American Views on Economic Leadership

 

GOODMAN: OK. Well, good morning. Good morning. Good morning from Washington. Welcome to the Council on Foreign Relations. And welcome to the hundreds of people watching online; delighted you can join us as well.

Let me begin by thanking Robert B. Menschel for the generous gift he made to the CFR that made this event and similar events possible.

Thanks also to the Amy Falls and Hartley Rogers Foundation for their generous support of the RealEcon Initiative, which I run and which I’ll explain in just a second.

So my name is Matthew Goodman. And I direct an initiative here at CFR called RealEcon, which is sort of an acronym for Reimagining American Economic Leadership, which is an initiative we launched almost exactly a year ago with the goal of exploring America’s role in the international economy, why that matters to U.S. interests, why it matters to the American people, why it matters to the rest of the world, and to try to nudge us towards greater understanding/greater agreement on what a constructive role for the U.S. in the global economy ought to be that would serve all of those people and those interests.

And you know, we decided pretty early on in this initiative that the road to that understanding and agreement starts with listening, and so we launched a year ago a nationwide listening tour that is the subject of the report that you received when you came in—or, if you’re online, you can now find the report at our website, which is CFR.org/RealEcon, all one word. And between March and December of last year, my colleague Allison Smith—in the back—and I traveled to nine U.S. states, from Florida to Oregon, from New Hampshire to Arizona, and met with more than 400 people from all walks of life: local officials, business leaders, workers, students, journalists, and many others. We asked them about local economic conditions and about the areas of international economic policy that we’re exploring in RealEcon: trade; foreign investment; foreign aid; and the intersection of economics and national security, which is increasingly being called economic security here in Washington, although we didn’t use that term on the tour because economic security to most of us means something different from what it means in Washington.

So, anyway, from those conversations we drew out seven themes that we heard across the country. Three of these related to broad economic conditions, and those were that U.S. economic dynamism sits alongside U.S. economic insecurity, that employers are struggling to find qualified workers, and that manufacturing still plays an important role in the U.S. economy. You can read more about those things in the report. The other four themes related to the policy areas that I mentioned, namely that Americans’ views on trade are complex, that foreign direct investment is generally welcomed but with caveats, that Americans want to help other countries but have reservations about foreign aid, and that concerns about China are more muted around the rest of the country than they are in Washington. And that’s a little bit controversial, but I’m happy to defend it if challenged. That’s what we heard.

And you can read more about this in the report, and we’re going to hear more about it today in this great meeting. But let me just say that we decided from the beginning not to do a typical report where we ended with a set of, you know, five, seven tangible policy recommendations. We really wanted to put the focus on listening and reporting what we heard. We did have a discussion at the end of the report you’ll see of our sort of broad takeaways of the implications for policymaking in Washington. And we sort of talked about three things.

That the policy community in Washington—not just government officials, but think-tank scholars and others—would benefit from more direct input and feedback from outside the Beltway from Americans. This would improve policy itself and also bolster support for policy.

Second, we came away from the tour feeling that most Americans don’t fear international competition but—and are willing to embrace more affirmative trade and investment policies if they believe that the playing field is level and that they have the tools to compete. And again, we’re probably going to talk more about that—I know we are—today.

And third, we believe that Washington should do a better job of assessing the costs and benefits of policies before, during, and after they are put into place, and to communicate those more transparently and openly to the American people.

So we’re going to dive more deeply into these issues in RealEcon’s work in the months and years ahead, and you can read more about them in the report. But, importantly, today we’re going to have a chance to talk about some of these themes. And we’re going to—we’ve just got a terrific group of people to do that with us today.

We’re going to start with a fireside chat between former New Hampshire Governor Chris Sununu and Heather Long, who’s a columnist for the Washington Post who writes about many of the economic issues that we’ll discuss today.

We’ll take a short break, and then at 10:15 Washington time we’ll reconvene here with a panel discussion featuring two of the people we met on the tour, Karla Morales and Don Evans—and they’ll be introduced later—as well as Cathy Novelli, who conducted her own listening tour in trade and has some very interesting insights from that that you’ll hear about in a moment.

You know, before I introduce or invite Governor Sununu and Heather up onstage, I just want to say that—you know, how powerful the conversations that Allison and I had on the road were for us. We think these insights that we picked up that were just terrific from all these 400-plus people, we just—had a big impact on us and we think are going to be very helpful to the—to making the work of RealEcon more substantive, more realistic, and more credible. And so we’re—you know, we hope that that’s also going to have some rebound effect on policymaking in Washington. There’s a lot of work to be done in that regard. But we’re very grateful to the 400-plus people we met with and couldn’t have done this without you, and so thank you so much for your time and insights. And we hope to stay in touch in the second phase of this project, so stay tuned.

With that, Governor Sununu and Heather, please come up. (Applause.)

LONG: It’s like kindergarten; they tell you where to sit.

SUNUNU: There you go.

LONG: So ever since I heard I was going to be interviewing you and asked around what should I ask, by far and away the number-one question I received for you is: When are you going to announce you’re running for the Senate? Now could be a good time.

SUNUNU: Not today. (Laughter.)

LONG: But what’s holding you back? Seriously, what are you still mulling?

SUNUNU: Ah, boy. All right, well, let’s get into it a little bit. It’s not—the door’s open, but I’m not likely to do it. I’m talking to a few folks and all that.

I’m a governor. I’m a CEO. And when you’ve been governor of a state, especially through the pandemic where a lot’s put on your shoulders, it’s a 24/7 job. You can be incredibly effective not just in terms of policy, but actual outcomes. It’s a—as we say in New Hampshire, it’s a—it’s a wicked-hard job. (Laughter.) But it’s amazing and fulfilling.

I’m a cynic when it comes to this town, especially that building, the big one on the other end of the road here in D.C. I don’t think Congress and the Senate do enough. I think they spend more time raising money than actually delivering results. I am a fiscal hawk. I’m a budget guy. I’m a balanced-budget guy. I work really, really hard under those constraints. And you know, as I like to say, especially in New Hampshire but a lot of states, especially the redder states, you know, we’ve been doing DOGE for a long time, right—before DOGE was cool, so to say. And I just don’t—do I want to sit there for six years and bang my head against the wall? And I think there’s a massive fiscal crisis coming down the road. I think short term we’re going to be in good shape. I think America’s going to be in good shape. But the question is, in eight, nine years from now when Social Security goes insolvent, when Medicare goes insolvent—like, at the same time, by the way—and our interest rates go to—interest payments go to 1.4 trillion (dollars), and we have 45 trillion (dollars) in debt instead of 36 trillion (dollars)—all of this stuff is very, very real. It’s not theoretical. It is happening. It isn’t political. It is math, right?

LONG: Well, you sound pretty fired up. Hardly a place for me to jump in.

SUNUNU: Yeah. I am fired up. And so that’s why I—do I want to spend the next six years—I guess it’s prestigious and illustrious, and I’m not saying they don’t do any good work. But the work I want to see is incredibly frustrating. So maybe I can be more effective on the outside. And, look, I’ll cut to the chase. I was a civil engineer. I was an environmental engineer for many years. I ran a ski resort. There’s no money in that, by the way. It’s a great—it’s a great place. So, yeah, I’d like to enter the private sector, maybe make some money for my family and all that. I’m fifty. I also—you know, the world—I have probably three life—I consider we all take, like, ten-year chunks of our lives. So I have about three or four lifetimes to go, if I take enough Ozempic and stay—(laughter)—and keep the weight off.

LONG: Well, let me ask you the number two question.

SUNUNU: Yeah, so probably not likely. But we’ll see.

LONG: Oh, probably not likely. All right, we’ll see. So number two question that I got, and I bet you’re getting a lot of this too. Look, Americans are worried that there could be a recession. They’re concerned. You know, what are you telling people? How concerned are you? And what are you telling people in New Hampshire when they call you and say, why is President Trump doing this with the tariffs? You know, why—could it possibly cause a recession?

SUNUNU: Oh, sure. So, a couple things. First, there will be a recession at some point, guys, right? I’m a math—I’m a math guy. I’m a physics guy. I went to MIT. They taught me everything is in cycles. You’re going to have good times and bad. You can have up and down. And even Trump has said there could be a soft recession here. So it isn’t just—and I’m a free market guy. So I’m not big on the tariffs, and that’s being super polite about it. If it were a strategy to kind of challenge the other countries, we’re going to match you on our tariffs to force you to come down to have more of an international free market on tariffs, that would be something.

If a tariff is being implemented to get better long-term strategy with Mexico, for example. Hey, we’re going to pound you, even though you’re our number one, number two trading partner. We’re going to pound you because you need to close the border, get tough on the cartels, stop the fentanyl traffic, and extradite those evil criminals that have to face jail time here in the United States, which we haven’t had for years but is actually now happening. If that is part of the strategy, I’m with it. I get it, because you do it kind of in the short term, get what you need, build long-term strategy, and then you can back off.

I think there’s a little bit of both of that happening, but not enough. I do think—I’m not a Peter Navarro fan. I don’t—I’m not a zealot on tariffs, like these guys are, that you’re going to balance budgets and all that sort of thing with it—with the tariffs. You’ll bring in a few hundred billion dollars, but our problem is in the trillions of dollars, right? So it isn’t Trump is doing it to, you know, exact some sort of a penalty onto the American economy. He’s doing it to make sure that we’re not unfairly treated around the world.

Now, at the same time, there are things happening. This is where the—you know, it’s give and take. This is where the DOGE stuff comes in, where DOGE isn’t just about, you know, cutting people out of bureaucracy. That’s fine. I’m all about that, especially in New Hampshire. You know, we built our model on that. It’s about saying the private sector is vastly more important than the public sector. Saying when you support the private sector and capitalistic ideals the benefits to the economy, to humanity, to poverty, all go up, right? And really changing that dynamic and that model. And America was definitely slipping into an emphasis on the public sector, big spending, government comes first, we’ll tell you how to live our lives mentality.

And so his emphasis there is going to kind of push back—push some positives into the economy. Energy. I was with the governor of Louisiana yesterday. And I just happened to bump into him, Governor Landry, great—by the way, you should invite him if you want to talk about energy. Like, Governor Landry and Governor Burgum, or, now Secretary Burgum. Although, when Landry gets all fired up he gets that Cajun accent. You can’t understand anything he’s saying. (Laughter.) But he’s a great guy. Fifty billion dollars—$50 billion in investment going into just Louisiana right now on LNG and LNG production. And so the offset to the tariffs is also releasing a lot of economic opportunity here within the United States that puts us in a more positive position for the long game.

Is it going to be a bumpy ride because of transition? Absolutely, guys. Serious transition away from the public sector is not easy. It’s going to be bumpy. I wish the messaging out of DOGE was a little more empathetic and sympathetic. I think what Elon is doing is actually pretty darn good, but I think the messaging and running around with a chainsaw—stop. (Laughter.) That’s not—that’s—you got to bring the American people with you on tough decisions. You have to have a glide path, more of a—I’ll call it a more of a political message in terms of what you’re doing so you get supported in the hard—in the tough decisions. So Congress and your legislators will support you and what you need to do. They’re kind of missing that piece of it right now. So—

LONG: So you think it could be worth it, even if there’s a recession in the next—

SUNUNU: Oh, absolutely. Oh, absolutely worth it. I don’t like the tariff stuff, per se. I think without the tariff stuff things would even be better, potentially.

LONG: What about tariffs on Canada? You’re the governor of New Hampshire. Your state does a lot of trade with Canada. Does this make any sense?

SUNUNU: It’s hard to explain. It’s really hard to explain. And I won’t even try, because it—again, I’m very biased. Whether it’s soft wood, or maple syrup products, or whatever it might be—aluminum. I think they should be much more strategic about it. Now, I do think this is what’s going to happen. And you even saw some of it this morning, if you were watching the ticker this morning. Of the fifteen countries where we have the biggest trade deficits, a lot of them right now—or, tariff deficits—a lot of them right now are like pre-negotiating out of it before April 2, when they all kind of come into play.

And you’ll see. I’m going to guess half of them, India and others, pre-negotiate to soften the tariff blow come April 2. Canada, not so much. Canada is also a political play. I think it’s—I don’t want to say it’s just personal with the president and Canada and Trudeau, but I think the president is really trying to make a statement that what Canada is doing politically, where it has gone with the Labor Party and all of that, is not really—is not what we want to see in a trading partner. He’s going to push hard in the hopes that he gets some—what you see in Europe, more of a conservative movement in Europe, which sometimes goes pretty far. But anything more conservative than Canada, and especially Quebec, where it’s really important in terms of a political mentality.

I think that’s what he’s trying to extract out of them as well. But they are our number-one trading partner. Canada is our best friend in the world, our number-one trading partner. They do have bad tariffs on us. There’s no question about it. So my hope is that that’s hard, it’s fast, and it comes off and even—and we start coming back to something a little more normal by the end of the year.

LONG: Have you been able to speak with President Trump on these issues? Kind of bring the concerns of New Hampshire residents?

SUNUNU: We’ve spoken, yeah. Yeah. And he gets it. I mean, he does. You know, he’s—look, I’ll say this, I don’t want to say he’s a different president, but the conversations I’ve had with not just the president but the White House in general, or the folks on Capitol Hill, they’re different. I think that—I’ll say this. I think what’s going on, especially in the Senate, there’s a different mentality. I appreciate what Mitch McConnell did for the Republican Party and getting folks elected. I think Mitch had a very different style than John Thune. I appreciate Thune’s style. I appreciate this kind of new generation of senators. I think there is a new generation. It’s kind of this younger cohort of new folks coming in, on both sides of the aisle. And I definitely appreciate that. So I think there’s a—there is a different mentality.

And the president himself is—he’s not as firebrand-y, I’ll just—is that the right word—as 2017 and 2018. He’s more modulated. He’s clear. He believes very much in what he’s doing. It’s not just, you know, I got an idea this morning and I’m going to throw it out there. He really believes in it. We may disagree on some of those policies here and there, but—and I’ll say this about the White House, much more professional staff than they had last time. (Laughs.) I don’t know a better way to say it. I think Susie Wiles is terrific. I think the deputy chief of staffs they have there are very smart. They’re thinking things through. They’re very calculated. They’re, again, not just firebranding on a political conservative—or political whims on the hip. They’re very thoughtful and smart about what they’re doing.

Could disagree, right? We can disagree on a lot of those issues. But I think they’re very smart and calculated in what they’re doing. So, yes, it could be bumpy. It’s going to be a transition, because we’re moving away from bad ideas of big government to good ideas of privatization and capitalization and decentralization of regulation.

LONG: So you’ve stated that you see more professionalism from the White House. Obviously, in the last twenty-four hours we’ve learned that national security secrets and potential places to bomb were being shared with a journalist on an unsecure app. You know, how do they regain credibility in the national security space?

SUNUNU: Well, look, I’m not going to excuse that by any means. It was a big mistake. It was a singular mistake. Thank goodness it didn’t have massive repercussions. They have to learn from it, change their policy and protocols, have some internal reviews. My message—I was on CNN and all these stations yesterday saying when, at least as a governor when you when a problem like that happens, you have to be super transparent about it. Super open about it. Oh, we did this. This happened. Huge mistake. This is how it happened. We’ve done these changes in protocols to make sure that it doesn’t happen again. And we’re going to learn from it, and move on. You have to be very, very open about it. We’ll see what happens.

I think everything was OK to the point where Hegseth got off that plane yesterday and used the word “hoax,” right? He started effectively calling Goldberg—you know, and by the way, I think Goldberg is extremely liberal, and he hates the administration, and all of that. But that doesn’t—I don’t necessarily believe—I guess we’ll find out. But I don’t think any of us really believe that what Goldberg put out there was false. It would be the end of Goldberg’s career if he had done that, right? So Hegseth should not have been using the word “hoax.” I think—I think the White House, when they released the statement on it, they said it looks like this is verified and we’re going to get to the bottom of it. That’s exactly what they should have said. The White House had the right response. Hegseth himself didn’t.

Now, so we’ll see where it all pans out. But hopefully it’s a learning—a good learning example. I don’t think it defines the administration. Both sides—look, I think there’s a much bigger conversation, this is a tiny piece, of how we deal with classified information. I’ll remind folks of the boxes of files behind Joe Biden’s car in the garage. You know, the files that were at Mar-a-Lago. The fact that so many people—and that’s just the presidents. You have folks in the CIA that take files with them. You have people at the FBI that take files with them that they probably shouldn’t be taking.

LONG: Should anybody lose their job over this?

SUNUNU: I don’t know about losing their job, but there should be a—boy, you know, we didn’t realize that shouldn’t have been done. This policy was in place. Things are different. I don’t know about losing their job, but a change in protocol and procedure, for sure.

LONG: So we shouldn’t use Signal for—

SUNUNU: I don’t know. Look, Signal’s encrypted. I’m not one to say whether that should be used. I would guess not. But let’s have this discussion, they need to be able to text certain things back and forth, right? So the issue was, why was Goldberg on there? They got to figure that out. Should they have been using Signal? It’s encrypted on both ends. Is that really the right protocol for any sort of text transaction between high-level administration officials? Don’t know.

And the information that was—the third piece is what information they were actually talking about, the timing of the bombings and all that. So all three of those pieces really have to be adjusted. I’m not a technology guy. I would assume Signal’s not the right answer and they have other protocols. I don’t think you can say every time they want to talk they have to go into a certified SCIF and do it that way. Certain times you have to. I had to do that as governor. You know, these SCIFS are, like, these metal boxes, basically, that you go in that are super highly classified. But there’s got to be ways to communicate via text with certain technologies that are OK. There’s got to be check protocols.

Have you used signal before? Like, you have to, like, go in and actually click a button to see who’s on that conversation. It’s actually not that obvious. So probably not a good idea to use that. (Laughs.) So they got to find some technological means. Look, you ever—look, if they—it was a bad butt-dial. I mean, it really—I mean, that’s really what it was. And we’ve all sent texts where we go, unsend, unsend, unsend. We’ve all had those moments. But this is a whole different level of you need checks and balances and protocols to make sure that doesn’t happen again.

LONG: Let me ask you a big picture. You know, we’re sitting here in the Council on Foreign Relations. And there’s a lot of concern around the world that, you know, the Trump administration, given all the rapid pace of change and everything that they’re doing, that the United States may lose its place as the world leader from—

SUNUNU: Oh, we’re going to—no, we’re going to put ourselves further on the top than ever before. Look, if we go like every other country and just go big government, big public spending and all that, we’re going to be like everybody else. But what have we done? We’ve now—in three months—you got to give credit where credit is due. He’s forced Western Europe to actually invest in defense, to invest in their own—their own infrastructure like never before, which they should have been doing years ago but we didn’t have leadership that actually forced it to be done. He’s forced that to be done. He’s dealing with Ukraine. I think the Ukraine issue is going to be solved, resolved, people are going to stop dying in droves, sometime in the next four to six months.

LONG: So, what was your reaction Oval Office meeting where President Zelensky of Ukraine is berated by the White House?

SUNUNU: OK. Let’s talk about that. Zelensky made the first mistake. I don’t think the White House handled it the best they could, but Zelensky made the first mistake there. He met with Democrat leadership two hours before that meeting. Do you think Democrat leadership on Capitol Hill told Zelensky, yeah, go in and just cut the best deal. They told him to push back. They told him that he had to stand tough against Trump. And the first twenty minutes of that conversation were fine, if you watched it. And then Zelensky starts saying, when a—the term that got Zelensky upset was “diplomacy.” No, no. Diplomacy won’t work. Diplomacy won’t work. Understand too, Zelensky and the vice president and Rubio had already pre-cut the deal. He was there to sign the deal that had been pre-negotiated.

And all of a sudden he’s saying, diplomacy won’t work. Well, of course, J.D. and Rubio are sitting there going, well, what are you talking about? You’re trying to win a war. We’re trying to end a war. Ukraine, you can’t win. I’m as pro-Ukraine as you’re going to find, but Ukraine cannot win this thing. They have to come to some sort of resolution. And they’re not necessarily—going back to the old borders is not necessarily going to happen. And understand the realities of what’s going on. Western Europe is supporting Ukraine, right? Well, then why did Western Europe pay $23 billion in natural gas—for Russian natural gas in 2024 and provide $22 billion in aid to Ukraine? They cut their natural gas buy down a huge, but they still spend $23 billion on Russian natural gas. And that goes to fund the Russian army.

So let’s cut the hypocrisy nonsense here, right? The president is the only—is, right now, the only one forcing everybody the table saying, get us a resolution. Let’s stop the dying. So I think Zelensky handled that very badly. He went in trying to be the tough Zelensky guy. I don’t care whether they wore a suit or not, by the way. That was stupid. Elon doesn’t wear a—like, who cares what he was wearing? I think that was a dumb play by other people. But so they started nitpicking on certain things. But Zelensky played that badly. And you’re not going to go in and win an argument in the Oval Office, in Trump’s house, with that kind of attitude.

And what happened? A few weeks later Zelensky—he didn’t apologize, but tried to smooth things out. And we’re back to having these conversations. We’ve now had a conversation with Russia. We’re closer than ever before in trying to find some type of resolution there. And my sense is there’ll be a resolution. And the deal that will be cut—if you want investment ideas internationally, here you go. Romania, right? So where’s going to be the landing ground for when we put billions in to rebuild Ukraine? Because that will be part of the deal. We’ll become partners in the minerals, right, and that way we have a stake in the security of Ukraine because if we’re partners to the tune of hundreds of billions of dollars of mineral rights there that’s huge for us.

And so we’re going to be not the protectors, but it’s going to be a lot harder to go in—back into a place like Ukraine when we’re there as their hand-in-hand partner. But then you’re going to have a rebuilding ground out of Romania and some of the surrounding countries for concrete, steel, and things of that nature. And, you know, you have guys like Lindsey Graham out there—and while I might disagree with Lindsey on a lot of things, he really does believe in rebuilding that country. And you’re going to have a lot of huge investment there on that side of things internationally.

LONG: What about ending USAID? Was that the right move? Was that justified?

SUNUNU: Yes. So—yeah, it absolutely was. And I’ll tell you why, because it’s going to come back in different forms. So USAID—what they’re really doing here is saying, OK, there’s a lot of money spent out of USAID. Some of it’s good and some of it’s really dumb. And so we’re going to kind of expose it all and force all these sub-programs out of USAID to come back and justify why they need to exist. Should we be spending $21 million on a get-out-the-vote effort in Somalia? No, we shouldn’t, by the way. We have—we have 36 trillion (dollars) in debt. I think the Somalians can do their own get out the vote. Should we be spending a billion dollars on AIDS prevention, malaria prevention out of USAID? Yes, absolutely we should, right, in keeping—you know, helping the world, keeping their children healthy and empowered, absolutely we should. And those ones will remain.

So they’re forcing a conversation on quasi-government agencies that have had no accountability or oversight, right? Who oversees USAID? Nobody, guys. Nobody. They don’t report to anybody. So they’re saying we’re going to put these important programs to report back into the State Department. And the programs that are just a bunch of nonsense, and that we—maybe you can justify them at some point, but not when you have $36 trillion in debt. You have to have priorities.

I was a governor, right? I had $7-8 billion I had to decide every year how we were going to spend, even though we don’t have income tax and sales tax. And you should all rethink your life choices and move to New Hampshire. That’s my plug for New Hampshire. But I had to make really tough decisions. Guys, we can’t afford this. But this is more important. The United States federal government has never had those conversations in twenty-five years, right? The most conservative fiscal president we’ve had, I would argue, in the last forty years, is Bill Clinton, right? And that’s hard. And I say that to the Republicans on Capitol Hill all the time, guys, Clinton got it done. And I think George W. Bush really had the mindset, obviously, but the war came into play and that changed the dynamic there. But—

LONG: But do you think the way it’s being done is—

SUNUNU: I think the messaging isn’t right. I think the messaging is—they need—remember, and this wasn’t the best idea, but they married—it was going to be a partnership with Elon and Vivek Ramaswamy. Vivek is not the right guy there. But the theory of partnering Elon with a—I’ll call it, a politician. Someone who can speak and explain what’s going on. So Elon and his team are doing the hard work. And there’s somebody out there ramping that messaging, that kind of idea that I started with. Now, Vivek went away, and they didn’t put anybody in there. And I would strongly encourage the administration, and I’ve said this directly to the president—I strongly encourage you guys find somebody that can be a better messenger. Elon running around with a chainsaw and all that kind of stuff, it just—it looks terrible.

So what they’re doing in the back room is terrific. I would encourage everyone, whether you like Fox News or not, there’s an amazing—I saw an amazing thing with Laura Ingraham, where DOGE was there talking specifically on the IRS. Just on the IRS, what they’ve discovered in two months with the fraud, waste, abuse, and screw-up-ness of how the IRS manages your dollars. Holy cow was it eye opening. So that’s what they’re doing, guys. They’re peeling back layers of an onion that haven’t—that has not even been explored in twenty-five years. And the amount of corruption and fraud is far more than any of us thought. They haven’t even gotten into Medicare, which is a—I mean, so important and so abused. And even Bernie Sanders and Nancy Pelosi have screamed to the hilltops, there’s massive waste, fraud, and abuse in Medicare. We have to get at it. Finally, somebody’s going to do that.

LONG: But so far, isn’t the savings from DOGE minuscule?

SUNUNU: It’s been three months.

LONG: Uh-huh.

SUNUNU: Not even. It’s been two months. And we’re talking about well over $100 billion in savings. Medicare has to be reformed. Medicaid has to be reformed. Social Security has to be reformed. And how the Defense Department contracts. That’s another really big one. We need to keep putting money into defense, of course. But if they just trade—look at how things are—the really screwed up contracting process we have in this country, which effectively allows these massive companies control the process, write in their own poison pills that if they don’t get a contract the whole thing falls apart, type stuff. If Hegseth and others go and explore that and open that up, you’ll find massive amounts of savings, and effectively efficiency, so we can put 100 billion (dollars)—we don’t lose a bullet or a soldier, and can actually reinvest.

I mean, where you’re going to see the biggest reinvestment in the military is going to be in the Navy, shipbuilding. That’s one of America’s biggest problems right now is ships, not just on the public—in the military, but the private side as well. They’re going to make huge investments there, I think, in the coming years. That’s going to be another huge economic opportunity. And, again, allow America to keep its place between energy, steel, aluminum, shipbuilding, LNG. These types of things will offset the pains of the tariffs, and make sure America has a long-term strategy and policy to keep us as the world power economically, which, by the way, every other country wants. Except maybe China. But every other country knows how important it is for America to be strong.

LONG: So you mentioned, you know, obviously we know your championship for balancing budgets and trying to reduce the deficit. I got to ask you about the tax cuts. I mean, the forecast of just extending the Tax Cuts and Jobs Act is close to 5 trillion (dollars). Obviously, the president would like to do other things, like not taxing Social Security or tips. This is pretty big cost to do this at a time—you know, you’re cheering 100 billion (dollars) in savings, and we’re talking about 5 trillion (dollars) more in spending on tax cuts.

SUNUNU: Sure. So, look, I hate taxes. So I’m always going to be for tax cuts. There’s no doubt tax cuts spur the economy and allow big companies, and small companies as well, to reinvest. And they reinvest in their employment base. They reinvest in technology. Technology, again, the big one here is AI, right? So we’re going to make the investments that have to happen in energy and AI. And those tax cuts help spur that along. There’s no question about that.

Now you have to pay for them somehow. It’s really hard. Theoretically, some of these—that’s tariff stuff, right? If the benefits—the financial benefits of the tariffs coming in offset the tax cuts, hmm. What I would like to see is them to say, OK, we’re going to move forward on the tax cut plan. We’re going to even move the debt ceiling a little bit up in the short term, because we just, you know, have to. But we have a long-term strategy to get to that balanced budget. I’d like to see one package where we say: We’ll give you this, but you have to commit to this. And that commitment could say, look, we’re going to balance our—we commit to a balanced budget, or even a balanced budget amendment. You know, I’d love to see a constitutional amendment, by the way. Every state—every one of your states has a constitutional balanced budget amendment but the federal government doesn’t, right? So I’d love to see one play off the other.

And I—look, I—

LONG: I got to push back a little bit. I mean, look, you’ve just said a few minutes ago that you’re a free trade guy. And now you’re saying we should be having a lot of tariffs in place—

SUNUNU: No, no. I’m not saying we should have. I’m saying, if you’re going to have them, use them—again, use them in this package to get here.

LONG: But they have stay on. And they have to be high in order to generate a decent amount of revenue.

SUNUNU: No, you don’t have to do it—no, you don’t have to do with just tariffs. I mean, I’m sorry. That’s Trump’s, I think, plan. We’ll keep—we’ll get the tariff money to offset the tax cut—you know, to pay for the tax cuts and all that, while at the same time incentivizing more folks to invest in our economy here. So that’s not my strategy, per se. There’s other ways to do the tax cuts. I think—look, my strategy would be, you take your pain, you rip the Band-Aid off. You get to this—a balanced budget in four or five years. You deal with entitlement reform.

You know, Social Security, let’s talk about that one just real quick. And I know this—I know that’s kind of a different issue, but it’s a huge issue. So in eight years Social Security becomes insolvent, right? That’s fact. That’s math. And what happens? The law on the book says that you lose 20 percent of your benefits. I think it’s 17 ½ percent. Everyone in America gets a 17 ½ percent cut in benefits. That’s the law, guys. So what I’ve encouraged the administration to do is don’t tell people you won’t touch Social Security. Tell people you’re going to fix it, because it really needs to be fixed.

When you talk to young people, a little bit of gray hair in this room. Not maybe as young as the GW crowd I was talking to a couple weeks ago. (Laughter.) But when you talk about moving the retirement age, they don’t care. Young people do not care about moving the retirement age one bit. Most of them don’t even believe they’ll see Social Security, or it’s so far away. You know, so there’s opportunities there for structural changes and reforms. It would take more than that, of course. Maybe means testing Social Security a lot more aggressively, right?

So going back to the DOGE, you know, it drives me crazy when Elon—I think it was Elon—you know, he has said some disparaging things about Social Security. Don’t disparage Social Security. It is the lifeblood for so many Americans. It allows them to pay for heat and heating oil and actually stay in their homes and pay their taxes, or whatever it might be. So you need that for the core base. But there’s a lot of people in this country getting Social Security that don’t need a penny of it. So just redo the means testing on it. And what I would do, I’d bring—who’s the biggest advocate for doing nothing on Social Security? AARP, right? They’re the biggest political machine to say, we’re not touching Social Security. Just borrow more money to fix—no.

So I would bring them in and say, OK, you help us fix it, right? You be part of the solution. I did that as governor. If folks really didn’t like a change in mental health strategy that was going on, a change in drug reform policy that was going on, I’d bring those folks that really—I’d bring them into the conversation and say, OK, give me your ideas, right? This is broken. We can all agree that something’s broken. Help me fix it. I don’t want to have to fight with you on it. Let’s find a common ground here. And so I think if you have more of that mentality, whether it’s Medicare, or Social Security, or other issues, and more of an open conversation of what the problems really are, you’ll get there.

I get frustrated—Republicans do this too, but today it’s the Democrats—saying, well, we’re not going to vote for anything that Trump wants. Stop. Don’t do that. I know Republicans did it to Biden. You shouldn’t do it on that side either. You got to find—you got to give a little to get a lot. I think there’s a different—like I said, I think there’s a different mentality in the U.S. Senate today. I think there’s leadership changes. I think Schumer’s is going to be out pretty soon. I don’t necessarily like what’s going to come after Schumer. (Laughs.) Who knows? But that leadership change could be a healthy thing.

LONG: Well, you sound like somebody running for Senate—running for Senate, again. All right, we’re about to open it up to audience questions. But let me just ask you one more, since you brought up entitlements. I mean, look, you can see in New Hampshire and other places, people are worried about Medicaid cuts as a possibility here, when they’re looking at the Republican plan going forward.

SUNUNU: Yeah, so a couple things. So Medicaid is—just so—people get Medicaid and Medicare mixed up. Medicaid is run by the states, effectively. Federal program run by the states. So Medicaid, the base core of Medicaid—of folks that have disabilities and all that, it’s a fifty-fifty split. So the federal government gives us 50 percent of the dollars, we put in 50 percent of the dollars, and we administer Medicaid. Now, when I need a change, a waiver, something in New Hampshire’s a little different, it would take me two years to come down to the CMS and HHS to get that change. And it was incredibly frustrating. So hopefully there’s some regulatory reforms there so every state has more flexibility.

But expanded Medicaid, which we have, maybe thirty states have, something like that, that’s a ninety-ten. Meaning, I only had—New Hampshire only to put in 10 percent of the money. The feds are paying 90 percent of an expanded Medicaid population. Whether we should have even had expanded—I mean, it works. Don’t get me wrong. I’m not going to say—we were never going to say no to that money. What the folks in Washington are saying is, guys, it was fifty-fifty. Maybe it should just be fifty-fifty for everyone. And if you want an expanded Medicaid population, it’s not going to be easy but it can be done in those states, you pay fifty, we pay fifty, right?

LONG: But doesn’t New Hampshire have that trigger law that you signed, that if it’s not ninety-ten anymore that you would lose—you would end that program for the expansion.

SUNUNU: Yes, technically—it would have to be revisited by the legislature. That’s all. We wouldn’t continue—and I think every state would have to do that. They’d have to go back and say, are we willing to pay that extra 40 percent delta for the Medicaid population? New Hampshire could probably do it. It’s expensive, but, no, we could—we could actually probably do it there. Look, we are a—we have the least amount of government in the country, right? We’re the Live Free or Die State. It’s not just four cool words on our license plate. It’s really how we live in New Hampshire, right? We decentralized our government. Like I said, we were DOGE before DOGE was DOGE.

And we send a lot of the control down to the locals, right? We take care of what we take care of here, but by empowering the locals to have more control, and more say, and less government on top, it gets more people involved in the process, it promotes the private sector. It’s, I would argue, the most capitalistic of all states there is, because we don’t want your money. It’s your money. We have to take certain taxes and fees here and there, but we—we’re ranked the most efficient government in the country, right? We get the best bang of our programs for the dollars going in. We’re ranked number one. Have been for four years in a row. And I get it. Efficient government’s like being the best surfer in Kansas. Like, you know. But we really do it well.

The lesson there is that there’s always a way to either help with privatization, incentivize—you know, having that those private side partnerships and promoting that free market. And what’s the result? The lowest poverty rate in the country, right? I have to make really, really hard decisions on austerity, on not wasting your dollars. And the result is I have the lowest poverty rate in the country, some of the highest wages in the country, right? We don’t have—we don’t raise our minimum wage laws. That’s the stupidest thing you could do, right? We defer to the federal minimum wage. We have the lowest minimum wage in the country, yet we’re ranked, like, number five in the country for average wages per adult, because we let the market take care of it, right?

When you drive minimum wage up, it’s a complete disaster. Look at California. Congratulations, California. You had all the opportunity in the world, and you’ve driven that—no, you’ve driven that right into the country—right into the ground.

LONG: All right, let’s hear from some audience questions—

SUNUNU: So you got to promote that private sector to create opportunity for those that don’t have it right now.

LONG: All right. We will welcome audience questions, if you could raise your hand. Yes, right here in the front. And then we’ll do the lady.

Q: Mark Kennedy with the Wilson Center.

I’d appreciate—and I enjoyed serving with your brother. But I’d appreciate your thoughts on higher ed. A lot of cuts in research. Leave aside—the other thing, as we go onto higher ed, we’re in a tech race with China. We’re going to need the talent and the research that the universities are delivering. Could you give me your thoughts on that?

SUNUNU: You bet. I don’t mind what they’re doing with NIH. And I’ll explain why. We need the research, we need the development, of course. When I administer a federal grant, almost any federal grant in the country, there is the line item in almost every federal grant that says: You can spend up to 12 to 15 percent on overhead and administrative costs. That’s in every federal grant out there, except NIH. So they’re not pulling the NIH money, guys. They’re telling universities, you can’t spend—they have an exemption where they can go—like, over 50 percent of the dollars can be spent on salaries and staff within those universities. And they’re saying, no, no, no, no, no. You have to spend—you can spend up to 15 percent administratively. The other money has to go to the research, right?

So, yeah. They’re telling the universities, you have to play by everyone else’s rules. Stop abusing the dollars. Keep it on the research where it needs to go. And by the—you know, when I hear folks from Harvard complain about this, I laugh. Why don’t you open up your wallets on that $40 billion endowment you have, that you just want to build and make bigger, start investing not just in your university, your research and your students, partner with other universities, right? There’s a trillion dollars in endowments out there, guys, that could offset this. And all we’re asking the universities to do—I’m not asking—but all the federal government’s saying, play by the rules. Play by the rules. Stop just paying these Ph.D.s that happen to be in the same department with those dollars. Spend it on that.

And last time I checked, what are you paying your students? The students do all the research, and they’re getting paid, like, fifteen bucks an hour. So they’re saying, stop abusing the program and put it to the research where it belongs. And I’m sorry, the universities, I don’t think they have a whole lot of legs to stand on, on this one. Why should they get an exemption? When, by the way, university—can anyone explain to me why NYU costs $100,000 this year? Why has the cost to a student gone up at two-and-a-half times the rate of inflation in the past twenty years? Universities don’t want to talk about that. So they’re bringing in plenty of freaking revenue out there, abusing the federal grants for their own salaries and benefits over here.

I think it’s wrong. And all they’re saying is, we got to all play by the same rules. And we can do that and still have the same research and still have the same opportunities. But we’re not going to, you know, pay the $250,000 salaries of the Ph.D. professors that that aren’t actually working on the projects.

LONG: You think it’s also fair to tax endowments? I mean, that’s part of the proposal too, to raise the tax on endowments. And you’re saying that they should be used.

SUNUNU: Yeah, the endowments are technically nonprofits, right? Yeah, I don’t know about that. If it’s a nonprofit they have nonprofit status. I wouldn’t necessarily tax the endowment. But, no, because the endowments are just—are just holding cash. You know, do you don’t want to start taxing that because what are we going to do, mark to market type taxation? That’d be terrible.

LONG: Yeah. More questions from the audience at the next table. Yes, this lady here.

Q: Hi. My name is Krista Auchenbach. I’m a visiting fellow at CSIS from DOD. So these views do not represent the Department of Defense.

When we allowed China’s accession into the WTO there was a discussion about the impact that that would have on jobs in the U.S. And there was supposed to be some support for that transition. Didn’t necessarily realize. We’re now in a period of potential significant economic disruption again. What has been the conversation in the administration about how to ease that transition, to some of your earlier remarks before, particularly for some of the lower-income earners where the move to the area where the jobs are might actually be out of their kind of financial ability?

SUNUNU: Yeah. So let’s be—I’m not part of the administration, guys, so I cannot speak on behalf of the administration. I visited the White House a couple times and I have a couple times and I have a lot of friends there, but I’m not part of the administration. So I can’t say what that discussion is, per se. But I’ll say this, what they’re doing—what they’re trying to do is focus on working—we are effectively an information and service provider—we’re on the verge of becoming an information and service provider economy. That’s bad. We need to reinstall manufacturing working class jobs, right? We need to make sure that the economic spectrum is successful up and down. That’s why you saw so many folks within the working class start voting Republican in this past election, because they’re tired of being, you know, kind of taken advantage of.

So what Trump is focusing on is steel and aluminum, energy production, right, building out our energy infrastructure. These are solid jobs here in America to make sure that we’re producing, you know, the right jobs, the right manufacturing jobs. You’re going to have—the energy thing obviously supports AI, right? And the development not just of AI in in the AI sphere but the actual physical development of these massive datacenters and whatnot to keep us on top technologically.

There’s a huge, also, investment, which is—I think, is pretty exciting, this regenerative medicine. We do a lot of it in New Hampshire, right? New Hampshire has become kind of the center of regenerative medicine, where we’re going to take your DNA. And we’re going to grow you a new kidney, if you need it, in six weeks, and ship it to you. I mean, that’s not fantasy anymore, guys, that is really happening in the next ten years. You’re going to see—like, the theory is to get people off waitlists for organs and transplants. And that’s actual, you know, biomanufacturing, if you will, with factories that actually build this kind of stuff.

Investing in shipbuilding is going to be huge, as I talked about. Right now America, it creates about 0.5 percent of the world’s ships. And the stupid Jones Act that we have out there, this antiquated thing which drives me crazy—do you know, during the pandemic—I’m going off tangent, because that’s just what I do. Do you know during the pandemic I had to buy natural gas from Europe because I couldn’t get it from America? Not because we didn’t have it. Because we didn’t have the ships and the crews. I cannot buy LNG from the United States unless I had an American-built shipment with an American-built crew. We don’t really have those anymore, right? So it was too expensive. So it was cheaper for me to buy natural gas from Europe in 2020 and 2021 than it was to bring it in. That’s crazy. And mostly it’s because of a lack of ships in these antiquated acts that we have. Theoretically, that all gets cleared out and we invest there.

So I can’t speak to exactly what they’re doing with China. China is not an enemy, but it is an adversary to be sure. I think they’re going to move on Taiwan. This is my personal. I’m not speaking for the administration. I don’t work for them. I think China definitely has a plan to move on Taiwan before 2030. I think one of the strategies with Ukraine right now is to say, look, we’re not pro-Russia. Don’t fool yourself with that. But what they are trying to do is give Russia a valve out, right? If we lock Russia into a corner where they have no other friends in the world, their only friend will be China. And when the push comes to shove with China, now we’re dealing with China and Russia.

So you need to open relations. As much as they’re an adversary as well, you need to open those relations somehow by resolving the Ukraine issue with some sense of balance there. And I think that’s what they’re doing. They’re planning for the long term there. Russia, let’s also don’t forget, I mean, they are the gas station to that part of the world. Their natural gas, oil, timber, minerals, fertilizer that keeps the agriculture of that part of the world going. All comes out of Russia, really. So you got to have—there is an economic advantage to holding them at bay, making sure that they, you know, follow the rules and start playing by a lot of the rules.

But you can’t do that just by, you know, ignoring them. And you got to make them at least part of the conversation with America’s upper hand. So that’s the best answer I can give there. I do appreciate that they are trying to make this investment. Maybe you agree with the tariffs. Maybe you don’t. But they are trying to make an investment in the remanufacturing of this country in some form.

LONG: Let me follow up really quickly on that. I mean, New Hampshire has a lot of steel production still in your state.

SUNUNU: No, we don’t make steel. No, not really. Sorry. No, we do timber.

LONG: At least—all right. Well, I guess I got that wrong. Anyway, I’m curious your take as a businessperson on, you know, should the president allow Nippon Steel to take over U.S. Steel, or do that merger deal? Does that help save and grow this vision?

SUNUNU: I got to be honest, it would be great if it stayed in completely U.S. hands, of course. I don’t know the economics of that deal, per se. So I wouldn’t—I’d be out on a limb if I was talking about that. I know—sorry. There’s steel plants, like, Arkansas—if you look at Arkansas, a lot of infrastructure on new steel plants going on down there, which is—which is really cool. Who owns it and what the what the economics are, I don’t know. But I love that they’re building it here.

LONG: I think we have some questions online. Liz, will you help us out?

OPERATOR: We’ll take the next question from Krishen Sud.

Q: Yes. Hi. Can you hear me? I’m just a member of CFR.

So we all know that in the last election you supported Nikki Haley pretty aggressively. So if you decide to run for Senate again, do you think that you have the support of the Trump, you know, group of the Republican Party? Or do you think he will challenge your decision to run for Senate?

SUNUNU: No. No, no, no. No. If—and that’s a huge if. I’m not playing on running right now. But if I ran, I have no doubt I’d have their support. There’s no doubt there. But, yeah, no. That’s just that. So, yeah. (Laughter.)

LONG: Well, can you share—

SUNUNU: We all get along. We all get along. We don’t agree on everything, but it’s OK. You know, I was at the White House recently, and I’ve talked to the administration, and they’ve talked to me about running, and the folks. So not a huge—it’s probably not going to happen, but I have no doubt I would have their support.

LONG: What were the talk—can you share anything you were urging President Trump when you met with him to do?

SUNUNU: No.

LONG: No? All right. (Laughter.)

SUNUNU: No. It was a great conversation.

LONG: Yeah, right here.

Q: Governor, I’m a lawyer. I’m not an economist. But I did work—I did work for fifteen years on the staff of the Senate Banking Committee.

So I heard a lot of economists through the years. And a formula for GDP includes the term “net exports.” When you have trade surpluses, you add the GDP and job growth in your country. When you’re running negative net exports, it detracts. Last year, our trade deficit in manufactured goods was $1.2 trillion. Since China joined the WTO, we’ve run about $7 (trillion) or $8 trillion worth of trade deficits with China. My concern is that we have helped China become a very powerful country by transferring that kind of wealth to them. I don’t hear enough talk in this town about the need to deal with the trade deficit. Warren Buffet wrote an article some years ago saying the trade deficit is going to sell the country out from under us. Why isn’t there more discussion in this town about the need to deal with that particular problem?

SUNUNU: I don’t know—well, so why isn’t—the question is, why isn’t there more discussion in Washington about the need to deal with the trade deficit? Because it’s a complex problem and they don’t like to deal with complex things here. They like to—it’s a complex problem, and they don’t like to deal with complex things. They like to go to fundraisers. So you bring up a very strong point. Why they don’t talk about it enough, I won’t say. I’ll say—let me just give you my thirty seconds on China. China is going to have a—is right in the early stages of a population crisis, right? They’re going to lose manpower very aggressively, which is why they’re investing all across the world in infrastructure, ports, military installations, things of that nature. They’re going very heavy on AI because they know in ten years they’re going to have a real manpower problem on them, even on the manufacturing side, robotics.

So they’re making the right investments for themselves. Due to a lot of the trade issues that you’ve talked about, they’ve been empowered. The one that nobody really talks about is India. India is the largest population in the world and half of it is under the age of thirty. Think about that. So they’re going to be an amazing workforce powerhouse, if you will, for quite a while. Now, they are our friends. And they’re our allies. And they’re a great partner in a lot of what we do. We do a lot of trade with them, a lot of trade deficit, by the way, with them, and a lot of—we have some tariff issues. And I think they’re trying to negotiate that out right now. (Laughs.) But what happens in that part of the world will really be impacted on if and when China moves on, Taiwan, where India—where are our relationships with India go, and whether we can maintain diplomatic relations in some form.

And don’t forget Japan. Japan’s still a huge part of that. So all that part of the world is completely intertwined in terms of what they’re doing. You know, why we made those decisions, I’ll leave, you know, with China early on what the strategy was and whether it really panned out. I think there were some benefits to it, and obviously some detriments as well. There’s no doubt it pushed up the Chinese economy and made them a world power that none of us thought they would be back in the 1980s, right? China was not seen as an oncoming world power, per se, at that point. Why don’t the Congress take that on? Look, right now, they’re trying to keep up with what the White House is doing, right? (Laughs.) So that—maybe that’s why we haven’t heard a whole lot of it lately. They’re literally trying to keep up with the decentralization of government, which is good, and the deregulation of government, which is a huge economic benefit.

Q: Thank you, Governor.

SUNUNU: Yeah, sure.

LONG: I think we’ll go over here.

SUNUNU: Hi, Roxy. How are you?

Q: Good morning, Governor Sununu. So nice to see you. My name is Roxy. I’m an elected official. I represent the state of Maryland. I’m also an AI private sector leader.

My question is around manufacturing, but before I get to my question I also want to point out that also under—Africa, 70 percent of their population is under thirty. And I also wish we would talk about Africa more and the strategic opportunity that lies there.

On manufacturing, so I’ve been hearing from a lot of clients and manufacturing that they are worried, and they’re thinking, and being mindful around tariffs, which are prompting them to look at other investments globally across the world, with countries that are U.S. allies. I see this as a potential opportunity to really diversify our supply chain, especially around critical minerals. Do you see that as a longer-term play in terms of the tariff topic?

SUNUNU: Hundred percent.

Q: OK.

SUNUNU: On minerals? Yeah, the critical minerals, 100 percent on diversifying. And we could go on all day about the opportunities in Africa. They’re absolutely huge. The problem is you have so much war and conflict within those countries, and all that sort of thing. Now Africa—I’ll start there, because Africa is so—to date has been one of the world leaders in terms of driving those critical minerals. They do it in horrible ways, inhumane, and in-humanitarian ways, with the child labor issues and all—and the mines. If you’ve seen those pictures, it's just—it’s deplorable. So diversifying from Africa for a variety of reasons, and diversifying across the world so we have access to those minerals.

We have some access to them here in the U.S. The copper market is going to get really interesting, right, because copper is big but we’re theoretically going to open up a lot more copper mining in some of those minerals here in Utah, and Nevada, and certain places like that. But you have to have to have a world market of this stuff because they’re going to be so critical as we build out this, AI infrastructure. Part of the—part of the reason we—you know, of all the things we want to partner with in Ukraine, right, we could partner with them on, AG. We could partner with them on fertilizer. But, no, we’re going to partner with them on critical minerals—(laughs)—because that’s the future, right?

Everything we do is going to be based in some form of AI and AI infrastructure. So, yeah, all I can say is there’s no doubt the critical minerals are a huge part of where we go. But how we do it and where we do it is going to be really important. So by diversifying, by having a broad spectrum of who we can go to in that world market, it makes us not beholden just to one area or another. It’s not just Africa or Australia or Ukraine or even our own—our own local supplies, or China, right? We get a lot of it from China.

Can I add one more point on the critical minerals? Mining the critical minerals and where you get them is very important, but how we process them—I mean, up until very recently, I think only, like, this year, all the lithium in the world was processed in China. Even if you mined it here in the U.S., it had to go to China to be processed. Why? Because it’s an environmental catastrophe when you process it. (Laughs.) Only recently, I think, Bechtel and a few other U.S. companies have designed the right operations to process that stuff here in the U.S. That’s another important aspect of diversification within the critical mineral world. It’s not just getting them out of the ground, it’s what you do with them afterwards to get them to a usable state before you send them to the manufacturing facility.

It’s very environmentally bad. The waste products are awful. I was an environmental engineer. I used to clean up hazardous waste. I did that for about twelve years, soil and groundwater. It’s one of the few things I’m a legitimate expert on. Everything else I just tell you I’m an expert on, but this one I’m actually serious about. And how we diversify the usage and the transportation there. Shipping is huge. Hey, we’re going to get more minerals out of Ukraine and maybe out of Africa and all these other places. We’re going to diversify. How are you going to get them from A to B without being abused on tariffs and trade issues? Because we don’t control the shipping. That’s why I keep going back to the shipping piece. It’s so important as we really embrace this world economy.

LONG: And then lastly, to end on, obviously we’re here celebrating this really interesting report where they went—

SUNUNU: The report’s great, by the way.

LONG: —and did this great listening tour around the country. And I’m wondering if you can shed some light. You’ve been in D.C. for a few days now. What are some of the—

SUNUNU: And I’m leaving in, like, two hours. And I can’t wait.

LONG: (Laughs.) Hopefully—

SUNUNU: So that’s all I can take of this town.

LONG: Yeah, but what sounds different to you? You know, what are people talking about in New Hampshire that you just feel like isn’t being heard here in D.C.?

SUNUNU: Well, there’s a quick two answers. What people are talking—let’s talk about DOGE for a second, just in concept. The American people don’t mind what DOGE is actually doing. It’s the—I keep going back to this, but it’s so important—the messaging, and the explaining of the hows and whys, and the implications of it are not being transmitted as well as it should be. So people want less government. They believe there’s waste, fraud, and abuse with their dollars. And it’s their money. It’s not—the government owes nothing, by the way. The government doesn’t owe 36 trillion (dollars). You do. Your neighbors do. Your kids do. I mean, let’s talk about what the 36 trillion (dollars) is. Thirty-six trillion dollars—let’s put this into real perspective. Last time I checked, Jesus lived about, what, 2,000 years ago. Thirty-six trillion dollars is me handing you $100 every second for 11,000 years. That’s what you owe. You owe the government $100 every second for the next 11,000—think about that.

That’s a real number, guys. So what people are talking about is, boy, we conceptually like what they’re doing. We just don’t really understand. We conceptually hear that there’s an imbalance on tariffs, but we don’t really—even the economists, you watch CNBC, no one really is 100 percent sure. If you watch the Fed Reserve meeting a week ago, basically—(laughs)—you know, the chairman was, like, yeah, we’re going to do rate cuts, but not right now, and don’t really know what this mean. There’s a lot of uncertainty here. It was the most indecisive press conference I’d ever heard a Fed Reserve chairman have. So people don’t really know where it’s going. So I think that’s what’s being discussed.

LONG: So you really think it’s just the messaging and not the how it’s being done? The sort of sledgehammer versus scalpel?

SUNUNU: Yeah. Look at education, right? Getting rid of the federal Department of Education is a great idea, guys, for everybody, because there’s no—what’s the value-add of the federal Department of Education? What value-add do they have to educating your kids? Not much. They provide a little bit of money, not a lot, by the way, but a little bit of the money. But they also provide a thousand pages of rules and regulations on how those dollars are spent. And the example I give is this. Gavin Newsom in California—I might disagree with Gavin on a lot of things, but, believe me, Gavin Newsom, and the legislature, and the parents and administrators of California know what their schools need more than Washington, D.C., as does the folks in Massachusetts or New Hampshire, or Mississippi. So give them the dollars.

And so my example there is there’s, oh, the Department of Education is going away. So people are a little nervous about it. But it’s actually incredibly empowering to the states, localities, parents and administrators that will make their own decisions. I mean, the amount of—you want to talk waste, fraud, and abuse? How much—in New York City it’s approaching $50,000 per year per public school student, OK? So in a student—in a classroom of twenty kids, economics, how much is that per classroom? Just shy of a million dollars. Where is it going? If you’re in New York City and your kids go to public schools, if you’re a teacher in New York, you should be infuriated. You should go: Wait a minute. They spend nearly a million dollars on my classroom? Where’s the—where’s the money going, guys?

So when you return that power, that control, more of that say back to those localities, and those dollars are there, and the regulations are off, boy, that gives everybody a lot more power to say, how are we spending this and why? And don’t tell me it’s the federal government, because they’re not involved here anymore, right?

LONG: You mentioned two issues—

SUNUNU: So things like that, the messaging, if it could get stronger, I think people would feel more empowered and confident about what’s being done in terms of the, you know, the bumpiness, and where the bumpiness through this transition to more decentralization and privatization is going to take us.

LONG: And was there a second one? I know you’ve covered DOGE pretty well there, but is there a second one that you—(audio break)—

SUNUNU: (In progress following audio break)—side you’re—it’s a threat to democracy. And if you vote for that one, it’s a threat to—I mean, stop with the threat to democracy nonsense, guys. There’s no—our democracy is crazy strong right now, amazingly strong, stronger here than anywhere else in the world. So anyone who’s telling you that someone is a threat to democracy, all that talk has kind of diminished, right? And that’s a good thing. And Trump is—like I said, he’s a little more, I don’t want to say softer by any means, but he’s got a much more professional, much more strategic approach. You can disagree on the strategy, but it’s not just, you know, insulting people and all that sort of thing. He’s, I think, much more focused on what he wants to do, and he’s trying to go really hard, really fast. I’m not going to waste any time.

Congress, you had twenty-five years to do your job on all these issues. You failed. So I’m going to do it. (Laughs.) And we might break a few eggs when—we might make a few mistakes. And it’s going to be a little bumpy. But something is going to move forward. And so people actually appreciate that. And it’s brought the tone down a little bit on the polarization—the political polarization. I think that’s—people are generally happy about that. But we got to wait to see where a lot of this goes.

But, look, America—I’m just going to end on this. I’m super optimistic in terms of where the country is. I’m super optimistic where we are politically. We go back and forth. You know, I’m going to—I’m going to take thirty more seconds. For people who say that our institutions are threatened and democracy’s—stop. I’ll tell you why. We have the most—the strongest checks and balances of any country in the free world. We’re one of the only places in the free world where our parliament, our legislature, our Congress, they don’t pick our prime minister or our president. You do. Remember, in most other countries the ruling party picks the prime minister. So there’s a lack of checks and balance of power in most other countries. But not here.

You can have a Democrat-run Senate and House. You can have a Republican-run president. It’s your choice. And this election proved it. We voted. Your vote was counted. It worked. It works 99 percent of the time, right? You have the say on who your leadership is in every level of government. And not one—and every level is separate from the others. Sometimes our Supreme Court’s very liberal. For twenty years it was incredibly liberal. Sometimes it’s more conservative. At some point, it’ll go back to being a little more liberal. That’s good, guys. That’s OK, right? It’s going to go back and forth. There’s not one ruling party here. People stay involved, they get engaged. That’s all really, really healthy things.

Whether you like the guy, or—the man or the woman at the top, whether you like them or not, the system, the institutions are incredibly strong. And we’ve come through so much, right? We’ve come through a pandemic. We didn’t need to rebuild our institutions. They held strong. We came through 9/11. We came through a civil war. We came through World War II. We came through the ’60s, where our—let’s not forget, guys. The greatest voices in America were literally being assassinated in front of our eyes, right? JFK, RFK, Martin Luther King, Jr. And people said, the American experiment is over. It’s ending. We held strong. We came through these crazy, tough, awful times.

And our institution stood that test of time. And our democracy stood strong. And your vote is as powerful and important today as it ever was. And at the next election, you can vote any way you want, do what you want to do. Nobody cares, right? There’ll be winners, there’ll be losers. And we’ll move on. And the more you—I think the more we embrace that and say, well, have some gratitude. Not that it’s perfect. It’s not perfect by any means. It has a lot of flaws. But, boy, it’s way more perfect than anyone else’s system.

And so I just try to incense a sense of optimism and gratitude for the, you know, winning the—for a lot of us that didn’t move here and weren’t, you know, fortunate enough to go through the process and become citizens here, you know, we won the ovarian lottery, right? We got to get born—we were born in America. What a gift of God that was, right? So let’s have a little gratitude and appreciation. And still stay involved in that process, because your voice—whether on the private side, or public side, or in the voting booth—is still incredibly valued. And I would argue, more valued here than anywhere else. So it works pretty well.

LONG: Well, gratitude to you for covering a wide range of topics today.

SUNUNU: You bet. I’m sorry. Here we go. You bet. Gave my best.

LONG: Thank you, Governor. Yes. (Applause.) We’re going to have a really quick coffee break. Back at 10:15 for the panel.

SUNUNU: You bet. You bet.

MS.     : Thanks so much, ladies and gentlemen. We’ll take a short break for coffee and reconvene at 10:10.

(END)

This is an uncorrected transcript.

IP: Thank you very much for coming for this part of the session. Continuing with our discussion of U.S. economic leadership, this panel is going to talk a little bit about how folks out there in the economy—the workers, the communities themselves—are affected by and how they actually regard the importance and the quality of American economic leadership at home and abroad. And are—the priorities of the folks that we interact with here in Washington, are they the same priorities of folks on the ground out there making decisions for themselves, for their families, and when they go to the ballot box?

And we have a terrific set of guests here to help us answer this question. Starting from my—I won’t go—there’s details in your packet there about who our guests are.

But starting right here on my right, Don Evans. He’s been through many private and public sector roles, but right now he is CEO and president of the Pittsburgh Gateways Corporation and the Energy Innovation Center. Right, Don?

Karla Morales, vice president, Arizona Technology Council, and is also, I believe, on the board of a community college, right—Pima Community College?

MORALES: That’s correct.

IP: And, Catherine Novelli, you were assistant secretary of state, I believe.

NOVELLI: Undersecretary.

IP: No, I’m sorry, undersecretary. Excuse me. Oh my God, I just demoted you by accident. (Laughs.) Undersecretary of state. And you are now president of Listening for America.

So I’m going to start the question really big because, obviously, look, I write about economics for a living, and there’s really only one thing we’ve been, like, writing about for the last few weeks, and that’s tariffs and trade. Now, the irony, though, of course, is that you look at polls, and tariffs and trade are not the number-one thing people are worried about. They’re worried about things like cost of living and so forth, and tariffs and trade are way down on the list. Nonetheless, it is clear from what we’ve seen over the last few years that there’s been a bipartisan move, more pronounced on the Republican side under President Trump but on both sides, to move away from what we used to consider the ideals of liberalized trade to one that’s much more sympathetic to protection and tariffs.

I’d like to start with you, Catherine N., because of course you were in some sense at the heart of a lot of these issues in your role at State and you continue to be in your role. What led to this drift, do you think, from those ideals? And from your interactions with workers and communities, how do they feel about the so-called rules-based international order, and whether it works for them, and whether they want it to change?

NOVELLI: Well, thank you so much.

I spent a lot of my career negotiating trade agreements when I was at the trade representative’s office and then at the State Department. And after I left there I started this listening tour, very similar to what is being done in an updated manner by Matt and his colleagues. And so I talked to 2,000 people around every region of the U.S. about these exact questions, and my conclusion from that was that, you know, we asked people in focus groups, et cetera, you know, how did they make decisions about buying things, for example. And people told us they wanted the cheapest thing and the best-quality thing at the cheapest price. We asked people if they looked at where did the thing come from when they made their buying decisions; and almost everyone said no, that they were looking at quality and price as sort of their combination. There wasn’t a whole lot of—at the time, there wasn’t a whole lot of knowledge about how tariffs worked, what they meant, et cetera.

I think there was, in keeping with what was found in the report, a concern about fairness. That was a huge concern. And I can tell you from the negotiating perspective, and what we did inside the U.S. government, and from my conversations with other government officials like Sweden where there’s a very strong support for open markets, and when I asked them, well, why is that—why is—why is that, whereas we’re finding exactly what you suggested? And one of the things they said is that they had a whole-of-government approach to looking ahead at where were challenges going to be for the Swedish economy, and how could they as a whole of government look at how to make sure that they were looking at where is their comparative advantage and trying to support that, not necessarily by industrial policy but to sort of address that.

And I think—because we’re so huge, I think we haven’t really done that as well as we should. I think there has to be a partnership—and this was very clear from all the places we went—including Pittsburgh; including Greenville, South Carolina; et cetera—that where things work well is where there’s a partnership between the local universities, community colleges, government, industry, and where you really are localizing things and looking at how do you grow that economy that way, and policy up here is up here. That can enable it, but it needs to be taking into account not just the benefits but what are the costs. And I think that that was not well done at the federal level at the time, and there were not—there was not a whole-of-government approach. There were negotiators over here convinced they were doing good and that benefits would flow. But recognizing that not everybody was going to benefit, that piece of it wasn’t integrated in a way that should be. And I think we see the results of that now.

IP: Karla, I want to turn to you next because you come from a border state and, you know, many people including yourself have shared international heritage, right? And I understand from, Matt, your report that actually there are different attitudes about globalization when you go to a state like Arizona versus sort of a Rust Belt state like Pennsylvania or Michigan. Tell me a little bit about what are the attitudes towards globalization where you come from. Do the folks that you deal and your communities, do they see it as an opportunity or a threat, a bit of both? And how do you see your role and the Technology Council’s role as managing to leverage the best and tamp down the costs of the things people worry about?

MORALES: Thank you so much for the question. And absolutely, as a border town in Arizona, we have a great relationship at the Council with most of our—with all of our community members.

And one of the things that I want to make sure that I bring to the attention is that when we talked about the conversations that we were having—and actually, Matthew in his report included it as well—it is very important for us to have those trade relationships with Mexico. They are our number-one export and import partner, so it’s incredibly important for us to have that relationship with them. And it is very, very important to the business community because, as Catherine mentioned, yes, costs and quality are two things that are being considered, and as business owners the tariffs, the globalization, these are things that are going to impact the products and the cost of products, which will then subsequently impact the consumer, right? And so for us, it’s incredibly important for us to have those great relationships with Mexico and Canada as our trading partners. Our communities are very, very well informed and very well connected and very vocal about how important it is to them as consumers and as business owners.

IP: Now, Don, I want to sort of ask more or less the same question to you because you, you know, spend your time in a different part of the country, right, but dealing with a similar sort of group of workers and folks. Tell me a little bit about what you do in terms of helping people transition to future job opportunities and what your experience has been in terms of whether people sort of see the outer—the rest of the world as having been the cause of some of the economic hardship in their community.

EVANS: Yeah. Yeah. I love it when someone introduces a person from Pittsburgh as being part of the Rust Belt. That means you haven’t been to Pittsburgh recently. But truly, the legacy of Pittsburgh, you know, we have a front-row seat on the issues of unfair trade practices. And if you look at the legacy of steel and aluminum and the downstream manufacturing industries that really made western Pennsylvania, you know, we saw that—those business decisions that resulted in the dismantling of our industry and the offshoring of our—of our industry. And so when you start talking about an issue like tariffs to protect the aluminum industry and the steel industry specifically, that’s all well and good if we can follow that money trail and we can see those excess collected tariff dollars returning to protect the industry that we say we want to protect, right?

And so, you know, Pittsburgh—you know, I run a nonprofit. You know, we’re focused on economic development. We took a 200,000 square foot—Connelley Trade School, the largest trade school in the country when it opened back in 1930s, and we brought it back as a workforce development engine for the community. And we poured into that workforce development programs, business incubation. We generate over 900 entry-level jobs every year. And so we’re very focused on what are the employer-specific needs, and how can we fill those, right? We have low unemployment, but we have a very a large sector of our population which is underemployed. And those are the people who are the voice, those are the people who really want to see trade policy work for them to bring back the manufacturing base, those good-paying jobs, you know, of the future.

IP: Another question I’d like to ask all of you is that, obviously, the president talks a lot about tariffs. Calls it the most beautiful word in the English language. What’s your experience? Does his tariff message resonate with the people that you deal with? And if so, why? And, Karla—

MORALES: Yeah, I’d love to answer that. And almost to follow up on what Don just said. For us in Arizona, as you know, we are the tech hub of the nation when it comes to semiconductor manufacturing. Aerospace and defense depend a great deal on manufacturing, particularly in aluminum and steel. And so for us, those tariffs have a significant impact on those very important and critical industries in our region.

IP: Positive or negative impact?

MORALES: A negative impact, right, because there’s a higher cost. It’s going to slow productivity, depending on the negotiations. It’s going to have significant impact not just on the economy, from the manufacturing perspective, but also from a workforce development perspective. It’s going to require more training for our workforce, because people are going to different jobs as those manufacturing jobs are not there, because we don’t have the steel that needs to be necessary for the industries, like I said, in aerospace and defense or in semiconductor manufacturing. And while our academia, the universities and our Pima Community College and our community colleges in the Phoenix area, are doing a great job in providing that training with career tracks and specific trainings in those areas, again, the limitations of the products, the raw materials that we need, are going to significantly impact the Arizona economy.

NOVELLI: Can I just add a couple things too? One of the things that became very clear when we were doing our listening sessions, we actually asked people, you know, would they support tariffs, you know? And people were concerned about rising prices. They were very concerned about that. And so they were not really thinking that that was a great thing for them. In the Midwest, where we were in Ohio and Michigan, there was a great concern at the time—when we were talking to people, there was this concern about what was going to happen to NAFTA, which became the USMCA, among those in the auto industry at every strata, including organized labor, about getting rid of that benefit that they saw, because they saw that there was an integration, and they were very concerned about what that meant for their own competitiveness domestically, as well as internationally.

IP: Don, I want to come back to you for a moment because, as you correctly point out, I mean, Pittsburgh is the antithesis of a rust belt town now. It’s like it’s built its future on robotics, medical technology, and so on. And yet, culturally, a lot of the state still thinks of itself as, you know, manufacturing, you know, it’s in the name of the football team, and so on. And in the last election campaign, that message resonated. We saw both former President Biden and President Trump appealing to that self-identified image. And so my question to you is it’s been at least a generation since the steel industry shrank significantly. Do the people that you deal with still identify closely with that part of their heritage and their economy? Does it still shape their attitude towards things like global trade and tariffs? Will it always be thus?

EVANS: Yeah, absolutely. So, you know, if you think of, again, our building, the Connolley, built in 1930,

the graduates of the Connolley ran the steel industry, ran industry of the ’60s and ’70s. You know, they’ve moved on. Their children went off to college, came back, and really built the eds and meds of Pittsburgh. But I would say, manufacturing is still very much part of the DNA. And there’s still a lot of that infrastructure, still a lot of that, kind of, drive towards the manufacturing base. And why? You know, the lived experience in Pittsburgh is those were good jobs, right? Those were high-quality, life-sustaining jobs.

The opportunity of the future—you know, we’ve seen the pendulum swing back. There’s more demand for the career and technical education pathways from our freshmen and sophomores in high school. In fact, the underserved schools don’t have the capacity to meet the demand that the students are asking. They’re looking for other pathways. But the manufacturing of the future needs to focus on, you know, clean tech manufacturing. We’re looking for more than the menial jobs. We’re looking for the career pathways in industries that have resilience, have sustainability. Again, the history of the offshoring of industry is still very much scar tissue for the region. So we want to make sure that we get it right the next time.

I think, with respect to tariffs, and you touch on that, you know, I started life as a free trader, as an intern under Congressman Don Bonker. But as I’ve—as I’ve grayed I’ve really focused on tariffs in the absence of a strong industrial policy, and that are not integrated with a strong and well-thought, well-crafted industrial policy, are just price increases, right? And that’s where there are concerns that tariffs that are not using those excess funds to support the industry that we need just raise prices, and you’re taking those funds, moving them to tax breaks, that don’t trickle down. So I really think that the use of tariffs, it’s an effective tool. It’s a strategic tool, for sure. But it needs to be used to actually protect the industries that it’s targeting.

IP: So I want to address this question of manufacturing, because certainly, again, a place where the bipartisan consensus has moved is to be much more supportive of manufacturing in general. And it’s almost like a normative as opposed to a quantitative sort of judgment. You’ll often hear it said that the U.S. has lost its ability to make things. And this motivates effort to reinvigorate the manufacturing base. And you’ll often hear it said that manufacturing jobs are intrinsically superior to other types of jobs, that they provide non-college-educated people with good paying work to raise a family in smaller communities.

Among the communities and the folks that you deal with, is there a view that manufacturing is an intrinsically superior way to make a life and that we need to bring it back? Or is it the kind of thing they only think of in an abstract sense—yes, but not for me, not for my kids? And what realistically, can we promise those people who think that we should have more of those jobs back? Catherine Ann, can I start with you?

NOVELLI: Yeah. I think that’s just such a great question. And, you know, what’s interesting is, if you look at the U.S. economy, 80 percent is services. And one of the—sand that surprised everybody we talked to. They just did not conceive of that. And when you talk to people about, well, what does that mean, about services? They would say, oh, they think it means you’re working at a minimum wage job at a box store or, you know, at a fast food place. And they are not thinking about services in a bigger way, even though if you look statistically at what—you know, what is the return and the wages of services industries, actually they’re very high. And so I do think you’re right that this sort of nostalgia, this view that manufacturing is a better way of life, is absolutely there. And we found that everywhere we went even if, you know, the facts aren’t exactly that.

So I think there is an issue of looking at, of course, countries have to make things. And no one’s suggesting that. But developed economies also have a very high services component. And that has helped them grow as well. So I think—you know, one thing I would say, and the report also confirms this, is that people will approach this whole question as, we know, this is really complicated and we don’t understand all the pieces of it. So there’s a lot of emotion there that is—that is a valid emotion. And I think the question is, how do we have a conversation that takes that into account, but also takes into account how do people make the best living possible?

IP: Karla.

MORALES: And I think in Arizona—I appreciate that. I think in Arizona what we are doing is being much more intentional in changing the narrative of what manufacturing is and what does it represent for our community. We are more focused in advanced manufacturing. When you’re talking about manufacturing for us in Arizona, you’re talking about optics and photonics. You’re talking about aerospace and defense, healthcare, med tech. So for us, manufacturing has completely changed. So where we are looking at advanced manufacturing as a high-quality, high-paying job.

And I want to add that high-quality and high-paying, for us, is very intentional. Again, in not just a job that helps you provide a living, but a thriving job that actually provides the intellectual stimulation, the work environment that fits your culture, your needs, the kind of job that allows you to provide for your family not just immediately, but long term, whether it’s buying a house or investing in a business. So those jobs are paying those high-quality wages because they’re being very intentional with, again, the three legged stool that we call the partnership between academia, industry, and community. So having those conversations to make sure that the entire ecosystem really grows and expands and supports itself.

IP: So, Don, I want to talk to you about what maybe the employers are detecting. So, for example, here’s one of the paradoxes. Is that, like, there is a desire in a lot of the communities to have these good jobs, then we all hear employers constantly saying can’t find the workers, can’t find the workers. There was a line in that from the report that sort of struck me. Now, this is not about manufacturing, but they said during a roundtable on a dairy farm in northern Wisconsin one farmer pointing to the surrounding fields memorably said: You would have dead cows if you did not have immigrants, right? And the message was essentially there is work out there that is working on farms, working in mines, and in factories that is so brutally hard and does not pay great wages. It’s very difficult to find American kids who want to do those jobs.

What are you finding? And is it realistic to think, as we sometimes hear, that we’re going to bring all those manufacturing jobs back, when we can’t even fill, like, slaughterhouse jobs. Those are manufacturing jobs. They have extremely high turnover because pay is not great and the working conditions are really difficult. What are employers telling you? And how realistic is it that we can promise people that there are these—all these great, well-paying manufacturing jobs waiting for you, if we just get tariffs right?

EVANS: Yeah. And maybe answering that just slightly different approach. You know, I want to applaud Matt and Allison for the work that they did. You know, their task was to go out and listen. And I think you listened well. And the report really is a starting point, I would say, to uncovering that lived experience that individuals out outside the beltway are actually feeling. And I especially appreciate the identification—you know, your mandate was to look at foreign trade, and foreign aid, and those issues. But what you uncovered were these, I think you called them domestic foundations, you know, like the high cost of living, and the housing crisis, and our desire for those good manufacturing jobs, and the lack of funding to provide that workforce development infrastructure to get individuals who are working to put food on the table and don’t have the resources, and don’t have the capability to pivot to, you know, another position. You know those are the underlying conditions that that people face on a day-in, day-out basis.

And so I think, you know, there are jobs there. We have a very low unemployment rate, but the underemployed, you know, is a huge swath. And we have a huge swath of our population that’s not in the labor pool because the cost of participating are higher than the benefits of participating, right? And one thing—I know you pointed it out in the report; it could have taken up a whole page instead of a paragraph—but if we look at ’60s to today, the CEO compensation was 20X in 1960. It’s now 350X, right? We have an underlying wealth and income disparity issue that is one of those lived experiences, right? That it’s the—it’s the elephant in the room. It’s the issue that needs to be addressed. Does the free market answer that? Does the free market fix that? I’m not so sure anymore, right? I think it takes good leadership. It takes good leadership of our government and good industrial policy to drive that.

NOVELLI: Can I just add one thing there? I think it’s really interesting when you look at cities that have faced huge international competition—Pittsburgh being one, Greenville, South Carolina, where the textiles industry just, you know, was fading away and was going to—or even Grand Rapids, Michigan, where they lost their furniture industry and other things, not really to trade but to the south. And what was—what is interesting is that, in terms of leadership, that you saw leaders sort of come forward and say, OK, like, what cards do we have here to play with, and how do we work together with industry, with bringing in new investment, with the community colleges and our universities and politicians, to create something that can thrive?

And what you saw is that folks did that. And so you see just incredible benefit that people have today from that good leadership, and that kind of vision, and that bringing together those pieces of things. But, you know, you don’t want that only in isolated places. And I think that is one of the big conundrums that happens. And I fully agree that, you know, just sort of saying, OK, we’re going to put on tariffs and we’re going to just protect this does not allow for dynamic building on a going forward, and a vision of, OK, what really is our comparative advantage? And how do we build that? And at the same time that transition is taking place, how do we support people who are not benefiting from that transition? And to me, that’s the problem. And it’s not—it’s not so simple. It’s not sound bites. And that’s why people don’t grab onto it. And I’m really glad that Matt and his colleagues are.

IP: Thanks.

Let’s start with some questions now. We have some folks with microphones, so when you get the microphone please state your name and affiliation. We’ll start with you right here.

Q: Thank you. Hi, again. Roxy. Great panel discussion.

I guess my question is around workforce participation models, because I think that’s evolving very rapidly. And I hear a lot of the things that you’re saying from the listening sessions and some strategies that you’re thinking through, but even if you take advanced manufacturing, for example, when I look at my constituents, many of them can’t even conceptualize what that even looks like, to work in an advanced manufacturing plant. Versus, if you were to tour one or really go deep into one, there are a million innovative things that are happening that are so incredibly promising. And I look at it as an industry for the future. But so how do you think about these workforce participation models that now need to evolve to show people what’s possible for their life? And, hey, you might have been in the farming industry, and you might have had these skill sets, but let me tell you how that’s transferable to truly advanced manufacturing, or 3-D printing, or robotics, and things of that sort.

IP: Karla—

MORALES: I love that you asked that question.

IP: Yeah, I was going to ask you.

MORALES: I would love to answer that. One of the things that I’ll say is when Matthew and Allison went over to Arizona they met with our community college. And they met at our facility, at our advanced manufacturing facility. And I believe Matt mentioned it in the report, one of the things that we’re doing is our academia is talking to middle school students. They’re no longer talking to high school. They’re talking to middle school students. We are working at the Tech Council with our 750 member companies in the science and technology field to bring in some of that knowledge base into junior high and high schools, to do dual enrollment programs. So when we’re talking about advanced manufacturing for the future, we’re doing it now. We are talking right now and creating career track and very focused certificate programs to make sure that we have a ready and prepared workforce to be able to meet the demands of industry. So we’re being very intentional in the way that we approach manufacturing.

IP: Karla, are there opportunities for, like, kids in high school to tour some of the plants going up around there, so they can see, you know, as she was asking, with their own eyes what these jobs look like?

MORALES: Absolutely, so part—absolutely. Part of the industry partnership, in collaboration with community, is middle school and high school students touring the facilities every so often. We have events that take place. For example, tomorrow, actually, I had—that’s why I’m going back in a few hours—we have a program called SheTech, where we bring all of the young girls from the high schools all around Pima County to the facility in the Pima Community College with partnerships with the city of Tucson, with Pima County, with city of Phoenix, from different areas to talk about the jobs that are needed and the skills that you will need to be able to meet those demands.

EVANS: I’d like to just add to that, because I do think going after the middle school, early high school is the long game, right? We have to be doing that. But even with respect to those twenty-year-olds and older, right, that that are in—that are outside the labor pool or are underemployed today, you still have to provide a pathway to allow them to envision it. And one thing that—we have a pre-apprenticeship program that readies people. It’s called Intro to the Construction Trades. It serves the sixteen trade unions that that are in construction trades. And that’s a five-week wrap around, you know, engaged pre-apprenticeship. It was rated the number one in Pennsylvania just recently. And it really focuses on allowing those individuals to envision what it would be like to be a carpenter, right? And, quite frankly, those pathways—we’re working with underemployed or unemployed individuals, low-income individuals, to allow them to picture that.

What I would say is our unions have healthy workforce development structures. They’re called apprentices, right—apprenticeships. And so if we can just get people on the pathway to those apprenticeships, we’ve done a whole lot of good. The one problem that we have in the country, and I know, you know, Congress is looking at it, WIOA, the funding vehicle that funds many of those pre-apprenticeships and apprenticeships, is funded on the basis of unemployment rates. And so here in western Pennsylvania, where we are growing and we have construction and the demand for good union jobs and people to fill those jobs is going up, the funding for workforce development is going down, right, just by formula. Which is the same as driving your car by looking through the rearview mirror instead of out the windshield, right? And so we have to fix things like that that are systemic, that are that really holding back the opportunities for all to move them into good careers, good family-sustaining jobs.

IP: Patrick. Can you wait for a microphone to come to you? Your name and affiliation, please.

Q: I was lucky in life to have been on the staff of the Senate Banking Committee for fifteen years. I was general counsel. I remember Congressman Bonker quite well.

Here’s what I’m wondering. What we saw up there was a movement—Business Roundtable in 1980 said they had a responsibility to the stakeholder capitalism. They had a responsibility to workers, their communities, their suppliers, their customers. And then at around ’86 or so, they moved to say their responsibility is to shareholder primacy. Their responsibility is to enrich their shareholders. And then CEOs got paid by shares. So I went to China in 1981. I saw a poverty-stricken country. They developed a strategy, in my view, to incentivize our company, who were interested only in shareholder primacy, enriching themselves, and that’s when CEO compensation went from 25 to 300 times the average worker. So this was shareholder primacy capitalism. So they invited—they had incentive to get our guys to offshore all of that stuff. And that’s why they wanted PNTR so dramatically to lock our market open so that our companies would feel freer to offshore all those jobs to China. Now, we still have an appetite for manufactured goods. Our trade deficit in manufactured goods last year $1.2 trillion. So we’re losing all the manufacturing, but we’re not producing them.

IP: OK, is there a question—

Q: One last thing.

IP: I just need a question.

Q: A couple years ago the Business Roundtable moved back and said they’re going to move back to stakeholder primacy capitalism. I haven’t seen any sign of it yet. So I just think, do people think that that is a part of the problem that we have in our trade—in our trade problem, running these massive and ongoing trade deficits?

IP: Catherine Ann, since you helped negotiate some of our trade agreements, why don’t you take that?

NOVELLI: Well, one thing that was very clear when we were doing listening sessions was that every place we went there was not support for corporate behavior. And it didn’t matter—I mean, it didn’t matter where you were. You know, because we talked to people in focus groups, and in one-on-one conversations, and that was a theme that just ran through everything. That corporations were about greed and not about people, et cetera. So I think it is a very clear sentiment in the country that there is a huge issue here.

Q: Thank you, Catherine. Anybody else?

IP: A question right here, please.

Q: Hi. Thank you very much. My name is Paula Stern. I chaired the U.S. International Trade Commission, where I served from ’78 to ’87. And, of course, have continued in my trade work, particularly with President Clinton.

Trade adjustment assistance is still in the law. There are provisions for tariffs to be put on within the law, not the way we are seeing it coming out of the White House. It was always considered, quote, “burial insurance.” And I believe that we have a system that we ought to go back to and fund. In Arizona, it is really the model for the country because it includes the tech, and the fact that we are not a manufacturing nation, as we used to think of it. And I am concerned that Congress has kind of given up on the law. And with regard to China, there was a provision, again for only five years—I thought that was a mistake; it should have been much longer—for when China joined the WTO, so that there would be this adjustment system. So I guess what I’m trying to say is we have the law. We do not have at the White House any indication at all that there is a worker-centered adjustment program.

IP: Don, why don’t you tackle that one, because you were just talking a second ago about some of the structural flaws and how we approach retraining and so on. And certainly there’s been a lot of criticism of TAA over the years, that it’s too narrowly drawn to actually serve the purpose.

EVANS: Yeah. As far as the workforce training. I mean, a secret for workforce development programs, and it’s not rocket science, is that you have to start with the employer and work your way backwards, right? You have to look at what are the skills that that employer needs, what are the—and what’s lacking then in our workforce development infrastructure to provide a pipeline of talent to those growth opportunities? It does—it does start, though, with identifying what are you going to focus on? You know, who are those employers we need?

I love the comment with respect to the—you know, the way that we change the carrots and sticks in the past. And we allowed for that offshoring. If we’re going to be—if we’re going to bring back manufacturing and kind of a strong economic domestic economy based on manufacturing, then we’re going to have to be a lot more intentional and a lot more focused on doing that in a proper way, so that when we bring it back we bring it back for all. And we have—we bring the entire population along with us to achieve that benefit. And I think that’s—it means good intentionality, which means good leadership.

IP: And, if you could in your answer address the question, is an absence of federal resources or commitment part of the problem?

NOVELLI: Yeah. Yes. I think—I think that, you know, in all the people we talked to and all the states we went to, we met one person who had benefited from trade adjustment assistance.

IP: Just one.

NOVELLI: And that was a good thing, but the conclusion that we drew was that trade adjustment assistance didn’t have enough funds and It was way too narrowly focused. And that really you can’t just focus on trade, that you have to focus more on what’s the churn in the economy and what are the jobs of tomorrow, regardless of whether they’re impacted by trade. But change happens in any economy, and how are we setting up workers to be able to evolve? And that takes money. And it takes funding. But it also—and this, I think, is very—the point was made this morning. The question is, do you need central control of that or do you need to fund and let more local decisions be made about how those funds are used, based on what’s going on there? And that was a very clear message that we took away.

MORALES: And if I could add also, I think it’s important to recognize the systematic challenges and inequities when we’re talking about the workforce and these adjustments. We have to talk about the limitation, whether it’s in childcare, and transportation, digital divide. There’s just so many different aspects that are not being talked about that are going to significantly impact those opportunities for trade adjustments.

NOVELLI: Agreed.

IP: Any questions from online? No, OK. Any other questions? Yes, there at the back, please.

Q: Hi. Sam Dreiman with Ripple.

First, Karla, congrats on the Arizona win, sweet sixteen. Great job there.

MORALES: Thank you. I appreciate that.

Q: Welcome. I find it really interesting that we have a Pittsburgh representative and an Arizona representative up here, because your two locations have kind of redefined manufacturing for your own places. With Pittsburgh, self-driving cars, autonomous vehicles have really helped explode the local area. Same thing with autonomous vehicles and the governor’s policies, and, as you mentioned, semiconductors. How are you—how are you each thinking about your own local advantages, whether it’s talent, education, or real estate, you know, land, to drive towards, like, new areas for manufacturing and/or trade fields?

MORALES: I think for us we are very, very fortunate. I might be biased because I am from Arizona, but we have the fortune of having 364 days of sun, which gives us solar power, which helps us promote clean energy. We have the perfect landscape to be able to support industries like aerospace. We have amazing research institutions that are focused on optics and photonics, which makes us leaders in the world for those areas. What we are doing is, again, really strengthening the collaboration to make sure that we continue to bring that benefit and that richness to Arizona without, of course, losing who we are. Because we want to maintain the culture.

You all know that we are known for our five C’s. Culture is one of those. And so for us, I think we’re very fortunate to have pretty much everything aligned for us. And having that collaboration between our government and our community and our academia is really going to help us. But for us, thriving in manufacturing, obviously, as you all have seen in the news recently announced, Intel and TSMC investing in semiconductor manufacturing, is really helping our state. And it’s really going to help all of the southern region. My biggest concern is, again—and I don’t want to continue the conversation in a negative way—but those tariffs are really going to impact us. Arizona, being a border town that focuses a great deal on trade with Mexico in either raw materials, in the auto industry, or agriculture, those are the things that we’re going to need to focus on right now.

EVANS: Yeah. With respect to western Pennsylvania, I think if you—if you draw a rectangle around western Pennsylvania, it really is a microcosm of a lot of the challenges and opportunities that the nation as a whole face, right? And I say that. We’re the swing side of the swing state, until they change the Electoral College. We always will be. And we invite that spotlight on western Pennsylvania, because we believe if we solve issues like that wealth and income disparity, if we solve the energy transition, if we solve the onshoring of industry and manufacturing, if we—if we show how to solve that in western Pennsylvania, we can leverage that and scale that throughout the country.

And we’re convinced of that. I think we have a strong position. We have two top-tier educational college facilities. You know, we are big in the eds and med, big in the automated vehicles. You know, when you think of the AI and datacenter boom, we—the facility I run is called the Energy Innovation Center. And most of this industry, datacenters, are going to run on energy. So those are key topics. You know, we’re bullish on the opportunities not just for western Pennsylvania, but for the country. But we need the leadership. We need to loosen those reins and be intentional about choices that are made to make sure that we build the infrastructure and build the opportunities the right way for all people, to get rid of that disparity.

IP: It’s 11:00 now, so I guess we should—how much time did they give us today? Fifteen more minutes? OK, good. All right. Yeah, sorry, at the very, very back, behind you. Yes. Sorry.

Q: Hi. Pamela Bates from the U.S. Department of State.

I wanted to ask if you are seeing an impact on investment decisions in Pittsburgh and Arizona currently. And a second question would be, going forward, what policies would you want to see to encourage investment for the types of manufacturing that you would consider to be the growth industries for the future, at the federal level? Thanks.

EVANS: Yeah, so very specifically under the past administration the DOE was on a path to really cede capital money, grant money, out into very specific energy-related investments that are needed to guide us into the future. Of that $400 million pool, I believe Pittsburgh took away about one hundred—or, western Pennsylvania took away about 100 million (dollars) of that, for two specific investments. Obviously, we’d like to see those funds come. And let’s finish the job of bringing those—you know, and that is—those are in clean tech generators—clean tech generators and amorphous metals, which are both critical to the grid modernization efforts that are going to be needed in this country, across the country, to make sure that we’ve got the grid infrastructure we need, and modernized in the way to pick up DERs, to manage higher electrical loads as we electrify. Yeah. So those are investments that we need to make. And they need to be very strategic, as we were on path to do. Our hope is that once the dust settles here, you know, we can get back to that and move those investments forward.

IP: I actually want to tee off that question and ask specifically about the question of foreign investment, right? And I think this is a question, Matt, that you actually probed people’s attitudes about, right? Because Americans have kind of an ambivalent attitude about foreign investment, right? Sometimes they see it as taking away jobs. Sometimes they see it as creating jobs. And the current president says we welcome foreign investment as long as you make it here, and if you don’t we’ll tariff you. What is your experience talking with workers and communities about the role of foreign investment? Are some countries more welcome than others? Are certain types of investment more welcome than others? And what would your advice be to, you know, foreign companies that are thinking of coming here?

MORALES: I would say, for us in Arizona, I think in the last three, maybe four, years, we have benefited greatly—probably more than any other state in the country—with foreign investment. Again, with the drawing of TSMC to Arizona, that really significantly increased our foreign investment. I think that we have a great opportunity as well in the med tech area. In southern Arizona, we’re very fortunate because we have our world-renowned technical park that focuses a great deal on bringing semiconductor to southern Arizona, but also clean tech, as Don just mentioned.

For us, I think that we are really focused—at the Arizona Technology Council, when you ask the question about policy, one of the things that we really want to support is clean energy initiatives, because clean energy has more to do than just solar panels and electric vehicles. It’s more about creating a sustainable workforce, a sustainable economy that creates jobs, that creates opportunities, that creates growth for our economy. So for us, the trade—and we do see a lot of companies coming from all over the world in the area of optics and photonics. But for us, it’s really going to be for policy, clean tech, clean energy, and really advancing those opportunities for the southern Arizona region of energy.

IP: Karla, can I just ask you, there was some controversy, I know, in the TSMC situation, where they brought many Taiwanese engineers over to do some of the initial work. Some local trade unions, I think, raised concerns about that. How did the community negotiate that particular tension?

MORALES: I think that was a partnership and a conversation. Again, I always call it the three-legged stool, right, because we talked about, do we have the prepared workforce? So there’s a point where the community colleges came in and started creating those certificate programs to be able to prepare the workforce to meet the demands of that industry. So that’s one way that they did—had that conversation. To my knowledge, and don’t quote me 100 percent, but it is my understanding that TSMC has now expanded, but because they have that prepared workforce now with us. And those individuals that originally came are no longer here. They’ve actually gone back, because now we are prepared to be able to meet those demands.

IP: And this goes to the point that I think several of you made, that you need a holistic, integrated approach of training, industrial policy. And it can’t just be more tariffs. It can’t just be one of those things.

Did you want to address that?

NOVELLI: I was just going to also add that—and the report makes this distinction, and we found this as well—that greenfield investment was widely welcomed, because it was seen as bringing new jobs where jobs didn’t exist before. And we saw that all over the country, where we want people—there was no antipathy towards greenfield investment at all. There were questions about taking over something that existed, and what would that mean. So I do think there’s a distinction in attitude between those two things.

EVANS: Yeah. And I would—I would second that. The concept of foreign direct investment—I mean, in global equity markets, I—unless there is a very clear national security concern where this is the Chinese government buying into a critical asset, a critical industry that we need to protect for national—for true national security issues, you know, I think everybody understands that, you know, the federal government needs to step in and block that. But in the absence of that, it’s like any other investor. If you’re buying it just to close it, to take away our jobs, you know, or are you buying it to invest in it and grow in this space?

And so there we should, and we should have always, asked those tougher questions of buyers, as far as their intentions, as far as their covenants, as far as their—you know, their promises to the community. And I think that’s really the underlying theme that I see. And, again, I think Matt and Allison did a great job really focusing on that lived experience. The reality of that is that when these communities ask, what’s in it for me, when you’re talking about international economic policy—when they ask the question, what’s in it, for me, the policymaker and the politician should be able to answer that question.

IP: You have a question from the online audience.

OPERATOR: We’ll take our next question from Kyle Murphy.

Q: Thank you very much. And thanks to the panel.

Among the great value that’s been derived from the conversations this morning is identifying what we get from these nationwide conversations with a variety of stakeholders about economic policy. And so I wonder what the panelists’ views would be on how to expand and deepen those feedback loops going forward to ensure that economic and industrial policy is hearing not only from Washington and business leaders, but also from community members and workers all around the country.

IP: Catherine, why don’t you tackle that one? Because that’s kind of your stock and trade, right?

NOVELLI: (Laughs.) I think it is critically important. I think it is something that not enough was done of. You know, people inside the beltway kind of heard from advisory committees that were also inside the beltway. And I think getting out and doing more is hugely, hugely important. And I think it needs to go back and forth. So now there’s all this listening, but then the question of, well, where do we go from here also needs to be discussed in the country, and not just people come back with this information, and then make up something, and fully bake it, and then, you know, don’t really iterate as they go forward. And I think that you will find a lot more support, for whatever decisions are made, if people feel like it’s—they’re involved, and they’re heard, and their views are actually taken into account. And I think you’ll end up with a much better result too.

IP: Are there collaborative or conferencing technologies that have come along in the last ten, fifteen years that can significantly expand the breadth of views you hear from, and consolidate and aggregate what you hear?

NOVELLI: For sure. I mean, think about, you know, one thing the pandemic brought us was Zoom and, you know, all of its competitors, and the ability to have those bigger conversations without having to physically, you know, go everywhere. Although I will say, I think talking to people in person is also really important. And I think the difficulty is we’re a really big country. We have a lot of diversity of views. And how one prioritizes being able to take—to do this, that this is something that must be done, I think needs to be baked into decision making. And it heretofore has not been, in anything but a more pro forma manner.

IP: Matt.

Q: Can I—thanks. Can I abuse the host role here, just to piggyback on Kyle’s great question, because I was going to ask that. And I think Cathy’s done a great job of answering this. But I was going to ask Don and Karla, you know, what do you think we should do next? What would be the most useful thing for us to do, to follow on, to dig more deeply into some of the substantive policy issues that we were looking at, industrial policy or workforce training, or other things—noting that we’re the Council on Foreign Relations, so we’re not necessarily the right place to do deep research on workforce issues, for example. But it feels like it’s important. And this conversation has brought this out. And it is linked to our international position.

So while you’re thinking of answering that, can I—can I just say, there are a lot of—there are seven other states—well, six, I guess, because we had Governor Sununu. Six other states not represented on stage, but I know they’re listening because there were messages from Wisconsin, and Oregon, and other places. So I just wanted to say to all of them, again, thank you for all they did to support us. And we’re looking for your ideas as well of how to follow up on this to make it useful. But with that, if you’re willing to indulge me, you know, Don and Karla, what should we do next?

MORALES: Yeah. I would say I love the fact that you mentioned the three that I was actually going to bring up. I think that trade, economic development, and workforce development are all synergies. They’re all—they all work off of each other. You can’t have one without the other. We talked today a lot about, you know, whether there’s enough people to do the jobs, and what role does immigration play in that? I think that’s where the border trade agreements—that’s where the conversations about border trade play a big role in those discussions. But I think it’s also important for us to have the necessary policies to have the prepared workforce that we need to meet the industry demands. And if we have those things, we will see economic development boost. And we will see a boost in our economy, a significant—I seriously think that that is three areas where I think we should really focus on.

EVANS: Yeah. Again, back to the listing and being heard, I think that’s a critical element. And we need more of that. So as far as next steps, find those ways of listing more, bringing more feedback. But then it’s also what you do with that feedback, right? We need leadership that leads in more than sound bite analyses and digs into issues. The amount of publicity that the foreign aid and the USAID budget got. Yes, foreign aid is absolutely a strategic tool in the arsenal of our government, but it’s also 1 percent of the budget, where most of America thinks it’s 20 or 30 percent of the budget, right? That’s because of miscommunication, right? And so, you know, I think we need better leadership to focus on leading from the facts, leading from, you know, addressing those lived experiences, and really leading for the benefit of all as opposed to leading for the benefit of just certain interest groups.

MORALES: I really appreciate that you said that, because I have to say—I have to—I would be remiss if I didn’t recognize that we are very fortunate in our state because within the same week we had Congressman Ciscomani, who is a Republican, advocating for initiatives in clean energy and supporting the state’s growth and continuation of that. And within days, we also have Senator Kelly advocating for the removal of these tariffs that are significantly impacting the Arizona economy. So when you talk about listening and talking, it’s also about doing. And it’s also about our leaders, decision makers, to be able to go to Congress and support the initiatives that matter to their community. So I would be remiss if I didn’t mention the work that our congressmen are doing to support the Arizona economy.

IP: I think we’re now out of time. This was a fascinating discussion. I like to thank Catherine, Karla, and Don for joining us today, and, Matt, for your support and for your report. And thank you, audience, for your questions. (Applause.)

(END)

This is an uncorrected transcript.