The Economic Theory Behind J.D. Vance’s Populism

When Donald Trump on Monday chose Senator J. D. Vance of Ohio as his running mate it excited populists — and unnerved some business elites. Later that evening, the president of the Teamsters, Sean O’Brien, gave a prime-time speech at the Republican National Convention. “Over the last 40 years, the Republican Party has rarely pursued strong relationships with organized labor,” O’Brien said. “There are some in the party who stand in active opposition to labor unions — this too must change,” he added, to huge applause. There’s something happening here — a real shift in the Republican Party. But at the same time, its official platform, and the conservative policy document Project 2025, is littered with the usual proposals for tax cuts, deregulation and corporate giveaways. So is this ideological battle substantive or superficial? Oren Cass served as Mitt Romney’s domestic policy director in the 2012 presidential race. But since then, Cass has had an evolution; he founded the conservative economic think tank American Compass, which has been associated with J. D. Vance and other populist-leaning Republicans, like Josh Hawley, Marco Rubio and Tom Cotton. In this conversation, we discuss what economic populism means to him, what it looks like in policy, and how powerful this faction really is in the Republican Party. Mentioned: “The Electric Slide” by Oren Cass “This Is What Elite Failure Looks Like” by Oren Cass “Budget Model: First Edition” by American Compass Book Recommendations: The Path to Power by Robert Caro Project Hail Mary by Andy Weir The Green Ember by S. D. Smith Thoughts? Guest suggestions? Email us at [email protected]. You can find transcripts (posted midday) and more episodes of “The Ezra Klein Show” at nytimes.com/ezra-klein-podcast. Book recommendations from all our guests are listed at https://www.nytimes.com/article/ezra-klein-show-book-recs. This episode of “The Ezra Klein Show” was produced by Annie Galvin. Fact-checking by Michelle Harris with Kate Sinclair and Mary Marge Locker. Our senior engineer is Jeff Geld with additional mixing by Aman Sahota and Isaac Jones. Our senior editor is Claire Gordon. The show’s production team also includes Rollin Hu, Elias Isquith and Kristin Lin. Original music by Isaac Jones. Audience strategy by Kristina Samulewski and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie Rose Strasser. Special thanks to Sonia Herrero.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:03Ezra Klein?

  From New York Times Opinion, this is the Ezra Klein Show.

• 0:23Ezra Klein?

  Good lord, what a week in politics. Over the weekend, there was an assassination attempt on Donald Trump. I thought that was going to reshape everything going forward. But then on Monday, everything shifted again. And Donald Trump picked Ohio Senator J.D. Vance as his vice presidential running mate. There is a lot to say about Vance. Maybe I'll start here. Vance is a very ideological pick, not a political one. If Trump was worried about the polls, if Trump thought he might lose, if he wanted a vice president who could help him win Virginia or win Wisconsin, those picks were on offer. But in Vance, he showed a different kind of confidence.

• 1:06Ezra Klein?

  He picked the vice presidential candidate who has done the most to turn Trump's impulses, his rhetoric, his political and personal brand into a coherent governing philosophy. Vance has done that in ways I find scary, like the deep distaste for a democratic process and elections that he's shown since 2020. But he's also done that in ways I find interesting, maybe even important, like the more serious form of economic populism he's pursued in the Senate. I find that a lot of liberals don't want to admit this is happening. They want to brush it off as just illusion. But something is happening here. If you watch the first night of the Republican National Convention, the key speech was given by Sean O'Brien, the president of the Teamsters Union.

• 1:51Ezra Klein?

  That was startling. And listen for a second to O'Brien.

• 1:54Speaker 01

  There are some in the party who stand in active opposition to labor unions. This, too, must change. The Teamsters and the GOP may not agree on many issues, but a growing group has shown the courage to sit down and consider points of view that aren't funded by big-money think tanks.

• 2:23Speaker 01

  Senators like J.D. Vance, Roger Marshall, and representatives are among elected officials who truly care about working people. And this group is expanding and is putting fear into those who have monopolized our very broken system in America today.

• 2:42Ezra Klein?

  Hearing a stadium full of Republicans cheer the idea of being a pro-union party, that's different. Something is changing here. Whether or not it actually changes, I don't think we know yet. But there is some factional struggle happening in the Republican Party. And in picking Vance, Trump has given a lot of power to the emergent faction. On Friday, so a few days before Vance was named, I sat down with Orrin Cass. Cass is interesting. He was Mitt Romney's domestic policy director in the 2012 campaign, so as orthodox Republican economic thinker as you could find back then. But then, after Romney's loss and Trump's victory in 2016, Cass went through this evolution,

• 3:25Ezra Klein?

  founding a group called American Compass that's become a policy nerve center for the party's younger, more populist generation, that has critiqued the Republican Party, that has attacked the Republican Party for being an anti-worker party, for giving up on the very people who vote for it, who it is supposed to represent. American Compass does not represent or speak for a large faction of Senate Republicans, but there are a number of younger Senate Republicans, like Tom Cotton, like Marco Rubio, like Josh Hawley, like J.D. Vance, who are quite close to it, who are part of this sort of emergent faction. And so I think it's worth exploring what Cass has been trying to do here. He wants Republicans to become a pro-worker party as he and they define it, which is

• 4:10Ezra Klein?

  definitely different than how Democrats define it. He wants to see Republicans become a pro-union party. It's not often that I have Republican policy experts on the show who make an argument for sectoral bargaining. I mean, that is something new. And the Vance pick makes this conversation a lot more relevant because it means Cass's thinking is now much closer to the center of Republican Party politics. It might soon, if Donald Trump wins, be in the White House, or at least in the Vice President's office. But that doesn't mean that Cass's thinking is alone. Look at Project 2025. That's not an economically populist document. Look at the GOP platform. The Republican Party is in the midst of a factional ideological battle.

• 4:54Ezra Klein?

  You still see it proposing these corporate giveaways and all this deregulation and these tax cuts. And so it's easy enough to wonder, is any of this real? Or is it just putting another populist face on the same old agenda? And if it is real, is what is being proposed here even a good idea? As always, my email, [email protected].

• 5:23Ezra Klein?

  Warren Cass, welcome to the show. Thank you so much for having me. So we're here talking on the cusp of the 2024 Republican National Convention. But I wanted to play you a clip from the 2012 Republican National Convention when Mitt Romney received the nomination. And I wanted to hear how you hear this now.

• 5:45Mitt Romney?

  In America, we celebrate success. We don't apologize for success.

• 6:02Mitt Romney?

  Now, we weren't always successful at Bain, but no one ever is in the real world of business. That's what this president doesn't seem to understand. Business and growing jobs is about taking risk, sometimes failing, sometimes succeeding, but always striving. It's about dreams. Usually, it doesn't work out exactly as you might have imagined. Steve Jobs was fired at Apple, and then he came back and changed the world. It's the genius of the American free enterprise system to harness the extraordinary creativity and talent and industry of the American people with a system that's dedicated to creating tomorrow's prosperity, not trying to redistribute today's.

• 6:51Ezra Klein?

  You were Mitt Romney's domestic policy adviser on that campaign. What do you think of that political message now?

• 6:57Speaker 03

  Well, let me say, first of all, I'm relieved. I thought you were going to play the bit with Clint Eastwood in the chair, so.

• 7:03Ezra Klein?

  I was there for that. That was one of the most surreal moments in my political life.

• 7:08Speaker 03

  Yes. Well, anyway, we've, we've only moved to the more surreal from there in various respects, but it is a fascinating clip. And one of the things that strikes me most about it is it's almost drowned out in the applause. But what he describes as sort of the secret of the free enterprise system is harnessing the, I don't remember the exact adjectives, ingenuity and productivity and so forth of the American people to build these successful enterprises. And I think that remains exactly correct. I think what was so often missing in the Republican Party, including in the message as often presented in the Romney Ryan campaign,

• 7:49Speaker 03

  was recognizing that we had moved away from that system, that if you ask who was being most successful in the American economy, whether, whether you're talking about Steve Jobs at, at Apple or the folks running Bain Capital, it was not achieving success by harnessing the, the power of the American worker. It was achieving success by avoiding the American worker.

• 8:14Ezra Klein?

  One thing that strikes me about that clip and Republican Party rhetoric from that period is that it is pitched at somebody specific. The sense was that, that we had come to talk down the entrepreneurs, the risk takers, the corporate executives. And now, when I listen to a lot of Republicans, and I don't think their policy always backs us up, but when I listen to them and when I listen to you, there's been an implicit shift, at least rhetorically, in who is the, the vox populi? Who is the, the political ideal voice?

• 8:49Speaker 03

  That's definitely true. I think it is true both in a sort of political understanding of who the Republican Party's base is. It's also true as a matter of understanding what message they want to hear. Of course, it was always the case that most Republican voters were not the business creators and the entrepreneurs. That's always a small share of the population, but that those who weren't were not necessarily as enamored of that message as maybe people assumed, as the consultants and the speechwriters certainly seem to assume. And then, of course, that's only become more true. If you look at the realignment going on within American politics, you see increasingly the

• 9:34Speaker 03

  upper income, most educated parts of the population moving left, and you see a huge number of working, middle-class, moving right. And so you have a new political coalition that Republicans are speaking to, and I think you have a much better understanding of reality among conservatives about the real challenges the country has and the kinds of things you're going to have to not just talk about, but actually focus on if you're going to solve anything.

• 10:04Ezra Klein?

  My sense is the shift you have made and some of the people who politically you are closer to, like J.D. Vance and Marco Rubio and Tom Cotton and Josh Hawley have made, is a sense that the Republican Party's view of what, if anything, economic policy should be subordinate to, what it is downstream of, what it is trying to achieve, has changed. So in 2012, what would you say Republicans believed the point of economic policy actually was? And what now is the faction of Republicans that you are part of trying to say the point of economic policy actually is?

• 10:47Speaker 03

  If you look back to 2012, to sort of the pre-Trump Reagan-Ryan GOP, whatever you want to call it, there was essentially this view that GDP was the goal, that we're here to grow the pie, growth is the end. And maybe if there's a lot of inequity as we get that growth, we'll do some redistribution on the back end, but we'll complain along the way. And I think you're exactly right that underlying this shift in thinking on trade, on labor, on any of these things and so forth, is the recognition that GDP

• 11:28Speaker 03

  growth is is nice, right? I'm not a degrother who wants to go live in a log cabin, but that it's certainly not the be all and end all, and it's not even a very good proxy for a lot of the things that matter most. One thing that I've always found fascinating, and it's somewhat coincidental, but it's between the 2012 election and the 2016 election that all of the research on deaths of despair even emerged. It's during that same period that David Autor's research on the China shock emerged, and you know, the consensus among economists that, well, free trade is always good. So of course, free trade with China has been good, was finally challenged by the reality that in fact, free trade with

• 12:11Speaker 03

  China had not been good. You know, it was an interesting thing about Romney and this thing I've written about that was very formative for me was that he was actually very skeptical of the China trade story. And I sort of, I got sent off to do the research on why was that not working well for the American people. But that was seen as a sort of, you know, weird one off exception. And the basic assumption was still, you know, the understanding of the invisible hand, as people thought Adam Smith spoke of the invisible hand, which was that there is some miraculous force out there that ensures that when everyone is left to pursue their own profit, the public benefits as well. You know, the rising

• 12:52Speaker 03

  tide lifts all ships. And that is something I think, you know, certainly I, to a significant extent, took for granted, and just proved as an empirical matter not not to be the case. We have now had decades for which that did not happen. And so I think the shift certainly that that has occurred in my own thinking, and I think you're right, that is is driving a lot of what's going on within conservatism. Is a recognition that the ends that we're actually focused on, which you might broadly describe in a vague term like human flourishing, has a bunch of specific elements within it. And high material living standards is one of them.

• 13:35Speaker 03

  But strong, stable communities, family formation, the ability of people to build decent lives, typically in the communities where they've lived, where their families have lived, to raise children, to be productive contributors to their communities, that that's really what the goal is supposed to be. And that we're actually allowed to assert that those things are goals, instead of just saying, "Well, whatever liberty and the market produce is the end unto itself." Senator Rubio has a very good line about this, that the market or the economy is supposed to be serving people, not people serving the economy. That is then not only our right, but in our sense, our duty to think about how we want to govern and to proactively govern to ensure

• 14:20Speaker 03

  that the market is generating the kinds of outcomes we care most about, even if those aren't the ones that would get an A on the exam as efficient.

• 14:30Ezra Klein?

  Let me try to understand why this felt so earthshaking to you. Because I'm more liberal. I would describe the dominant view among liberals in this era as pro-free trade, but quite aware that you had markets that were poorly structured, you had people, a huge shift in income to capital away from labor, and that that income should be redistributed. I don't exactly understand the shift from that insight, which felt true to me then and is true to me now, to where at least some on the right have gone, which is to a full-on skepticism. We should fully move away from the level of global integration we've had.

• 15:13Speaker 03

  There's a lot to unpack there. I think exactly as you described, the progressive view tends to more take for granted that, yeah, markets are good for some things, but they're not going to work all that well. You have to have, therefore, a lot of interventions all over the place in various ways, both sort of in advance, hopefully to get more equitable market outcomes, and after the fact to redistribute and compensate for inequitable outcomes. And I think the conservative view, certainly my view, is that there is always going to be some need for that. But that the better model, the one that we should be aspiring to, to the extent that we can, is one in which we actually set up markets so

• 15:58Speaker 03

  that they do work well. That in some respects, the kind of big structural questions are the better place to operate. And so, you know, that's where one of the key arguments we make at American Compass, certainly two right of center audiences in particular, is to say, it's not even necessarily a trilemma, it's a pretty basic dilemma. Either you have to be willing to put constraints around the American market, such that we can have a relatively free American market, or you're going to leave the American market totally exposed to global forces, and then on the back end going to have to intervene all over

• 16:38Speaker 03

  the place. And so we'd in a sense, rather focus on those big structural questions and see if we can get them right.

• 16:45Ezra Klein?

  Let's ground this in tariffs, because I think it's helpful to put this around a policy. Because, look, anybody trying to get the right to question the idea that markets are some natural phenomenon that arise out of natural law and then work perfectly wherever they appear, so long as the government doesn't get in their way, you're doing the Lord's work. I appreciate it. I appreciate everything you do on that. But I do think that the traditional way that progressive economics thinkers think about this is like, okay, which markets are failing and why?

• 17:20Ezra Klein?

  And what you're saying is at a place where conservative reformers, populist conservatives like yourself have begun to diverge, just saying, "Well, we don't want this piece-by-piece set of interventions. We want to put in place some big rules that shift the structure." So a big rule that would shift the structure that you have proposed, that Donald Trump has now proposed, is a 10% tariff on all imported goods, a significantly higher percent tariff than that on imported goods from China, I believe, for Trump at 60%. Stop by making the case for that policy to me.

• 17:55Speaker 03

  I think where it starts is with consideration of the trade balance and whether or not you care that we run roughly a trillion-dollar-a-year trade deficit. And what that trade deficit represents, at the end of the day, is roughly a trillion dollars' worth of stuff being made overseas to be consumed in the American market that is exchanged not for stuff that we make here to be consumed elsewhere, but that is instead exchanged for assets. Because when you have a large trade deficit, when people are sending you a lot more than you're sending them, it's not being sent to you for free as a favor. You are, in fact, buying it on credit.

• 18:39Speaker 03

  And so, to a significant extent, what we send back, for instance, is treasury bonds, right? We literally send back pieces of paper that say, "Well, the US government will pay you via taxpayers at some point in the future." You're sending back corporate debt. You're sending back corporate equity. You're literally saying, "Here, you can have our companies and the future profits that come from them," and so forth, "and we'll just consume this stuff now." And, you know, in some respects, hopefully as that description makes clear, that is an extraordinary long-term concern for the health of an economy and of a nation. But in the short run, what you're doing is you're taking what would otherwise have been demand

• 19:21Speaker 03

  for things that are produced in America, and you're just eliminating it. You're just saying there is now less demand for stuff made in this country. There is less demand for the American labor that comes with that. There is less need to do investment in the United States, and we're just gonna enjoy the consumption anyway.

• 19:41Speaker 03

  Now, there are some people who say that's fine. For a long time, the mainstream view among economists was that that's great, even on the left of center. And I think what people are increasingly recognizing is that this is a terrible model. It is bad for American workers. It is bad for the communities in large portions of the country where manufacturing, resource development, things in the physical economy are where there can be most productive. It's bad for innovation because in the long run, it turns out that you can try to do the iPhone designed in California, assembled in Shenzhen thing. But in the long run, actually, where the manufacturing goes, then the research and

• 20:23Speaker 03

  development goes, and you end up not being able to do it at all. And that has happened in broad swathes of the American economy with our industrial base. And so if you look at this and say, okay, this is not good, then you are prepared to ask what we can do about it. And so that then leads you to start thinking about things like tariffs.

• 20:44Ezra Klein?

  I'm not a believer here that there's a one-size-way-to-think-about industries. I think it's good to make some garments in America, but I don't think, given an economy like ours with labor like ours, it makes sense to try to imagine a world where most garments that Americans wear are made in America. I'll be interested here when I finish this question, if you disagree with that. But let's think about, say, semiconductors. I'm completely bought in that we want semiconductor manufacturing, to a much greater extent than is true now, to happen in America. Semiconductors are a huge global industry. They are of tremendous strategic importance. If we lost access to semiconductors made in Taiwan, say, we'd be in terrible trouble.

• 21:29Ezra Klein?

  And Taiwan is a very politically volatile spot. But the reason we lost dominance in semiconductor manufacturing is, I mean, it's a complicated story, but but one of the major parts of the story is it just became too expensive to make things here. And the semiconductor supply chain is insanely complex and there's no way it's all going to be here. You have to import a huge number of goods. And so at this exact moment, when we are trying to bring back semiconductor manufacturing through the Chips and Science Act, through, you know, giving groups like Intel money to create plants here, we're going to come in and say to them, oh, also, every part

• 22:12Ezra Klein?

  that you import to make semiconductors in America is going to be 10% more expensive because we're going to slap a tariff on it. And when I hear that, I think, oh, that's going to be really good for anybody who wants to locate a semiconductor manufacturing plant in Canada, or for that matter, in Taiwan, because we're creating a cost increase to making complex goods here. Tell me why I'm wrong here about what this will mean for, say, an Intel.

• 22:39Speaker 03

  Well, I guess what I would start with is your description of why we lost semiconductor manufacturing as because it got too expensive to make things here, which I don't think is is really true at all. The reason that semiconductor manufacturing moved overseas at a significant rate was because other countries introduced massive subsidies to invite and underwrite the cost of building fabs elsewhere. So it is true that relatively speaking, it ended up being more expensive here, but that wasn't a market force. There wasn't any sort of comparative advantage, like, you know, oh, rocky outcroppings off the coast of China turn out to just be really great places to make semiconductors and Silicon Valley is not.

• 23:24Speaker 03

  And the reason I sort of start with that is to say, I think it's really important to recognize that our basic model

• 23:31Speaker 03

  That we learn in economics class of so-called comparative advantage, where everybody's going to specialize in the thing that they're relatively more efficient in making, simply does not describe a modern industrial economy. Comparative advantage is really created, not discovered, based on who invests in what. If the United States decides it wants to have semiconductor manufacturing here, we really should do two things. We both need the industrial policy, things like the CHIPS Act. But then we're also going to need policies that essentially just say, if you want to serve the US market, you are going to have to do it from the US. And that may raise your costs somewhat relative to elsewhere.

• 24:16Speaker 03

  And that may mean the final cost of the thing that you produce is higher, at least in the short run. I think we have to question whether, over time, it will be cheaper or more expensive to do something in the US. But that's just the way it's going to be. So to answer the question specifically, when you say, well, maybe I'll go do it in Canada instead, well, the answer is no, you won't. Because if you do, then you're going to have to pay the 10% tariff when you try to import the chip into the US anyway. And so what you're doing at the end of the day is saying, look, access to the US market, it is going to be more advantageous to be in the US market. And sometimes that will mean you end up having to pay tariffs for some of your inputs.

• 24:57Speaker 03

  But it's also going to mean other parts of the supply chain move to the US as well. Because it's certainly the case that, you know, Guatemala can't have a soup-to-nuts supply chain in semiconductors. But I have yet to hear a reason why the United States can't. Of course, the United States did when we pioneered and developed the semiconductor, before we allowed it all to move overseas.

• 25:19Ezra Klein?

  Well, let me make a couple of points on this. So one, I really just want to say strongly disagree that it is plausible that we would have a soup-to-nuts advanced semiconductor supply chain in America. I mean, if people have read Chip Wars, which is, I think, the best book on this, the semiconductor supply chain is just extraordinarily complicated and fragile. And There's a lot of populism in the way these proposals are framed. But something we have seen with real starkness in the past couple of years is people do not like higher prices. Those are politically unstable. Something we have also seen, and something you're talking about, is Americans like to have, want to have, in many of these cases, strong export-focused industries. We want to have

• 26:02Ezra Klein?

  global leadership. And to the extent that we have made it very difficult for these industries to import what they need to then be cost-competitive when exporting what they need to export, that's going to be of a lot of anger, possibly to voters. We're not going to turn the country out of being in a globalized world where there are real advantages to participating globally and to selling globally. And practically like a one-time huge shock to prices is going to be politically tricky. So I'd also be very curious how you think about that.

• 26:32Speaker 03

  It would be lovely to have high levels of trade, if it's balanced trade, if we are making things and sending them elsewhere in return for things that are made elsewhere and sent to us. That is the economic model we all thought we were signing up for. So my point is not that literally, you know, we will be a closed economy that makes everything and, you know, we can't use ASML machines from the Dutch or whatever else. But I do think it's worth just noting that this idea like, well, we couldn't do that. I'm not sure why. I mean, there was a time when the soup-to-nut semiconductor process was executed in the US because we had literally invented the whole thing.

• 27:16Ezra Klein?

  But it was much simpler then. I mean, I think that's the answer to the question you're asking. The semiconductors being made then were extraordinarily simplistic compared to the hyper-advanced semiconductors that TSMC is now dominant in now.

• 27:30Speaker 03

  If you look at what the US has done repeatedly in industry after industry as it has developed these technologies, we show an extraordinary ability to innovate and develop the entire thing.

• 27:45Speaker 03

  And then we sort of look away and say like, well, I mean, it was literally our view. We don't care whether or not we actually make it. You know, the, the most famous quote on this is computer chips, potato chips. What's the difference? I mean, that was the policy environment in which we stopped making all of this stuff. It was not because it was too complicated for us to make. It was not because we were not the best at making it. It was because we just didn't care. And so I do think it's important to sort of step back and recognize that in a well functioning trading system, first of all, most of this stuff never would have left. We would, I mean, you could make the case that, you know, we're not going to have every raw mineral that, that goes into the chip. That, that might very well be the case.

• 28:26Speaker 03

  But the idea that we can't be the technological leader in the various stages of the semiconductor manufacturing process, when we are still 25% of GDP, among other things, of, of global GDP, 20, 25%, I don't know why that would be the case.

• 28:40Ezra Klein?

  To be very clear, my view is that the US actually can be the leader on many dimensions of these things. But that to take seriously the complexity of the things we need to make and the cooperation across supply chains needed to make them, that to try to achieve leadership by raising the prices we pay for the things we need to be competitive, both on a manufacturing level and on a innovation level in these things, is likely to be counterproductive. And as you say, you learn a lot by manufacturing. And so if it's much cheaper to manufacture in other places, not just because labor costs

• 29:24Ezra Klein?

  are lower, but because it's much easier to cooperate across supply chains, et cetera, we are not going to take over that manufacturing. And if we don't take over that manufacturing, we're not going to take over that innovation. We don't, if we don't take over that innovation, we're not going to have the leadership that you want us to have. So I'm not arguing that we shouldn't have leadership in these places. I am skeptical that broad-based tariffs will get us there.

• 29:49Speaker 03

  Yes, there is absolutely a cost associated with reshoring and regaining leadership.

• 29:57Speaker 03

  But I think the two things I would say about it first is the cost is certainly temporary and potentially quite short-lived. And I think a good illustration of this comes from the auto industry where, you know, one of the quintessential illustrations of successful trade policy, and it wasn't even tariffs, it was an outright quota, was the 1980s when the Japanese automakers were not just making inroads, but sort of poised to badly beat Detroit. And Reagan just negotiated an outright import quota with the Japanese. You will not import, growth of imports will simply stop. Now, what happened? The economists

• 30:39Speaker 03

  will tell you Japanese car prices therefore did go up, maybe as much as 5% to 10% in those initial years. But more importantly, what happened is all of the Japanese automakers moved their production facilities to the United States, right? Right away, they started with assembly facilities. Soon after that, their entire supply chains moved. Then they started opening R and D centers here. It was literally only a few years before the quotas could be lifted because once you'd actually changed the flow of that investment and said, if you want to sell in the American market, you have to make it in the American market. Guess what? You can actually make things in the American market quite efficiently

• 31:21Speaker 03

  and effectively. For many, many years, the Toyota Camry was the most American car on the market in terms of American content in the vehicle. And so I guess you could step back and say, oh, whoa, what a disaster. Look at how the prices of these cars went up for a couple of years. But I'm not sure if there's anybody who would say, well, actually, I know a couple of people at the Kato Institute who would. So let me say, there are not many people who would say, well, this was just a mistake. Having the Japanese auto industry now in the US employing hundreds of thousands of people, all of those jobs, all of that future innovation, et cetera. Well, you know, we shouldn't have done that because if you

• 32:02Speaker 03

  actually intervene in the market like that, you're going to raise the price for consumers. So that's one point. The second point is that it's really important to keep in mind. And I find it funny when folks on the left of center make this mistake because it is the quintessential right of center mistake. I fight with the Tax Foundation folks about this all the time. People complaining that tariffs are going to raise prices behave as if the tariffs just set the money on fire. Tariffs are tax revenue. What you're talking about is a tax, the instance of which is not entirely borne by Americans anyway, and even to the extent that it is, lands as revenue in the treasury.

• 32:44Speaker 03

  And so I think we have to have a much broader conversation about what an economy with versus without tariffs looks like and how that balances out and who wins in the long term, because I would say it is in fact working families that win the most, rather than do this sort of very narrow static analysis of, okay, well, there's a tariff, so now the banana is 10% more expensive.

• 33:07Ezra Klein?

  Orin, you've put me in genuinely a terrible position here because there are a lot of things I want to ask you about, but I also really enjoy talking about trade policy. And I'm having trouble between the part of me that knows how to structure a good conversation and the part of me that just wants to do this forever. I'm going to do one more beat on this and you can have lost word on it, then we'll move on. I have friends who are trade economists and the auto example is really interesting and it drives them bananas, to keep using bananas in different ways in our conversation. Because as you know, the Japanese example is really interesting. We decided we needed to bring in Japanese manufacturing, right? We actually, what we created in that policy that you're talking about under Reagan, it

• 33:50Ezra Klein?

  was a profound collaboration with Japanese firms and we learned a lot from those firms. We respected Japanese innovations in manufacturing and logistics and organizational processes. Like you could find from that era, a lot of books about how Toyota was run as a company and the five whys is still a tactic from how Toyota was run that is often talked about in American business classes. So what we did was we brought that in and we learned a lot in addition to profiting from the fact that now Toyota was running manufacturing facilities in America. Right now, we know that China is not just effective as a manufacturer because there's a lot of low wage labor in China.

• 34:33Ezra Klein?

  They have figured things out as a manufacturer that we have not. They have developed kinds of expertise that we have not. They know how to make things that we are not as good at making. One thing you can imagine doing is a policy, what we want to do is bring in these Chinese electric vehicle manufacturing firms to work in America, right? To start up these factories and do roughly what we did when we were doing this with Japan and Japanese automaking in the eighties. That is not the policy really of either Biden or Trump, to my knowledge. They have been in a much more competitive position with China. They want to see the Chinese auto firms weakened. They do not want them to have a foothold in the American market, even if that foothold would come through having factories in the American market.

• 35:15Ezra Klein?

  And also, we don't treat Chinese manufacturing as something we could learn from. We don't treat Chinese firms as having lessons to teach us. My sense of the politics is that nobody is saying, well, the real thing we're trying to aim at here is having Chinese EV firms manufacturing their low-cost, very popular electric vehicles here, which is what we did with the Japanese. Are you saying that that's what we should do? That's the point of where our policies should go?

• 35:42Speaker 03

  No, definitely not. And I think you've put your finger on a really interesting challenge and the EV industry is in fact the exact quintessential illustration of it. I just finished up a large project on EVs for this exact reason, that the Japanese analogy fails when you get to the point that, okay, well, just getting BYD to set up American factories is not where we want to end up.

• 36:06Ezra Klein?

  But you're the one using the Japanese analogy.

• 36:08Speaker 03

  Yeah. I guess I would, you know, won't tie a bow on it, but you're exactly right. There are things about China and the relationship between the US and China that makes it a lot harder. What we're talking about setting up If we create the incentive that you have to make it in America is not bringing Chinese factories to America, it's creating that incentive and then allowing the investment to figure out the best way to do it here, which is going to look very different. But given where we are in technological development, potentially is is an ideal time to be doing it. And, you know, maybe that's just the free market conservative me talking, but I think that's exactly the formula we should be striving for. I don't want to just see

• 36:50Speaker 03

  us sort of going around and trying to figure out, okay, here, you know, this spot and that spot that we need to do a big subsidy. To answer your question, I actually think garments are an extraordinary potential area of innovation. And I would love to see our policy be, look, it's going to be more expensive if you have to use foreign stuff than if you can use domestic stuff. Now, companies of the free world, investors of the United States, go forth and figure out what to do.

• 37:43Ezra Klein?

  There's a lot that you now propose, that others now propose, which, you know, if you squint, it can sound like Elizabeth Warren, not the terrorists, but policies around labor, for instance, that they get much closer to what liberals have been saying for a long time. But my sense is this is where a lot of things diverge, that when I read you and I read some others in your sphere, what I really hear being said is that we need to use economic policy to make the single breadwinner but two-parent family with not one to two kids, but three to five kids, possible again, specifically, although not only, for a lot

• 38:24Ezra Klein?

  of these men in the Midwest for whom we see really now quite negative outcomes. How fair, unfair is that is a description of your goal?

• 38:34Speaker 03

  I'd say partly fair, partly unfair. The part that's definitely fair is I think you've put your finger on very specifically when I talk about the idea that human flourishing means people being able to build decent lives in their communities, contribute productively, form and raise families. Yeah, we want that to be possible in the ways that most people, in fact, say they want to do it, which is that model you've described, being able to get married, have kids, and have a single income, be sufficient to support the family so that you have choices about the extent to which you want one or two earners, and especially you can have a parent at home with young kids.

• 39:16Speaker 03

  The part I would say is very unfair is, I think, when you start to sort of throw in that, you know, we're specifically talking about men in certain Midwestern communities and so forth. You know, Adam Posen, who is the president of the Peterson Institute, had an infamous quote a couple of years ago, saying that the concern for manufacturing was, it was really about a fetish for keeping white men in rural areas in powerful positions. Whether white men in rural areas have ever been in all that powerful position is another matter, but this isn't an issue of race or gender or region within the country. It's an issue of making sure that people actually have the ability to pursue the life

• 39:58Speaker 03

  courses they themselves say they want to pursue, and recognizing that that only happens if you have an economy that makes it possible to raise a family on one income. And if that is a possibility, then you can do that, and you have lots of flexibility around that. But I don't think we have that today.

• 40:21Ezra Klein?

  The reason I focus there is that, things I notice, right? The whole death of despair thing was about white men in particular parts of the country is now expanded. I'm not a believer, really, in death of despair. I don't think the evidence on that has held up as what is going on, but it is where a lot of this was generated from. And because there is a very strong focus in the work you and others do on manufacturing and production, and what has happened to the declining fortunes of men who have lost a...

• 40:53Ezra Klein?

  Space as breadwinners, and by the way, I actually am concerned about that. I don't think it's a thing to wipe aside. So when I say this, it's not really as an attack. It just strikes me that the concern came from somewhere and the policies being proposed are more specific to a certain kind of job. Whereas say if you're really worried about families headed by black or Hispanic mothers, you would be much more concerned about service sector jobs and whether or not those pay well and what kind of advancement they have and how the scheduling works. And I'm not saying you or the people you advise don't care about that, but I hear a lot less about it. And going back to what I was saying earlier about Mitt Romney and Donald Trump and implicitly

• 41:35Ezra Klein?

  who is being spoken about, it often seems to me we're implicitly speaking about, you know, the kinds of people that say Vance was worried about in his book Hillbilly Elegy. And the policy proposals are flowing in that direction.

• 41:49Speaker 03

  I don't think that's the right way to characterize the policy agenda overall. I think you're certainly right that when we're talking about globalization and trade deficits and so forth, we're obviously talking about manufacturing. It wasn't predominantly because those are the good family supporting jobs. These are going to be highly automated factories. I think they certainly provide some good family supporting jobs. That is among the reasons we care about them. But in my mind, actually, a critical reason to care about those manufacturing jobs is because manufacturing and the industrial economy, describe it more broadly, is typically recognized, I think correctly, as the foundation for productivity growth more generally.

• 42:33Speaker 03

  It is a lot easier to get high levels of productivity growth in the making of things than in in many parts of the service sector. And it is in fact, through productivity growth. In the manufacturing sector, that everybody can be paid higher wages everywhere else. And so, an industrial economy is as the anchor for productivity growth and innovation, where you can get productivity growth, and then can provide the anchor of of local economies that can enjoy more prosperity in the service sector as well, I think is at the end of the day, the reason that manufacturing is such an important place to focus. I think if you look then at other parts of the policy agenda, you see again that that

• 43:18Speaker 03

  much greater focus on service sector. So just to give two examples, one is is immigration policy. And I I always love hassling my progressive friends on this point, that it is unclear to me how one talks about worker power or higher wages in the service sector for that Hispanic mother you were just describing, while taking the Democratic Party's position on immigration. In fact, tight labor markets, particularly at the low end, are incredibly important to higher wages in the service sector. And then another area, I think, where you see a lot of focus is on, as you mentioned, these some of these questions around labor, and how do you develop a labor movement and

• 43:57Speaker 03

  and a model for organized labor that actually works effectively in the especially more distributed service sector? And and I think that's a a key argument for more of a sectoral bargaining model. You know, the American model that we take for granted as what a labor union is, you know, Norma Rae standing up on the table with the sign that says "union," this idea that organizing is supposed to be this company by company, factory by factory, worksite by worksite fight, which, among other things, companies quite rationally resist. It it is a real competitive problem to have a union if your competitors don't. You know, pick your industry, let's say you're a janitor in New York City. There shouldn't be a fight in your building

• 44:42Speaker 03

  or in the janitorial service company you work for, whether that is going to be unionized. There should be a janitors' union. And, you know, we can talk about all the upsides and downsides of that, but I think it avoids a lot of what's worst and most dysfunctional about our system in the US and empirically has shown much better outcomes where it is used as a way of giving workers power and representation. And so I think if you're having a discussion about trade and tariffs, then yes, you're quickly talking about manufacturing jobs. But if you're looking at the agenda as a whole, I think it is very clearly and holistically and in good faith. I mean, I think if you asked Senator Vance this, he would tell you the same thing.

• 45:25Speaker 03

  He is deeply concerned about wages in the service sector of people of all races and genders and how you give those workers more power at the low end.

• 45:35Ezra Klein?

  It is fascinating to me that you and some others in the Republican Party have begun to get interested in sectoral bargaining, which for a very long time has been a policy view held by people like me that would have been like last on my list to ever imagine there might be any kind of Republican interest in. So on the one hand, there is something happening there. On the other hand, I would not look at Donald Trump's Agenda 47 and say what I see is a holistic focus on the labor power of Hispanic mothers in the service sector. I think that would be an unusual argument to defend. You know, quite hostile to unions, et cetera. Something people like me worry about, and I worry about even when I do shows like this,

• 46:19Ezra Klein?

  is that within Republican Party economic politics, you're one of the people I find more interesting. I find myself more sympathetic to. But there can be a dimension of populist washing, where there are people who have a more holistic agenda here, but then, you know, and they're part of the coalition, but the parts where they get listened to are not necessarily those parts.

• 46:40Ezra Klein?

  You were a contributor to the labor chapter specifically in Project 2025, and that proposes a number of reversals on pro-union policies. So I'd be curious for your description, because I'm obviously outside your coalition. From inside it, how would you describe what the sort of factional cleavages are that allow some of these ideas to go over the finish line and do not allow, at least at this juncture, some of the other ones to become the headline proposals or make it into these big coalitional documents?

• 47:13Speaker 03

  Working on that was a fascinating experience because, as you said, the coalitional dynamics are front and center. It is certainly not the labor chapter I would write, but I'm actually incredibly proud of what we accomplished because it, maybe in all of Project 2025, departs most from what was the standard orthodoxy on the right of center for so long. I mean, there's actually a ton of stuff in there, so much so that they then, for coalitional reasons, had to include dissenting opinions. One of my favorites is prohibiting a BA requirement in a job description, embracing the idea that workers should have voice and power, that we care about that, the idea of putting workers on corporate boards.

• 47:57Speaker 03

  I could kind of go on. I think that being said, certainly, as you know, there is not an endorsement of unions today. Labor unions are functionally arms of the Democratic Party in the way that they collect enormous amounts of money from what is an entirely heterodox set of workers, if any, a set of workers that probably tilts more pro-Trump than pro-Biden at this point, and converts that into political and financial support for the Democratic Party. So at the end of the day, I can't blame Republicans and folks in the conservative movement for saying, purely as an instrumental matter, that we are not going to support that.

• 48:42Speaker 03

  Trump is going to talk about what Trump is going to talk about. And so if your observation is that... The politically salient things that Trump is focused on don't align entirely with this economic vision. You won't get any argument from me about that. But I think in earlier in the conversation, when you were sort of characterizing this movement and thinking, I think you rightly identified, you know, Senators Rubio, Vance, Cotton, Hawley. And if you look at what they're working on and in fact, bringing to the floor as legislation, I think it's exactly across this swath of topics. I mean, just, you know, to give some examples, I believe it's Romney, Cotton, and Vance are all on a proposal

• 49:26Speaker 03

  to raise the federal minimum wage significantly and impose mandatory e-verify, right? Like, that is a quintessential raising wages at the low end focused on immigration policy in a constructive tightening of labor market way proposal. You know, Hawley more generally, I think, has particularly made a point of trying to be more engaged with unions. I was just at a speech he gave where he specifically said it's time for conservatives to embrace unions, private sector unions. But he's obviously been, you know, working with with the Teamsters in particular. You have, Trump has Sean O'Brien, the Teamsters president, speaking at the RNC. Senator Rubio has likewise done concrete things on labor. He and Jim

• 50:11Speaker 03

  Banks, who is currently a congressman likely to to win a Senate election in Indiana in November, you know, done a proposal for alternative models of worker representation, including putting workers on boards. And so, you know, I mean, we could go on across all these areas. I think, you know, certainly interesting work on industrial policy, other work on immigration enforcement, other work on, you know, non-college pathways, which I think is is an incredibly important area. And so my factional analysis would be, you know, the question is, first of all, who is going to be making policy in Congress if there is a Trump administration? And then what comes after Trump? And on both of those

• 50:52Speaker 03

  fronts, I think what you see is that this exact cohort is the rising leadership, not just in the conservative movement, but in the Republican Party. And this is the stuff they're talking about and working on.

• 51:29Ezra Klein?

  One reason I'm interested in the work you're doing, I mean, I have been for some time, but it feels more relevant to me now, is, look, by the time this comes out, we'll know who Donald Trump's pick is. But all the reporting suggests that it's down to Rubio, Vance, and Burgum. And Rubio and Vance are, so far as anybody is in your camp in the Senate, Rubio and Vance are in your camp in the Senate. So two of Trump's three plausible vice presidential picks are very American compass curious, we could say, but I think you could put it more strongly than that. So it does seem to me, when I talk also to younger Republicans, that there is something generational happening here. The other thing

• 52:08Ezra Klein?

  that I'll throw you a softball on here is, one of the reasons, or one of the ways it feels to me like it's playing out, is a sense that the liberal coalition's self-conception of who it is for and who it serves is no longer true. And there's a tremendous wedge that can be driven in there. And I took that as sort of part of the argument you're making in your Times piece about populism and sort of elite failure. And so I'd like you to expand on that a bit, because I do sense that the part of the opportunity you see, and that Rubio and Vance and some of these others we're talking about see, is a view

• 52:49Ezra Klein?

  that liberal economics is not about what liberals think it is about. It is not about who liberals think it is about, and that there is some political opportunity there. So do you mind laying out that critique?

• 53:03Speaker 03

  Well, I thank you, Ezra. I would be delighted to. To pick up briefly on the generational point, I think you're exactly right. And in some respects, you know, this is a process that is ongoing in conservatism that looks a little bit confusing because of Trump's presence. I mean, if you think about the sort of 15 or 20-year periods over which parties, you know, truly realign and shift their ideology.

• 53:29Speaker 03

  Typically, it starts with something of a bang. And that bang is usually a massive electoral loss. Right. It's Goldwater in 64 that eventually leads to Reagan in 1980. It's then Reagan crushing Mondale that gives birth to the new Democrats and ultimately leads to Clinton. And I think all of this work would be going on post 2016 on the right of center. And it would look a lot more familiar to analysts if Trump had lost. And you have a lot of this work sort of more going on in the wilderness and building to something that emerges as the next generation takes over. And in a sense, that that is just happening in parallel to the things going on at the top.

• 54:13Speaker 03

  And so it is, you know, when you say Rubio, Hawley, Cotton, Vance, not by coincidence, are you talking also about a younger generation of Republican leaders? When you look at what the orientation is of essentially everybody under 40 on the right, it's overwhelmingly in this direction. I'm right at that cutoff and I essentially qualify as sort of a, sort of a gray beard, I guess. An elder millennial? That's, that's right, an elder millennial. For me, the interesting question is, what's my first political memory? And for me, it's watching the, the jets take off of the aircraft carriers in the Persian Gulf in 1991, watching CNN, which means that Ronald Reagan is fall of the Berlin Wall, the Cold War. That's, that's just in a history book.

• 54:58Speaker 03

  And that's not at all to minimize its significance, but it is to say that when I think about political problems, orientation of political parties, you know, economic challenges for the nation, it is the problems and challenges of the 90s and 2000s and 2010s. And picking up a Ronald Reagan Heritage Foundation playbook and flipping through it for the answer just seems absurd. And so I think generational turnover is almost inevitable in the post-Cold War era. I'm very pleased to see that this kind of conservative economics is what people are moving toward, and it is, I think, what is going to come next. But certainly, there's a lot of chaos and inconsistent conflicts and factional fights along the way.

• 55:43Speaker 03

  So this then, I think, connects to your point about the Democratic coalition, the Republican coalition. What I think is especially exciting and appealing about this situation for conservatives is that moving in this direction has the prospects of building a durable governing majority. It is true that you lose libertarians as well as gaining working-class voters of all races, but it turns out there are maybe 10 times as many working-class voters who are fairly socially conservative and would just like to hear something sane on economics

• 56:22Speaker 03

  from the right as there are libertarians who are taking their college degrees and their $7 lattes over to the Democratic Party.

• 56:32Ezra Klein?

  How much are the lattes you buy?

• 56:35Speaker 03

  Maybe lattes in these coastal elite markets are even more expensive now, especially when you add the soy milk and the shot of chia. Obviously, I'm no longer in my area of expertise.

• 56:48Ezra Klein?

  You don't go to coffee shops?

• 56:49Speaker 03

  I'm not a coastal elite living in a big city, so I can't tell you what the prices are, anyway. But the point is that, in theory, there could be an opportunity here for either political party. I was just delivering remarks at the National Conservatism Conference where I made this point. There's a world in which the Democrats take some of the basis of their economic message and combine it with just something slightly more sane on their progressive social issues, and you could imagine them coming out on top. The reality is that they seem to be headed in the opposite direction still, and you

• 57:28Speaker 03

  do see on the right, at least, the potential for a conservatism that combines a social conservatism that attracts a lot of working and middle-class voters with an economic message that appeals to them as well.

• 57:44Ezra Klein?

  Well, you've described this in terms of the wedge being social. But when I read you, I often see the wedge as educational. But the critique you make of the Democrats is that whether or not they realize it's been happening, that their economic policy has begun to serve more and more the questions of a more educated electorate, right? That their economic policy is more for people with college diplomas than without them. Make that case, because I don't think that's how Democrats see themselves.

• 58:16Speaker 03

  Yeah, I think that's right. And so I guess what I'd say is, it seems to me there are a lot of people out in the US, maybe even the majority, who, on these more social issues, tend to be more conservative, but have typically preferred what was the traditional, more working-class-focused Democratic message. But what you have today from the Democrats, notwithstanding some of the rhetoric, is an agenda that, to me, anyway, looks overwhelmingly focused on the interests of a quite sort of narrow, highly-educated, high-income set of voters. And so, you know, the quintessential set of policies, if I think about the sort of,

• 59:00Speaker 03

  you know, the big fights that the Biden administration has chosen to pick, certainly immigration policy is one example. You know, an education policy focused overwhelmingly on just telling people they don't have to pay back what they borrowed to go to college is another element of that. I think the climate agenda as the focus of industrial policy is another element of that. You know, a lot of people ask, well, like, isn't the stuff you're talking about on industrial policies exactly what the Biden administration is doing? I would say, conceptually, to some extent, it is, but it is all done subject to this green agenda, which has a set of costs and benefits that I don't think pans out very

• 59:43Speaker 03

  well for for most workers, and I don't think they do either. And so I think when you sort of step back and look at it, it's very hard to make out the priorities of the Democratic Party and the things they're going to the mat on as at all aligning with what most Americans care about, and certainly what those who are not doing so well economically are focused on.

• 1:00:05Ezra Klein?

  Although when I look at a lot of Republican Party positioning, and this includes still with things like Project 2025, I still see a lot of financial deregulation proposals. Project 2025 wants to get rid of the financial industry regulatory authority. It wants to severely limit the Consumer Financial Protection Bureau. I still see a lot of proposals to slash Medicaid very, very deeply, to cut the Affordable Care Act. As much as you might be for a child tax credit, it is Republicans who let the expanded child tax credit expire and have been very, very resistant, though again, not your faction, to figuring out some way forward on it. It still seems like there's a Republican Party

• 1:00:47Ezra Klein?

  that has kind of the old Reaganite spending priorities and the old Reaganite views on regulation. And the Democratic Party, while it does say, have a view on college loans that it didn't used to have. And my view for a very long time has been, if you want to go around forgiving debt, you want to start with medical debt, which I think is much more built around bad luck than college debt is. But nevertheless, that it's still very focused on negotiating pharmaceutical prices and trying to expand subsidies and health insurance programs and trying to expand things in Medicare, that there is this sort of this old spending line has actually not changed all that much.

• 1:01:26Speaker 03

  Well, no disagreement on the Republican point. And if I could, you know, quote one of our great statesmen, I am in a sense trying to imagine what could be unburdened by what has been. You know, what I'm describing is a potential future for conservatives. And to your point, it's the one that folks like Vance, Rubio, Hawley are also trying to make the case for, right? You don't hear J.D. Vance out there talking about.

• 1:01:56Speaker 03

  Cutting entitlements and removing access to medical care and so on and so forth. I think on the Democratic side, you're right that Democrats certainly do stand up for and represent essentially the big spending element of the agenda. I'm also not sure at this point how much it actually does distinguish them from where Republicans are on any of this stuff. And so that's why, you know, I very specifically said, if I look at the fights the Biden administration chose to pit, like if you're looking at where are the actual political conflicts, where are you actually going to see a very different world depending on which party is in power? The things the Democrats, at least the Biden administration, really seem to have planted

• 1:02:40Speaker 03

  their flag on are these set of things that are very important to people who work for the Biden administration, but not necessarily those that that are critical mass of voters are interested in. And I think just the last thing to say about this, a really interesting place to see where the rubber meets the road, where we've started doing a lot of work at American Compass, is is on fiscal and budget questions. Because it seems to me there's no question, given where we are right now, you are going to have to bring spending down. And I think that is something that there is going to be significant support for in the country. Whether either party can can find the right position on that remains to be seen.

• 1:03:22Speaker 03

  I've at least started to see some Republicans going out there saying, look, we need both to bring spending down and we are going to need more revenue. I have yet to see the Democrat ready to acknowledge that, yes, some spending is going to have to come down and here's where we're going to focus.

• 1:03:40Ezra Klein?

  Really? I feel like Democrats acknowledge that. I mean, I feel like we're acting like we just fell out of a coconut tree, to quote the same great stateswoman. I think Democrats talk about this frankly, all the time. I mean, you walk into Mark Warner's office and ask him if he doesn't think spending needs to come down sometime. Look, like, I think Joe Biden would be perfectly happy to get into a negotiation with congressional Republicans. I mean, I would bet money on this, real money, that if Mike Johnson wanted to come to Joe Biden and say, hey, look, I think our fiscal position is out of whack, and we're open to a deal that cuts spending and raises taxes, Joe Biden would be like, I would love to have those negotiations.

• 1:04:21Ezra Klein?

  Whereas Donald Trump has a real articulated policy here, which is that he wants to continue his tax cuts, which cost in the trillions of dollars and were largely unpaid for, or at least like were not nearly fully paid for, is I guess another way of putting that. And he wants to use some of the money from the very tariffs we were talking about earlier to do a deeper corporate tax cut. This is a place where, since the Republican Party of Mitt Romney and Orrin Cass and Paul Ryan in 2012, things really seem to have changed, where I can't track what Republicans even think about debt and fiscal policy any longer. They don't really seem to care, doesn't seem to motivate anybody. And Donald Trump specifically seems to care a lot about tax cuts.

• 1:05:04Ezra Klein?

  The suspicion Democrats always have about Republicans, because it has, you know, in the lifetime of someone like me, always been proven true, is that Republicans want to talk about fiscal irresponsibility, but then when they get into office, the first thing they want to do is cut taxes. So what I see when I look at Republicans, and you can tell me if you think this is wrong, is a desire to extend the Trump tax cuts, a desire to cut taxes more, and a desire to radically, or at least significantly, increase defense spending. And I've heard actually zero that is not sort of old school Paul Ryan-ism, you know, we're going to get rid of the Department of Education or something, about how they're going to pay for any of this. Am I misstating it in your view?

• 1:05:50Speaker 03

  I think you are a little bit. I would have agreed with that as of a, as of a couple of years ago. And also so stipulated with respect to Trump. I have not heard anything fiscally responsible for me.

• 1:06:00Ezra Klein?

  But that's a big, that's a big stipulation, right? Because he is the leader of the party and people fall in behind him.

• 1:06:05Speaker 03

  Oh, and I think we've made clear at a number of points during this conversation that certainly what I'm speaking about and have optimism for broadly speaking is essentially what this set of folks in Congress is working on, where conservatism is headed. And, you know, in that respect, if you look at this exact question, you've seen a dramatic change, even just in the last year, on how very prominent Republicans are talking about this. So, you know, Jody Arrington, who's chair of the House Budget Committee, went on the record saying, we need to put revenue on the table. Tom Cole, Chair of the Appropriations Committee, went on the record saying we need to put revenue on the table. Chip Roy, Policy Director

• 1:06:49Speaker 03

  of the House Freedom Caucus, went on the record saying he's open to taking the corporate tax rate up. Josh Hawley, I mentioned the speech he just gave about embracing unions, also specifically highlighted corporate tax cuts as a mistake, suggesting we should have a higher corporate tax rate. And so it seems to me that quite recently, there is actual reason for some optimism that there could be progress on this and that the, the 2017 version of the kind of Paul Ryan-led fiscal policy is not what is going to be the future here for conservatives. I am struck by your comment, though, about go and ask Mark Warner,

• 1:07:31Speaker 03

  go and ask Joe Biden, because something that we've tried to do some work on, given this openness that some Republicans have conveyed, is, okay, who are the Democrats? Who could be the other side of it? And, you know, just an example, we did a, an American Compass podcast interviewing Jody Arrington and then also interviewing Ro Khanna, the Democratic representative. And it was fascinating to interview Khanna about this because he essentially just said, no, I'm not actually interested in reducing spending. I, you know, I do believe we could get more efficiency in healthcare spending, negotiating drug prices, et cetera. But that, what he'd do with that is plow that into more healthcare programs, not actually

• 1:08:16Speaker 03

  bringing spending down at all. Certainly other Hill offices on Democrat side we've spoken with, we've run into the same thing, which is, I'm not actually sure, what would Mark Warner say? I mean, you don't have to speak for him directly, but what is the spending cut that Democrats might actually be open to putting on the table at this point?

• 1:08:37Ezra Klein?

  Look, unlike literally any significant policy I know of during the Trump administration, the Inflation Reduction Act was scored as fully paid for and more. I mean, they raised taxes in order to pay for what they wanted to do and then raised taxes by a bit more than that, so they would get a positive score under the Congressional Budget Office. So I think, one, there's just a baseline level outside the stimulus spending of COVID, which I think was a very extraordinary situation for all kinds of reasons. There's a baseline level of belief that you should not worsen the fiscal picture and you should pay for what you're doing. And then though, and I do think this, I won't speak for Ro, but I feel like I have a good sense of people like Warner and your Tim Kanes and your Ron

• 1:09:19Ezra Klein?

  Widens and so on on this. They all feel very burned, and your Joe Bidens for that matter. They feel very burned by the budget negotiations of the Obama era, where they feel like they put a lot on the table. And at the end, it was endlessly difficult to get Republicans to deliver, such you finally just had the super committee sequestration process engage. And we just had these dumb, automatic cuts for years and years. And so my read of them, because I don't think they've been saying anything different than they frankly always said. And all of these people have at different times endorsed all kinds of packages of potential spending cuts. But they don't believe it's there for a deal.

• 1:10:00Ezra Klein?

  I remember Barack Obama signaling openness to raising the Medicare retirement age, which made everybody on the left super angry at him, only at the end for Boehner to not be able to deliver. And the view of Democrats is that Republicans cannot deliver on hard votes in Congress any longer. And so the upside of getting into that kind of process, particularly around an election year, would be quite low. I'd be very curious to see what would happen in the kinds of negotiations you're talking about. If you're asking me, why is Joe Biden, which is a different question? If you're asking me why Joe Biden has not engaged in a budget process with Republicans, I think it's an interesting question, but I don't think they believe Speaker Johnson can deliver, and I don't think Johnson has signaled the kinds of things you're talking about here.

• 1:10:45Ezra Klein?

  I agree that people like Vance and Rubio have a time signaled and openness to a bit more revenue, but I think that there is a credibility building operation that would need to happen there before people took that seriously.

• 1:10:59Speaker 03

  Yeah, no, totally agree. And we just did a big project on where on earth do we go on this stuff? And that was exactly where we landed, that these, here's my 10-year budget to path to a balanced budget, here's your commission on this or that, is exactly backward. What's needed is these smaller credibility building exercises. Can we get in a room and actually do? Can we do 50 billion of revenue and 100 billion of spending cuts, right? Like, just something that both sides actually begin to believe the other side is serious. I am more optimistic than I've been in a long time that that could actually happen, and it is a function of as with other things we've been talking about, you know, some of these shifts on the right that I hope will continue.

• 1:11:41Ezra Klein?

  Let me end here on a question about prices. One thing that you are very sensitive to in your writing is that if you want to be a populist economics thinker, you have to take pretty seriously what the public thinks. And the public is pretty clear right now that they want prices to go down. They are very mad about how much they are paying. A lot of these policies that even some of the ones that I agree with, but some of the ones that I don't, tariffs and, you know, sharply curtailing immigration, they're price increasing, sometimes as a one-time thing, sometimes for longer than that. How is your thinking about the politics and pitfalls, I guess, of prices changed, given how many people say the thing they want from their politicians above all is for things to be cheaper again?

• 1:12:25Speaker 03

  I guess it hasn't really changed my thinking very much. The inflation of the past few years was obviously very damaging. It is, in my mind, rightly connected to some quite irresponsible policy choices that were made. And I don't think that's going to be forgiven. And so I think that is sort of priced into current thinking about how people feel about the last few years. That being said, inflation has obviously now come back down. Hopefully, we are returning to a period of price stability. And I think it would be a mistake to infer from this experience.

• 1:13:05Speaker 03

  Therefore, the correct policy agenda is one that first and foremost promises low prices. Because I think what there is still an opportunity for is to essentially be honest about and intentionally pursue a policy that has trade offs. And that's something that's been lacking in our politics for a very long time. And I honestly think there's an opportunity right now, and this is something we're doing a lot of work on, particularly in a populist framing, to be quite honest about the hole that we have dug for ourselves over the last 40 years and about some of the things we can and should do to dig back out of that hole.

• 1:13:49Speaker 03

  And I think if it were understood that you were actually getting something for your price increase, that is, this was not a result of bad policy and mistakes. This is happening because we actually are doing the reshoring, because we actually are bringing up wages for those who have been struggling. I really do think there's a political message to be built around that that is way more effective than a lot of what we've been hearing. And certainly, all the polling that we do finds that same thing, that when you tell people honestly, "Look, here are the ups and downsides of a tariff. One of the downsides of a tariff is it raises prices." That doesn't reduce support for tariffs.

• 1:14:34Speaker 03

  But the idea that you should ask people to pay a price for something is not foreign to our politics and in fact can be a very healthy part of a message. Then, Al, as our final question, what are three books you'd recommend to the audience?

• 1:14:47Speaker 03

  All right, I put some thought into this because I want to provide a useful and diverse set of recommendations. So I have nonfiction. I've been reading Robert Caro's Lyndon Johnson biography, and I must admit, I'm not very far into, you know, what, the thousands of pages and four volumes. But I'd always been skeptical that a four-volume, thousands of pages biography could be especially interesting. And I have to say, it's phenomenal. So The Path to Power by Robert Caro would be one. For those who enjoy science fiction, and especially if you need an audiobook for a long drive, I would recommend Project Hail Mary by Andy Weir. He's the guy who wrote The Martian, which became the movie with

• 1:15:29Speaker 03

  Matt Damon, Stranded on Mars. But this one's even better. And without too many spoilers, it is an intrepid scientist and his little alien buddy saving the world. And finally, for those with kids, a wonderful bedtime read aloud. It's called The Green Ember. It's actually given to me by my team because they knew I liked reading to my kids. And it is about rabbits fighting with swords. Who could do better than that? Oren Cass, thank you very much. This was awesome. Thank you.

• 1:16:09Ezra Klein?

  This episode of The Ezra Klein Show is produced by Annie Galvin. Fact checking by Michelle Harris with Kate Sinclair and Mary Marge Locker. Our senior engineer is Jeff Geld with additional mixing by Aman Sahota and Isaac Jones. Our senior editor is Claire Gordon. The show's production team also includes Roland Hu, Elias Isquith, and Kristen Lynn. We have original music by Isaac Jones, audience strategy by Kristina Samulski, and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie Rose Strasser. And special thanks to Sonia Herrero.