Good day from Newsweek headquarters at the top of the World Trade Center in New York City on a beautiful fall September day here. I am Carlo Versano.
This country was stone cold dead. This is the 1600. It is UN week here in New York City, which you know most New Yorkers hate. They despise it because it's impossible to get around and everything's booked, yada yada. I actually, I love it. It's the only time of the year where you can legitimately like run into a head of state walking down Fifth Avenue. Feels like you're living in the center of the world. But anyway, my guest today is not a head of state, at least not yet. Anthony Scaramucci is here back with us in the cut making his return appearance to the pod. Anthony, good to see you, man.
Carlo, I'm happy to be back. I mean, I had a lot of fun with you last time I was in this beautiful studio.
Also, you're the podcaster with the best view in America.
The view here is a north-facing view of Central Park and the Empire State Building, some of the most beautiful architecture in the city. It really is. Thank you. And yeah, it doesn't get old, right? I mean, you get that view, it really doesn't get old. Anthony, if you don't know him, which I think would be unlikely if you're listening to this, he of course briefly served as White House communications director under Trump 1. He now hosts the uber popular podcast, The Rest is Politics US, with the great Katty Kay of the BBC. And he's got a new book out called All the Wrong Moves. We've got it here in studio. It's a great book. It's about the catastrophic decisions that we've frankly talked about here on the podcast and in the newsletter that have been made, you know, over the course of several decades by both parties that Anthony argues led to the rise of Trump and this frankly nightmare that we're all living through right now. Also, my favorite New York Italian who I don't share a name with.
All right. Well, I love that. Okay. You know, it's interesting. My favorite Italian is my mother.
Okay. But you're coming up the list.
Okay. What's your... Are you Sicilian?
No. You are though, right?
Okay. Yeah. So my family's from Avellino, which is near Naples. We're considered Napoli Dons.
But my father's family is from Umbria, which is slightly newer.
That's where I did my study abroad. Perugia.
Yeah. That's so funny. That's where I did my study abroad. Have you ever been there?
Beautiful. Beautiful little town. Yeah. Beautiful.
Okay, let's start with the book, Anthony. The book opens with your recollection. It's funny because this is... you had sort of like a similar experience that I did. You were watching the 1999 WTO protest back when was that, 25, 26 years ago in Seattle. And I mention that because I recently interviewed the filmmakers behind this documentary WTO99, which was sort of like a found footage documentary about those protests. And I had this experience watching it that was... it's sort of like the experience that you had watching it that you write about in the book because you talk about how when it happened in the moment, like many people, you sort of looked at that as like these are just some naive hippies. They're just some kids, you know, protesting against globalization, blah blah blah. They don't really get it. And now you look back on it and you see them as prophetic.
Really? Right. Yeah. Well, listen, I want to just say it's a big honor to be on here. I got a lot of things wrong in my life which I do chronicle. If this was a book about all my wrong moves, it would have been a phone book. It would have been this big. But I tried to pick a couple things because when I do public speaking or my podcast or I'm traveling the world, people say to me, 'What happened? What happened to America, right? How do we get so polarized? How do we end up with such anger-based populism in the body politic?' And I tried to analyze that based on my upbringing, my analytical skills as a Wall Street capital allocator for 38 years, my failed experience as a White House communications director, but my 30 years in presidential politics as a fundraiser and sort of somebody that I would consider, you know, self-described insider to that process. So, to me, I want to stipulate that global trade, we need it. I am a free trader. I do believe in the global integration of an economic society to make things fairer, more prosperous, but you have to make things at the employer level, the difference between capital and labor, you have to make that an equipoise. And so what happened is when we brought China in, and remember, they didn't have permanent member status. Their goal was to come in as a permanent member.
That protest was for the vote. They were voting on whether or not they were going to become a permanent member.
And the people up there said, 'Don't make them a permanent member. They're going to use predatory pricing. They're going to team up with their government to lower prices on goods and services because they're going to get a government subsidy into those private enterprises.' And I remember thinking, 'Oh no, they're not going to do that. They're going to integrate into the global society and they're going to be eventually open politically.' I write about what Clinton said and the different speeches that were involved. And then there were hundreds of corporate publicly traded CEOs that descended on Washington to implore Washington to let China in. And just to remind everybody, we all thought on Wall Street that that market was going to be open to all of us, right? And we just found a 1.3 billion person market for us to sell our goods and services. So there I am as a smug, self-absorbed 35-year-old Wall Street hedge funder sneering and laughing at the protesters. And I start out the book, I was wrong. They got it right. They saw something that was about to happen that I didn't predict. The market didn't open. There was predatory pricing. Lots of companies dislodged their labor, moved them into Mexico or parts of Asia. And we saw middle class wages stagnating. And I think that was our big mistake. One last point on the Chinese. They should be in the World Trade Organization, but they should have been checked as their economy was growing. So they had emerging market status. If you look at the deal that we did with them, right? And as they became the size of the UK or they became the size of Germany, they should have been treated like Germany, but they had a lot of protective features in that that we let them take advantage of. The other thing I remember watching the WTO 99 protest now is, you know, part of it is hippies and sort of like the Occupy Wall Street crowd, but it's not all that. When you look back on it, a lot of it is union guys, right? Hard hats, labor leaders, still alive.
And it's funny because you just sort of mentioned this, but you're not coming at this as sort of like an anti-globalist or an anti-capitalist, right? At all. You're not in the DSA, right? You're a Republican hedge funder, you live in the Hamptons, you drive a Lamborghini. You're part of the bipartisan elite.
I'm a bougie nouveau riche guy, right? But I started in a blue-collar neighborhood. I was able to ascend to Wall Street and live a very good part of the American dream. So I'm trying to tell people that the family I grew up in was economically aspirational. My father had a decent wage. He was in construction, right? He was. We had a single-family house. Yeah. Did we have a budget? Certainly. But I never grew up poor. I never dishonor my dad or my mom's work effort to say that we were poor. Never did that happen. We believed... We've taken those families, those economically aspirational families, and we've made them economically desperate over 35 years. And I try to explain to people how that happened. And I think the most resonating message of the book, at least the one I'm trying to convey, is nobody did it on purpose. There's no malevolence. These are good people working in President Clinton's administration, President Clinton himself. There were good people that made decisions around the Iraq and Afghanistan wars. You and I are standing or sitting on sacred ground down here. Of course, 25 years ago, we had this horrific tragedy that we both remember. And so there were mistakes made. We can have very smart people who make decisions and they're expecting a certain outcome and they get the complete opposite outcome. And in the three cases that I write about in the book, that's what happened. And again, it's not a partisan polemic. It's not tribal. It's a historical, economic, and political observation of the country after the fall of the Berlin Wall where we were pretty smug. We're like, 'Hey, we've got this figured out.' Right. Francis Fukuyama, end of history. We got this figured out. And let me tell you something, everybody's coming our way. The liberalism, the democratic capitalism, the free market basis. Everybody is going to import our system. And there's a little bit of arrogance in that crept in and then we started making some faulty decisions.
I would quibble with one thing, which is that I think the Iraq decision was more malevolent than you probably think. I was watching... you just mentioned 9/11, right? So the 25th anniversary was a week or two ago. I don't know about you, but there was something about this anniversary that felt much heavier than it has in a while. I don't know if it's just because it was a big number, quarter century.
Well, is that because Osama bin Laden is winning? Is that why it's heavier? Because I wrote an op-ed on the day and I got a lot of criticism for it, but you got to tell the truth. Osama bin Laden said, 'I'm going to hit you guys. You're going to wildly overreact. You're going to come and spill your blood and treasure in my homeland. We don't care. We're playing for the next life, right? And you're going to take away your civil liberties,' which we did with the Patriot Act, 'and we blew $8 trillion in the Middle East. It could have been spent on education and infrastructure and the environment.' So, when you're sitting there on the 25th anniversary of 9/11, and the deficit started at the beginning of Bush's term, George W. Bush, at $5.8 trillion. Yeah. And we had pay-as-you-go legislation that had us printing a budget surplus before Bush got into office. He cuts taxes twice, goes to war twice. You kill 10,000 Americans, millions of Middle Easterners, and we print... look at the numbers. You go from $5.8 trillion.
Yeah. What are we at now? 40.
40. We're about to hit 41 trillion, right? Which... and I think Trump is responsible for like a third of that or something. It's unbelievable. And now we're doing it again.
But by the way, and again, I'm critical of the president, but I want to be fair to him in the following respect. You or I could be president.
And nothing's stopping that train. And that's the truth because look at the Biden numbers, right? You know, we have... neither party is capable of doing what needs to be done on the...
Right now they're not. But we were doing it in the 1990s. We put that legislation together that corralled the spending.
It would take us 15 years to pull out of this thing.
But we have three-minute sound bites on television or a podcast like this. You may get 20 minutes, but that's it.
Right. And no one's working on a 15-year plan.
No. Well, ain't that the truth.
You mentioned in the book this quote that Abraham Lincoln gave in his first message to Congress in 1861 that I forget what the exact quote is, but his basic point is like labor is superior to capital. Well, not only are labor and capital not equal in our current system, right? Capital is taxed at a lesser rate than labor. Isn't that sort of like the skeleton key to understanding so many of the problems that you talk about? Like we don't value work, we value capital.
So, here's the thing. I just want to explain how that happened. Let's say I make $100. You tax me at 50%. But let's say I save 25 of it. I've already been taxed on the money. So, if I go to put it into the capital markets, that's the form of saving. I'm the ant, not the grasshopper. Okay? And so, now I'm going to make money off of my savings. The idea was you would give me a lower tax rate on those gains because I've already been taxed. But the perversion that's going on now is because the way we've created things, you can get founders of companies that can make a billion dollars, never pay any taxes, and they just borrow the money off of their margin account. So, we would have to fix that. But I just want to explain where that came from. But what Lincoln was trying to say, and Lincoln is the man, by the... I have a book on my nightstand is Lincoln's original writings, his speeches, some diary entries, the Douglas-Lincoln debates. But what Lincoln was trying to say is that capital is more important than labor because while it's important, labor feeds the system. If you have disposable income as someone that's in the labor part of the society, you spend that money at Target and Walmart and it filters through the system. And so the higher flywheel of disposable income is the engine of capitalism, is the engine of capital.
Isn't this the trickle-down, the Reaganomics?
Well, it's the reverse of it. It's actually saying trickle-up. Right. Trickle-down would be I'm cutting taxes for capital and then capital invested into the businesses. You see? You see what I'm trying to say? But Lincoln was trying to say something that I try to write in the book. When you have an equipoise between capital and labor, you have real living middle class wage rises. When you have it where it is now, the capital is making tremendous amounts of money. I don't mind that. But you got to give something to the little guy, right? You don't give something to the little guy, you're going to leave them out. They're going to get upset and they're going to come after you. They're going to come after you with a tiki torch and a pitchfork. You want democratic socialism, which I do not want. They'll come and they'll say, 'Hey, look, we're going to take you, you earned too much money. We're taking it from you.' Right, because nobody has given them, the DSA people, the socialists, a better solution. So, of course, that's what's going to happen. But Teddy Roosevelt had it. Remember, he was a Republican and he was the father of progressivism. He broke up the trust. He told Rockefeller he couldn't have two and a half percent of the GDP of the United States. I'm very sorry you're going to do that. He enforced the building code system so that the tenements where the immigrants were living weren't collapsing on each other. And he pushed an idea that you could have a fairer deal for people and you could create aspirational living standards in the country. For some reason, we have grown different and we have grown indifferent and we've grown apathetic to those ideas. But I'm telling you those ideas are better for the society. I don't want to be... You're right. I'm rich and bougie. My wife would be really upset of me using the word. She's like, 'Never use the word rich. It sounds garish.' But I've made some money. The family has some level of financial independence. We didn't start that way. But what I don't want to have happen is I don't want to be living in a barbed-wire security compound while my fellow neighbors are suffering. Yeah. I would rather have less money and know that my neighbors are doing well so that the crime rates are lower and their kids feel like they can get ahead and they get their kids to the starting block the way you gave me a starting block.
I was behind the rich kid. I was behind the kid that was driving the BMW on my college campus. No problem. Right.
And you felt in the moment that you had a shot. I'll be driving the Beamer one day.
And we still have... the American dream lives. I'm not a dour guy. I'm not a pessimist. It lives, but we've made it unnecessarily harder for a large group of people. I'm trying to explain in the book how we got there, and then here's some things we could do or think about to make it better for people.
It's funny because I think we had somewhat similar upbringings. I mean, it was similar in the sense that we both grew up in suburban New York City, single-family income, right? Like your mom didn't work. My mom... I mean, part time. My mom worked on the weekend as a makeup artist, but yes, the primary breadwinner was my dad.
Same. And same with my pop. He worked, you know, he worked for the city, not construction, but we never felt poor, just like you were saying.
It was a good upbringing.
And I just feel like so many of our problems now are you don't have that sense that you can't assume that your life is going to be better than your parents was the way that we sort of could, right?
Well, not only that, when it's polled, right, 70% of the Americans in that income strata say it's not going to happen, right? When it's polled and there's the anger. So, they're like, 'Wait a minute. You're leaving my family out? Oh, wait a minute. There's a two-tiered system. The people at the top are making unlimited amounts of money. The president's obviously doing stuff with his family that I think is overtly ridiculous.' That level of corruption also makes people think that there's a two-tiered system and there's not a glass ceiling, but there's a concrete ceiling over their heads and they can't bust through. And so you have to make sure that there's economic fairness, economic opportunity, and you have to pay the section of the economy where they're not tied to assets a decent amount of money so that people in the family think, 'Hey man, I'm making it.' You know, my father was like a hard worker, right? He did well. He did better than his father. Grew up poor, but he was like, 'Hey, you know, this is the American dream. Go work. Go bust your hump.' And you know, we both know, which is why I enjoy coming on your show, is that nothing that is worth anything comes without hard work.
Said differently, you have to work your ass off and the things that are worth it require that level of work, but you got to be able to work. You got to have the opportunity.
Right. Exactly. Well, and I think that a lot of the angst around AI right now is a lot of young people feeling like they're getting locked out of the job market. They did everything right. They studied, learned to code. They went to college. They did everything that we told them to do. And now they're coming into a job market that feels like it's just locking them out.
Yeah. Or they're going to get a job, but it's going to be half the wages that they could have gotten or there's redundancy now because you can use these large language models and you can put up 50 agents to do the work that used to take 50 people. And all that's true, but I'm an entrepreneur. And I believe what will happen is parts of the economy will transition to other things. The same way when the horse and buggy went by the wayside and the horseless carriage showed up or the telephone.
So you're not an AI doomer.
I'm not an AI doomer. I am an AI cautionary tale person. Yeah. You have had atomic weapons in this world since 1945. Sure. The advent of the maturation of the Manhattan Project. So we've got it under control by some miracle. I think AI could be apocalyptic. I think AI could be dangerous but I also think from my understanding of it we can create large language models that can help us rebut the bad actors. You know, said differently, think about quantum computing. If we get the quantum computing, they'll crack every encryption, but then you'll have to match it with quantum resistance. And so, if we can do that combination in an AI format, I think we'll be safe. I think you have to raise the warning levels and if it's necessary to slow things down to make sure these protections are in place, we should certainly do that. But I don't think AI idles the population. The population doesn't get idle. Every time we've had a big wave of technology, things change. And by the way, it wasn't that long ago, 150 years ago, we had a six-day work week. Now we have a five-day work week. Right. Maybe with AI, we have a four-day or a three-day work week.
They've been saying that forever, though. I'm still working five days a week.
I am, too. But maybe that will change. And maybe you'll have more leisure time.
And guess what? There'll be a bigger leisure economy, right? And there'll be people working on making sure your leisure is going well for you. And that could be a very big shift in the economy.
I think... no, I'm generally in agreement with you. I guess I think that the fear that a lot of people have is just they don't trust these guys, the tech oligarchs, right? And I think they look at some of these guys and they're like, you just sold us this bag of goods on social... this social media was going to connect the world. It was going to make everything better. And it's done the absolute opposite of that in basically every way. Like everybody's more miserable, more polarized.
Well, because we know something about ourselves. Okay. When we are doing a comparative analysis with other people and when you're living an unfiltered life, which we all are, and you're examining and making a comparison between your unfiltered life with somebody's filtered life, you feel FOMO, you feel regret, you feel anxiety.
You feel... This is part of our primordial wiring. We feel this stuff. The jealousy instinct comes from survival.
No. Exactly. But these guys, they gamified that, right? And they were able to monetize it. And I think that's what people say, well, if they did that with social media after telling us that it was going to be this great thing and it wasn't. Why do we expect these same people are going to have our best interest in mind with this next technological revolution?
I think it's a big risk, which is why you're going to have to have regulation and you're going to have to have some type of bipartisan, at least in our country, bipartisan oversight of the models, right? And you're going to have to have some consumer protections on those models. I think it's a big risk. I see that. But I'm confident because the incentives are lined up that they will all obey and abide to whatever those guidelines are because that's the only way they're going to look... you got a choice. Don't want to obey the guidelines. You want to send us into an apocalypse, right? Then your company's not going to make a lot of money. And sort of my hope, too, is that right? For them, your economic interest is to avoid the apocalypse as much as it was to avoid a nuclear strike.
Yeah. Exactly. All right. Well, you're making me feel a little bit better. All right. Back to the book. So, it's framed around these big three economic decisions that you call catastrophic. The first being what we just talked about, our decision in the '90s to privilege China in trade. Tell me the other two in brief. We sort of hit on one of them, but explain and don't give away the book obviously.
Yeah. No, but I mean it's important to tell people. So we had pay-go, that's the name of the legislation you look up on Google. We had restrictions on the Congress in terms of the guardrails of what they could spend. A result of which when the economy boomed, the economic growth exceeded the tax spending growth.
Okay. And that caused us to flip into surplus. And so we were sitting at the beginning of 2000. So the CBO said from 2000 to 2010 we're going to print $5 trillion of surplus, we're going to be able to pay down our national debt.
But when Bush won, he wanted to cut those taxes. So he did.
But then the war started. He cut the taxes in March. The war started in October.
And then all of a sudden the lines started separating. Now, Bush did say and Cheney did say that those wars would last weeks, if not months, but they lasted two decades. Yeah. And that's where the real separation started. And I'm just saying step one, you're stagnating the wages by allowing China to come in unchecked. Step two, you're putting wars on the credit card, which sends the trajectory of the deficit to the moon, which is inflationary.
Right. Deficit spending is unfunded tax liability and so you have to pay the piper.
Our politicians are weak-kneed. They chose to pay through inflation. That's the most pernicious and most regressive tax.
So now you hit the person, you stagnated their wages and then whatever wages they were making, you devalued them.
Okay. And then the third piece which is equally infuriating, you gave a trillion dollars to the banks. You could have split it. You could have said, 'Okay, here's 750 for the banks, 250 for mortgage relief, rental relief, credit card relief, some type of subsidy.' But we didn't do that.
You're talking after '08.
After '08 and then the money goes into the banks and then 5,000 people in the American banking industry earn a million dollars or more in a bonus, right, in a year where they were taxpayer subsidized. And man, if you want to get people angry, you do that while they're losing their house.
Well, this was Obama's original sin.
Yes. Yeah. And by the way, Obama would push back and say, 'Well, George Bush came up with the idea, right?'
I say, 'Yeah, that's fine, but you had to implement it, right?'
Okay. And you and Tim Geithner, because Geithner was one of the architects of it, implemented it. And they all, if they want to be honest, they will have to admit that we made a mistake in terms of the allocation of subsidy that went into the economy after the crisis, too much of it went into the banks.
Yeah. Recapitalizing Wall Street at the expense of Joe Schmo.
And you socialized... so you personalized my capital losses and my risks in capitalism and you socialized the banker's losses, right? Okay. And so you get Occupy Wall Street, you get the Tea Party, those two guys, which are funny because those are... you didn't feel like it in the moment, but those are two sides of the same coin.
Oh yeah. Well, that's Bernie Sanders and Donald Trump, of course.
And so again, look at me. Everyone says that the left-leaning populism and the right-leaning populism is a horseshoe. I don't see it that way. I see it as an incomplete triangle. They're a lot closer together than you would think. Go take a look at Trump's speeches. Yeah. And Bernie Sanders speeches. You want to have a little fun? Right. Ask for the transcript of 10 Bernie Sanders speeches. Ask for the transcript of 10 Donald Trump 2016 speeches. Put them both in ChatGPT and say, 'Are these similar?'
That's where Trump was somewhat cogent and coherent.
