Mini-episode: Slavitt and Scaramucci Unfiltered
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With Trump set to make a declaration on “opening the country,” Andy decided to call someone he’s never met but who knows how the president operates: Anthony Scaramucci. Intended as a short conversation, all the rules went out the window once it got going. Andy also asked Mooch to tell listeners how to interpret the financial situation, Congressional actions, and the federal budget. Also, free financial advice!
- http://lemonadamedia.com/inthebubble/ (Patreon)
- https://www.poemuseum.org/the-masque-of-the-red-death (Short story: The Masque of the Red Death, Poe
- https://tinyurl.com/y7o4autl (Book: Firefighting: Financial Crisis and its Lessons)
- https://tinyurl.com/ydfft2pq (Book: The Richest Man in Babylon)
- https://tinyurl.com/y8f773ot (Book: The Great Influenza)
- https://tinyurl.com/y6wxrwk8 (Book: These Truths, Lepore)
[00:01] Anthony Scaramucci: OK. I should be OK now. Andy, how are you? That’s nice pictures behind you. So where’s Barack Obama, Andy, when we need him? What the hell’s going on?
[00:14] Andy Slavitt: Hi, it’s Andy Slavitt. Welcome to In the Bubble with Anthony Scaramucci. I thought Anthony would be a fascinating person to have on because there’s a couple of veins he could talk about, probably virtually better than anybody else. One is, I think many of you out there, many of us have 401Ks and retirements. And before he was at the White House, Anthony Scaramucci was one of the most sophisticated hedge fund investors and could be helpful in helping us understand the financial climate. He’s also been incredibly outspoken about what Congress needs to do to help. And we’ll go down that frame. And he probably has more personal experience with how the president’s thinking about managing this crisis than anybody. So welcome to the show and thanks for agreeing to be on.
[00:57] Anthony Scaramucci: It’s a pleasure to be on. I follow your stuff and so very happy to be here. Thanks. Thanks for including me.
[01:04] Andy Slavitt: Now you realize we’re on the record, right?
[01:05] Anthony Scaramucci: Yeah, well, it wouldn’t matter anyway, right? I mean, that’s my standard hike. I don’t know the difference between on and off the record. When I was on Stephen Colbert he was like, did you think you were going to last a long time in the White House? I said, “Stephen, I thought I was gonna last longer than a carton of milk in the refrigerator.” I didn’t know I was going out like that quickly. But it’s life. You know, it is what it is. I think the key thing for younger people is when you make a mistake like that, own the mistake, but then move on. I mean, you have to forgive yourself from the mistakes you make. Otherwise, you’ll be carrying millstones around. It’s not not necessary.
[01:34] Andy Slavitt: It’s not healthy. Too many other challenges. The first way I want to talk to you is as a New Yorker, you’re probably one of the quintessential New Yorkers if you couldn’t tell by Anthony’s accent, and very much identified with the city. The city is going through the kind of trauma — I’d love to hear you compare it to what we went through two decades ago. How’s the city doing and how are people doing, in your view?
[01:59] Anthony Scaramucci: Well, listen, I mean, I’m a lifelong New Yorker. I’m very good friends with Chris and Andrew Cuomo. We sort of grew up in the same neighboring area. And I do Chris’ show twice a month for CNN. And obviously he’s doing much better. I talked to him yesterday for Easter. I would compare it to 9/11 in the following respect: it is a great human tragedy. It’s happening in slow motion in New York. And so it’s almost like a slow-motion car crash. And we know that there’s doom and death. And, you know, it’s 10,000 people now. So it’s like three times the scale of 9/11 for our city. But 9/11 was so traumatic, Andy. I’m sure you remember we’re exactly where you were when it happened. I was in my office in Manhattan. I made the decision to evacuate the office. By the way, in 9/11, I learned a lot. You know, evacuate, ask questions later. And so I closed SkyBridge’s office in New York City on March 6th. I think it was that Friday because I said, “OK, guys, I’m super worried. The stuff doesn’t look good.” And thank God we got out of there. I remember a couple of my buddies in financial service like, why are you closing the office? Is it because it’s going to be really bad. And then a week later, other people closed. So my learning experience of 9/11 is closed the office and evacuate, ask questions later. But yeah, this is similar to 9/11 from the human tragedy. It’s less similar from the trauma. I think that we were so hit so hard and we were watching from our offices those towers exploding and the smoke. And, you know, I knew so many people. I know people in this. Somebody asked me the other day how many people they know personally that passed away? I would say five. In 9/11, it was 44. So it’s a tragedy, and it’s a tragedy on a number of different levels.
[03:57] Anthony Scaramucci: And so just to talk quickly about the economy, the two things that we’re learning about our society — and is something you’ve done a great deal of work on — is that we’re living in our society, most of us, paycheck to paycheck. And so that is absolutely devastating when you get a situation like this, because the bottom just falls out for so many people. The second thing, which I know you know a great deal about, is that it turns out we’re only as safe as the weakest link in our healthcare system. And so the great irony is you could be in that VIP concierge service, but there’s a person that can’t get good healthcare. And guess what? They’re in the system now. They’re in the social system and they could wreak havoc on you and your family. And so I’m hoping and I’m praying that we can go through this situation, look past it together as Americans, not as partisans, but as Americans who say, you know what? We’ve got to fix a lot of things about our society and about our culture. And we’ve got to look at it in a bipartisan way. And we’ve got to fix this situation related to people’s salaries, and related to what they’re making, and also the differential in our healthcare system. Because, man, we were not prepared for this. And I don’t want to be in a situation of being this ill-prepared going forward.
[05:13] Andy Slavitt: When people ask me, do I think that the debate over health care will be different in the future because of this. On one level, it’s hard for it not to be, because you made the exact right point, which is that you’re only as healthy as your least healthy neighbor. And so Americans, I think we’ll see that. On the other hand, I tell people that I don’t see it immediately changing. I don’t see the president and the Republicans, or the Democrats for that matter, evolving their views from where they were before this in the near-term. So I’m still pessimistic that there will be a Kumbaya moment based on just being close to the Senate and the House in the last few weeks. I don’t see those changes. What do you think?
[05:53] Anthony Scaramucci: Well, I have a tendency to agree with you. My experience in Washington was short, but I got like an 11-day PhD and their nonsense, you know, and I get the violence of their nonsense and I get how they try to do numbers on each other. But what I’m really hoping is that we can reach into the country, people like yourself, and we can have this open and honest conversation with the country. And if we can get people to focus not on left or right, but right or wrong, and we start firing public servants that are more centered on their partisanship, or their power struggle and their need to keep power versus their need to be patriotic and serve the country. But, you know, I mean, on this healthcare issue, which I know you know so much about. I just want to say this, because I think this will make so much sense to so many people. We can’t live in a guarded, gated society. You know, there’s a great short story I recommend to everybody, it’s called The Mask of the Red Death and it was written in the 1840s and it was Edgar Allan Poe. In the great city of London, people were dying from a plague. And the upper class was partying. And so they went to a beautiful masquerade party. And in walked Prospero, who was dressed up in the appropriate dress, but he was a serf. He was a lower-middle-class person. He had the plague and he walked in and he ate off of everybody’s banquet table and swapped spit in the different drinks and so on and so forth. And then he ripped his mask off and he turned to all of those elites and he said, “hey, you know, you’re not paying attention, everybody. Now, all of you will have this plague, and maybe this will cause you to change your minds about where we need to go in the society.” So for me, it’s more about right or wrong and it’s less about left and right.
[07:41] Andy Slavitt: So, you know the president. And it’s always puzzled me a little bit that he hasn’t been interested in just taking the healthcare issue off the table, which to me he could easily do by saying, you know what, we’ve got basic agreement here. I don’t love the ACA. I would’ve done it differently. Maybe it’s like NAFTA, it could’ve been improved, but I’m not going to get rid of it until we have something better. And therefore, there’s no daylight between me and Biden on the fact that I want everybody to be covered. It feels like, politically, that would be an understandable move. I also feel like that doesn’t offend what I think is any deeply held principle on his part. So would a health crisis like this cause him to rethink, or you think he’s not likely or capable of doing that?
[08:24] Anthony Scaramucci: Well, he’s a reactionary, so he’s probably not likely capable of doing that because what’s in front of him right now is seeing if he can get out of this somehow, blame it on somebody else, get the economy restarted so he can reform that electoral narrative. You know, you mentioned that I know the president. So, you know, I worked for him for a year. I was on the inaugural committee. I was on the executive committee. There were 16 of us for the transition. But the president says he barely knows me. You know, and that’s sort of what happens with the president when you get into a fight with him. So you’ve never felt more alive in your life, Andy, than when the president of the United States is calling you an unstable nut job on Twitter. Let me tell you. It changes your whole universe. OK. So for me, you know, despite him not knowing me, I actually have a pretty good, you know, life history with him and a lot of interaction with him. So let me stipulate a few things for your listeners. Number one, when the president is doing a news search, he is searching T-R-U-M-P. He is not searching USA. He is not searching Y-O-U. So if it’s good for T-R-U-M-P, then he’s gonna do it. If it’s bad for T-R-U-M-P, then he has absolutely no interest in it. Stipulation number two, for whatever reason, he dislikes President Obama. Is it jealousy? Is it envy at the president’s success, and him being one of the most popular figures in American culture? And, you know, one of the most respected people every year and all those voting lists and so forth? It could be that. But I know people in the administration, cabinet members, who have said to me, you know, Mooch, if the president’s going down one direction and I got to get him to change his mind, I look at him, I say, oh, you know, that’s what you want to do. And he says, oh, yeah, that’s what I want to do. And then my line is. Well, that’s exactly what Barack Obama would do.
[10:19] Anthony Scaramucci: And then all of a sudden, Trump will look at them and say, oh, OK, what’s your idea? Then what’s your idea? OK. And it’s funny, the ACA, because it’s an Obama plan — and as you and I both know, there’s elements of Mitt Romney and there’s elements of the American Enterprise Institute in that plan — that makes it almost a trifecta. You’ve got a think-tank, in the president’s mind a RINO — although in my mind, the only elected national Republican in my mind at this point. And then you’ve got President Obama. That’s the trifecta to have the president just do everything he can to abrogate the ACA. And I’ll make one last stipulation for you, which is that, again, you can take it on faith, but this is my life experience with President Trump. If there is a good idea on the table, it has to be his idea. There are no co-stars, there are no spotlights on anybody else. There’s no shared praise. Ronald Reagan had a plaque on his desk in the Oval Office that said you can get anywhere you want in life as long as you don’t care who gets the credit. President Trump is the exact opposite of that. And so if there’s a rising star, he doesn’t like that. If he turns to you and says, hey, I think you’re getting more famous than me. You’re about to get hit with a ray gun. Or if he says to you that you’re a television star, fly to Argentina on a junket and get off TV. And so those are some stipulations. And if you look at him through that prism, you’ll get to his decision making very quickly.
[11:54] Andy Slavitt: So let’s take that prism, which I think probably I’m guessing listeners out there were nodding their head, but take it and superimpose it on the current crisis. And let’s think about the characteristics that you need in wartime. So someone who’s very data-driven. Number two, someone who is very decisive. Number three, someone who makes sure that the frontline troops in the battle are constantly armed. Number three, someone who’s very skeptical of good news and wants to ask all the tough questions. Number four, someone who puts themselves out of the picture when making decisions. Those feel like historically, if you were going to talk about great wartime leaders, those would be the kinds of characteristics you’d want because you’d feel like you’d get decisive action. You’d get options on the table. You’d get command and control, and you’d get less ego. So given that we’ve got the leader that you described, how does a leader like that navigate this crisis, or a better yet, how do his advisers help — because they know who the man is — how do they help us navigate the crisis in a way that gets him where we want him to go?
[13:02] Anthony Scaramucci: So I want to just add one more thing to that and then explain to you why in a second. A good leader also knows that in the fog of war, a lot of mistakes are gonna be made, you know. Churchill had a situation at Gallipoli. It costs him the Admiralty. The early part of his career. And then when he got back into the Admiralty and eventually became the prime minister, people may or may not remember this about him, but he put Chamberlain on the war cabinet with him because he wanted it to be as unifying as possible. But what he wrote in his diaries at those times was there’s tremendous fog in the war. And it’s almost like what Mike Tyson said, you know, everybody’s got a plan until they get hit in the face and then the plans start changing. And so you have to have a leader that understands that as well. And so let me just take you to where we are and then let me explain to you where I think they’re trying to get him to go.
[13:53] Anthony Scaramucci: Where we are is he did not want to close that economy, because when you’re thinking about T-R-U-M-P closing the economy, you’re gonna have growth slippage, you’re going to have higher unemployment. His whole narrative is, and he says this at his rallies, you may hate me, but you like your 401K and you like the economy and you like where the stock market is. And so you’re gonna vote for me anyway. That’s his narrative. So when someone comes in and says, hey, the South Koreans are shutting down their economy, they have experience with MERS and SARS and we’re gonna go into a 21- or 28-day lockdown and that’s actually going to save the economy. He’s like NWF, this is likely a hoax. They tried to get me impeached with this “perfect call.” And so this is likely a hoax. I’m not going to go in that direction, OK? And now he’s getting pounded. Then he does a lot of press conferences. And what President Trump tries to do is he tries to curve reality towards his version of reality. And he’s been very successful in doing that. We have to tell the truth about that. He gets up there and he says this is fake news and that’s fake news. And his people, his acolytes, part of his movement, they clap their hands. But in science, Andy, you can’t get up there and say, hey, guys, you know, two plus two equals seven. Two plus two is four? No, no, no, that’s fake science.
[15:14] Anthony Scaramucci: So what was happening to him, he’s up there making these press statements and it’s going to go away and clear-eyed, objective money managers, they start selling down their portfolios because they’re getting in a defensive position. And then over the weekend, after Friday the 13th and that debacle, the markets rallied a little bit. You may have remembered that. And after that debacle, a couple of very senior guys from Wall Street met with him. And then on the 16th, he went in the other direction for social distancing because they explained to him, you’re going to have hundreds of thousands of people die. And you’re going to have a nightmare in the economy. Your best hope is to get this shut down, apply some stimulus, and then you’ll be able to return with a good marketing narrative in the fall. And so I’m telling you right now, as I’m sitting here, I know this guy very, very well. His only concern right now is to get that economy open, and he’s going to want to open it as quickly as possible. So is that a regional opening, where New York goes first? Because we’re over the plateau? I don’t know. And he’ll be up against it. There will be mostly Democratic governors up against him. The Republican governors are probably too afraid of him.
[16:34] Anthony Scaramucci: But this is the thing that I don’t like about where we are, we’re not basing it on the science and the intersection of common sense. You know, we talked about Churchill before we started. Churchill made a decision to destroy several naval vessels right after May of 1940. And he knocked them out, killed 1,300 of his own servicemen by accident because he did not want those naval vessels to get in the hands of the Nazis. It was a very brutal decision that he made. And we sort of need somebody that’s going to be able to do that. The other thing that we need, which he’s not capable of, unfortunately, is the straight talk that somebody like Andrew Cuomo’s giving people. When you’re in a crisis, you want all the bad news. My fund got hit during this. You know, I’m doing this 31 years. I’m in a lot of structured credits. Structured credits down 40. I’m down 20. Not great performance. But my first move was to call every one of my clients immediately and tell them exactly what happened, why it happened, and why we are where we are, why we like where we are. And what that did was it calmed everybody down. And he’s not capable of doing that. Okay, so three things. We’ve got to calm everybody down. We’ve got to prevent him from firing the healthcare professionals like Anthony Fauci that are telling the truth. And we have to figure out the intersection between saving people’s lives and saving our economy, and saving the average person’s life so that they can make their mortgage and rent payments. And so that’s what his people are trying to do right now with him. And again, the only way to get him is explained to him that it’s good for him. And if they do that, he’ll go in that direction. If they don’t do that — by the way, when you criticize him, forget it. When you criticize him, it like presses a button like he’s Dr. Evil and he ejects you like you’re an Austin Powers villain into the flames, you know. And that’s a difficult thing to be a leader in this period of crisis.
[18:28] Andy Slavitt: Given that I think he’s probably hearing there’s not going to be a lot of investment and not going to be a lot of hiring until there’s a working public health strategy, that runs up against the fall and the lead up to the fall where he’s going to want the economy to be as normal as possible. What does he do? What does he do? How does he navigate the fact that he will not be able to fool science or the stock market, yet he’s got this political imperative?
[18:53] Anthony Scaramucci: So remember, I campaigned with him. And so he is, like it or not, is a good communicator. He may fumble syntactically and he may be loaded with bombast, but people watch him, because it’s like watching a — it’s almost like watching a verbal car crash. You know, you’re flipping through the channels, you see him like, okay, I got to watch this and you start rubber-necking him. Right. And so he would tell you if he was on your broadcast — and by the way, if you get him, I would love to hear that conversation — but he would tell you that this is a marketing competition. That running for president is a marketing competition. So let’s talk about marketing. There’s a narrative, there’s a brand, and then there’s an aspect of this thing where there’s an emotion. OK. I’d like to tell you that this is a hiring contest, and that there’s a board that gets together, and we’re searching for the best available candidate that’s data-driven and hits every one of those categories you describe in wartime. But it is not a hiring decision. It is a marketing competition and a popularity contest. So if the public health people convince him that he can’t get the economy open, that that will be devastation for him, he’ll go into a very big-time wartime narrative, OK? And then he’ll try to position himself as the person who can get you through this war and you’ve got to re-up him. This is almost 1940 for FDR. Right. I’ve run two terms, but we’re going to go to war, we can’t have Wendell Willkie. We got to have me. That will be his narrative. If he can somehow figure out a way to get the economy going before then, then he’ll run on the economy. And obviously, you know, he’ll viscerally attack Joe Biden.
[20:37] Anthony Scaramucci: Now, I have an opinion on this. I think it worked in 2016, but I think it’s become less effective for him today. Meaning the bullying of public servants, and calling one guy low-energy and another guy lying Ted Cruz and crooked Hillary and all this sort of stuff, I think it was novel in 2016. But we’re now in a full-blown economic and health crisis. And it doesn’t strike me that 45 to 65 percent of the American people are going to want that nonsense coming into November. And so the real question for me would be very interesting, is he going to shift gears on that and he’s going to focus in a way differently than people expect? Because if he’s calling Vice President Biden “Sleepy Joe Biden,” I think Vice President Biden, whatever his strengths and weaknesses are, could run on a normalcy ticket.
[21:34] Anthony Scaramucci: His narrative could be, we’re going to return to normalcy. We’re gonna open up the tent. He may even suggest bringing some Republicans into his cabinet and trying to heal the country. And if I were in the Trump campaign, I would be worried about one thing: I don’t know if you saw this couple weeks ago on Super Tuesday 3, the registered voters in your neighboring state, Michigan, there were 500,000 additional registered Democratic voters for that primary that voted for Joe Biden. I mean, some voted for Bernie Sanders, but the point was there were 500,000 more. And so if I was on the Trump campaign, I’d say, whoa, the passion is on the side of the Democrats. This is a defeat-Trump-at-all-costs. Today as we speak, as you and I sit here today, Bernie Sanders is out of the race and he has fully and full-throatedly endorsed Joe Biden. He didn’t do that at this time in 2016, and there was certainly that morass related to how he lost last time. But this time, Bernie Sanders is of the opinion that he respects and likes Vice President Biden, and those “Bernie Bros,” he’s going to galvanize as many of them as possible to defeat Donald Trump. So I think Trump’s gonna lose. And I’ve been saying that since January, though I was at the World Economic Forum with a group of elites. Trump’s going to win. It’s a slam dunk. These are the very same people that said he couldn’t get the nomination in ‘16. The very same people that said we had limitless growth in 2007. And then after the crisis was over in January 2009, they said we’re going into Hades with our world and the economy.
[23:14] Anthony Scaramucci: And they were saying in January, 100 percent he’s going to win. But you and I both know no modern president has won the incumbency during a recession. Now, he may be able to flip it to a war. He may be able to disclaim that it’s an invisible enemy that caused it. But you’re going to look at six weeks of frustrated decision-making that the other side is going to explain to the American people. The business-man president destroyed the American economy through his inaction. Any public health official would have told them, follow South Korea, you’ll be out of this thing mid-April. Anyway, I’m off my soapbox. But my point is, I think he’s gonna get it handed to him in November one way or the other.
[23:59] Andy Slavitt: Do you regret helping elect him?
[24:01] Anthony Scaramucci: I regret helping elect him because, again, you know, from my point of view as a hiring decision, people say to me — like I was on Jesse Watters’s show, they won’t invite me on Fox anymore, but when they did I used to love debating them and then they said, wait, we don’t want to debate this guy. He called me a flip-flopper, I said I’m not a flip-flopper. I’m a business person. We had two choices. I’m a lifelong Republican. I went with a Republican. But now I’ve watched three years of his interaction with the American people, the world and his decision making. He’s not the right guy for the job. And so I said that in August. If you go back and see I was trying to support him. The last piece is one of your congresswomen from Minnesota. I’m sorry, you can’t talk like that. Last summer, he was telling four congresswomen, three of which were born in the United States, one who naturalized here, all four elected to the Congress, to go back to the countries they originally came from.
[25:00] Anthony Scaramucci: Now, I can’t speak to your personal heritage, but I can speak to mine. I see some bar mitzvah pictures in the back, though, so I’m sure you have an immigrant story from somewhere, and your family struggled to get here, and they probably faced some levels of discrimination or perhaps anti-Semitism. My 18-year-old grandmother was told go back to the country that she came from. I told Rudy Giuliani, I said, come on you can’t defend that, you cannot defend that. You don’t allow your personal integrity and your personal story on planet Earth to be corrupted by one guy who’s acting like a demagog. So I switched. So I’m sorry I made a mistake. But what I don’t regret, though, Andy, if I could be brutally honest with you, is the process. I don’t regret the life experience. I don’t regret working in the White House, talking to the press like I did on that one press conference I was able to have, meeting people, learning. I don’t regret any of that. But yes, did I make a mistake supporting him? Yes, I did. But listen, if you want to ridicule me for supporting them, I get that. Not you personally, I’m saying in a generic you, but what I’m telling people, you got to create an off-ramp for other people. There are 62.8 million Americans that voted for him and made a mistake. But if you’re going to ridicule and subject them to that, they’ll stay in that clan when you need them to break from that clan or that tribe and help us unite the country. So to me, I made a mistake. I’m willing to admit it. But I’m also telling you that it was an amazing life experience for me. It was very, very humbling. And I learned a lot about myself in the process, for better and worse.
[26:40] Andy Slavitt: You made a point that my wife Lana makes frequently, which is you’ve got to learn to accept yes for an answer. Which is to say that people who don’t like Trump, when they hear people say, you know what, I no longer like him, or I’ve thought differently, they want to focus on why did you do what you did? And look, part of my brain now, Anthony actually wants to ask you, what part of Obama born in Kenya didn’t you see? Right. Because all that stuff with the congresspeople that was there. But I’m not going to do that because that is not a —
[27:13] Anthony Scaramucci: Let me answer that. No, no, let me answer that. OK, so that narrative is, listen, he didn’t change. He’s the same guy that he was in 2015. you were supporting it then. And so, like, why aren’t you supporting it now? And so my answer, it’s not a flattering answer to myself, but it’s a very honest one. He may not have changed, Andy, but I have changed. I had become way more aware. I have changed. I become way more knowledgeable of the hurt and the pain.
[27:44] Andy Slavitt: Back with our guest after the break.
[27:49] Andy Slavitt: In the Bubble has a team of producers and editors and composers that bring you the show every week. Please help support the creation of the show by going to www.LemonadaMedia.com/Patreon. By signing up to pitch in wherever you can, you’ll also get exclusive show content and any profits that come to Zach or I will be donated directly to Covid relief.
[28:21] Andy Slavitt: I got off TV one day, I was probably doing an MSNBC or CNN, you’re probably similar and someone sent me a note and said, you and Mooch — and I don’t know if you like be called that or not.
[28:32] Anthony Scaramucci: Yeah, it’s fun. I’ve been called that since 1972. My phys-ed teacher in the second grade called me that. So I actually like it, it’s no problem.
[28:39] Andy Slavitt: So said you and Mooch just basically got on TV and said the same thing about what Congress needs to do. And they said does that surprise you?
[28:48] Anthony Scaramucci: Was ever related to the stimulus or what was it?
[28:50] Andy Slavitt: Yeah, related to the stimulus. Exactly. Does that surprise you? I said no, I said he probably knows a lot more about finance than I do, but I watched your tape. And we were both essentially saying that the amount of money necessary to sustain people through this next period of time is going to be very substantial, something we’re unaccustomed to. And if I’m doing the math right, government spending is about 35 percent of GDP. During the height of World War II, which was the highest it ever got, was about 40 percent. We’re going to see, by my estimation or numbers I’ve seen, like a 20 percent hit to GDP this quarter. And we’re going to spend much more money in Covids 4 or 5, 6, 7, 8, etc. So we’re going to be up to some really unprecedented levels of government spending. Help the lay people who are not economists, but who are living and dying by the economy, and affected by the economy understand. How far can the government go? How far can the Congress go? How far should they go? And what will be the consequences?
[29:52] Anthony Scaramucci: So, yeah, they’ll also put it into context in terms of operating deficits. Okay. So we were in the 60s, some 60 percent deficit spending to our GDP at the peak of that war. And so you have to frame it, if you accept the proposition, which I do, that we are at war, it is a global war. It’s against an invisible enemy and it’s going to wreak havoc on us if we don’t get it in control. I also predict that we will have a cabinet-level position, like after 9/11 we had the Department of Homeland Security, we’ll have something like the Department of Pandemic Defense, which will make sure we’re well-stocked with ventilators and PPE and all the stuff so that we don’t go through this fiasco again. And whatever we think of Homeland Security, we haven’t had a terrorist attack. So my guess is we’ll go in that direction from a policy perspective. But what I was doing, which I think you were doing, I did an adjusted gross income analysis of all 50 states. I backed out the savings rate. I backed out the non-essential consumption. Your and my consumption — I mean, this is the only bright spot, my American Express bill, let me make the sign of the cross, is the lowest I’ve seen it since like 2000. OK. I can’t believe it. OK. So that’s a positive in one way. But it’s bad for the economy in others. Right. But the point I’m making, back out all the non-essential consumption. Look at what we’re actually spending on for each American. And I got into $3,000 per adult and $1,500 dollars a child. I also recommended that for people below $85,000 or $100,000 dollars a year, that they pay no income tax.
[31:28] Anthony Scaramucci: So whatever money they’re able to make — let’s say you’re working in a supermarket right now and you’re making $40,000 a year. Don’t make ‘em pay any income tax. You know, I mean, to me, that would help from a recovery point of view. And so I got the stimulus at $3.2 trillion. They got it at $2.2 trillion. They’re talking about another $250 billion being layered on small businesses. But I’m telling you right now, they’re going to add another trillion. They’re going to get to that number that you and I got to because you’re not going to have a choice. You’re not going to let a trap door happen to that many people from a public policy perspective. I’ll give you one last point, which I think is a very important one. There’s no villain this time. And so if you read Firefighters, which was a great book by Hank Paulson and Ben Bernanke and Tim Geithner, what did they say in the book? They said, well, we had a villain. It was the bankers. And so when Lehman Brothers failed, there were some people that were happy about that. But what they failed to recognize is the failure of Lehman Brothers destroyed credit default swaps, hurt the money-market businesses. And according to Bernanke, it was a 5 percent increase in unemployment in the United States that took three years to burn off. So even though we could have saved Lehman Brothers and you know, not punish those bankers for bad actions, it would have been better for the overall economy. And so Bernanke’s point is the point you’re making, and the point I’m making right now, hit this with overwhelming force from the governmental side. And by the way, there’s no villain. And so the members of the Congress, what are they going to do? They’re not going to be able to say there was a villain. They’re going to want to lubricate this thing to its maximum capabilities. So that’s what I’m recommending.
[33:11] Andy Slavitt: And how much can we afford?
[33:12] Anthony Scaramucci: Well, it turns out we can afford a lot. Yeah. I’m not a modern monetary theorist, but when Richard Nixon took us off the gold standard in 1971, he remarked that we’re all Keynesians now. And economists chuckled because he was just basically saying that he was gonna use fiat currency to stimulate the economy, not hook it to the gold standard. I’m not a modern monetary theorist, but guess what? We’ve all become them as a result of this crisis. And so what the Fed can basically do is create the money and buy the Treasury bills from the the Treasury, put it on its balance sheet and give that money to the Treasury. And Treasury can then spend it in the economy. Now, you’ll say to yourself, well, that should create a lot of inflation. Well, the reason why it didn’t create inflation after 2008 is that the rest of the world is creating deflation. So I don’t wanna bore people, but I just want to explain what deflation is because it’s very important. A lay person needs to understand this, OK?
[34:12] Anthony Scaramucci: Inflation, we all grew up with it. We get. But deflation is when the value of the money is going up. And so that means that the prices for things are going down. And my mother, who’s 83, never went to college, she once said to me, Anthony, why is that bad for me? I can go to the supermarket and buy things that are worth X, Y, Z, but I’m paying less for them. I said, well ma, it’s not you. And it’s not the slowdown in consumption. But it’s the way we carry debt in our society. So if I’m the average American, I’d have $60,000 of salary and $200,000 of debt. If we get deflation, that means the wages are going to go down on my job. Let’s say they go from 60 to 30. Well, Andy, look at what just happened to my debt. My debt has doubled in real economic terms. I now can’t afford to pay it back. And so I turn back the keys to my car, my home, my farm, my capital equipment. So what’s happening around the world is because we’ve introduced so many people into the Western consumption-based capital system, we have a surplus of goods and services around the world. And so that the government can print this money without being worried about inflation right now, because we have so much deflation going on around the world. And in a debt-laden society, the worst thing that can happen is deflation. Because you can’t pay the debt back with dollars worth more than the ones that you borrowed. You’ll never catch up. We have the leg room to print the $10 trillion, to absorb it on the Fed’s balance sheet and to get the economy back. But what I’m hoping we’re going to do is we’re gonna marry good public policy to that. Healthcare policy, infrastructure policy, jobs training. There’s an extraordinary opportunity to make this a Main Street-style bailout, where you can help lower- and middle-income people feel less frustrated about their plot in life and make them feel way more aspirational, like my blue-collar parents felt in the ‘60s and ‘70s when I was growing up.
[36:14] Andy Slavitt: But economists have an expression where they talk about either a V-shaped recovery, or more of a U-shaped recovery. And let me just explain that, because I think it’s a really good visual metaphor. A V-shaped recovery is kind of what Trump talks about when he talks about we think we’re going to bounce back greater than ever. It’s a straight line up. That means people get hired. That means companies invest, companies spend, and things take right back off, and we’re back to where we were before but better. A U-shaped economy is where you kind of ride a bottom and have a slower curve up and people are more reluctant to spend coming out of this recession. And people are more reluctant to invest and may be more reluctant to hire. It’s a harder process. Let’s say that we’re putting the public health crisis in the rearview mirror. What does that look like? What does that feel like? How can the government help?
[37:03] Anthony Scaramucci: I actually think it is a V-shaped recovery. But some people, when I tell you what I think is gonna happen, will say well, that sounds like a U to me, but I don’t think so. If you think this is going to return to normal June 1st, September 1st, I’m telling you right now that that is not going to happen. It would be impossible, given what I know about the magnitude of what has to go on, literally turning on 31 million small businesses and restaurants and all this other stuff. It will take a while for it to happen. But I’m saying it’s a V-shape because I really believe in the first quarter of 2021, you’ll have GDP numbers that look like the third and fourth quarter of 2019. And so some people say, well, that’s too long of a period of time. I say no, I say that that will happen.
[37:50] Andy Slavitt: People who listen to the podcast know that I liked to end with a personal, kind of fun question. What have you learned about yourself during this last couple of months that, if you hadn’t been shoved indoors, hanging out with everybody, you never would’ve known? Something about your personality.
[38:07] Anthony Scaramucci: Well, listen, I mean, I’ll take you back to the dark days for me. And if you’re having a bad day as a result of this virus, you’re trapped in the house, think of me getting my butt fired from the White House on July 31, 2017. Lit up in the national press, destroyed on all the late-night comedy shows, which is actually very funny. And then my wife is filing for divorce at this exact same time. So if you’re having a bad moment, I want you to put yourself in that perspective. And so for me, you know, my wife and I have subsequently reconciled, and we’ve been in the house together. I mean, we go for walks and things like that. We’re doing the same thing everyone else is doing. We’ve been together for 30 days. So one of things I learned about myself and her, we actually really liked each other. OK. And if we could just dial down all the external nonsense and focus on some really important things, guess what happens? You get a richer, more developed relationship. But I mean, you know, look, I mean, three, four years ago, I was getting my You-Know-What kicked. And so I would tell people, put things in perspective. Focus on the gratitude, you know, get up in the morning, write 10 things down that you love about your life, and focus on that. You know, the fact that we’re sitting here together, you and I are healthy, and I pray that your children and family are healthy. My parents are elderly now. My dad worked his butt off. He’s 86 years old. I don’t want him to die from Covid-19. I would prefer a more natural cause than that. But he’s lived a great life. And those are the things I think about and I’m grateful for.
[39:39] Andy Slavitt: Well, that’s a really happy story to end on. You and your wife, back together. I’m not smart enough to know what the metaphor is, but I hope there’s a metaphor for our country in that reconciliation. I’m just so pleased to hear it.
[39:51] Anthony Scaramucci: Yeah, you can put it. We can put it back together. Be less tribal.
[39:55] Andy Slavitt: Thanks, Anthony.
[39:56] Anthony Scaramucci: Great to be on. Thank you. I really appreciate it.
[40:01] Andy Slavitt: In the Bubble is a production of Lemonada Media. Niccole Galteland is our producer and Ivan Kuraev is our editor. Music is by Dan Molad and Oliver Hill. Zach Slavtii is our co-producer and my co-host. You can find out more about our show on social media @LemonadaMedia. And you can find me on social media at @ASlavitt on Twitter, @AndySlavitt on Instagram. If you liked what you heard today, tell your family and friends, but tell them at a distance. For now, stay safe. Share some joy. We’ll get through this together. And #StayHome.