← Breaking Points with Krystal and Saagar
Breaking Points with Krystal and Saagar
4/7/25: Elon Jumps Ship On Tariffs, Mass Protests Erupt, Dem Congressman Faces Off On Tariffs
00:48:42
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- [00:00]
Crystal Ball
Does this podcast make you happy? Of course it does. That's why you're here. But it only comes out once a week. For happiness, every night. You need Adam and Eve.
- [00:10]
Sagar Enjeti
Yes.
- [00:10]
Crystal Ball
I'm talking about sex toys. It's cool. It's cool. You have earbuds in right? Adam and Eve, America's most trusted source for adult products, has been making people very happy for over 50 years with thousands of toys for both men and women. Just go to AdamAndEve.com now and enter code IHEART for 50% off. Almost any one item plus free discreet shipping. That's AdamAndEve.com, code IHEART for 50% OFF.
- [00:37]
Ro Khanna
At Ameca Insurance, we know it's more than just a car or a house.
- [00:43]
Oren Kass
It's the four wheels that get you.
- [00:44]
Ro Khanna
Where you're going and the four walls that welcome you home. When you combine auto and home insurance with Amica, we'll help protect it all. And the more you, the more you can save Amica. Empathy is our best policy. Amazon Pharmacy presents painful thoughts 20 more minutes to kill in the pharmacy before my prescription is ready. Maybe I'll grab some deeply discounted out of season Halloween candy. I never had a chocolate pumpkin with raisins before. Those were raisins, right?
- [01:28]
Sagar Enjeti
Next time use Amazon Pharmacy.
- [01:30]
Ro Khanna
We deliver and no, those were not raisins. Amazon Pharmacy Healthcare just got less painful.
- [01:37]
Sagar Enjeti
Hey guys, Sager and Crystal here.
- [01:39]
Crystal Ball
Independent media just played a truly massive role in this election and we are so excited about what that means for the future of this show.
- [01:46]
Sagar Enjeti
This is the only place where you can find honest perspectives from the left and the right that simply does not exist anywhere else.
- [01:52]
Crystal Ball
So if that is something that's important to you, Please go to BreakingPoints.com, become a member today and you'll get access to to our full shows unedited ad free and all put together for you every morning in your inbox.
- [02:03]
Sagar Enjeti
We need your help to build the future of independent news media and we hope to see you@breakingpoints.com let's turn now to some internal divisions inside of the Trump administration. Elon Musk, allegedly the most powerful person who was currently in the Trump administration, is majorly counter signaling the Donald Trump tariffs. He appeared recently in an interview with respect to European where he has been speaking against tariffs and what he would like to see is the end goal. Let's take a listen.
- [02:33]
Ro Khanna
I'm hopeful for example with the tariffs.
- [02:35]
Sagar Enjeti
That that at the end of the.
- [02:37]
Ro Khanna
Day I hope it is agreed that both Europe and the United States should Move ideally in my view, to a zero tariff situation, effectively creating a free trade zone between Europe and North America. And that would be my. That's what I hope occurs. And also more freedom of people to move between Europe and North America if they wish. If they wish to work in Europe or wish to work in America, they should be allowed to do so, in my view. So that has certainly been my advice to the President.
- [03:17]
Sagar Enjeti
Obviously that's not what the President has taken in terms of his advice. And Elon is now openly at war with Peter Navarro, who is trying Trump's trade advisor and definitely the person where a lot of these formula and this idea came from. Put this up there on the screen just so you guys can see. So Navarro gave an interview where he was responding to some of Elon's points. Elon replied, A PhD in econ from Harvard is a bad thing, not a good thing. Results in the ego and brains are greater than problem. He replies. Navarro is 100% correct. PhD or no PhD, just obsessed with trade for quite a while. Elon, quote, he ain't built shit. Here is Peter Navarro's response. Let's take a listen.
- [03:59]
Ro Khanna
Can we go back to Elon Musk for a second?
- [04:00]
Crystal Ball
Because I'm glad that you brought that up.
- [04:02]
Ro Khanna
He also took a shot at you personally on X and he's going against the administration with respect to the tariff policy. The President has said in the coming months he may leave the administration.
- [04:13]
Crystal Ball
Peter, is there a rift internally?
- [04:17]
Ro Khanna
No.
- [04:17]
Sagar Enjeti
I mean, look, Elon. Look, Elon when he's in his Doge Lane is great, but we understand what's going on here.
- [04:24]
Ro Khanna
We just have to understand. Elon sells cars and he's in Texas assembling cars that have big parts of.
- [04:34]
Sagar Enjeti
That car from Mexico, China.
- [04:37]
Ro Khanna
The batteries come from Japan or China.
- [04:40]
Crystal Ball
The electronics come from Taiwan. And he's simply protecting his own interests.
- [04:45]
Ro Khanna
As any business person would do.
- [04:48]
Crystal Ball
We're more concerned about Detroit building Cadillacs with American engines.
- [04:54]
Ro Khanna
And that's what this is all about.
- [04:55]
Sagar Enjeti
So it's fine.
- [04:56]
Ro Khanna
There's no rift here.
- [04:57]
Sagar Enjeti
There's no rift, Chris. So who do we root for? Is this an Iran Iraq situation? We wish both sides the best of luck. Is that. I don't know. He's not wrong in terms of Elon's incentives. What's Tesla stock at? Let's check.
- [05:11]
Crystal Ball
But here's the thing. Here's the thing, though.
- [05:13]
Sagar Enjeti
Minus nine today. Good Lord.
- [05:16]
Crystal Ball
Tesla has lots of issues with Tesla, mostly Elon's leadership and the union busting. But they have gone out of their way to source parts domestically.
- [05:24]
Sagar Enjeti
They are made in America. Beyond the battery, it's the more made in America car than gm.
- [05:28]
Crystal Ball
I want you to think about what Peter Navarro is actually saying here, because if their policy was going to do what you're saying this policy is going to do, Tesla should be a huge beneficiary.
- [05:39]
Sagar Enjeti
Great point.
- [05:40]
Crystal Ball
They're an American made car. This should be great. Elon should be celebrating. This would be in his. And the fact that for even Tesla, which has done everything they can to have a supply chain that is more or less here in America, that for even them, it's going to be devastating and a real problem. And Tesla stock is falling that, you know, there's all sorts of reasons Tesla stock's been falling, but the latest one is certainly related to the tariffs as the rest of the market is in free fall at the moment. So it's such an admission that even for a company like Tesla, this is going to be extremely bad for business. As far as Elon's ideology, you know, we noted, I don't think this got nearly enough attention at the time when he was out there praising Javier Milei, who's anarcho capitalist, you know, hardcore libertarian leader of Argentina, praising him for rolling back tariffs. And we noted that right away, like, that's very different from what the Trump plan here is. Ultimately, Elon also had gone to war over H1BS with members of the sort of like Steve Bannon type MAGA portion of the Republican base. At that time, he won the fight for Donald Trump's heart. Trump basically completely sided with him in that particular battle. That's not gonna be the case in this battle because Trump has just decided this is happening, period, end of story. So, question mark, what this means for the future of the Trump Elon relationship. Last week we talked about the fact that Trump was saying, hey, Elon's gonna be out in a few months. I mean, Elon has already completely changed his political stripes. You could see him. If the Democrats go back to being a total neoliberal, like they're renegotiating TPP or whatever, maybe Elon's gonna come back to the Democratic Party. I don't think that any Democrat should ultimately want that, but who knows what the future is gonna hold. But very noteworthy, given how much power Elon has and how Peter Navarro really is the sort of like, hardest core ideological tariff supporter within the Trump administration, who, I mean, he is a sycophant, but he's not just there to be a sycophant.
- [07:42]
Sagar Enjeti
Let me go off on this a little bit because I like Peter Navarro and I'm pro tariff and I'm pro. But this talking point that the problem with Japan, like Trump just put this out, spoke to the Japanese Prime Minister this morning. He's sending a trap team to negotiate. They have treated the US very poorly. They don't take our cars, but we take millions of theirs. Yeah, you could give away a Ford F150 in Tokyo and they wouldn't drive it. Why would you? It's an over engineered, 80 something thousand dollars massive car. That wouldn't make sense when you have access to a $10,000 more fuel efficient Toyota Hilux. You know why we drive Toyotas? Because they're more fuel efficient, more comfortable, better engineered and they're cheaper. It's not because of a trade deficit. Same in Europe. The Fords and Chevys or whatever that sell in Europe, they would never sell here. They're tiny. If you ever go over there, you don't even recognize some of these models.
- [08:30]
Crystal Ball
America try to drive an F150 through like a European tablet. Literally won't work.
- [08:35]
Sagar Enjeti
You can rent one of those piece of shit little Peugeots and be driving around in Italy and you still can barely fit the damn thing through these 1000 year old. Okay, so that's one thing. But that's what he's like. This is a Stephen Miller thing too. He's like, you never see any American cars in Japan. I'm like, yeah, why is that? And it's like it's not because they're, it's not because they're being blocked. It's because their cars are better than ours. And I hate, I hate sounding like some Milton Friedman esque, like they're, you know, specialized comparative advantage. But like what are we doing here? Do we really want Japanese who have half of the median income of the average American to be rolling around in a Cadillac with a cooler in it? The way that that's what these Americans are buying. And actually they shouldn't even buy them. They're ridiculous. They break all the time. They have too many electronics in, way too expensive. We choose all of this bullshit luxury and then wonder why they were getting 20% APR at a $68,000 car payment for a brand new car. It's one of those where it's totally out of step. Like in Japan, they would laugh at you if we were like, oh, you need to buy a more. What is it? Chevy Equinox. They're like, no, why would I do that? Whenever I have Access to this Toyota will last me for 25 years. Or a Honda. Or you know, go to South Korea and tell them to buy this. Preposterous. This is where I just. I'm seeing it's not even 19th century. Cause at least that actually made sense. You know, I dug out actually. I'll bring it in. We can look it over together. I have a 1902 US Atlas that I found in an antique store. And it's awesome because it shows all of our national expenditures and our customs duties. And it's true, almost 42% of all of revenue in 1902 from my atlas shows comes from the customs duties. But you know, it's also a country that basically spent nothing and had no income tax. It was very, very different. Right. One of the interesting things in there too is to actually see how little America mattered at that time. In that atlas it has a list of the military sizes of the great German of the Germanic empire and all this. America's like number 25 in all of these. It's actually a fascinating view into history. But my point just broadly is just like what are we trying to do here? Are we trying to have more re. Industrialization? Great. Do we want to force Japan American cars on? Have we not exported enough western bullshit over to them? Leave them alone. Same with the. And this is not just my Japanese love. Same thing with the Europeans. Like they drive their cars because they're engineered for their purposes. In the same way that the Jeep Grand Wagoneer with coolers appeals to the American soccer mom. Most of the other rest of the world thinks that's grotesque and weird. But you know, different markets, different strokes for different folks. I just like listening to all of this. It's that their own goals make genuinely no sense on their face. And I don't think it's just people like me who are anti free trade protectionist or whatever. Even to the basic. The person who is dying to understand this, you can't. There's nothing there. There's nothing to tug on.
- [11:35]
Crystal Ball
No, there is nothing there. And it's going to harm. Like if your goal is increasing manufacturing in the U.S. it's going to harm manufacturing in the U.S. if there is no changes to this, it will harm manufacturing in the US it will harm ordinary people. And we've talked about this in previous shows, but I wanna make sure we get it in this show too. The whole social contract of this country is cheap shit. That's what we don't.
- [11:59]
Sagar Enjeti
And the number has to go up for our.
- [12:00]
Crystal Ball
And the number has to go up. That's right.
- [12:02]
Sagar Enjeti
That's right.
- [12:02]
Crystal Ball
That's what we like. That's what. We don't have a social safety net like the Norwegian. We don't have that. Like the Scandinavian countries, like Europe does. We don't have that. Okay, so what do we get? We get our Walmart runs, we get our Costco trips. We get what Hasan biker calls our treats. We get our treats, we get them cheap, and the line goes up. That's the deal. Okay, I would like to change that deal. The deal that is on offer from Trump is you don't get your treats and you don't get anything else. You don't get anything else, you're gonna lose your job. We're going to have a recession. The line is going to go down. I mean, he is playing with fire. He really is playing with fire here. And maybe the global economy is able to absorb this better than we expect. Maybe the tariffs are rolled back and Trump is making the ultimate bluff here. And maybe it doesn't end up as catastrophic as it could, but he is playing with fire because you are getting to the core contract that has been made and sold to the American people over 50 years. And he is in one fell swoop without any Democratic input, knowing damn well that it is going to be like a political bloodbath for him and his party. Whatever. He doesn't care. He is in one fell swoop with no Democratic input, completely blowing that up. Look, we'll see. We'll see what the fallout is. We'll see how people react to that. But I think it's. I think on it, honestly, you know, one of the things also about the market crashing that also was, like, making me sick last week to think about. There was a metric that came out, I think, from Friday's trading that hedge funders were dumping more than equities than they ever had before.
- [13:48]
Sagar Enjeti
Yeah, I did see that.
- [13:49]
Crystal Ball
And retail was buying the dip at larger numbers. And so you also have, like, the movement over the past number of years, like the, you know, the Stonks movement, the Gamestop, that, like, impetus of retail trading and crypto. And those people are going to get destroyed. Like, I just. The amount of pain, the real harm that all of this is going to do to real people boggles my mind. It just boggles my mind. I cannot wrap my head around it. And so I don't know. I don't know where we're at.
- [14:25]
Sagar Enjeti
Buy the Dip Bros are in a tough one because they're down about 10% from when they bought the dip. So, you know, it's rough at the same time, you know, if you have a long term view, et cetera. Yes, things are cheap and I would never encourage panic selling.
- [14:39]
Crystal Ball
This is not financial advice.
- [14:40]
Sagar Enjeti
None of this is. You absolutely should not ask me. But just generally, we are screwing with people's lives. Yes, there will be damage at a personal level. The number one cause of divorce in North America is money problems. One of the major reasons that people commit suicide, Great Depression, people feeling inadequate, et cetera. That's just on a personal level. Men in particular, men in particular, provider role. Go look at the male suicide rate from.09. Bloodbath. Same thing whenever it comes to businesses, people's dreams. I just talked, it's April. A lot of people graduating, millions of Americans graduating in a month from now. What are they gonna do? You know, their theory, what are their parents gonna be? Are they gonna have to move home? A whole generation of millennials had to move home. It was embarrassing, you know, for a lot of folks. They felt very inadequate. It caused a lot of social problems. All of this is coming together right now. And yeah, you're screwing with people's lives. That's really where, you know, I don't forgive that. I don't downplay that. And I think it's a genuine red, like it's a red button panic mode and people can accuse you of bedwetting and all that. I'm always gonna bedwet for people who are, you know, who are trying to just live at a very basic level and who, as you said, they signed the contract, they didn't do anything wrong. And I genuinely don't think that they are getting what they thought they were going to get. Like, you could say all you want about Trump, 10%. This is so far beyond that from where, you know, anything that he sold out on the campaign. Well, and not even common understanding.
- [16:16]
Crystal Ball
He ran on, I'm going to bring prices down.
- [16:19]
Sagar Enjeti
Right.
- [16:19]
Crystal Ball
This is going to raise prices significantly. Now he's saying, I don't really care. I could care less if prices go up. I mean, that is directly contradictory. So, yes, look, if you're a Wall street, if you're on Wall street and you were like placing bets based on, he's not serious about these tariffs. Like, you were a fool. Sorry, you were an absolute fool. You should have just read Jeff Stein in the Washington Post and you'd be much better positioned. But for your ordinary person, he was out there saying, I'm gonna deal with this inflation crisis. Like, this was a centerpiece of his campaign. And I saw the numbers earlier, 40% of the people who shifted from Biden to vote for Trump, they said inflation was their number one reason. That's what they thought they were getting. They thought that that was Trump was the businessman and he would write the economic ship and he's always had high approval ratings on the economy and they just of felt like he's got it, he'll do a good job, right? Whatever that entails. He says tariffs, he says tax cuts. Well, he'll figure it out. He's a good businessman. I'm sure he's gonna steer in a good direction. In no way, in no land did the mass of voters think that intentionally crashing the stock market was gonna be that direction. And the reason I keep saying that with such he posted himself a video that said Trump is intentionally crashing the stock market. And how can you not look at this and say he is engineering a massive crash of the stock market and very likely, if we continue in this direction, a recession intentionally. Does this podcast make you happy? Of course it does. That's why you're here. But it only comes out once a week for happiness, every night. You need Adam and Eve.
- [17:55]
Sagar Enjeti
Yes.
- [17:55]
Crystal Ball
I'm talking about sex toys. It's cool, it's cool. You have earbuds in, right? Adam and Eve, America's most trusted source for adult products, has been making people.
- [18:06]
Sagar Enjeti
Very happy for over 50 years with.
- [18:08]
Crystal Ball
Thousands of toys for both men and women. Just go to AdamAndEve.com now and enter code IHEART for 50% off. Almost any one item, plus free discreet shipping. That's AdamAndEve.com code IHEART for 50% OFF.
- [18:22]
Ro Khanna
At Amica Insurance, we know it's more than just a car or a house.
- [18:28]
Oren Kass
It's the four wheels that get you.
- [18:29]
Ro Khanna
Where you're going and the four walls.
- [18:33]
Oren Kass
That welcome you home.
- [18:36]
Ro Khanna
When you combine auto and home insurance with Amica, we'll help protect it all.
- [18:41]
Sagar Enjeti
And the more you cover, the more.
- [18:43]
Ro Khanna
You can save Amica Empathy is our best policy.
- [18:52]
Sagar Enjeti
Amazon Pharmacy presents painful thoughts.
- [18:57]
Ro Khanna
20 more minutes to kill in the pharmacy before my prescription is ready. Maybe I'll grab some deeply discounted out of season Halloween candy. I never had a chocolate pumpkin with raisins before. Those were raisins, right?
- [19:13]
Sagar Enjeti
Next time, use Amazon Pharmacy.
- [19:15]
Ro Khanna
We deliver. And no, those were not raisins. Amazon Pharmacy Healthcare just got less painful.
- [19:24]
Crystal Ball
That's probably a good transition point given the likely fallout from these policies. To move to already the resistance that is formed among the liberal base against Trump. One of the early, some of the early things that we said about Trump 2.0, after the election in particular, and even early into inauguration, the early months of his administration is like this resistance is not the same as 2017. You had the Women's March. It was so many people in the streets. You had, of course, and this part still is different, but you had Democratic elected and the media and a lot of corporate executives all standing up against Trump. This time, the landscape is very different. Well, over the weekend, we had our first mass resistance anti Trump protest movement. This was organized. It's called Hands Off. And let's go ahead and put this VO up on the screen and I can tell you more about it. So this was from Boston. Estimates are that there were some 600,000 people that came out in locations across the country. So this is Austin, Texas, here. There were protests in all 50 states. There were Ryan Grimm's dad was down at one in the villages down. Even in my area, which is pretty far outside of D.C. there was a protest there. That was Macon, Georgia. Here's Oakland, California. There were huge ones in the major cities in New York, in Chicago, Portland, Oregon, with a very significant protest there. Richmond, Virginia. I know I saw a quite significant one in Utah, in Salt Lake City, Utah, even in some smaller places. Like we had the Macon, Georgia one up on the screen. So 1,300 different locations, all 50 states, 600,000 people. And the branding is interesting to me too, Sager, because this is also, I think, a contrast from last time around. The beating heart of the sort of Democratic base resistance to Trump last time was Russiagate. And it was also like him being a misogynist. That's where the Women's march, the hands off, whatever. Yeah, grab her, by the way.
- [21:26]
Sagar Enjeti
Let's just all forget that that all happened.
- [21:29]
Crystal Ball
Yeah. So anyway, this time the messaging is hands off, as in hands off Social Security, hands off Medicare, hands off Medicaid, hands off veterans. And there was a lot of both anti Trump and anti doge and anti Elon sentiment. But there was also a lot of frustration, too. And we can put E3 actually up on the screen from Ken Klippenstein. There was also a lot of frustration among these folks aimed at Democrats who Democratic elected officials who they felt were not fighting back adequately. So there was a lot more of a, I guess a sort of class war frame here as well in terms of focusing on the social safety net versus 2017. But Ken was there at one protest and he talked to people and just asked them, like, why are you there? One Person said Luigi was very right, if that gives you a sense of where they are right now. Another one said Congress is doing nothing. They were disgusted with the lack of leadership, both from congressional Republicans and Democrats. There's no spying. Said another, is this America? There were a lot of concerns about the deportation with no due process, the disappearing of people into this foreign gulag and El Salvador. Recover more developments there tomorrow. Someone said, we have to fight harder. We have to get rid of them. It's rough out there. And talking specifically about Trump and Musk. So what I would say is, Sagar, why I think that these are significant is first, it's the first real mass resistance that we've seen. Second, it comes at a pivotal moment because you just had the Wisconsin Supreme Court thing and those Florida special elections, and now you have this tariff insanity. And so I think it will probably make Republicans a little bit more nervous about the way that the opposition is getting more organized and more vocal. And I think probably most significantly, it will help bolster Democrats and make them feel a little more emboldened than the meek way that they have predominantly been operating in the Trump 2.0.
- [23:30]
Sagar Enjeti
Well, I think that the benefit that the protest movement has more than anything is that the do so doge and Social Security was. It was realistic, but it was still somewhat hypothetical. And it was like, okay, it's going to eventually get to this place, right? About Social Security, Medicare, et cetera. Yes, you can talk about longer lines, but this is not exactly the same thing as like a real cut. Same with Elon taking over the government or any of that. I think it still requires quite a bit of media literacy and people actually reading the news to be able to connect with that. Everybody can connect with losing money and higher prices. That's where what you want is your protest. The center of gravity of your argument to hit to exactly where people's biggest concern is. That is where people are at right now. And that's why we can all agree at a fundamental level that this is one which will strike truly at the heart of where every common American can come together. Immigration. I mean, look, even on the immigration thing, as you know, I changed my mind on this stuff. But the Wall Street Journal poll shows that even if you violate due process, the due process, I think the majority of Americans are the people who stand behind that. People gotta be honest about where the country is too, on immigration. So as much concern trolling as there does come from a lot of liberal activists like, you gotta understand also where a lot of public opinion is on the other side. But here, this is where public opinion, I think, is totally united behind, at least on increased prices and the violation of the social contract without an immense amount of change on the other side, which they're not wrong. They don't see, and they're correct.
- [25:04]
Crystal Ball
Yeah, yeah, yeah. I wouldn't call it concern trolling. I would just call it concern personally.
- [25:09]
Sagar Enjeti
Well, I'm just saying, though, I mean, you have to acknowledge the architect, the architecture of where we are in the discourse as a country. That's a pretty insane place to be.
- [25:17]
Crystal Ball
The country has moved. I saw that poll and the way that it was phrased, it definitely did not ask the question, do you support sending indefinitely a makeup artist who has literally done nothing wrong at all to a foreign prison to be tortured for the rest of his life? That was not the phrasing of the poll. So I don't think that Democrats should be afraid of prosecuting that case as well. But there is no doubt that in terms of what will cause people en masse to completely turn on this administration, this president, specifically, like, if your. Your bottom line is your bottom line, if you can't make rent, if you can't afford to feed your fit, prices are going up, if you lose your job, if the president engineers a recession, you can expect these protests to be like, to look like nothing compared to the backlash that will come. And that seems to be what Trump is courting right now. So with that being said, we're really excited to be able to have Ro Khanna on and Oren Kass. So both of them just to set this up a little bit and they'll explain their position specifically. So I don't mischaracterize, but Roe is someone who is not a neoliberal. He supports some level of protection. He certainly supported the Biden protectionism and industrial policy. Oren also supported the Biden tariffs and industrial policy. Oren is on the right. He is very supportive of tariffs in general. However, he does have some concerns about the way that this is playing out. So I think it should be an interesting discussion, slash debate between the two of them about the actual contours of what is being done here and what the fallout could ultimately be. So let's go ahead and get to that discussion. Does this podcast make you happy? Of course it does. That's why you're here. But it only comes out once a week. For happiness, every night. You need Adam and Eve.
- [27:16]
Sagar Enjeti
Yes.
- [27:17]
Crystal Ball
I'm talking about sex toys. It's cool. It's cool. You have earbuds. In right, Adam and Eve, America's most trusted source for adult products, has been making people very happy for over 50 years with thousands of toys for both men and women. Just go to AdamandEve.com now and enter code IHEART for 50% off almost any one item plus free discreet shipping. That's AdamandEve.com code IHEART for 50% OFF.
- [27:43]
Ro Khanna
At Ameca Insurance, we know it's more than just a car.
- [27:48]
Oren Kass
It's the two door coupe that was.
- [27:50]
Crystal Ball
There for your first drive.
- [27:53]
Sagar Enjeti
The hatchback.
- [27:54]
Ro Khanna
That took you cross country and back.
- [27:58]
Oren Kass
And the minivan that tackles the weekly.
- [28:00]
Ro Khanna
Carpool for the cars you couldn't live without. Trust Amica Auto Insurance Amathy is our best policy.
- [28:13]
Sagar Enjeti
Amazon Pharmacy presents painful thoughts.
- [28:18]
Ro Khanna
20 more minutes to kill in the pharmacy before my prescription is ready. Maybe I'll grab some deeply discounted out of season Halloween candy. H I never had a chocolate pumpkin with raisins before. Those were raisins, right?
- [28:34]
Sagar Enjeti
Next time use Amazon Pharmacy.
- [28:36]
Ro Khanna
We deliver. And no, those were not raisins. Amazon Pharmacy Healthcare just got less painful.
- [28:45]
Crystal Ball
So we are very fortunate to be joined by two friends of the show here for a little friendly discussion slash maybe debate. We have Oren Kass, who is senior economist for American Compass. And we also have Congressman Ro Khanna of California. Great to see both of you. Really appreciate you taking the time.
- [28:59]
Sagar Enjeti
Great to see you.
- [29:00]
Ro Khanna
Thank you. Good to see you, Congressman.
- [29:02]
Crystal Ball
Yeah, of course.
- [29:03]
Oren Kass
Great to be on with Oren. I always love debating or chatting with them.
- [29:06]
Crystal Ball
Lovely. All right, Congressman, let me just start with you. Just top line, what do you think of what the President's up to here?
- [29:13]
Oren Kass
This is the single most destructive act to the American economy and American wealth in modern times. I mean, you have to look at probably what Volcker did in the 1980s in terms of inducing a recession to have anything close. And their Volcker actually had reasons because you had high inflation here, you just have blanket tariffs which are going to actually make it harder for manufacturers because it's going to drive up input costs and supply chain costs. You have no permanence. So if you're Mary Barra or Jim Farley, you can't even say let's build factories here because Trump himself was saying, I don't know, maybe these will be gone in a month or two months or a year. They're not targeted and they're impacting allies as well as very poor countries. I mean, it is just economic illiteracy. What I would say is, you know, you have the sort of total free market people who Just think, let everything be free markets. They're wrong. And then you have this kind of incoherent protectionism. They're wrong. And what we need is sort of smart, industrial, smart tariff policy.
- [30:23]
Crystal Ball
Oren, what are your thoughts on the specifics of what the president has imposed here?
- [30:28]
Ro Khanna
Well, I guess I agree with some of that and disagree with some of it. I think big picture, you know, the direction here in moving away from the unfettered globalization of the last generation is the right move. I actually think also that the sort of very blunt and broad tariffs, something like a 10% global tariff, is a useful policy. I prefer to see us sort of change the rules of the game in that way than have government going product by product, sector by sector, and trying to figure out what to do in every case. But I do agree with the Congressman that in terms of how some of this has been rolled out with some of the confusion, certainly the lack of permanence, I think we're, we're sort of increasing the costs a lot further than, than they need to be and we're probably not going to get all the benefits that we potentially could. And so, you know, in my mind, the, I think the Volcker comparison is actually very interesting because, you know, ultimately Volcker was addressing a very serious problem. There was pain involved. And I think we all look at, back at that, very grateful that we had leaders who were willing to bite that bullet and that it was successful. And so I think that model can work. I think that kind of thing is needed here as well. But the specifics do matter, and I think there's a long way to go here on the specifics.
- [31:46]
Sagar Enjeti
Yeah, I mean, sticking to the specifics and more because we could debate rollout, but we should also debate vision about where things want to go. Something that Howard Lutnick, the Commerce Secretary responsible for rolling much of this out, has said is to bring back manufacturing, even in terms of screwing the little screws. So let's take a listen to that and we're going to get both of your reactions.
- [32:05]
Ro Khanna
Great American workers, you know, we are going to, on other networks, armies of millions of people. Well, remember the army of millions and.
- [32:14]
Oren Kass
Millions of human beings screwing in little.
- [32:16]
Ro Khanna
Little screws to make iPhones.
- [32:18]
Oren Kass
That kind of thing is going to come to America.
- [32:20]
Crystal Ball
It's going to be automated and great.
- [32:22]
Oren Kass
Americans, the tradecraft of America is going to fix them, is going to work on them.
- [32:27]
Ro Khanna
They're going to be mechanics, there's going to be H vac specialists, there's going to be electricians. The trade craft of America, our high.
- [32:35]
Oren Kass
School educated Americans, the core to our workforce is going to have the greatest resurgence of jobs in the history of America.
- [32:43]
Crystal Ball
Work on these high tech factories which.
- [32:45]
Oren Kass
Are all coming to America.
- [32:47]
Ro Khanna
That's what's going to happen next generation of America.
- [32:50]
Sagar Enjeti
Congressman, what is your reaction to that? Because you represent one of the most high tech districts in the United States.
- [32:56]
Oren Kass
I was just a little bit sad. I invite the commerce Secretary to come out to my district. We could give him a free education. Screws are about a point 2% of an iPhone's cost. You know, we may want to work on things like the display screen or the flash drive or the camera. I mean, it's almost like he's living in the 19th century. Of course, they've got 19th century policies on how to build an industrial base. I mean, you want to build high tech factories here. What we need is financing. What we need is a government to say, if you build it, we'll buy it. That's how Silicon Valley started. What we need is investment in the workforce. So they're just going about this in a way that isn't how FDR or Hamilton or Lincoln built America. I mean, tariffs were a part of it, but it was a very discreet part of it. FDR actually, who did more to re industrialize America than anyone in the modern age, actually opposed the high tariffs, explicitly opposed the Swoot Hawley tariffs and then opposed high tariffs and had a vision for industrialization. So, you know, this is just, I can't emphasize enough how much this is economic incoherence and how much Trump supporters are aghast at what's going on. I mean, the guy won because people thought he knew what he was doing with the economy and business. And he's destroying American wealth, he's destroying American factories. There are no new factories that are coming up because these things aren't permanent. He's increasing the input cost effectories. He's hurting small businesses. The Russell 2000 is collapsing. And I just, I hope there's some intervention or.
- [34:41]
Crystal Ball
Let me, let me get, I want your response to that. But also some of the things Lutnick has been saying kind of get to this key question of what is even really the goal here. Because, you know, people raise, okay, let's say you bring, you know, iPhone production to the US the iPhones, because we have higher labor costs and because, by the way, you know, we don't have as large of a social safety net also as other countries. So businesses have to bear a lot of that costs in terms of what they're paying labor, things are going to cost a lot more. And what Letnick has been saying is no, because it's really going to be robots doing this job. Which raises the question of like, okay, so are we bringing back manufacturing for robots to fill the jobs, or is this about jobs? Is it about national security in your ideal world? What is actually the goal here? Is it to have manufacturing capacity for robots to be screwing in tiny screws, or is it to have manufacturing capacity for human beings? Some blend of the two? How do you see that particular dimension of this?
- [35:39]
Ro Khanna
It's a great question. And I guess briefly, I just want to say I agree entirely with the Congressman about his broader point about the other kinds of policy we need here too. Whether it's the financing policy. I think workforce development is huge. Get, you know, that's not kind of like details of implementation. That's a big part of the strategy that I think we probably agree on to a significant extent. I strongly disagree with his reaction to the Commerce Secretary's comments because I think it reflects what we've been seeing too much in this debate, which is an attempt to sort of take the worst possible and even obviously incorrect interpretation of what people are saying just to dunk on it rather than try to engage with it. Lutnick didn't say it was the screws that were high value part of the iPhone, and that that's what he wanted people making. What he said was that he wanted to have the actual assembly process, which includes the screwing of the screws in the United States, that that would be automated, and that the, the good jobs that he's talking about are the jobs actually operating the automated factories. And, and so look, I'm happy to have a debate about whether that's right, but let's be clear on what he was actually saying, which is, is not nonsensical or incoherent. And I think it's actually, you're saying.
- [36:52]
Oren Kass
It much more sensically than he did. He didn't say let's have people be operating the advanced machines. He said, let's have them doing the assembly of the screws. I just think he's out of touch. I don't know if he's ever been to Apple's campus or to Silicon Valley. I think he's got no clue about technology. I think these people are stuck in James Polk expansionism and McKinley's tariffs. And the saddest thing is they don't understand the modern economy. They're kind of clueless.
- [37:17]
Sagar Enjeti
Go ahead Oren, you can respond to that?
- [37:18]
Ro Khanna
Well, look, he, I mean led. It was specifically saying, he was talking about the mechanics, jobs, maintaining the robots. This was. I, I'm happy to say that there's room for improvement on the communication here, but what he was talking about is highly automated, highly productive factories and the jobs that come along with those.
- [37:34]
Oren Kass
My guess is he probably wouldn't even be able to name the five top components of an iPhone, like literally. I don't think the guy understands the modern economy.
- [37:41]
Ro Khanna
But fine, I understand that part of.
- [37:43]
Oren Kass
Your job is to communicating it.
- [37:45]
Ro Khanna
I understand that part of your job is just to attack people on the other side. But I'm interested in what the actual.
- [37:50]
Oren Kass
Substance of the policy is collapsed the American economy. Who has gotten people who are going to get people laid off. Yeah, I'm going to attack him. He's done the most destruction of American wealth, of the American economy we've seen for.
- [38:02]
Ro Khanna
Can I answer Crystal's question?
- [38:03]
Oren Kass
And he's incoherent.
- [38:04]
Sagar Enjeti
Yeah, go ahead and answer the question then. I have one.
- [38:06]
Ro Khanna
Thank you. Go ahead. Yeah, because I think the vision point is very important here and it's a key point to understand that, you know, what I think the Trump administration envisions. You know, certainly what I think is so important in focusing on this re industrialization is not that you're somehow bringing back the same jobs of the 1950s doing the same kind of work. What you're talking about is actually rebuilding the industrial base and a strong industrial base in this country where we do actually have high quality, advanced, cutting edge manufacturing across a wide range of sectors. For one thing, it does provide a lot of good employment. And yes, there are many fewer jobs in those factories than there were in the factories of the 1950s. 50s. But you know what, There's a lot more jobs in those factories than there are in not having the factories. And so when you're talking about how you, you produce a, a broad based renaissance in the industrial economy, you're talking about a lot of regions that have left behind that you don't bring back by putting everybody back in a factory that you bring back by having highly productive, high value factories. If we're sending a lot more advanced engineers to work in those factories, that would be great for those regions too. And so there's a lot of upside there. And Sagar, just to make one more quick point, I think the other thing that's key to recognize here is that the reason the industrial base is important is that you can't just pick and choose which things you want to be good at. We've tried to do that with our defense industrial base. We're just going to be good at the aircraft carriers and the submarines and someone else can make everything else. And what we're seeing is that you can't just make those things. You can't just do the high end stuff if you don't actually have the core industrial base underneath it. And so that's why I think the broad based tariff model is right. We actually do need to have a capacity to really make. We're not going to be autarkic, we're not going to make everything for ourselves. But we do need to have an industrial economy that supports our prosperity.
- [39:55]
Sagar Enjeti
One of the things that's at the heart of both of your arguments, we'll start with you, Oren, and then to you, Congressman, because this is a bit of a challenge, is that you're both kind of talking more about high tech manufacturing. But the way that this is sold and ultimately was Trump was elected on the backs of, was on working class voters who don't necessarily have a four year college degree or years of vocational training and engineering knowledge, et cetera. So in both of your cases in support of these policies, how do they actually help the person in the bottom, let's say quintile of the American economy and somebody who feels as if their job and their stable life was taken away from them? Because I haven't seen that in the vision that either of you are really saying. Oren, you can start.
- [40:33]
Ro Khanna
Well, let's keep in mind that when you're talking about the bottom quintile, you know, you're talking about people who don't even have a high school education a lot of times. And so you know, to some extent what, what you also want is even the sort of lower skilled, you know, service jobs in a local economy. Whether those are good jobs depends on whether you have a strong manufacturing base. I actually love sending people to a wonderful video. You know, the very libertarian Cato Institute did a video trying to show that free trade was good. And, and they highlighted a, a town that had been crushed by NAFTA. And then they showed it coming back 20 years later. And the way that it was coming back was with guess what, a new manufacturing plant making cars to sell in America. And so the examples of the jobs that created was not in the, it was in the manufacturing plant, for one thing, it was also at the pizza parlor in town, because you can have a good pizza parlor in a town that has a strong manufacturing plant. And so this is about a broader industrial ecosystem and a broader economy generally. That actually spreads economy. Excuse me, that that spreads prosperity widely.
- [41:34]
Sagar Enjeti
Yeah, Congressman, go ahead.
- [41:38]
Oren Kass
I agree with a number of things that Orna said. One, one is that if you have factories in place, it has a multiplier effect three to four times. So let's say you have a modern steel plant, okay, you're not going to have 4,500 people because you have robots in automation. You have a thousand people in a town of 20, 30,000. That's still a lot. And if those are high paying jobs, they're going to spend them on restaurants, they're going to spend them on daycare, they're going to spend them on, on a gym membership. And it can actually revitalize an economy. Now, now to your point, Sagar, there's a difference between saying we want advanced manufacturing and we just want high tech stuff. I agree with you. If it was just let's put semiconductor factories and battery plants everywhere, that is maybe not going to create a sufficient amount of jobs for the working and middle class. But if we're talking about advanced steel plants, if we're talking about advanced production in and of itself, that is going to create electrician plumber jobs, jobs of machinists. And what we should do is make sure that every person in high school has an opportunity to have a trade, whether that's a vocational trade or a digital trade. And many of these advanced manufacturing facilities would create those jobs. Plus they're going to spawn the service sector to have higher wages. But it needs more of an investment in the workforce and it also needs, in my view, standards for wages.
- [43:05]
Crystal Ball
Or let me get to you on this piece, which is something you've kind of alluded to. If we could put F4 up on the screen because you've said, listen, you support tariffs in principle, but it has to be done the right way. And part of that, like a really critical part of that the right way is pairing it with industrial policy. And you can see here we actually, not that it's been the end all, be all, not that it's been enough, not that we don't need to do more, but we actually have had a policy over the past couple of years that has significantly increased US Manufacturing construction spending. And that has been the Biden policy of a combination of protectionism and industrial policy through both the CHIPS act act and the Inflation Reduction Act. So not only is this new tariff scheme completely unmoored from any sort of industrial policy, not only are we actually at a Time when this administration is engaged in an austerity push that was going in the opposite direction of industrial policy, but they're also undermining these programs which actually were working to increase the US Manufacturing base.
- [44:10]
Ro Khanna
Well, I certainly agree with the strength of some of the industrial policy that we've seen in the last few years. You know, I'm a very strong supporter of the CHIPS act, and I think what you saw in that chart was a huge bump overall, driven almost entirely by a huge bump in those red bars, the, the electronics.
- [44:26]
Crystal Ball
That's right.
- [44:27]
Ro Khanna
And manufacturing where the CHIPS Act. You know, look, we're spending a lot of public money. It's about $40 billion of public money, but that is generating hundreds of billions of dollars of investment in those specific chips factories. Then, you know, as the congressman was describing, in, in a broader ecosystem of other manufacturing and suppliers around them. That's, that's a huge part of the picture. I, I think my support is for the idea that you, you don't want to only do that. And, and the reason is that what we'd start to look at is, okay, well, now every one of those bars that you want to increase, are we going to go, you know, are we going to pass a law for every one? Right. I mean, it took us four or five years to get the CHIPS act up and running. There's an interesting effort now on shipbuilding, funny enough, the Ships Act, I think that's very promising, too. But the idea that we're going to go through every industry and in every case figure out how to create a new bill, a new office to fund the investment in that where there is something as particularly high priority like chips absolutely is. I think the industrial policy push makes a lot of sense. But on the, on, alongside that accompanying it, I do think it's important to put a thumb on the scale for domestic manufacturing broadly and say that whoever's supplying those factories in other industries that aren't going to be politically sexy, you know, we, we would like to see investment in domestic industry there, too, Congressman.
- [45:48]
Crystal Ball
On that, that chart. And, you know, you've, you've had sort of a bipartisan consensus that has emerged that is a break from neoliberalism. And, you know, Trump gets some credit for that from his first term with his China tariffs. I think, you know, the Biden policy maintained most of those, expanded them, introduce the industrial policy piece. And one of the things that I'm fearful of is that Democrats will just be completely negatively polarized against all tariffs. And you already see some signs of this among the democratic base. Representative D'Aluzio, who's a member from Western Massachusetts, sorry, western Pennsylvania, put on a video that was like, hey, I have big problems with these terrorists tariffs in general. Okay, maybe in the right place, but big problems with what Trump is doing. And he was viciously attacked online by a lot of liberal Democrats who say, how dare you even say that tariffs are good in any circumstance whatsoever. As you someone who has, like myself, a more nuanced view on trade and sees the utility of tariffs in certain targeted instances, what are you hearing and feeling from your colleagues? Is that a concern that you share?
- [46:51]
Oren Kass
I think the attacks on Representative D'Aluzio Bentoli, uncalled for. He's one of the most thoughtful people on this issue. I highly recommend his New York Times op ed on terrorists, which he basically said, smart tariffs to protect critical industries against unfair trade practices and dumping are perfectly reasonable. What we don't want is blanket tariffs. And what we don't want is them done with no collaboration because you have no idea whether you're going to be there a month, two months, three months, and there is no planning in terms of whether they're actually going to help create new factories. So I think the attacks on him have been unreasonable. And he's, he's one of the most thoughtful members of Congress. In fact, he's leading this group I've been calling for economic patriotism, and he's been leading a group of economic patriots, group that is very productive. I do want to say that I appreciated Oren's role in helping with the Chips and Science Act. Todd Young and I did that with at the time, Senator Schumer. He's a much better legislator than he is at this moment in getting debt through. And it's one of the things I'm proud of stuff. And he's right. From $30 billion, it's $1,400 billion of investment. All five semiconductor manufacturers, Intel, Micron, SK, Hynix, Samsung and TSMC are in the United States. No other country has that. And so we should be looking at efforts like that. The problem is Trump is basically Reaganism of tax breaks, deregulation, disguised as I want to build new factories and basically is added to that high, high, blanket, irrational tariffs. There's no strategy of building things. And in three periods in American history, you look at Hamilton, you look at Lincoln, you look at fdr, how they did it. The large part of it was in federal investment and investment in our workforce.
- [48:47]
Sagar Enjeti
My last question, Oren, this is a political and a coalition Question for you is, I'm a restraint person. I supported the withdrawal from Afghanistan. We also have to admit it was a disaster. The rollout, even if we support it on a policy level, it enabled, I would say, and I know the congressman will disagree with me, full scale funding of the war in Ukraine. It emboldened the neocons and in my opinion, set our foreign policy in a much worse direction for a few years, even though at a basic level I agreed with the spirit of what was being done. Since you are involved in these coalitional fights, are you worried that a bad rollout here would embolden the Cato Institute, Americans for Tax Reform, the Chamber of Commerce, and winning over the public's heart if this is not done correctly?
- [49:31]
Ro Khanna
I don't worry so much about those sort of old right groups, which I just don't think are as irrelevant anymore as they used to be just across the board. I do worry a lot about the American people. I do worry that if this is done poorly, if there are a lot of unnecessary costs imposed, if the point of the policy isn't communicated well, and then if you don't do the kinds of things that actually generate the benefits, then I think people will rightly look at it and say, well, that didn't work. And the broader principles have the potential to be discredited. So I do think getting this right is obviously incredibly important. And that's something that American Compass we were sort of ultimately focused on. Right. We're very happy to kind of go to the mat defending these principles and the direction and at the exact same time be totally honest about what, what we think is, is not structured correctly. What, what we think really puts the project at risk. And, and hopefully that, that plays some small part in, in maybe moving us.
- [50:31]
Crystal Ball
In a better direction or Trump can always change. He could do something different tomorrow. He could, you know, we could be having a completely different discussion next week. God only knows. But if these particular tariffs move forward and stay in place and are not matched with any commensurate industrial policy or support for Americans who are, and American businesses who are going to be facing massive fallout over this, do you think that these tariffs will do more harm than good in your estimation?
- [51:02]
Ro Khanna
I think the short term costs have the potential to be pretty high. You know, I think one of the most important elements of this that we've always put into anything we argue for is that you want to see things phased in because the kind of transformation that we're talking about takes time. And so you certainly want things to be coming into effect as quickly as possible to create incentives that people respond to. But it doesn't make a lot of sense to impose a lot of costs faster than people can respond. And so I think that's where we're getting a lot of the unnecessary cost. And then on the flip side, and Congressman, exactly right about this, if you don't have the certainty and the permanence, you're not going to get the investment, and therefore, you're not going to get the benefit. And so that's what I'm focused on, is there are costs here. I love that we potentially have leaders communicating that we accept that there will be costs for things and we think they're worth it. But you have to get that equation right, and you have to take an approach that keeps the costs as low as possible and that then delivers the benefits. And that's what I think we have to sharpen.
- [52:03]
Sagar Enjeti
All right, Congressman, last word to you. One minute until we gotta go. What do you say?
- [52:08]
Oren Kass
Building things in America has always been hard. When FDR tried it in 1933 is when he started, and he prepared the country over a decade for then. What was the industrialization in World War II. And I just think we've got to be honest with the American people that just having massive tax breaks and having tariffs isn't going to magically transform us into a manufacturing superpower. What we need is an investment in the workforce. What we need is to doing hard things like the CHIPS Act. What we need is better state capacity and being able to do things faster than we did during the CHIPS Act. What we did is federal financing, and it takes years to build. And this is not something that can just happen in one quarter. But I think what Trump is doing is appealing to the sense that we lost too much to China. We need to build. But trying to tell people he can just magically wave a wand with tariff policy and tax policy and fix it. He can't. And he's making things worse with the blanket tariffs.
- [53:09]
Crystal Ball
Got it.
- [53:10]
Sagar Enjeti
Well, thank you both very much for joining us. I think people will get a lot out of it, so we appreciate it.
- [53:13]
Crystal Ball
Thanks, gentlemen.
- [53:14]
Ro Khanna
This was great. Thank you.
- [53:16]
Oren Kass
Thank you.
- [53:17]
Sagar Enjeti
Thank you guys so much for watching. We appreciate it. I hope you enjoyed our tariff special. We'll see you all tomorrow.
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