report card two thirds of 0:10:21.480 --> 0:10:24.120 our kids cannot do reading a mathic grade level, and 0:10:24.160 --> 0:10:26.880 now the president, not a governor, has spoken up is 0:10:26.920 --> 0:10:29.960 a crisis. Our kids are failing and our adults are 0:10:30.000 --> 0:10:34.240 failing their kids. Three Which is the kind of goose 0:10:34.280 --> 0:10:37.720 that lays the golden egg. Your research universities that are 0:10:37.760 --> 0:10:41.000 the envy of the world. You said, declared war on cities. 0:10:41.000 --> 0:10:48.840 You're declaring war on the golden goose. Get back AI, semiconductors, biotech, etc. 0:10:49.160 --> 0:10:53.079 Take the quantum, Take all the twelve major areas that 0:10:53.240 --> 0:10:58.200 China's declared war out America and fundamentally fund them to 0:10:58.200 --> 0:11:01.800 where we go back to four percent of our GDP 0:11:02.120 --> 0:11:04.880 is in research dollars on the public sector side, not 0:11:04.920 --> 0:11:08.800 counting private into the core technologies that are going to 0:11:08.880 --> 0:11:13.000 determine who owns the future. And we have a great 0:11:13.120 --> 0:11:16.800 resource need to be reformed, a great resource that we've 0:11:16.840 --> 0:11:22.280 decided to declare war on. Ala Harvard mit Ala Stanford, etc. 0:11:23.160 --> 0:11:28.040 Rather than invest in it. Fourth, what can't be aied 0:11:28.080 --> 0:11:35.960 out or outsourced, etc. Fundamentally invest in America's modernization of 0:11:36.000 --> 0:11:40.200 its infrastructure. Fifth, as it relates to illegal immigrants, there's 0:11:40.200 --> 0:11:42.400 no wall high enough that I'm not for, and there's 0:11:42.440 --> 0:11:46.000 no enforcement at the workplace that I'm not for, including 0:11:46.040 --> 0:11:49.880 the employers that hire people illegally. Now, let's reform our 0:11:49.960 --> 0:11:54.400 legal immigration so it reflects the twenty percentury. No firing people, 0:11:54.840 --> 0:11:56.280 want to come to this country, want to get a 0:11:56.280 --> 0:11:59.760 green carried, want to become Americans. Is self inflicted rules, 0:12:00.440 --> 0:12:04.080 you're illegal, you cross illegal. As a guy that created 0:12:04.120 --> 0:12:09.319 Operation Gatekeeper for President Clinton, forget about it. Illegal is illegal. 0:12:09.760 --> 0:12:13.200 The guiding principles for immigration reform or a nation of 0:12:13.200 --> 0:12:17.160 emigrants and a national laws or respect both. I probably 0:12:17.240 --> 0:12:20.160 left a ton of stuff out. It's another five. I 0:12:20.280 --> 0:12:22.720 think that those are the five things I would do 0:12:23.040 --> 0:12:25.160 to get America out of neutral movement. 0:12:26.440 --> 0:12:28.640 Your point about the universities, because it overlaps with something 0:12:28.720 --> 0:12:30.920 we said before. My colleague Shawn Donn a very great 0:12:30.920 --> 0:12:34.640 peace about this. We underestimate how much universities have been 0:12:34.679 --> 0:12:36.840 part of the economic revival of a lot of big 0:12:36.880 --> 0:12:39.400 cities that had been and de industrialized and other things. 0:12:39.400 --> 0:12:42.640 So it's also it's kind of hurting his President Trump's 0:12:42.640 --> 0:12:45.400 industrialization and agenda. I mean, what he's doing to universe. 0:12:45.440 --> 0:12:47.760 I don't I don't mean to cut you off, but 0:12:48.160 --> 0:12:50.200 it would not be in a manual I did. But 0:12:50.240 --> 0:12:52.240 take a look at the President did a conference in 0:12:52.320 --> 0:12:56.240 western Pennsylvania, Pittsburgh area about AI and the data. So 0:12:56.520 --> 0:12:59.320 you know, you look twenty years ago, fifteen years ago, 0:13:00.040 --> 0:13:04.480 we talked about the de industrialization of America and because 0:13:04.640 --> 0:13:09.520 of energy production Carnel emailon in Pittsburgh, University of Pittsburgh, 0:13:09.760 --> 0:13:12.079 and you look at what they've done in the investment. 0:13:12.600 --> 0:13:14.880 You can take an old steel plant and make it 0:13:14.920 --> 0:13:18.520 a data center or a producer of major kind of electricity. 0:13:19.080 --> 0:13:22.240 And now you have known the reindustrialization but the economic 0:13:22.240 --> 0:13:24.960 opportunity for that area that twenty years ago you would 0:13:24.960 --> 0:13:27.000 not be writing about. You'll be talking about the jobs 0:13:27.040 --> 0:13:29.800 and the factories that are losing. And you can't talk 0:13:29.840 --> 0:13:34.240 about the revitalization of Pittsburgh or emails not mention at 0:13:34.280 --> 0:13:37.400 least in the first three fattuses, or the University of 0:13:37.440 --> 0:13:38.600 Pittsburgh for that matter. 0:13:38.920 --> 0:13:41.079 So you could revive a lot of that research. That 0:13:41.120 --> 0:13:43.800 the core government funding research is not actually a big 0:13:43.840 --> 0:13:46.640 money in the scheme of things, but education, reforming education, 0:13:47.559 --> 0:13:51.480 and transforming infrastructure that is big money. In the case 0:13:51.480 --> 0:13:53.840 of infrastructure, it was actually done, I mean an ex 0:13:54.120 --> 0:13:58.000 generational supposedly, certainly the biggest in a long time. Infrastructure 0:13:58.040 --> 0:14:02.160 bill passed by President didn't seem to move the needle. 0:14:02.920 --> 0:14:04.480 Two things. One to say, I want to get back 0:14:04.480 --> 0:14:07.199 to this because it relates. I happen to think robotics 0:14:07.280 --> 0:14:10.560 is going to be essential to the future. Carnegie Mellon 0:14:10.640 --> 0:14:14.320 leads the country. My guest lecture at MITEAM just got canceled, 0:14:14.600 --> 0:14:17.280 but there's no doubt that Carnegie Mellon leads it. You 0:14:17.320 --> 0:14:20.800 could make Carne Mellon the core of your funding at 0:14:20.840 --> 0:14:24.400 the federal government for robotics. With University of Ohio, Michigan 0:14:24.640 --> 0:14:27.160 and mik you could do a consortium and say, Okay, 0:14:27.160 --> 0:14:29.400 here's going to be what the guaranteed stream, here's where 0:14:29.440 --> 0:14:30.760 we want to see you invest. You've got to bring 0:14:30.840 --> 0:14:33.520 public private dollars in and we want to see X, 0:14:33.640 --> 0:14:37.400 Y and Z. Now they did do stuff on infrastructure, 0:14:37.440 --> 0:14:39.480 you know, Donald Trump, I will say this in his 0:14:39.520 --> 0:14:42.760 first term called it for Infrastructure week every week. Now 0:14:42.800 --> 0:14:45.600 the new thing for his infrastructures canceling projects rather than 0:14:45.680 --> 0:14:48.600 promoting them, and nobody's called it out. He's decided not 0:14:48.640 --> 0:14:52.080 to invest in America's competitiveness, but to literally cut it off. 0:14:52.600 --> 0:14:55.400 But there's things that have to be done, not just 0:14:55.440 --> 0:14:57.800 in rural but in small town America, both on the 0:14:57.840 --> 0:15:00.440 infrastructure and the education. You look at it a small 0:15:00.480 --> 0:15:05.960 town in America, A community college, a hospital, unfortunately a prison. 0:15:06.200 --> 0:15:09.360 Those are the economic opportunities, and we need to make 0:15:09.400 --> 0:15:12.960 the investments, both in the infrastructure and the workforce that 0:15:13.360 --> 0:15:17.080 make that an attractive place. Would a data center, a 0:15:17.120 --> 0:15:20.960 new production of alternative energy or old energy? 0:15:21.640 --> 0:15:23.640 But are you going to need money? I mean, on 0:15:23.720 --> 0:15:25.360 that you might be able to get some private funding. 0:15:25.400 --> 0:15:27.880 But on the education, I mean you are talking about 0:15:29.040 --> 0:15:33.600 some costly interventions in the economy to make the American 0:15:33.720 --> 0:15:36.000 dream more affordable. How are you going to do it? 0:15:36.520 --> 0:15:38.960 Well? Yes and no. I'm going to be going down 0:15:39.040 --> 0:15:41.400 in a couple months to Mississippi. They have a what's 0:15:41.400 --> 0:15:44.240 called the Mississippi Miracle. They went from forty ninth on 0:15:44.360 --> 0:15:48.480 reading toninth. Now, either they did really well or basically 0:15:48.520 --> 0:15:51.560 everybody else did really bad. They did it over a decade, 0:15:52.040 --> 0:15:56.040 so you can basically redirect it and get better results 0:15:56.160 --> 0:16:00.160 and not continue to spend money on failure. Now it 0:16:00.200 --> 0:16:03.960 relates to spending other types of infrastructure. There's a trillion 0:16:04.000 --> 0:16:07.200 dollars there. Spend it, make it, and force it out. 0:16:07.400 --> 0:16:13.040 Democrats got so preoccupied with the rule making they never 0:16:13.120 --> 0:16:19.200 got the results. 0:16:27.720 --> 0:16:30.120 The criticism of Democrats is they didn't get stuff done. 0:16:30.640 --> 0:16:32.120 And we know, one of the things that's been a 0:16:32.200 --> 0:16:34.960 sort of distinguishing feature of President Trump ever since he 0:16:35.520 --> 0:16:37.480 kind of came more onto the scene in New York 0:16:37.720 --> 0:16:40.920 in the nineties was this sort of sense of you know, 0:16:40.960 --> 0:16:42.440 I'm going to get stuff done. I'm going to get 0:16:42.440 --> 0:16:44.960 this ice open that had been closed for a long 0:16:45.000 --> 0:16:47.280 time because the city was stupid. And you sound like 0:16:47.320 --> 0:16:49.280 you just constantly wanting to go back to that that 0:16:49.560 --> 0:16:52.560 you're channeling and reminding people of all the times that 0:16:52.600 --> 0:16:54.600 you've got things done. One of the things that you 0:16:54.640 --> 0:16:56.800 helped to get done was actually quite a kind of 0:16:56.920 --> 0:17:02.320 historic deficit reduction plan in the first Clinton administration, which 0:17:02.360 --> 0:17:05.760 seems almost inconceivable. Now, how would you do that just practically, 0:17:05.840 --> 0:17:07.640 because we certainly haven't seen that for a long time, 0:17:07.680 --> 0:17:08.679 including under Biden. 0:17:09.040 --> 0:17:12.920 Three things. One, the budget gets balanced and he doesn't 0:17:12.920 --> 0:17:16.080 get enough of them applause. Because George Herbert Walker Bush 0:17:16.119 --> 0:17:20.520 forty one showed leadership and broke his promise and raised taxes, 0:17:21.240 --> 0:17:24.639 got elected saying read my lips, and he got unelected 0:17:24.680 --> 0:17:27.400 in nineteen ninety two because he broke in ninety one. 0:17:27.840 --> 0:17:31.320 Bill Clinton comes in in nineteen ninety three building on 0:17:31.400 --> 0:17:34.439 that progress. That's fair, and in ninety three there's no 0:17:34.480 --> 0:17:39.760 Republican support, passes the deficit reduction and raises. 0:17:39.440 --> 0:17:42.000 Revenue and raises taxes on the higher earners. 0:17:42.080 --> 0:17:44.560 And you could argue that that piece because it wasn't 0:17:44.560 --> 0:17:47.560 felt economically like it did in the second term or 0:17:47.600 --> 0:17:49.399 in the back end of the first term, et cetera. 0:17:50.320 --> 0:17:54.280 Starts the deficit on a massive reduction. Interest rates get 0:17:54.320 --> 0:18:00.119 also massively cut. Third, underappreciated, totally separate is the the 0:18:00.160 --> 0:18:03.639 Internet boom in productivity is just taking off. So you 0:18:03.680 --> 0:18:08.000 had a kind of the cocktail of ninety one, ninety 0:18:08.040 --> 0:18:14.080 three and Internet all together lead to this now the 0:18:14.119 --> 0:18:16.440 Dirty Little Secret. And I can tell you an anecdote 0:18:16.480 --> 0:18:19.200 from it. The Dirty Little Secret was in by nineteen 0:18:19.240 --> 0:18:21.800 ninety seven, the budget was going to be balanced, whether 0:18:21.800 --> 0:18:24.159 you had a balanced budget agreement. I stood in the 0:18:24.200 --> 0:18:27.399 back of Erskine Bowl's chief of staff's office with Bob Rubin, 0:18:27.600 --> 0:18:30.639 and Bob was against this. He was against a balanced 0:18:30.640 --> 0:18:32.800 budget agree because I see no reason to do this. 0:18:33.160 --> 0:18:35.239 It's going to be balanced. I said, Bob. There's an 0:18:35.240 --> 0:18:38.000 old rule in Chicago from Richard J. Day. When you 0:18:38.040 --> 0:18:40.040 see a parade, get your Brittanna, get in front of it. 0:18:40.440 --> 0:18:43.040 And I said, we're going to get political credit in 0:18:43.080 --> 0:18:44.760 the same way that the Berlin Wall was going to 0:18:44.840 --> 0:18:48.240 come down. Whether George Bush did anything so that happened, 0:18:48.720 --> 0:18:51.640 that's a build up. The answer to your question, I'd 0:18:51.920 --> 0:18:55.520 passed immediately a rule in Congress, and Congress were passing 0:18:56.200 --> 0:18:59.320 never can interest on the debt exceed defense a budget? Oh? 0:18:59.440 --> 0:19:02.480 Is that the Neil Ferguson rule. He's credited with saying 0:19:02.480 --> 0:19:03.800 that's when you stop being a great power. 0:19:03.880 --> 0:19:07.440 Read the article very persuasive. So here's what Republicans like 0:19:07.520 --> 0:19:10.200 defense spending. I'm all for it because I actually think 0:19:10.200 --> 0:19:13.000 it's important as a detern to China. So here's the rule. 0:19:13.600 --> 0:19:16.960 Never can interest on the debt exceed your defense budget. 0:19:17.200 --> 0:19:20.320 And once you create that discipline like ram Rudman Hollings 0:19:20.320 --> 0:19:23.600 did in the past, you will start to see deficit reduction. 0:19:23.400 --> 0:19:25.440 Or you'll start to see a president that's trying very 0:19:25.440 --> 0:19:28.560 hard to increase defense spending faster than the debt bills 0:19:28.600 --> 0:19:31.480 going up and also push down interest rates by taking 0:19:31.520 --> 0:19:33.760 control of the federal reserve. I mean, that's what it 0:19:33.760 --> 0:19:34.919 also incentivizes. 0:19:35.520 --> 0:19:38.440 Also, it could be the way to force the Congress 0:19:38.520 --> 0:19:41.679 deal with unlike some people that talked about deficit reduction 0:19:41.800 --> 0:19:45.080 but never did Bowl Simpson actually deal with revenue. 0:19:45.080 --> 0:19:47.360 Anyone sensible looking at the budget, looking at a six 0:19:47.400 --> 0:19:50.439 percent of GDP budget deficit in a booming economy. It's 0:19:50.480 --> 0:19:53.840 booming in terms of the level of unemployment and other things, right, 0:19:54.000 --> 0:19:56.080 Anyone looking at that would say there has to be 0:19:56.200 --> 0:19:59.080 a tax increase in America's future. But anyone looking at 0:19:59.080 --> 0:20:01.760 Congress for the asked well for a long time, would 0:20:01.760 --> 0:20:04.760 say there was no chance of that. And looking at 0:20:04.760 --> 0:20:06.760 any presidential candidate, frankly. 0:20:06.920 --> 0:20:09.119 That's why I think Republics haven't done anything on tariffs. 0:20:09.560 --> 0:20:12.200 Donald Trump has raised taxes on everybody. It just calls 0:20:12.200 --> 0:20:12.840 the terraffs. 0:20:13.040 --> 0:20:14.800 Okay, well, that gets us very quickly. We're going to 0:20:14.840 --> 0:20:15.920 run out of time. But I do want to ask 0:20:15.960 --> 0:20:18.360 you about the China policy. And one of the difficult 0:20:18.359 --> 0:20:22.040 things about pivoting away from Donald Trump's China policy is actually, 0:20:22.040 --> 0:20:24.240 and Jason Furman pointed this out on the podcast a 0:20:24.240 --> 0:20:26.920 few weeks ago, that you will have those tax revenues 0:20:27.040 --> 0:20:31.000 coming in better or worse from Donald Trump's tariffs that 0:20:31.080 --> 0:20:34.960 are non negligible and quite hard to just say goodbye to. 0:20:35.280 --> 0:20:35.680 True. 0:20:36.280 --> 0:20:37.520 So what are you going to do? What is the 0:20:37.600 --> 0:20:39.440 China strategy under your plan? 0:20:39.720 --> 0:20:41.840 First of all, the idea that it's down to tariffs 0:20:41.960 --> 0:20:45.600 is not no disrespect is it's more complicated. On't mean 0:20:45.680 --> 0:20:48.320 to say that we're our podcast. It's slightly more than 0:20:48.359 --> 0:20:51.679 a thirty seconds answer. There's a couple of things. I 0:20:51.720 --> 0:20:56.880 think forty percent of our imports into the country, our 0:20:56.920 --> 0:21:01.439 products are going to our own manufacturing capacity. Take the 0:21:01.480 --> 0:21:05.440 tariffs off of those, you're actually killing manufacturing jobs, not enhancing. 0:21:05.880 --> 0:21:09.080 There's nothing you've done to enhance America's competitiveness on the 0:21:09.080 --> 0:21:13.600 industrial base by taxing or putting a tariff on a 0:21:13.920 --> 0:21:19.359 product that goes into our own ultimate assembly and manufacturer. Two, 0:21:20.119 --> 0:21:22.639 you have to be more strategic, and it relates to China. 0:21:22.720 --> 0:21:24.840 It's not just about tariffs. I happen to think what 0:21:24.880 --> 0:21:28.840 the President just did is a failed effort. Dealing with 0:21:29.000 --> 0:21:36.480 China is both with military, geostrategic, political, and economic understand fundamentally, 0:21:36.560 --> 0:21:39.480 which America has been late to the game. The Chinese 0:21:39.480 --> 0:21:43.600 Party leadership and President Jip specifically decided in twenty twelve 0:21:43.680 --> 0:21:47.199 that America is not a strategic competitor, but a strategic adversary. 0:21:47.480 --> 0:21:50.320 They actually do need to do harm to us. I 0:21:50.320 --> 0:21:53.639 think President Trump has been naive to think that he 0:21:53.640 --> 0:21:56.520