The Truth with Lisa Boothe: The Socialist Surge: Economist EJ Antoni Warns of America’s Leftward Turn

Summary

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Podcast Summary:

The Clay Travis and Buck Sexton Show – The Truth with Lisa Boothe: The Socialist Surge: Economist EJ Antoni Warns of America’s Leftward Turn
Host: Lisa Boothe
Guest: EJ Antoni, Economist at Heritage
Date: November 4, 2025

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Main Theme

This episode explores the rising popularity and mainstreaming of socialism in American politics, particularly among younger generations and in major cities like New York. Lisa Boothe interviews economist EJ Antoni to discuss the real-world effects of socialist policies, the shifting attitudes of young people, potential economic fallout for New York City, and the national political and economic landscape heading into the 2026 midterms.

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Key Discussion Points & Insights

1. Defining Socialism & Its Appeal ([02:08]–[06:21])

• Socialism defined: EJ Antoni calls socialism, “theft…force…not even an economic system,” but a “way of taking an existing economic system and…bastardizing it…to achieve political ends.” He emphasizes that socialism gives government rights to control people’s lives and property ([02:40]).
• Education and misinformation: Antoni argues that modern education “is more like indoctrination,” and youths are taught the “promises of socialism and not the actual outcomes.”
• Illustrative quote:
  • “Socialism is theft. Socialism is force…It gives the government rights which properly belong to the people…” — EJ Antoni ([02:40])

2. Socialism’s Track Record & the Reality versus Rhetoric ([06:21]–[09:08])

• Outcomes in practice: Socialism’s promise of equity ends up creating “a ruling class,” while “everyone else…falls into poverty.”
• Global examples: References to conditions in Venezuela and Canada, highlighting long wait times in Canadian healthcare and economic decline in Venezuela.
• Hypocrisy among progressive leaders:
  • AOC’s “tax the rich” dress at the Met Gala and Sanders’ private jet use illustrate, according to Boothe, socialists enriching themselves while preaching equity.
  • “They espouse equity…and try to pretend they’re populists, but then inevitably like they’re just enriching themselves in the process, which is like…seeing how socialism plays out…” — Lisa Boothe ([07:35])

3. Potential Impact of a Socialist NYC Mayor ([09:08]–[12:34])

• Zoran Mamdani’s Policy Platform: Boothe raises concerns about the likely election of a Democratic Socialist as NYC mayor and his ideas such as government-run grocery stores.
• Consequences of socialist policies:
  • On groceries: Price controls create shortages. “If a grocer can’t sell at a profit…he’s not going to sell it at all.”
  • On rent control: Leads to landlord neglect, slum conditions, bifurcated housing (only luxury units and slums), and a persistent underclass.
  • Quote:
    • “Even far left so-called economists will say rent control doesn’t work…instead of creating a one class utopia…you end up creating a caste system.” — EJ Antoni ([12:34])

4. Economic Fallout: Business and Population Flight ([15:21]–[18:04])

• Expected exodus: High earners and businesses are likely to leave NYC for lower-tax states (Texas, Tennessee, Florida).
  • “You keep driving up these top marginal tax rates, you end up driving high income earners out…We've seen so many people leaving the state of New York, Illinois, California…” — EJ Antoni ([15:37])
• Trickle-down effects: The departure of high earners cascades, hurting service industries and broadening economic damage.

5. The GOP’s Messaging Challenge on Socialism ([18:04]–[22:11])

• Empirical vs. moral arguments: Young people today are “unimpressed with empirical analysis” and are more responsive to moral arguments.
• Teaching point: Antoni uses a grades analogy, likening redistribution to taking A-students’ points and giving them to F-students for “fairness,” which always elicits objections from students.
  • “Socialism says that someone else has a right to what you have earned. Is it fair for me as a professor to take some of your grade that you have earned and give it to someone else?” — EJ Antoni ([19:04])
• Critical thinking decline: “We indoctrinated them instead of educating them. We robbed them of the opportunity to learn these kinds of critical thinking skills…” ([21:46])

6. Economic Outlook Heading into the 2026 Midterms ([22:11]–[26:10])

• Current status: Economy is “sober[ing] up” from the “Biden administration’s spending and hiring binge,” shifting from the unproductive public sector to the productive private sector.
• Analogy:
  • “Biden was basically just one nightly drinking binge after the next…now, under Trump, we’re putting the bottle away…It’s going to be painful sobering up, but it’s necessary.” — EJ Antoni ([22:29])
• Short-term pain: The transition is causing disruptions, but is necessary for long-term sustainable growth.

7. Economic Relief and Voter Sentiment ([26:10]–[28:48])

• Partial relief: Inflation-adjusted incomes are rising slightly under Trump, but most Americans remain worse off than in 2019 due to cumulative losses during the Biden years and high personal debt.
• Important context:
  • “For the previous four years under the Biden administration…adjusted for inflation, was negative 4%…That’s why we have a cost of living crisis still in this country.” ([26:25])
• Voter psychology: Recovery feels insufficient because the “race” started with Americans already behind.

8. Potential Impact of a New Federal Reserve Chair ([30:46]–[37:25])

• Change in market perception: A Trump-appointed chair could increase market confidence and provide downward pressure on interest rates.
• Critique of Jerome Powell: Accused of lacking transparency, being a “political animal," serving Democrat interests, and implementing policies that drain lending from the private sector.
  • “Markets just don’t have any confidence in Powell right now…there was no empirical justification for cutting rates last year right before the election…” — EJ Antoni ([30:56])
• Prescriptive fix: Stop paying banks to park reserves at the Fed and encourage private lending and economic activity.
• Timeline: A new chair in May could trigger significant economic improvements ahead of the midterms.

9. Evaluating Trump’s Tariff Strategy ([37:25]–[42:32])

• Complex goals: Some tariff objectives (boosting government revenue, reshoring manufacturing, national security) contradict over different time horizons and markets.
• Strategic ambiguity: The administration leverages unpredictability as a negotiating tool, producing concessions from trade partners like China (on fentanyl) and Canada (on dairy and manufacturing).
  • “Other nations don’t really know beyond the simple demands what the President’s actual goals are…but if we want to avoid…damaging economic effects, we just have to do what the President says.” — EJ Antoni ([41:16])
• Relative leverage: In trade wars, “there are no winners…but not everyone loses the same.” (U.S. has the upper hand over smaller trading partners like Canada.)

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Notable Quotes & Memorable Moments

• On the psychological appeal of socialism:

  • “The promises are very, very nice. Everyone is equal, everyone gets what they need. Nobody goes hungry…who could be against things like that, right, Lisa? They always sound great on paper. It's only the implementation that always goes sideways.” — EJ Antoni ([05:45])

• On the modern left’s contradictions:

  • “They espouse equity…and try to pretend they're populists, but then inevitably like they're just enriching themselves in the process.” — Lisa Boothe ([07:35])

• On empirical arguments failing with youth:

  • “If I tell them…a million people are going to leave…the ones left are worse off…it doesn't really speak to them…So…the only way…is just by putting everything in moral terms.” — EJ Antoni ([19:04])

• On long term housing outcomes of socialism:

  • “…you end up creating this two class…not even a class system, but a caste system…there’s never any way to get from one to the other.” — EJ Antoni ([14:48])

• On current inflation and debt:

  • “Over the course of roughly five years, it’s not that you're up 1%, it’s that you’re down a net 3%. On top of that…over a trillion dollars in credit card debt. The interest rate…is near a record high…cost of living today is much, much worse than it was in 2019.” — EJ Antoni ([26:25])

• On the Fed’s policy problems:

  • “The Fed has been sterilizing trillions of dollars that way, to try to keep bank reserves at this magical ratio…robbing the private market of capital…” — EJ Antoni ([34:58])

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Timestamps for Major Segments

• Defining Socialism & Youth Support: [02:08]–[06:21]
• Real-world Socialist Outcomes: [06:21]–[09:08]
• NYC, Zoran Mamdani & Policy Risks: [09:08]–[12:34]
• Business/Wealth Exodus from NYC & Effects: [15:21]–[18:04]
• Messaging to Young People & Critical Thinking: [18:04]–[22:11]
• Economic State & Analogy of Sobriety: [22:29]–[26:10]
• Cost of Living Context: [26:25]–[28:48]
• Next Fed Chair & Economic Impact: [30:46]–[37:25]
• Trump’s Tariff Strategy: [37:25]–[42:32]

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Tone & Style

The discussion is frank and combative, laced with anecdotes and analogies. Boothe and Antoni speak in plain, direct language, expressing skepticism of socialist promises and blunt critiques of progressive icons, while offering practical analogies to drive home points about economics, morality, and the failures of left-leaning policies.

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Summary Prepared for Listeners Who Have Not Heard the Episode
This episode provides a strident, conservative take on the consequences of socialism, why it’s resonating with youth, and what the economic and political stakes are for New York and the country. The conversation draws on historical examples, economic theory, and contemporary political figures to deconstruct both the appeal and the practical fallout of leftward shifts in American urban policy. It closes with a sharp critique of the current economic climate, policy prescriptions for monetary reform, and nuanced insights on the strategic purposes and effects of Trump’s trade tariffs.

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Transcript

[A]

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[B]

Oh, Lisa, thank you for having me again. It is great to be back with you.

[A]

You always do a great job of explaining some of these complicated issues. You know, ej, I wanted to start, I don't know if you saw that Axios poll recently that surveyed US college students, but they found that 67% of the respondents hold a positive or neutral association with the word socialism, compared to only 40% for the word capitalism. You know, I think we talk about capitalism, we talk about socialism, but like, how would you describe socialism? Like, how would you define it as.

[B]

An economist, Socialism is theft. Socialism is force. In to a certain extent, Lisa, it's not even an economic system, right? It's, it's actually a way of, of taking an existing economic system and forgive me, but, but bastardizing it in such a way as to achieve political ends. In. In other words, what socialism does is it gives the government rights which properly belong to the people, certain property rights. The government gets to dictate to you things like where you're going to work, how much you're going to work, how much you're going to earn from that work, what you can do with your earnings, etc. That, that effectively is socialism. The problem is today education is more like indoctrination. And so kids are not taught that in high school, in college. Instead they are taught all of these fanciful ideas about socialism. They're told the promises, I guess I should say, of socialism and not the actual outcomes. The promises of socialism are that everyone is somehow equal, that everyone somehow earns the same amount. You know, Dr. Art Laffer has done phenomenal work, not just theoretically, but even empirically, showing that as long as you have these promises in socialism, I should say things like, everyone is going to work, everyone is going to earn the same amount. What happens? Well, everything devolves backwards until everyone decides they don't want to work. Because if you earn more than what the government says you can, what are you going to do? Well, you're going to work less. Why on earth would you earn more only for the government to take it away from you? And if you earn, if you currently work less than whatever the guaranteed income is, right? If you work and earn less than that, you know that the government is going to artificially increase your income to whatever their predetermined amount is. So why on earth would you work that much? You in fact, would also work less. Because again, if you don't make enough money, the government is just going to give you whatever you need to to get your universal basic income or whatever else they want to call that scheme. So everyone decides to work less and less and less and less until nobody works at all. And it's a shockingly good illustration of, again, what we see in reality. All the different places socialism has been tried, whether it's in Russia, whether it's in South America, you know, to a certain extent, our neighbors here in North America, like in Canada, the more they socialize things, the worse it gets. Look at Canadian medicine, for example. Ask yourself, is it Americans that are having to go across the border to Canada to get health care treatments in their socialized system? Or is it Canadians who are having to come across the border to flee their socialized health care system and get American private health care? It, of course is the latter because in Canada, sure, the health care is technically free, quote, unquote, except you have to wait literally months to get life saving treatment. And so if your choice is either dying or coming across the border to America and paying cash, a lot of people decide to do the latter. These are the fruits of socialism. It's not a matter of it sounds good. On paper, the promises are very, very nice. Everyone is equal, everyone gets what they need. Nobody goes hungry. Those are great promises. Who could be against things like that, right, Lisa? They always sound great. On paper, it's only the implementation that always goes sideways.

[A]

Well, and we see too in a lot of these places, like, you know, Venezuela, like the irony is these people push socialism because they want like quote, unquote, equity. But then in reality you're just empowering like the government, the people in charge, right? And then everyone else suffers. So it's like, it's actually like the, the end result is the opposite of what they are saying they're trying to accomplish, right?

[B]

And, and you make such a great point, Lisa, that you, you always, in socialism end up having this upper class, this ruling class, if you will. And, and everyone else, their situation just gets worse and worse. They fall into, into poverty, right? As, as they said, an animal farm. As George Orwell said, rather, what was the phrase he used? All animals are equal, but some are more equal than others. You know, if, if you want the government to have the power to be able to make everyone equal, they have to have the power to take things away from you. And that means there are certain individuals who are going to have to occupy those seats of power. And isn't it amazing, human nature being what it is, that those individuals always manage to scrape a little bit off the top as they take from A and give to B.

[A]

When we're even seeing that with, you know, like AOC and Bernie Sanders, for instance, like AOC went to the Met gala and like, you know, wore a really expensive dress that said, I think it was like, tax the rich or, you know, Bernie Sanders flies private and stays in very fancy hotels and like, they both have managed to make a lot of money or Bernie Sanders become a millionaire, right? So like, we're already kind of saying it in practice how they, you know, espouse, you know, equity and all these, you know, different terms and you know, try to pretend they're populous, but then inevitably like they're just enriching themselves in the process, which is like sort of seeing how socialism plays out, you know, when enacted, right?

[B]

Oh, 100%. It's another really great point, Lisa. And how many of these people in Congress do you see where they're making? I don't know what it is. Like it's like $200,000 or something like that. I think they make, which, you know, that's a good income, but that's not enough to go from a net worth of a few hundred thousand dollars, which is where several of them have entered. And within five, six years they have net worth worths in the tens of millions of dollars. I'm sorry, that doesn't pass the smell test. Even if you are a Nancy Pelosi or a Dan Crenshaw kind of investor, you know, that, that is still, that still does not explain those ridiculous increases in net wealth. Because they're selling their power, they're selling their influence, which again, you only have that kind of power and you only have that kind of influence to sell if the government is using it for nefarious purposes like socialism.

[A]

You look how like Maduro has all this money and everyone else, you know, can barely afford to eat, you know. Zuron will likely become New York City's mayor, overseeing a massive economy, a city of 8.5 million people. He's a member of the Democratic Socialists of America. What do you think his policies, like government run grocery stores will do to New York City? And how much damage do you think can be done in a four year period?

[B]

Well, I think they will do. Those policies will do exactly what they have done elsewhere that they've been tried and even where they've already been tried in New York, you know, when he talks about things like rent control, I mean, they already have that right in one form or another. So some of these policies, really, I should say all these policies, Lisa, we can just look at New York or other places in America where they have been tried or other places around the world where they've been tried and sure enough, it is the exact same result every single time, which is none of them actually achieve their intended ends and all of them make the situation worse. When you do things like you say, you know what, we're going to make it illegal for you to sell groceries or to sell utilities, whether that's gas, electric, water, you name it, above a certain price, what happens? Well, you end up creating shortages because a grocer is not going to say, oh goodness, you know, I can't sell this apple profitably, so I guess I'm just going to have to sell it at a loss. No, I'm not going to sell it at all. That's what I'm going to do. And you know what? People are going to have to go without. They're going to have to look else you're going to have to if you're.

[A]

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[B]

Sale that's what's going to happen. It is what has happened. Not just in places again like New York City, but elsewhere around the country. Look at what they've done in places like the state of Minnesota where they've tried to have state run grocery stores. It's been the exact same thing. There's no food because they're all, all the stores are losing money. Anytime you do have some food that comes in below market prices, everyone flocks to those stores, quickly buys it out and they can't keep it stocked because again, it's not profitable to do so you are losing money on it. And when you have programs like rent control, that's a really funny one because even far left so called economists will say rent control doesn't work. It produces exactly the opposite of the kinds of results that you want. What we see with rent control is absentee landlordism. Again, you can't force somebody to provide a product to the marketplace that, on which they're going to lose money. And I'm not talking about things like loss leaders where, where businesses will purposely, you know, sell something at a loss to get you into the store to buy something else. No, no, we're talking about doing this en masse. What we, what happens when we get things like rent control is landlords say, well, I'm just not going to provide all the different things that I used to in order to cut costs and that's how I'm going to be able to still make money on this property. So landlords don't repair things, landlords don't follow up on, on, on the complaints of leases, etc. And you end up with these rundown slums. You also get this very weird kind of barbell distribution, this bifurcation I guess you could call it, of residences where you end up with landlords who say, all right, I either can run a slum profitably, I can't run any kind of middle income housing profitably, I'll lose money on that. But if I do luxury homes that's exempt from rent control so I can make a profit there. So the only kinds of homes that you end up getting in those markets again are, are the rundown slums that nobody wants to live in, but people have to because it's now their only option. The middle income homes went away and then you get the protected rich who still get their luxury condos, their luxury townhomes, the luxury high rise buildings, et cetera. So instead of creating this kind of one class utopia that socialism always tries to sell us on, you end up creating this, this two class, not even a class system, but a caste system where you have the highs and the lows, you have the haves and the have nots and that's it. And there's never any way to get from one to the other. You end up, you end up driving a wedge between these groups instead of bridging the divide.

[A]

Got to take a quick commercial break. More with EJ and Tony on the other side. You know, what kind of well flight do you think we'll see from New York City in terms of, you know, businesses and high high income earners deciding to leave?

[B]

Oh, it'll be extreme. You know, I wrote a paper with, with Steve Moore back in, I want to say it was the summer of 2021, Lisa, if memory serves, and what we were analyzing in that was New York's latest big tax increase. And we explained how, you know, if you do the math and you do some regression analysis, you look at other states and you know, Dr. Art Laffer has done a lot of good work on this as have a lot of other, you know, good data scientists and, and what you just time after time, what you keep finding, Lisa, is that as you keep driving up these top marginal tax rates, you end up driving high income earners out of those places. That's a big part of the reason why we've seen so many people and they take their jobs and their incomes with them. We've seen so many people leaving the state of New York, we've seen them leaving Illinois, California, etc. Right. And where are they going? They're going to Texas, they're going to Tennessee, they're going to our favorite, Florida. Right. And what has happened is they've basically protected, they've shielded their incomes from state income taxes by doing so. Now there's other, there's other parts of the tax equation to consider, right? Sales taxes, property taxes, et cetera. But at the end of the day, they're still choosing to move from those states with a high tax burden to a low tax burden because they're saving themselves a whole heck of a lot of money in doing so. So when we, when we did this paper, we, you know, we got out our calculators, we did the math and we found that over the course of a decade, an extra 1 million people, almost all high income earners, were going to leave the state of New York. Now as they do that, it's not all high income earners because there's a trickle down effect, right, when, when a high income earner is no longer, no longer living in New York City, for example, he's not going to the grocery store, he's not buying food. So maybe you lose a job for a, you know, a guy stocking the shelves, he's no longer getting his suits dry cleaned there. So Maybe now there you lose a job at one of the city's many dry cleaners and so on and so on, right? There's just this kind of cascade effect. You're going to lose jobs in restaurants, right? Waitresses and bartenders and so on. And. And at the end of the day, again, it's a million people who leave the state over the course of a decade. That effect is only going to be exacerbated if you get the kinds of big spending and big taxing policies that this guy, this literal communist, has been advocating for in the city.

[A]

You know, I think the challenges, you know, obviously we're seeing sort of, you know, people like AOC and Bernie Sanders become more mainstream in their party, and so Ron might as well, too. We've seen some reluctance to embrace him from party leaders. But, you know, that'll probably change after the election, I guess. You know, they're talking about equity and things like that, which obviously, you know, are in affordability and, you know, things like that obviously concerns in a lot of these cities, like New York City, where it's so expensive to live, I guess. How do Republicans. I mean, this might be more of a messaging question, but I guess what should our response be to just this.

[B]

Kind of spread of.

[A]

And Bernie Sanders are making? Because, you know, I think to young people. Yeah, I mean, like, you know, what should our response be? I guess, because, I mean, the challenge is. I guess it's more of a messaging thing, you know, because when you talk about giving away free things to people who are concerned about affordability, that sounds a little bit better than talking about, like, reducing tax. You know what I mean? Like, it's a little bit of a challenge.

[B]

I think part of it, Lisa, is that we are. And this is what, this is what old generals tend to do. We've been fighting new battles with the same old tactics. We're kind of reliving, you know, historical moments instead of living in the present. So I, I find when I talk to young people, when I, like, visit colleges and give speeches, a lot of them are increasingly unimpressed with empirical analysis. If I, if I tell them what I just told you in the audience about how a million people are going to leave the state of New York and they're going to take their jobs and their incomes with them, and everyone left in New York is worse off as a result, you know, if I put it in those terms, they don't really seem to care that much. It doesn't really speak to them because they haven't, you know, they don't, frankly, they don't have a lot of those critical thinking skills. They don't have the ability to do empirical analyses. And so the only way I think that we can speak to a lot of these folks now is just by putting everything in moral terms. And it's not to say, but you know, that, that, that morality is somehow below mathematics. That's not the point at all. It's just that I think basic laws of morality to some extent are written on every human heart. Right. We have a certain sense of justice that's just kind of ingrained in our DNA where we can kind of intrinsically notice when something is fair or not. Now, obviously, you know, concupiscence can dull that part of your conscience over time. So you don't see it as much. And so that you think the government taking from someone and giving it to me, well, that's fair. Right? But, but again, I think that's where we kind of have to make an appeal. So when I talk about socialism a lot of times, again mostly to young people, I almost exclusively put it in moral terms. And I explain to them socialism is theft. Socialism says that someone else has a right to what you have earned. Socialism says that my, that I literally have a fair share of what you worked hard for. And look, is it fair for me as a professor to take some of your grade that you have earned and give it to someone else? In other words, this person over here, they got an F and you got an A. But if I redistribute some of your correct answers to them now, you both get a C. And that's equal. That's fair. Right? And of course, then immediately there's an uproar from the crowd. No, no, that wouldn't be fair. No, please don't do that. So again, that's. Those, I think, are the kinds of things that, that we need to say to young people because they're just not ready for maybe the more robust intellectual arguments that were made in yesteryear. The kinds of things that I think helped convince young people in the 80s and in the 90s, maybe even the early 2000s, that just doesn't work anymore, unfortunately, because we've, we've robbed kids again. We, we indoctrinated them instead of educating them. We robbed them of the opportunity to learn these kinds of critical thinking skills that would have given them the framework with which to understand socialism well.

[A]

So I think my question to you took like five minutes to ask. Ask. So, you know, the economy is likely going to be the Top issue heading into the midterms, as it was heading into the 2024 presidential election, how would you gauge today's economy?

[B]

It's definitely a moment of transition, I think is the best way to, to phrase it, Lisa, because we're basically having to undo a lot of the stuff that the Biden administration did, and that means the economy is, is sobering up. Maybe that's another good analogy, is alcoholism. We've, and I know we've kind of used that, you know, a few times on your show before, but if you want to think of it as the Biden administration was a government spending and hiring binge, right? The government spent all this money that made GDP look good. They hired all these people that made the jobs numbers look good. But all of the government spending and all of those government bureaucrats, they weren't actually doing anything productive. It's like if we go back to World War II, you know, GDP went through the roof after the, the Depression and once we got into World War II, but people weren't any better off. If you look at the actual part of the economy that was spent on or that consumers, you know, it was consumer spending, it was business investment in the private sector, not, not the public sector, but just the private sector. Those things were going down during the war, not up. You had price controls, you had rationing, people's standard of living, the, the consumer goods that they had available to them. All those things got worse, not better, during the war. And so the explosion in GDP would make you think that, that the standard of living had gone through the roof. It didn't. Not at all. In fact, the private, again, private gdp, if you will, not, not stuff that was going towards the war effort, but that was actually, like, available for people to consume that, especially on a per capita basis, and adjusted for inflation, again, it didn't go up. It really went down. So what happened, though, is the fact that literally half of GDP was getting blown up in the European theater and in the Pacific, but it made the numbers look really good. That was the story in a nutshell of the Biden administration making the numbers look good, not actually making people's lives better. And so as you undo all of that, well, it's going to cause a lot of economic disruptions. There's no doubt about that. You're going to see, for example, we've let go now well over 100,000 bureaucrats, federal bureaucrats this year. That's going to weigh down your jobs numbers, right? The portion of gdp, and we only have the first two Quarters of the year to look at. We don't have the third quarter because the government shutdown. But in the first two quarters, Lisa, in each of those quarters, the part of GDP that measures government purchases, again, that didn't go up in. It actually went down. And so the result of that has been to drag down the headline numbers. And we're reorienting the economy away from the unproductive public sector and to the productive private sector. And that's gonna cause some short term pain, some short term disruptions. Biden was basically just one nightly drinking binge after the next, but each one was followed up the next morning. Oh, I don't feel so good. Hair of the dog, right? I'm just gonna have another drink. So I don't feel as bad that that was the economic history, I guess you could say, you know, of the Biden administration and what has it been under Trump? We're putting the bottle away, we're ordering a black coffee. It's going to be painful sobering up, but it's necessary. And more importantly, more importantly, it's the path to long run health. This is how you get sustainable economic growth. That's, you know, that's a good clip. Not like the 2% we saw under Obama where people weren't happy with it, but a robust 3 or 4%. And again, we're talking private sector growth here, not just growth in government.

[A]

Do you think we'll see that before the midterms? Because obviously the challenge politically is that Americans need to feel the relief in order to, you know, vote for Republicans heading into the midterms.

[B]

Well, I think we're definitely already seeing some of the relief. But the problem is we have to appreciate the starting point. And I talk to some people in Republican circles who, they're just, look, they're good people, Lisa, but they're very disconnected from the common man. They do very, very well for themselves, and I don't begrudge them for that. But these are not folks who ever do their own food shopping, let's say. And, and because they make a very good income, they are relatively insulated from problems like the, the cost of living. And so they look at the official numbers like I do, and they say, oh, wow, people's inflation adjusted paychecks rose, you know, rose about 1% in just like the first six, seven, maybe eight months of the Trump administration. I mean, that's great news. So it's not just that your paycheck's gotten bigger, but it's what your paycheck can actually Buy. Okay, that's great news. But what's the context? The context is, for the previous four years under the Biden administration, the total change in people's weekly paychecks, adjusted for inflation, was negative 4%. So at the end of his term, what your paycheck could actually buy bought 4% less on average than what it could when he took office. That's why we have a cost of living crisis still in this country. Because now, over the course of roughly five years, it's not that you're up 1%, it's that you're down a net 3%. And on top of that, you have to consider that people have racked up well over a trillion dollars in credit card debt. Right? The interest rate on those credit cards is near a record high. So there are a lot of other aspects that aren't captured in that statistic that tell us the cost of living today is much, much worse than it was in 2019. So this is like if you have. I don't know, you have. You have Usain Bolt, the fastest man in the world running a race, except he is starting a whole lap behind everybody else. Yes, he has made incredible progress in his first, his first go around the track, but he still hasn't caught up to all the other runners that are slower than him. That's the way a lot of Americans feel right now. Yes, things have gotten a little better this year. They're not as bad as they were last year, but they're still significantly worse than they were in 2019.

[A]

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[C]

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[A]

President Trump will be able to pick a new Fed chair come this spring. What impact do you think that would have or will have heading into the midterms?

[B]

I think a tremendous impact for a couple of reasons. One is going to be market confidence. Markets just don't have any confidence in Powell right now. They have much more confidence, interestingly, in Scott Bessant and I would love him as Fed chair, except I don't think we can spare him at Treasury. We need him so that when rates finally come down, he can be there to refinance the debt. He is, you know, he is an absolute master of sovereign debt markets, including U.S. treasuries. And he is the world's best bond salesman. So again, we just need him. We need him there, fortunately or unfortunately. But in terms of pal, why don't markets trust him? It's because he says he's data dependent. Except even though we have all the data, we never know what he's going to do with it. Well then you're not data dependent, Mr. Powell. No one knows what you're going to do with the same data from one month to the next. So he is neither data dependent nor politically independent. He is neither of those. He is clearly a political animal. There was no empirical justification for cutting rates last year right before the election. And yet he gave us an emergency 50 basis point cut to try to goose the stock market and get their preferred candidate across the finish line. The people at the Fed overwhelmingly donate to and support Democrats exclusively. You can't tell Me, it's an independent institution. Please let's dispense with that garbage. So markets have never have any idea what Powell is going to do. Right. If you have somebody in there who is actually data dependent and is dead on reliable, what happens? Markets, as soon as economic data is released, basically move before they even wait for the Fed to move, because they know what the Fed's going to do. And to a certain extent this was true for, I think for Alan Greenspan, at least for part of his career. And that was very helpful to markets. So if you get somebody in there who is much less politically biased, I think that's a huge help. The other big thing is that the entire monetary framework that he has built, Lisa, since COVID has been an absolute disaster. And this is something we've talked about a few times before as well, is how they are paying banks not to lend money. They literally are paying banks at something like four, $400 million a day in interest for the banks to keep the money parked at the Fed. In other words, the Fed is saying to these banks and these other financial institutions, hey, instead of lending money to the private sector so that somebody can get a mortgage or student loan, auto loan, credit card, you name it, instead of lending money to the treasury for, you know, for the deficit or refinancing the debt, instead of doing any of those things, lend it to us. It's risk free. It's literally an overnight loan. So there's no term premium, you might call it. In other words, the bank doesn't have to worry about, you know, a 30 year mortgage where their money is now tied up for three decades and the Fed's going to pay you interest on it. It's a completely risk free rate of return. Why would you not do that? It's a no brainer. And so the Fed has been sterilizing trillions of dollars that way to try to keep bank reserves at this magical ratio they have. Well, there's a couple problems with that. One is the fact that it is robbing the private market of capital. It is making it much more difficult for you and I to get a mortgage or to open up a credit card or to get lower interest rates on any of those things. A big reason why interest rates on mortgages are so high today is that you are literally having to compete with Jerome Powell for loanable funds. The treasury is also having to compete with Jerome Powell for loanable funds. And the result of that is the interest rate on refinancing the debt this year is artificially high. Even though the deficit is coming down, even though we are making remarkable progress both in cutting spending and in bringing in more revenue. And, you know, markets have rewarded the treasury by putting in the new lows for the year on benchmark Treasuries. Despite all of that, those yields can't really drop any further, because if they do, you're now bumping up against the point where banks would rather just lend to Powell at the Fed, because why on earth would I get a lower rate of return somewhere else? It's what we call a floor on interest rates. And all of this has again resulted in this bizarre framework where, because Powell is now trying to maintain this artificial framework, the market is forcing his hand. We, we just stopped quantitative, or we're about to stop, I should say, what we call quantitative easing, which is the Fed selling off its balance sheet. And instead they're going to start adding to the balance sheet in the coming months. Why? Because the market is forcing their hand. That's going to actually create inflationary pressures in the economy. But Powell is obsessed with the financial plumbing, not with inflation, not with the job market. What you need in Powell's replacement, I really think is going to be somebody, if not Kevin Warsh, then someone likes him and some. Someone like him and someone who understands the market as well as he does. What you need to do is basically exactly the opposite of what Powell has been doing. You need to stop paying banks to lend. You know, not to lend, I should say. And, and what is that going to do? Well, banks are going to take several trillion dollars out of the Fed and start lending it. Normally, that would expand the money supply and be inflationary, but at the same time, the Fed can very quickly sell off its balance sheet, countering that. So what you do is you have now greatly increased the amount of capital available for the market. You have put tremendous downward pressure on interest rates, which is going to provide relief for American families and federal finances alike. The only loser in this whole, this whole change would be Wall street, because the big banks are no longer going to have. Going to be able to ride the gravy train of getting this, you know, getting these insurance handouts. Excuse me, this, this interest handout. So that's, Those are the kinds of changes that need to be made. And if you do all that. Sorry to make a long story endless here. If you do all that, I think it would provide a tremendous boost to the private economy. And even if these changes aren't made until May, when the next Fed chair comes in, I think you could literally see significant change in the economy in just a few months. And that would put us right before, right before the midterms, you know, and.

[A]

Then before we go, the Supreme Court is considering the legality of Trump's tariffs. So, you know, we'll see what happens with that. But we've seen some movement, at least on China with rare earth minerals. You know, how would you assess his tariff strategy to date? And sort of, where do you, what are you keeping your eye on right now in terms of where it's heading?

[B]

Well, the tariff strategy has definitely been multifaceted. And one of the reasons why it's so difficult to assess it, Lisa, is because some of those, some of those goals are contradictory. In other words, if you have, if you have an instance where you say, all right, we want to increase revenue, right, we want to increase customs duties from these tariffs, because that's what a tariff is, right? It's a tax on imports, well, then you're going to end up selling less, or, excuse me, you're going to end up buying less of those imports because if you tax something more, you get less of it. But then at the same time, you have. And I should say that goes hand in glove with this idea of, you know, we want to decrease imports, we want to increase what we call net exports, but those things run, run contradictory in the long run. In other words, over time, what's going to happen? You are going to reshore manufacturing. People are going to say it's not worth it to make stuff overseas and import it into the US we're going to make a factory into the US and that's great because now you've, now you've increased the number of US Manufacturing jobs and you have reshored supply chains. That's good for national security reasons. But what does that do now to your, your customs duties? Well, now they're going to fall off a cliff. So one of the things you have to understand with, with this whole tariff strategy, with, with the whole game that's being played here is that they are trying to achieve more than one goal. They're just not trying to achieve all of them at exactly the same time. And they're not all trying to be achieved in the same market. In other words, there might be one area, like steel, where we say that that's more of a national security interest. And so the primary goal there is not increasing revenue to the Treasury. The primary goal there is getting the facilities and the jobs back here at home somewhere else. The real goal might be not even economic at all. It might be a non economic issue like fentanyl. Look at the amazing progress the President has made with, with the huge tariffs that they had put on and threatened to go even higher on China. What happened, China backed down on pretty much all of their demands and said, all right, we're going to make sure that we're policing and we got to make sure they're actually going to follow through on this. But China has said they've promised that they're going to, you know, police the amount of fentanyl and fentanyl precursors that are coming into the country. You know, that that's really great news, but it has nothing, it doesn't even have anything to do with, with economic issues. So, you know, getting back to the Treasury Secretary, he has called this strategic ambiguity. In other words, other nations don't really know beyond the simple demands that the President makes what his actual goals are, especially not in all instances. And the result of that has been all these countries know is that, look, if we want to avoid some really, really damaging economic effects, we just have to do what the President says. And sure enough, look at, look at Canada. Canada decided they were not going to play ball. They decided they were not going to do what the President was asking, which were relatively simple things. Right? Let us sell our dairy in your country. Well, they have a very small but very powerful dairy lobby in Canada. I think it's concentrated in Ontario if I remember correctly. But I'm not positive. But wherever it is, maybe it's Montreal. They essentially said, no, no, we're not going to give in to that. We're going to keep all these dairy restrictions in place. And so the President slapped a bunch of tariffs on them. Now, there were other reasons to it, right? It wasn't just dairy Canada. Canada really hoses a lot of our manufacturing base in different ways. But whatever the case, the, the Canadian economy, the last economic report I saw, they're in contraction right now. In other words, they're basically headed towards a recession. Their unemployment rate is not looking good. I think it's like 7 or 8%. There are a whole host of economic indicators that are, that are flashing red for Canada right now. Why? Because they need us a lot more than we need them. At the end of the day, if you look at the size of our economy, we obviously have the upper hand in a trade war. If you look at exports, their economy is much more dependent on exports than we are. So again, we have the upper hand. And if you want to really drill down within exports, almost all of their exports come here to the United States. And so if we shut off trade, that is a huge, huge drag on their economy. It is an anchor around the neck. But in the US Very few of our exports actually go to Canada. I think it's single digits percentage wise. I mean, I don't even think it's 10%. So, yes, that, you know, a trade war hurts the United States, too. It hurts Canada a whole heck of a lot more. You know, there are no winners in trade wars, but not everyone loses the same.

[A]

E.J. and Tony, appreciate you making the time, my friend.

[B]

Thank you so much, Lisa, My pleasure. Thank you for having me.

[A]

That was EJ and Tony. Appreciate him for making the time to come on the show. Appreciate you guys at home for listening every Tuesday and Thursday, but you can listen throughout the week. Want to thank John Cassio, my producer, for putting the show together. Until next time, this is an I Heart podcast.