Senator Phil Gramm: Bold Leadership, Big Risks, and Transforming America’s Economy

Summary

Detailed Summary of "Senator Phil Gramm: Bold Leadership, Big Risks, and Transforming America’s Economy"

Podcast Title: Going Big! with Kevin Gentry
Episode: Senator Phil Gramm: Bold Leadership, Big Risks, and Transforming America’s Economy
Release Date: February 17, 2025

In this compelling episode of Going Big! with Kevin Gentry, host Kevin Gentry engages in an in-depth conversation with former U.S. Senator Phil Gramm. The discussion traverses Gramm’s illustrious political career, his economic philosophies, insights on America’s current economic landscape, and his perspectives on contemporary political issues. The episode is rich with historical anecdotes, policy analysis, and inspirational advice for aspiring leaders.

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1. Phil Gramm’s Journey and Philosophy

Early Career and Reagan Budget: Phil Gramm traces his early political trajectory, highlighting his role as the author of the Reagan budget. He emphasizes the importance of bold leadership and the willingness to take risks, stating:

“You got to be willing to fail to succeed. So my advice to young people is one, if you want something, don't be easily deterred.”
— Phil Gramm [00:01]

Gramm recounts his bipartisan efforts with David Stockman, leading to the creation of the Reagan budget, which significantly influenced American economic policy during the Reagan administration.

Party Switch and Congressional Career: Initially elected to Congress as a Democrat from Texas, Gramm made a strategic switch to the Republican Party to align with the changing political landscape. This move underscored his commitment to principles over party allegiance. He shares a pivotal moment when President Reagan supported his decision to switch parties:

“Reagan said, 'let people judge whether you're trying to do right.' So I resigned, went home, and was re-elected as a Republican.”
— Phil Gramm [07:15]

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2. Views on America’s Mobility and Capitalism

Gramm passionately defends American capitalism and the nation’s inherent mobility. He points out that over 90% of children born in the bottom quintile achieve better socioeconomic status than their parents, illustrating America as a land of opportunity:

“The mobility in the middle quintiles is something that no one biggest critic of capitalism never criticized. The mobility is being in the marketplace.”
— Phil Gramm [02:36]

He challenges critics who argue that capitalism fails the poor, asserting that participation in the free enterprise system is essential for upward mobility.

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3. Federal Debt and Government Spending

Addressing concerns about the growing federal debt, Gramm expresses significant apprehension:

“The federal debt has tripled since Barack Obama became president... It was still there because we were building up defense.”
— Phil Gramm [12:43]

He critiques the lack of fiscal responsibility in recent administrations, highlighting the impact of the Graham-Rudman Act in the past and drawing parallels to current spending habits.

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4. Defense vs. Domestic Spending

Gramm underscores the critical balance between defense and domestic spending. He shares an anecdote illustrating his priority of fiscal responsibility over political pressures:

“I'm more worried about the debt than I am about China and Russia. We’ve allowed defense to weaken because we spent the money on more politically urgent things.”
— Phil Gramm [15:20]

He advocates for strengthening defense systems while controlling government expenditures to ensure national security and economic stability.

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5. Analysis of Trump Administration Policies

Tariffs Criticism: Gramm vehemently opposes the Trump administration's tariff policies, labeling them as detrimental to economic prosperity:

“Tariffs are a tax to begin with. I'm against tariffs because I want Trump's program to work and I think tariffs are dangerous.”
— Phil Gramm [20:27]

He elaborates on the misunderstandings surrounding trade deficits, emphasizing that voluntary trade benefits both parties involved and that protectionist measures like tariffs ultimately harm consumers and the economy.

Deregulation Support: Contrasting his skepticism of tariffs, Gramm lauds the Trump administration's efforts in deregulation:

“Deregulation is far more important than I initially believed. The deregulation that the Trump administration is going to do is going to be as important, if not more important, than the tax cuts.”
— Phil Gramm [33:17]

He asserts that reducing regulatory burdens is crucial for fostering a healthy business environment and sustaining economic growth.

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6. Income Inequality and Phil’s Publications

Gramm discusses his book, "The Myth of Income Inequality," co-authored with Don Boudreau, which challenges prevalent narratives on economic disparity:

“The Census Bureau greatly overstates poverty and income inequality by not counting two-thirds of all transfer payments as income.”
— Phil Gramm [38:35]

He presents data illustrating that when accounting for transfer payments and taxes, income inequality is significantly less severe than reported. His forthcoming book, "The Triumph of Economic Freedom Debunking the Seven Great Myths of American Capitalism," further delves into these topics, aiming to provide a comprehensive analysis of America's economic systems.

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7. Changes in the Republican Party

Gramm reflects on the evolving dynamics within the Republican Party, drawing comparisons between the Reagan era and the Trump administration:

“The Trump majority is built on blue-collar Americans. Republicans who say we need to fund programs like Democrats is misguided. They voted for us because they want prosperity.”
— Phil Gramm [29:42]

He criticizes the faction within the party that leans towards populist programs, advocating instead for policies that promote economic freedom, deregulation, and tax cuts to encourage work, savings, and investment.

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8. Advice to Young Leaders

Throughout the conversation, Gramm imparts invaluable advice to aspiring leaders and young professionals:

“Learn what you need to learn to do what you need to do to get where you want to go to do what you want to do.”
— Phil Gramm [50:47]

He emphasizes the importance of ambition, resilience, and continuous learning. Sharing personal anecdotes, Gramm illustrates how determination and the willingness to take risks have been pivotal in his success.

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9. Personal Insights and Legacy

Gramm touches upon his personal life, highlighting the influence of his wife, Wendy, and his commitment to family:

“Every good thing in my life came back from her.”
— Phil Gramm [38:26]

He underscores the significance of support systems in achieving professional and personal milestones. His legacy is not only defined by his political and economic contributions but also by his dedication to family and mentorship.

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Conclusion

The episode concludes with Gramm’s unwavering optimism about America’s future and his dedication to advocating for effective economic policies. His life story serves as an inspiration for listeners to pursue bold ideas, take calculated risks, and commit to making a meaningful impact in their communities and beyond.

“As long as I'm alive, I'm going to stand up for what I believe in. And if I believe in anything, it's trade.”
— Phil Gramm [52:23]

Gramm’s narrative reinforces the podcast’s overarching theme of Going Big! by exemplifying how visionary leadership and steadfast principles can drive significant societal transformation.

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Notable Quotes:

• “You got to be willing to fail to succeed. So my advice to young people is one, if you want something, don't be easily deterred.” — Phil Gramm [00:01]

• “The mobility in the middle quintiles is something that no one biggest critic of capitalism never criticized.” — Phil Gramm [02:36]

• “Tariffs are a tax to begin with. I'm against tariffs because I want Trump's program to work and I think tariffs are dangerous.” — Phil Gramm [20:27]

• “Learn what you need to learn to do what you need to do to get where you want to go to do what you want to do.” — Phil Gramm [50:47]

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Final Thoughts:

Senator Phil Gramm’s candid insights and historical perspectives provide listeners with a nuanced understanding of American economic policies and political strategies. His emphasis on economic freedom, fiscal responsibility, and the enduring spirit of American opportunity encapsulates the essence of Going Big!—encouraging individuals to challenge the status quo and strive for substantial, positive change.

Transcript

[Phil Graham]

I used to say to young congressmen, senators, if you're willing to take on a tough issue, you don't have to worry about stepping on anybody's toes. Hell, people are going to shove you out there because then if the bullets fly, they're going to hit you and not them. So, you know, how did I end up being the author of the Reagan budget in the House or Graham Rudman as a freshman senator, I wanted to do it and I was willing to do it and willing to take the chances. You know, you got to be willing to fail to succeed. So my advice to young people is one, if you want something, don't be easily deterred. Don't just think bull effort will get it for you. Learn what you need to learn to do what you need to do to get where you want to go to do what you want to do.

[Kevin Gentry]

Welcome to the Going Big Podcast. I'm your host, Kevin Gentry, and this is the place where we celebr bold moves and big ideas. Each week I sit down with inspiring leaders, entrepreneurs, and change makers who are making a significant impact in their careers and in their communities. Whether you're looking to level up your leadership, pursue your passion, or just get inspired to take your next big leap, this is where those stories come to light. Now, if you're listening on iTunes, YouTube, or anywhere else you tune into podcasts, be sure to hit that subscribe button so you'll never miss an episode. Now let's dive in to what it means to truly go big. Well, I'm really pleased to welcome as my guest on the Going Big podcast, former United States senator Bill Graham, who, frankly, his whole life is defined by going big. And as you're going to learn from this conversation, everything from decisions he made as a child, going through his education, becoming a college professor, a member of Congress, and then a United States senator from the great state of Texas, then into investment banking. All kinds of different things, but his perspectives, insights, outlooks are awesome. But, Senator Graham, this is the Going Big podcast. So pleased to have you as a part of this. Do you think you can still go big in America the same way you could when you were a young man? Start us off by how do you see America today?

[Phil Graham]

Can.

[Kevin Gentry]

Can. Can somebody still go big?

[Phil Graham]

Well, first of all, thank you, Kevin, and thank you for all the problems and connecting up. I'm on the other side of the digital divides. Was very hard. Yeah. The answer is yes. This people have done great things in America in the past. One of George Washington's grandmothers was an indentured worker and he became the richest man in North America, President of the United States, and in the King of England's opinion, the greatest man in the world. And it still happens today. If you look at the data, over 90% of children that are born and grow up in the bottom quintile do better than their parents. The level of mobility is very, very large. And America is still the land of opportunity. Now, is it better to be born rich and beautiful and brilliant? Yes, you can do those things, do it. But not being born any one of those things is not a disqualifier in America. The mobility in the middle quintiles is something that no one biggest critic of capitalism never criticized. The criticism has been in the top quintile, but still there, there's an amazing amount of mobility. And it's important to note that all these mobility studies are measuring mobility as compared to other children your age. They're not measuring mobility as compared to how you do relative to your parents, which is what the American dream was about. And when you make that comparison, it's overwhelming because, for example, in 1967, if you look at the income levels in 1967 and compare them to today, 67% of Americans today have real purchasing power incomes that would have put them in the top 20% of income earners 50 years ago. So in that, with that kind of progress, there's great mobility. But mobility is being in the marketplace. If you don't work, you don't get on the escalator, which is the American economy, and you get left out. The criticism is capitalism is not working for America's poor. The real answer is when we started the war on poverty, 68% of poor people worked. Today, it's down to 36%. So if you're not part of the American free enterprise system, it's hard for it to work for you other than giving you things. So I saw opportunity growing up everywhere. It's still out there. It's still everywhere.

[Kevin Gentry]

Well, you've got so many terrific perspectives, both from the standpoint of a trained economist and an economics professor. But you're also quite the historian in. And you just referenced a topic that you wrote about in a book last year, I think it was, or two years ago, the myth of income inequality. I want to touch on that a little bit later. There's so much to talk about. But when you were serving in the, in Congress and, and that, by the way, in and of itself, you were elected to Congress as a college professor, as a Democrat in the House, from college Station, Texas. You famously decided to switch parties, but rather than just switching parties, you resigned your seat and then ran as a Republican to see if people would still elect you, and they did. And then subsequently ran for the United States Senate as a Republican from Texas, which was, which is extraordinary. But, but your congressional career was really defined by thinking and going big, big legislation. Would you comment? What, what does it take to think about going big with respect to policy changes? And do you think we're seeing some of that in Washington right now?

[Phil Graham]

Well, first of all, the last part's easy. I hope so. The look, I was elected to Congress as a Democrat because I was from the south and I was a Democrat because of civil war. There were no Republicans in my district. There was not a single elected Republican official in my whole district. When I was elected to Congress, I was a conservative. I ran as a conservative. I ran on the slogan of less government and more freedom. And I was elected by 122 votes. I got into the runoff in the Democratic primary and won and was elected. And when I got to Washington, the inflation rate was 13 and a half percent. We had had a runaway inflation for seven years in a row. There was a crisis. The Congress and the President weren't responding. So I put together a bipartisan budget with David Stockman, who was a Republican from Michigan, and we got 149 votes. And then Ronald Reagan was elected President. Stockman was chosen as OMB director. Our budget became the Reagan budget. And I was the author of the Reagan program in the House. And we were very fortunate with lots of hard work to get that passed into law. And then in the 1982 elections, Republicans lost 29 seats in the House. And so the Democrats threw me off the Budget Committee. I could have just changed parties, but I felt that there were some people in my district that would sort of feel betrayed that I run false colors. And so I decided the thing to do is to resign. And so I resigned. I went back home. I ran again as a Republican in a district where no Republican had ever gotten 30 more than 35% of the vote. And it looked impossible. And in fact, Lee Atwater, President Reagan's political adviser, begged the President to call me when I told him two days for I resigned that I was going to do it. So Reagan called me and said, lee Atwater's having a heart attack down here. Can you explain to me what you're doing? And so I explained to him, I've been elected as a Democrat and I'd been thrown off the budget committee that I could change parties. But I thought the right thing to do was to resign and go home and let people decide. And so Reagan said, well, it sounds to me like exactly what you ought to do. And people have a way of judging a man, Reagan said, on whether or not he's trying to do right. So I resign, I go home, I don't find out until I'm reelected that Atwater had gone back into Reagan's office, told him that if he didn't convince me not to run that I was going to lose and it was going to be the beginning of the end of the Reagan presidency. And so anyway, thank God I won. And it wasn't the beginning, the end of the Reagan presidency. In fact, very shortly after we cut spending, we built the fence, cut taxes, we had mourning in America, the economy recovered, the inflation stopped, growth ignited, and Reagan was re elected, winning 49 states. So it's pretty impressive showing indeed.

[Kevin Gentry]

And that's a great story. And it made all the better that Ronald Reagan not surprisingly embraced your wanting to do it the right way.

[Phil Graham]

And Kevin, how many presidents today would say, don't do what's in my interest, do what's right? I mean, it was pretty remarkable. Reagan was a very remarkable man. We were never close friends, our ages were different. And Reagan had his old Hollywood friends. But in those early years in working on the budget, I got to know the man well. And he never was anything in private. He wasn't in public. Pretty remarkable.

[Kevin Gentry]

Pretty remarkable indeed. And you know, you described George Washington and many other had many of the same character attributes and we're still talking about them in a positive way. So there's something to be said for that. Well, you, it wasn't the beginning of the end, it was the beginning of the new beginning. And you famously were part of passing the Gram Rudman legislation to limit federal spending. But, but I got to say the debt then was a smaller percentage in both or smaller in both real terms and relative terms than it is today. How concerned are you about the debt today in federal spending?

[Phil Graham]

Well, the federal debt has tripled since Barack Obama became president in three administrations is pretty amazing and frightening. Then the debt. We viewed the debt as a problem. I was certainly concerned about it. And Graham Rudman was sort of my reaction to the fact that when the economy started to grow and inflation went away and went away for 40 years, for 40 years, we had no real inflation in America right until the Biden administration and spending more in two years than whatever spent in three. And the Federal Reserve bank printing more money than in any other two years in the post war period. Once things started to get good in America, nobody cared about the deficit. And yet it was still there because we were building up defense. So Graham Rudman was an effort to try to force Congress to deal with the deficit. And did it have an impact? Yes, it had an impact in that in those years where Graham Rudman was, in effect were years where Europe's government exploded. Now, part of that was they adopted the VAT tax. But to get when the Supreme Court struck down the triggering mechanism, which I knew was a problem, but I couldn't get it adopted with OMB designating the trigger. Then in order to get it replaced, we had to do it so that the new president after the 92 elections got to decide whether to continue it. And President Clinton killed it. So it had an effect. It was long way from perfect. Congress and the presidency cheated on it. Spending is popular. That's a constant in the political life of all nations. Giving people things makes them appreciative to a certain degree until it creates problems.

[Kevin Gentry]

Well, that begs a question. So. And you talked about being obviously part of building America's, rebuilding America's defenses. The threat today from China or Russia or Iran is our greatest threat from the outside or is it from the inside in terms of the growth of government, the government spending, the burden of government, what it does to opportunity, as well as the burden of the debt.

[Phil Graham]

I've got to tell you another Reagan story because it's a perfect response to your point. One day after Graham Rudman had been adopted, I was going to an event in the White House and the President pulled me aside and said, phil, Cap Weinberger, who was the Secretary of Defense, says that you and Graham Rudman are more dangerous than the Soviet Union. Please tell me it's not so. And of course he was joking. But I said, Mr. President, I'm going to ask you a question. Deep down in your heart, do you believe Moscow is a greater threat to the future of America than Washington? And the President said, I better not answer that question. That could get me in trouble. So, yeah, look, they're both threats that I'm more worried about the debt than I am about China and Russia. But I'm worried about that. We, we've got to be strong so that we can be free. And we've allowed defense to, to weaken because we spent the money on more politically urgent things. And that needs to change. It's something we changed in the Reagan program. It needs to be changed now. And unfortunately, the need is at the very moment when we need to control spending. So what have you got to do? You've got to make some tough decisions. It's like once a majority leader in the House called me up and said, jeb Hensling is criticizing me overspending and you need to call him and get him to stop. Jeb had been a student of mine at Texas A and M and it worked for me and was now a new congressman and became chairman of the House Banking Committee. I taught him money in banking, in fact, but in any way. So I said, Mr. Leader, he said to me, well, we cut and cut. Where would you cut? And I said, everywhere. Everywhere. You can't find an area of government where if you apply a strict test of is it worth it taking the money away from a hard working American. You remember me talking about Dickie Flat, this printer in Mexia, Texas, real honest to God guy, never got the blue ink off the induced singers. And whether you saw him at the Boy Scouts or the Presbyterian Church, he was all, always had that blue ink under his fingers. And he worked hard. And so my test was I knew Flat well and so I looked at every program, said, is it worth taking money away from Dickey Flat to pay for that program? Let me tell you, there weren't a hell of a lot of programs that stood up to that test. And that's the test.

[Kevin Gentry]

Well, okay, so now we're at this moment in the United States, in Washington, the new administration, the new Trump administration. Elon Musk, Doge, what do you think of all of that?

[Phil Graham]

Well, I think it's encouraging and I think that the will is to do something is there. Whether or not they can do it in a way that works is the open question. There are plenty of errors that deeply deserve to be reviewed and cut. Whether or not we'll actually end up doing it, I don't know. I hope so. God knows we need to.

[Kevin Gentry]

Well, there's another aspect of the new Trump administration's policies that give folks like you and me heartburn, and that's tariffs. If you could comment on that. Look, we've read you in the Wall Street Journal. You're probably the loudest and most influential voice on this. Help us all remind us all why tariffs are not a great idea.

[Phil Graham]

Tariffs are a tax to begin with. Secondly, I'm against tariffs because I want Trump's program to work and I think tariffs are dangerous. Basically, the President has this sort of single entry, bookkeeping view of the world that if we sell another country something, we win and that if we buy something from another country, we lose. Well, that's preposterous. In a trade, a voluntary trade, both the buyer and the seller gain. And this idea that something is wrong because Mexico sells us more goods and services than we buy from Mexico, that sells us more goods and services they buy from us. You know, I've lived where I live out in the country for 22 years. I shop at Walmart like most Americans and thank God for Walmart. And in 22 years I've spent thousands, thousands of dollars at Walmart. How much have they ever bought for me? Nothing. I never sold Walmart anything. When I was in investment banking I visited Walmart but they never did any business with me. But did I quit going to Walmart in Helotus, Texas? No, because it was in my interest to go to Walmart. I've got Elon Musk satellite on my house. That's why we're doing able to do this program. Now if I got mad at Elon Musk, I could go out there and tear that satellite down, tear it down, throw it down, stomp on it and then I'd end up paying three or four times as much for inferior service. So I don't care if I got. And I'm not mad at Elon Musk. I admire Elon Musk. Musk, I don't know him, but I admire. But I'm not tearing that satellite down no matter what. Why? Because it's in my interest. So. And the President has this idea that if we're running a trade deficit, we're losing. And if we were running a surplus, we'd be gaining. Well look, you've seen these, the press conferences where the President is announcing all these people who want to invest in America, right? Yes, saw SoftBank $100 billion and he obviously thinks this is a good thing. But to invest in America, SoftBank has got to buy US$100 billion on the world's largest and most perfect market. And other things being the same, that drives up the price of the dollar, which makes imports cheaper in America and exports where we're selling abroad, more expensive. And so it drives up the trade deficit. And in fact on the world's most perfect market, if for a minute the trade balance didn't cancel out the capital balance, the value of the dollar would change until it did. And so this is all a made up problem. Now just give you an example. From 1947 to 1975 we had a monopoly in heavy manufacturing because World War II had destroyed the productive capacity of the world, except in America. And we ran trade surpluses. And then by 76, Japan and Europe had recovered, Korea had industrialized, Taiwan had industrialized, and we started running trade deficits. In the 29 years where we ran trade surpluses, we grew at about 2% a year in growth per capita. That is the growth rate divided by the population. For the 29 years after we started running a chronic deficit, we grew slightly faster. When the Reagan boom came, what happened to the trade deficit? It went up because foreigners rushed in to invest in American prosperity. And when we had the huge boom. During the quarter years. Yeah, during the Clinton years. During the Clinton. Not during the quarter years. During the Clinton years. Even in the four years where we ran a budget surplus, the trade deficit quadrupled. And finally, when Trump was president, because of the deregulation and the tax cut, the trade deficit went up, not down, even though we imposed tariffs because foreigners wanted to invest in America because investment here yielded a high rate of return. So we're. We're pursuing something that doesn't matter, and we're endangering something that does matter. Economic growth, prosperity, prices, inflation. And the economy's grew in the last quarter by 2.3%. Most of that growth was driven by people consuming at levels that aren't going to be sustainable at their current income and by government spending, which we're trying to cut. And there's no other country in the world that's really growing by very much. So they're not going to help us in terms of buying our goods. So why put prosperity at risk pursuing trade policies that don't make any sense? That's my argument.

[Kevin Gentry]

Well, well said. I wish you had more of a platform.

[Phil Graham]

You do.

[Kevin Gentry]

And everyone. I think people really do listen to you.

[Phil Graham]

Yeah. Read my stuff in the Wall Street Journal and you're going to hear, and again, I'm not trying to criticize the president. I want to fix this problem the president talks about tonight. And his supporters say, well, in the 19th century, we had trade deficits. I mean, we had high tariffs, and yet we grew. Well, in the 19th century, government didn't have the ability to impose an income tax. We tried taxing whiskey, and it caused an open rebellion. And so tariffs were about the only source of revenue for much of the 19th century. But when tariffs were falling, those periods from 1830 to 1860 and from 1870 to 1890, or the periods where we grew fastest, and McKinley offered his famous tariff as a House member, and the political reaction to it was so disastrous for Republicans that McKinley was defeated. It was a bloodbath for Republicans. And when McKinley was ultimately elected president, he set out a policy to open up trade because we were producing more than we could consume and we needed markets. So the president's drawn the wrong lessons from the 19th century.

[Kevin Gentry]

Well, thank you.

[Phil Graham]

You know, this is enough said on the subject. It's a subject I feel very strongly about.

[Kevin Gentry]

Well, you keep speaking out. I think it's very important. And as you know, I wanted to have you on now because it's such a timely message. You've always been speaking out about these sorts of important things. And. Thank you. You give a good clarity to it related to this that you talked about. You know, The Reagan years, 1984, the electorate was. Was realigning. There was a new coalition of people supporting the Republican Party under Reagan than had existed prior to that. The new Trump coalition and Republican Party is different. And you look at people like Robert F. Kennedy, Jr. And Tulsi Gabbard, how do you see the continued changes in the composition of the Republican Party?

[Phil Graham]

Well, it's different, but in many important ways it's the same. Reagan won with what were called Reagan Democrats, and they were basically working Democrats who were tired of the inflation and who wanted prosperity to come back. That's the basis of the electoral success of Donald Trump. What frustrates me and the two appointments, it's hard to gauge to what extent they're political and what extent they're real. The fact that their views are different doesn't frighten me. The prevailing views have given us the problems we have now. Maybe people who think different will do it differently. Maybe the outcome will be different. But the fundamental building block of the Trump majority is blue collar Americans. And what drives me to distraction is Republicans who say, oh, we're beginning to get blue collar votes. So what we need to do is we need to fund programs that benefit blue collar Americans. Well, my God, if programs bought their vote, they never would have voted for us to begin with. Why buy phony when you have a real thing? Democrats are spending somebody else's money. You can't outbid them. They voted for us because they want prosperity. Promote the prosperity, deregulate, cut their taxes. Not with some phony baloney. Refundable tax credit where we give money to people who don't work, but by lowering the tax rate to encourage people to work, save and invest. There's nothing that bothers me more than Republicans who say, now that blue collar workers are voting for us, we need to promote programs that are more like Democrat Programs. Well, my God, if those programs work, why did they vote for us? They voted for us because they were tired of the inflation and quite frankly, they were tired of both husband and wife working and living right down the street is a couple when nobody's breaking a sweat, that's about as well off as they are. Because welfare is so generous, which is a point we make in our book that you mentioned earlier, that if you look at the bottom 60% of American earners, our welfare program is now so generous that basically the bottom 60% have virtually the same income, even though only 36% of work age persons in the bottom 20% of earners actually work. And some 90% in the middle 20% work. And that's a terrible injustice and one that we need to deal with.

[Kevin Gentry]

All right, with all that said, are you still bullish? Should we still be bullish about America? Should we still be optimistic about the future?

[Phil Graham]

Well, nobody ever made money by selling America's shorts. And look, I grew up in this country. Neither my parents graduated from high school. My brother was the first person in my extended family of about 1800 people who graduated from high school. He went to college when he was commissioned an officer in the United States Army. Those gold bars, the biggest day of my mother's life. She never understood a PhD and in some sense didn't quite understand that I was the senator. Richard Shelby, senator from Alabama, came to see her one day, sat in the chair. And so about six months later, I had come to visit. And so she was telling me Richard Shelby sat in that chair. And I said, well, mother, I work with Richard Shelby. And another time we were going to see Paul Coverdale. You remember him? Senator from Georgia. I love Paul. We were going to see him. And so my mother said as we were driving to the meeting, well, you know Paul Coverdale, so. Yeah, I know him real well. Does he know you? Anyway, so look, the life I've lived where opportunity as I saw as a child was everywhere. And I, my mother decided for I was born, I was going to college because the people she nursed that were successful had sharp tools, which meant they were educated. And I failed third, seventh and ninth grades and I still managed to succeed in America. America gives you lots of second choices. You got to make a constant habit of making bad choices to fail in America. Now people do, but it's not easy. So no, I'm never, I'm never down on America and I always want America to succeed. Even when we have Democratic Congress, Democratic presidents, I'm never going to Cheer against America. I want programs that work, that make America better, and that's more important to me than who's in the White House or in Congress. I believe our programs work better. That's why I'm a Republican. I don't believe the Democrat programs, especially after Clinton. Clinton was the last reasonable Democrat. Clinton wanted to milk the cow, but he didn't mean the cow any harm. Obama wanted to bruise up the cow's tits, and Biden wanted to kill the cow. And that's the difference. The Biden regulators not only were hostile to the people they were regulating, they were hostile to the basic system of the country, and that's dangerous. And I highly applaud the regulators that President Trump is putting into office. Deregulation is far more important than I initially believed. I remember President Reagan saying to me, well, you know, we're all focused on the budget, and it's important. But he said, I think what we're doing in deregulation and what Carter did in deregulation is far more important than people realized. I didn't. I never disagreed with that publicly, but I wasn't so sure. But I'm sure now the deregulation that the Trump administration is going to do is going to be as important, if not more important, than the tax cuts. We have really hurt the business environment in America. We have Europeanized America under, starting with Obama and then with Biden, and it needs to be reversed. And the reversal has got to be pretty dramatic. Pretty dramatic.

[Kevin Gentry]

By the way, when it comes to deregulation, your wife Wendy is a superstar. And so the combination of the two of you all in your public service has been an awfully big dividend to America. I've got two final questions for you.

[Phil Graham]

Well, I got to tell you, Kevin, Wendy has a picture of herself and Reagan, and he signed it to my favorite economist. And my wife is a lot easier to love than me, so I don't resent it.

[Kevin Gentry]

That's terrific. Well, we love Wendy Graham, and you all are both a significant contribution.

[Phil Graham]

Every good thing in my life came back from her.

[Kevin Gentry]

Hear, hear. All right, so here are the two final questions. And by the way, I just want to say you referenced your book, but the Myth of Income Inequality is an important book, and for anyone listening, strongly recommend. Won the Hayek Book Prize. It's. It's so important. And, I mean, you've got another book coming out, right?

[Phil Graham]

Yeah, it's called the the Triumph of Economic Freedom Debunking the Seven Great Myths of American Capitalism. It'll be out In May. So I think it's a quite good book. I'm very pleased with it. I've been writing articles for a long time. I don't have a contract with a Wall Street Journal, and they're not obligated to publish my articles, but they published over 125 of them. And so I'd written so much on income inequality and poverty that I thought I ought to bring it all together. And I was fortunate to find in John Early, a former deputy commissioner of the Bureau of Labor Statistics, somebody who really knew how we collect data and report data in America. And so the book starts out to basically show that the Census Bureau greatly overstates poverty and income inequality by not counting two thirds of all transfer payments as income to people who get the payment like tax credits, and by not taking taxes into account for high income individuals who lose as much as 42% of their income in federal, state and local taxes. So the Census Bureau says the ratio of the top 20% of income recipients, the bottom 20%, is 16.7 times. But when you adjust for transfer payments and taxes, it's 4 to 1, not 16.7 to 1. Wow. And you can say 4 to 1 is too much. Okay. But it's a different debate than 16.7 to 1. We say the poverty rate's about 11.5%, but if you count all transfer payments, the average household in the bottom 20% of earners is getting, listen to this figure. 64.7, $64,700 a year on average in government benefits.

[Kevin Gentry]

Oh. So therefore, the people in the middle are really covering a burden as well.

[Phil Graham]

Well, what's happened is, of course, that the benefits you can get from the government are so big that if you don't have skills, what's the reward for working?

[Kevin Gentry]

Right.

[Phil Graham]

And so what has happened is since War on Poverty started, the number of work age persons in the bottom 20% of earners has fallen from 68% to 36%. We only have 36% of work age persons and the bottom 20% of income recipients who work. I mean, it's astonishing. Astonishing.

[Kevin Gentry]

So you wrote that book with John early, your new book. Is he the co writer who's helped you?

[Phil Graham]

No, it's with Don Boudreau, who's George Mason. And I was attracted to him because he thinks like I do and writes like I do. And his major professor, Bob Eklund, was one of my dearest, dearest friends. And he told me, you need to get to know Boudreau. So I did. And I think we're a pretty good team.

[Kevin Gentry]

Excellent. Well, I'm going to have to have Don Boudreaux on this podcast as well. Okay, here are the two final questions. First off is, if you look back on yourself as a younger person, young man, what would you tell that younger self to have done differently now that you have this perspective in life?

[Phil Graham]

I'll tell you one thing, Kevin. I wouldn't want to throw the cards back in and reshuffle and redeal. It would be hard for it to turn out as well as it's turned out for me. Interestingly enough, Wendy and I have talked about this a lot. I think the thing that I would change and she would change. We agree on it. Is we would have more children. We had two children, two boys that both been very successful, and we're very close to them. And we thought we were busy. We thought what we were doing was important. So when the second one was born, we decided that was enough. That was a mistake. I wish we'd done. I wish we'd had at least three or four. So that's what I. I know it's a strange answer, but it's. It's true.

[Kevin Gentry]

Well, you've got a fine family and great grandchildren and wonderful grandchildren as well. All right, here's the final question, because this is. This is the Go Big podcast. It's. It's an encouragement to people to be inspired by casting a big, bold vision. People who've done that, like yourself, what encouragement would you give any listener to this to think about their future today?

[Phil Graham]

First of all, smart people are a dime a dozen. There are a lot of really smart people in this world that never do anything because they're not driven. Some advice my brother gave me was at a critical moment in my life, I was going to get a new chance. And I asked my brother, do you think I have enough ability to do what I need to do? And he said, well, I don't think ability has much to do with the question is, do you want to do it? My mother's word for ambition was Warner, do you want to do something? And I would say, looking back at my career, especially in government, Warner played a big role. I got 28% of the vote when I first ran for public office. Normally, that's the end of a career. One end of my career. I figured when I authored the Reagan budget, it was probably the end of my political career. I wasn't sure, but I was willing to do it because I thought it was worth it. And I think the willingness to take risk and the willingness to learn. When I started in politics, Kevin, I was terrible. I was. I didn't like. I thought it was intrusive to go up, shake hands with somebody and introduce yourself. And so I was just terrible. But I learned, okay. It's not just bullheaded I'm going to do this thing. It was, I'm going to learn to do what I need to do to make it possible to do it. And so I got to the point where I'm really good at saying to people, hi, my name's Phil Graham, and I want to go to Washington to change America. I mean, one of my biggest meetings I ever had politically, I was a college professor. Nobody knew me. Most people knew me, didn't like me. And so I went to Austin and to visit with the head of the Texas Chemical Council, which is a huge organization of petrochemical producers. And so anyway, I go in and I shake the guy's hand, and I said, I'm going to Washington to save America, and you need my help. And he said, I sure as hell do. Sit down right here and tell me how you're going to do it. And so I sat down and told him I was going to do it. And I never ran again. They didn't support me.

[Kevin Gentry]

That's a great story, too. Well, thank you.

[Phil Graham]

Yeah, well, it shows you people you don't have to. I used to say to young congressmen, senators, if you're willing to take on a tough issue, you don't have to worry about stepping on anybody's toes. Hell, people are going to shove you out there because then if the bullets fly, they're going to hit you and not, you know, so, you know, how did I end up being the author of the Reagan budget in the House or Graham Rudman? As a freshman senator, I wanted to do it, and I was willing to do it and willing to take the chances. You know, you got to be willing to fail to succeed. So my advice to young people is one, if you want something, don't be easily deterred. Don't just think bull effort will get it for you. Learn what you need to learn to do what you need to do to get where you want to go to do what you want to do. I think those are the. And another suggestion I had the young people who were thinking about getting into government, be successful at something else first. Do well before you try to do good. Know the system you're trying to save before you try to save it. I'm always a little suspicious of people that, that want to get into politics but have never done anything else. And maybe it's because of my experience. I didn't. I had no outward, invisible signs of political interest. I never had my picture in a college annual. I got promoted to full professor when I was very young. And I woke up the next morning and I was an adult and I had two little children, and I didn't like what was happening in America, and so I started speaking out about it, and that's. That led to the career I've had.

[Kevin Gentry]

Wow. Well, thank you for taking those risks. I mean, look, you took those risks, and we're having this conversation, talking about all these big accomplishments, and also, more importantly, I think you went big. You thought big, you cast a big vision, and you went big and you took those risks.

[Phil Graham]

Well, Kevin, thank you very much. I've enjoyed doing the program. You are a very patient man. They help me get on the thing, get, get all this wired up. And I appreciate it, and I appreciate you. You're a good man. We need more people like you.

[Kevin Gentry]

You're very nice. We thank you. Keep speaking out, please.

[Phil Graham]

As long as I'm alive, I'm going to stand up for what I believe in. And if I believe in anything, it's trade. Therefore, I'd been elect. Let me tell you a story. I'd been elected to the Senate about three months. I'm in the Senate, brand new member, and somebody offers an import fee on oil. Okay, I'm from Texas, okay. So I figured, what in the hell am I going to do? I'm not voting for this thing. And then I figured, well, there's only one thing to do. I walk out the floor. And I was the first person to come out against it. I fought it, I killed it. And then I was the third senator from Massachusetts, I in Texas. And for nine months, I went all over the state, all over the state defending my vote, and I defended it. I went into chemical plants, I spoke in cities, I answered questions, I debated. And, you know, when I ran for reelection, I won, which shows you. Well, one, two things. One, I really believe in trade, and I'm really against tariffs. And two, if you're doing the right thing and can explain it, you can do it.

[Kevin Gentry]

You're here.

[Phil Graham]

Now, granted, I represent the greatest state and the greatest country in the history of the world, and that was a big damn advantage. But, you know, I believe I stand up what I believe in. Thank you so much. I appreciate you.

[Kevin Gentry]

Senator Phil Graham, thank you for looking forward to your new book. Thank you thank you.

[Phil Graham]

Be sure and buy it. But more importantly, read it. I don't need the money. I need people that know these things.

[Kevin Gentry]

Thanks for tuning in to the Going Big Podcast. I hope today's conversation left you feeling energized and ready to tackle your biggest goals. Don't forget to subscribe and leave us a review on iTunes, YouTube, or wherever you listen to podcasts. It really helps spread the word and it gets these inspiring stories out to more people. You can also find more content, resources and updates at our website, goingbigpodcast.com Remember, the only limits are the ones you don't challenge the limits that you impose on yourself. Keep pushing, keep growing, and above all, keep Going Big. See you next time on the Going Big Podcast.