Bloomberg Audio Studios, Podcasts, radio news.
I believe the moment the American dream becomes unaffordable and inaccessible is exactly when our democracy becomes unstable.
I'm Stephanie Flanders, head of Government and Economics at Bloomberg, and this is Trump Economics, the podcast that looks at the economic world of Donald Trump, how he's already shaped the global economy, what on earth is going to happen next? And this week it's a conversation with Rahm Emmanuel, a longtime Washington operator. He's also been White House chief of staff for Congressman mayor of Chicago, and President Biden's ambassador to Japan, and now, by all accounts, he's thinking about
running for president. We're recording this on Thursday, the thirtieth of October, and any one of those parts of his resume would give me plenty of reason to have Ram and Manuel on the show. But I'm going to focus here on the alternative to Trumpanomics that the Democrats need to offer to have a chance of retaking power in the next few years. The root cause of the fraught state of American politics, Rahm says, is that the American dream has become unaffordable, out of reach for the majority
of families. Democrats need to confront that head on, But how in a country that no longer seems to be able to countenance tax increases? For example? He also thinks President Trump's China policies have been costly and wrong. The President is now back from his Asia tour, but how exactly would the former ambassador to Japan have done things differently, especially now that China seems, if anything, to have gained
the upper hand. So that's plenty, But given his very close association with Chicago, I also can't help wondering what Rama Manual thinks about the way that American cities have been thrust to the center of President Trump's efforts to pumme up Democrats, ordering troops to Portland, Los Angeles, Washington, and Chicago and threatening to withhold funding for New York,
for example. Partly it's about stoking confusion and chaos in traditional Democratic strongholds, but there's a sense in which the President is also trying to weaponize a divide between rural and urban parts of America that's been building for a while and has not necessarily been good for Democrats. Rami Manuel I've talked far too much, but you can hear there's a lot I'd like to hear you talk about. Thank you for joining trump andomics.
Well, thanks for having me.
We will get onto your vision for an anti trumpnomics. You know, economic policies that can get Democrats elected. But first that issue about cities. I mean, Democrats have to navigate what President Trump is doing and threatening right now to do in American cities. What's the smart way to respond to that.
Well, let me push back on one thing in that introduction. It's not about an anti Trump. Everything I'm trying to do is about being a pro American. Fair enough, it's a very different flavor. It's not just a critique. But I think the American people I don't I'm not usually a glass half full kind of guy, actually know what we're doing right now is fundamentally wrong to the future.
I think if you think about twenty twenty eight in the presidential but also about what you want to do with it, this is about who can articulate about fighting for America, not just fighting against Trump. If you look at what I've talked about on education, housing, a national industrial policy, these are all about fighting for America not fighting against Trump.
That's a fair point.
B to the core question about cities. This is a political strategy as well as it is anything else. Now, look, there's both a good and a bad. Thirty of the largest metropolitan areas in America are seventy five percent of all your GDP. I used to joke as mayor of the City of Chicago, the metropolit the Chicago area is the twenty first largest economy in the world. We could join the g twenty. It's not that exciting. I've been to the meetings. I wouldn't go, but that's how big
the Chicago economy is. Now. If you want to compete and win, you don't bash the economic engines of your country. The negative side of that is, well, there's a concentration of economic growth and possibility. It's also to concentrate it. This is an attempt which is all part of Donald Trump's strategy. It's reliant dealing with our common challenges, divisions and drive them. He said it, so you're not looking for me to interpret. Goes to a funeral for Charlie Kirk.
I hate my enemies, goes to Iowa, says democrats hate America. You and I are doing this interview the same day that they announced that they're going to create a unit within the deal with civil disobedience in cities. So to me, this is about division, This is about his politics, and it has nothing to do with helping strengthen America.
On the cities, certainly the leaders don't feel that what they needed was troops. But when there is a sort of lack of trust there that the president is taking advantage of that, when the big cities cry foul and say we need help with this, but we don't want help with that, there is a lack of sympathy out in the broader country.
Well, I think I start from a different perspective. The American people prefer order versus disorder. Under Joe Biden, the disorder was an uncontrolled border that looked way out of control with people bring and the federal government looked like it didn't give a rats here. Donald Trump has moved
the disorder from the border into himself. If you think for a moment, the American people who don't live in Chicago or don't live in Portland, like the fact that people are wearing chemical masks, shooting tear gas at fellow residents of the city of Chicago or Portland or I disagree with your political assessment. Now do I think over the last twenty years the urban elite have rubbed people's
faith seeing that they are superior. Well, I've been talking about that for the last twenty years, and you all have finally caught up that we were walking around. I can't say it on your podcasts, but like that we were superior on a host of things economically and culturally, and we had a disdain for the way other people live their lives. That's a different issue. Then you have what's coming to you. Then we're we have every right to throw tear gas?
Are you?
And I would argue that's not Stephanie, work with the American people are I'll back that up with data.
And just on a practical level. This is the last one on this. No one's going to listen to the economic prescriptions of the Democrats. If the president has succeeded in fostering the idea that there is a crisis on American streets, even if he has created that crisis, even if he's fermented that violence, if it's there, he could well be successful in sort of making people feel that there was a crisis that needed special measures.
Quote unquote, let me get it this way, dear my view, Democrats hate what he's doing. Independent voters, swing voters, on affiliated voters by either party are uncomfortable with an untethered, unchecked Donald Trump. So the more that corporate America, the Supreme Courts, and the repose in Congress play complicit to this, this is not going to work. And I have enough data to show that that that's exactly what's happened in
every election since twenty twenty four. All the skills and qualities that you think make Donald Trump appealing politically work against it in government.
Okay, So the economic diagnosis that you would have that you think would be a winning strategy and indeed good for America in the next few years. Yeah, that comes to No, you're right when I say anti trumpenomics, I just mean it's just a neat phrase. I actually do mean, what's a better economic strategy, what's your diagnosis, what's your cure everything?
I'm being a jerk, that's all right.
Your reputation, your reputation precedes you.
Yeah, But the new thing is I'm aware now that I'm okay.
The first step that's at least the first step.
Well one is I believe the moment the American Dream becomes unaffordable and inaccessible is exactly when our democracy becomes unstable. It's not a coincidence. That is housing gets out of reach, college education gets out of reach. People aren't saving for their retirement, their one illness away from Chapter eleven bankruptcy, and only ten percent of the American people have access to it or their kids have access to the American dream.
Where you associate with the American dream is when you have all the politics of resentment and instability in the political system. So to me, both good economics as well as good politics restore the confidence and the accessibility of the American Dream. Starts with home ownership. I would just say this upfront, and Amy and I became empty nesters. The idea that we can get a mortgage for retirement home is insane. You have young families trying to start
off on the American Dream. They can't get a down payment or a mortgage for their first home, and I, in my position in life, get a mortgage deduction, which means other people are covering my butt. This is crazy, and there's things you can do along the way. I've worked on on healthcare, I've worked on retirement security as mayor of the City of Chicago. If you've got to
be average, we made community college free. Seventy five percent of the kids that took it with a first in their family now and to finish high school, but to go to college. To me, there's a serious of things you could do where the building blocks of the American dream become affordable again. Over the last thirty years. It did not happen over Tunald Trump. All of us accepted it. The ladder got pulled up. Everything from home ownership to
college education, to retirement security, to healthcare. The ladder got pulled up, and we were comfortable as long as our kids were comfortable. And everybody has a right to be pissed off. And as I jokingly say, paranoid people have enemies too. This system is rigged against your success. You're not paranoid. And I've spent a good time in my career trying to undrig the system. I'm now for rigging it on. Behalf of the family that work hard, play
by the rules. Number two. This is a passion of mine. But I happen to think It's also true if you go back through the five great periods of economic growth in American history, there's one constant education reform and education accessibility Langrand College's GI bill universal high school education. The idea that we got a report card two thirds of our kids cannot do reading a mathic grade level, and now the president, not a governor, has spoken up is
a crisis. Our kids are failing and our adults are failing their kids. Three Which is the kind of goose that lays the golden egg. Your research universities that are the envy of the world. You said, declared war on cities.
You're declaring war on the golden goose. Get back AI, semiconductors, biotech, etc. Take the quantum, Take all the twelve major areas that China's declared war out America and fundamentally fund them to where we go back to four percent of our GDP is in research dollars on the public sector side, not counting private into the core technologies that are going to determine who owns the future. And we have a great resource need to be reformed, a great resource that we've
decided to declare war on. Ala Harvard mit Ala Stanford, etc. Rather than invest in it. Fourth, what can't be aied out or outsourced, etc. Fundamentally invest in America's modernization of its infrastructure. Fifth, as it relates to illegal immigrants, there's no wall high enough that I'm not for, and there's no enforcement at the workplace that I'm not for, including the employers that hire people illegally. Now, let's reform our
legal immigration so it reflects the twenty percentury. No firing people, want to come to this country, want to get a green carried, want to become Americans. Is self inflicted rules, you're illegal, you cross illegal. As a guy that created Operation Gatekeeper for President Clinton, forget about it. Illegal is illegal. The guiding principles for immigration reform or a nation of emigrants and a national laws or respect both. I probably
left a ton of stuff out. It's another five. I think that those are the five things I would do to get America out of neutral movement.
Your point about the universities, because it overlaps with something we said before. My colleague Shawn Donn a very great peace about this. We underestimate how much universities have been part of the economic revival of a lot of big cities that had been and de industrialized and other things. So it's also it's kind of hurting his President Trump's industrialization and agenda. I mean, what he's doing to universe.
I don't I don't mean to cut you off, but it would not be in a manual I did. But take a look at the President did a conference in western Pennsylvania, Pittsburgh area about AI and the data. So you know, you look twenty years ago, fifteen years ago, we talked about the de industrialization of America and because of energy production Carnel emailon in Pittsburgh, University of Pittsburgh, and you look at what they've done in the investment.
You can take an old steel plant and make it a data center or a producer of major kind of electricity. And now you have known the reindustrialization but the economic opportunity for that area that twenty years ago you would not be writing about. You'll be talking about the jobs and the factories that are losing. And you can't talk about the revitalization of Pittsburgh or emails not mention at least in the first three fattuses, or the University of Pittsburgh for that matter.
So you could revive a lot of that research. That the core government funding research is not actually a big money in the scheme of things, but education, reforming education, and transforming infrastructure that is big money. In the case of infrastructure, it was actually done, I mean an ex generational supposedly, certainly the biggest in a long time. Infrastructure bill passed by President didn't seem to move the needle.
Two things. One to say, I want to get back to this because it relates. I happen to think robotics is going to be essential to the future. Carnegie Mellon leads the country. My guest lecture at MITEAM just got canceled, but there's no doubt that Carnegie Mellon leads it. You could make Carne Mellon the core of your funding at
the federal government for robotics. With University of Ohio, Michigan and mik you could do a consortium and say, Okay, here's going to be what the guaranteed stream, here's where we want to see you invest. You've got to bring public private dollars in and we want to see X, Y and Z. Now they did do stuff on infrastructure, you know, Donald Trump, I will say this in his
first term called it for Infrastructure week every week. Now the new thing for his infrastructures canceling projects rather than promoting them, and nobody's called it out. He's decided not to invest in America's competitiveness, but to literally cut it off. But there's things that have to be done, not just in rural but in small town America, both on the infrastructure and the education. You look at it a small town in America, A community college, a hospital, unfortunately a prison.
Those are the economic opportunities, and we need to make the investments, both in the infrastructure and the workforce that make that an attractive place. Would a data center, a new production of alternative energy or old energy?
But are you going to need money? I mean, on that you might be able to get some private funding. But on the education, I mean you are talking about some costly interventions in the economy to make the American dream more affordable. How are you going to do it?
Well? Yes and no. I'm going to be going down in a couple months to Mississippi. They have a what's called the Mississippi Miracle. They went from forty ninth on reading toninth. Now, either they did really well or basically everybody else did really bad. They did it over a decade, so you can basically redirect it and get better results and not continue to spend money on failure. Now it relates to spending other types of infrastructure. There's a trillion
dollars there. Spend it, make it, and force it out. Democrats got so preoccupied with the rule making they never got the results.
The criticism of Democrats is they didn't get stuff done. And we know, one of the things that's been a sort of distinguishing feature of President Trump ever since he kind of came more onto the scene in New York in the nineties was this sort of sense of you know, I'm going to get stuff done. I'm going to get this ice open that had been closed for a long
time because the city was stupid. And you sound like you just constantly wanting to go back to that that you're channeling and reminding people of all the times that you've got things done. One of the things that you helped to get done was actually quite a kind of historic deficit reduction plan in the first Clinton administration, which seems almost inconceivable. Now, how would you do that just practically, because we certainly haven't seen that for a long time, including under Biden.
Three things. One, the budget gets balanced and he doesn't get enough of them applause. Because George Herbert Walker Bush forty one showed leadership and broke his promise and raised taxes, got elected saying read my lips, and he got unelected in nineteen ninety two because he broke in ninety one. Bill Clinton comes in in nineteen ninety three building on that progress. That's fair, and in ninety three there's no Republican support, passes the deficit reduction and raises.
Revenue and raises taxes on the higher earners.
And you could argue that that piece because it wasn't felt economically like it did in the second term or in the back end of the first term, et cetera. Starts the deficit on a massive reduction. Interest rates get also massively cut. Third, underappreciated, totally separate is the the Internet boom in productivity is just taking off. So you had a kind of the cocktail of ninety one, ninety three and Internet all together lead to this now the Dirty Little Secret. And I can tell you an anecdote
from it. The Dirty Little Secret was in by nineteen ninety seven, the budget was going to be balanced, whether you had a balanced budget agreement. I stood in the back of Erskine Bowl's chief of staff's office with Bob Rubin, and Bob was against this. He was against a balanced budget agree because I see no reason to do this. It's going to be balanced. I said, Bob. There's an old rule in Chicago from Richard J. Day. When you see a parade, get your Brittanna, get in front of it.
And I said, we're going to get political credit in the same way that the Berlin Wall was going to come down. Whether George Bush did anything so that happened, that's a build up. The answer to your question, I'd passed immediately a rule in Congress, and Congress were passing never can interest on the debt exceed defense a budget? Oh?
Is that the Neil Ferguson rule. He's credited with saying that's when you stop being a great power.
Read the article very persuasive. So here's what Republicans like defense spending. I'm all for it because I actually think it's important as a detern to China. So here's the rule. Never can interest on the debt exceed your defense budget. And once you create that discipline like ram Rudman Hollings did in the past, you will start to see deficit reduction.
Or you'll start to see a president that's trying very hard to increase defense spending faster than the debt bills going up and also push down interest rates by taking control of the federal reserve. I mean, that's what it also incentivizes.
Also, it could be the way to force the Congress deal with unlike some people that talked about deficit reduction but never did Bowl Simpson actually deal with revenue.
Anyone sensible looking at the budget, looking at a six percent of GDP budget deficit in a booming economy. It's booming in terms of the level of unemployment and other things, right, Anyone looking at that would say there has to be a tax increase in America's future. But anyone looking at Congress for the asked well for a long time, would say there was no chance of that. And looking at any presidential candidate, frankly.
That's why I think Republics haven't done anything on tariffs. Donald Trump has raised taxes on everybody. It just calls the terraffs.
Okay, well, that gets us very quickly. We're going to run out of time. But I do want to ask you about the China policy. And one of the difficult things about pivoting away from Donald Trump's China policy is actually, and Jason Furman pointed this out on the podcast a few weeks ago, that you will have those tax revenues coming in better or worse from Donald Trump's tariffs that are non negligible and quite hard to just say goodbye to.
True.
So what are you going to do? What is the China strategy under your plan?
First of all, the idea that it's down to tariffs is not no disrespect is it's more complicated. On't mean to say that we're our podcast. It's slightly more than a thirty seconds answer. There's a couple of things. I think forty percent of our imports into the country, our products are going to our own manufacturing capacity. Take the tariffs off of those, you're actually killing manufacturing jobs, not enhancing.
There's nothing you've done to enhance America's competitiveness on the industrial base by taxing or putting a tariff on a product that goes into our own ultimate assembly and manufacturer. Two, you have to be more strategic, and it relates to China. It's not just about tariffs. I happen to think what the President just did is a failed effort. Dealing with China is both with military, geostrategic, political, and economic understand fundamentally,
which America has been late to the game. The Chinese Party leadership and President Jip specifically decided in twenty twelve that America is not a strategic competitor, but a strategic adversary. They actually do need to do harm to us. I think President Trump has been naive to think that he can get along with Putin and g They actually are trying to put our head under and he doesn't appreciate that,
understand that, or is responding to the threat level. Third, both from the universities and science and technology to the training of a workforce that has to actually have an education to compete and win at any level. Fourth, investing in the capabilities of america twenty first century infrastructure to move twenty first century economy from data to trucks and
everything between. And then fifth on the tariffs all they do for you as it relates to China, as we kind of figure out how to move away is you have to decide where your choke points are and fundamentally invest in them. That's what the whole critical minerals and magnet production is about. That there is take a deep research look at the supply chain, every choke point that exists, understand we're behind, and then invest in it over the next five years. Now g is upfront about this, don't
be naive, and you have to be understand. He wants a dominant China where everybody's dependent on China and China's independent of everybody else, and we have to move with a strategy where America is integrated with everybody else and everybody else is dependent on us.
We have I mean as a nation actually since the second Kids administration. I mean that same year that we had a budget surplus two thousand was also the time that we were negotiating to have him China into the WTO. We have leaned into being deeply dependent on China, much more dependent than we perhaps needed to be. When you talk about extricating it, I think it's Donald Trump's learning. It's pretty hard to say, oh, we'll get divorced in
ten years time, and I'm really firm about that. But what we've got to live together in the meantime.
Yeah, well, I mean, I don't know, you, step, I know a lot of divorced people that live in the same house, just separate rooms.
It's also saying, as you just said, that there are sworn enemy, that they are determined to destroy us. But by the way, can we have you know, can we have another bit of mineral earth?
One of the things I learned being ambassador of Japan. What they say is not what they mean. You got to find it. But she tells you the world is to be dependent on China, and China is to be free of the world independent. He's very upfront. Now, either you can say, oh, that's just for domestic consumption or act as that threat intents. Now, I believe the big mistake of the last twenty to twenty five years was allowing business interests to control our national securities related to China.
They were not a voice at the table. They were the voice at the table, and they should have been slapped and put in their place. And that was a huge mistake. And when g said and the Chinese leadership said, we're going to replace America and we're going to do X, Y and Z, as it relates to the world's dependence on China. That's a big opportunity. And when China decides to crush your steel industry, you're a luminum industry, your auto industry. That's an opportunity for America. Come into the
rescue of South Africa, Brazil, Mexico. They are doing things in their industrial manufacturing because the President g is leaning so hard on the dominance of manufacturing for its economy because other parts of it are failing. That's our opportunity.
And that kind of suspicion of globalization, or at least the globalization that was dominated by the sort of business interests of America as opposed to other things. That's going to outlive President Trump.
Do you think what's gonna be with us for the next thirty years. Look, globalization was a success if you had what you and I have and our kids have. I don't know whether they are kids are okay. I have three kids. They're the twenties to the armed forces, et cetera. They all went to good schools and they're all on their way doing well, et cetera. That was the success. The opportunities of globalization were not equally shared and the risks associated with globalization were not equally shared.
Globalization wasn't a mistake, it's what we didn't do, and we were aware of that was the mistake.
You do sound like and you've made no secret that you are someone who's thinking about running for president, and some would argue that you've already decided. But if there is a question in your mind, what's your biggest question in thinking about running, regardless of whether you know obviously the primary process will be what it is, But in terms of actually being a candidate, what's the question that you need to resolve in your mind.
To those that don't know, Squat, it's not actually a business. That's a professional decision. It's a very personal decision. I've lived a full life. I'm the son and the grandson of two immigrants. My kids are now on their way. They're making their own path, their own journey, their own success, their own failure, and they're incredibly supportive of me. But I have to make a decision I run for president. What does that do to their lives? It's not going
to be the same. So look, I know my professional I figure that out. How to restore the primacy of the American dream to the American people. So it's not just Stephanie and romskits. What does it take? Because I think it both has an economic and a political souve. And then there's a personal thing. And you know, my greatest teacher was my mother and father, and I take being a parent very seriously. I know we're not supposed to talk about it.
I know, talking about politicians talking about their kids all the time, I wouldn't worry about it.
Oh, I think, yeah, But I've been around them longer than you have. So that's the decision I'm going to make, and it's going to something I'm gonna make with my children and my wife.
If you do run, is your strategy to just not let anyone else get a word in?
Well, that's that's a habit that's been true for everything I was trying to image in a debate. I was trying to be economical with you, which is why, you know Henry Kissingder once said, do you have any questions.
For my answers? Quite say, rom Emanuel, thank you so.
Much, Thank you very much, appreciate it.
Thanks for listening to Trumponomics from Bloomberg. It was hosted by me, Stephanie Flanders, and I was joined by the former White House Chief of Staff and Mayor of Chicago, among other things, rahmim Manuel. Trumponomics was produced by Samasadi and Moses And with help from Amy Keene, and the sound design was by Blake Maples and Kelly. Gary Sage. Bowman is Bloomberg's head of podcasts and please to help others find this show, Trumpanomics, please rate it and review
it highly. Wherever you listened,