The Fight Over America’s Universities - with Josh Gruenbaum

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0:31You are listening to an Art Media Podcast. When it comes to civil rights issues, sadly, anti-Semitism ends up being that canary in the coal mine, and it's a leading indicator. And I will say, I could think off the top of my head, four or five specific instances of big name presidents of super prestigious universities and trustees who are around this situation. And what they basically said to us was, yes, we see what's going on, But we are actually being held hostage and captive by the faculty on our campuses. And in some instances, the students, but more so the faculty and more so the faculty in the humanities and in the social sciences.

1:14And they did not know a way out.

1:28it's 9 30 a.m on sunday november 8th here in new york it's 4 30 p.m on sunday november 8th in israel as israelis prepare to wind down their day the battle over anti-semitism and the future of American higher education is hardly over. The federal government continues to pursue cases involving alleged discrimination against Jewish and Israeli students. This includes a settlement with UNC Chapel Hill and widening investigations into troubling anti-Semitic harassment and intimidation at Swarthmore College and two other state colleges in California. And the U.S. Department of Education and the State Department have opened investigations, one involving a Duke University campus abroad over allegations involving the disclosure of foreign funding.

2:15At the same time, the administration's broader use of federal funding as leverage over universities remains the subject of intense legal and political battles. That's creating disagreement even within some Jewish organizations. And now, with Democrats about to take the majority in both houses of Congress, could they use the same power of the gavel to pressure universities in a different direction? Or could a future U.S. administration following the Trump administration use the same tools the Trump administration used to try to roll back some of the reforms taking place today at many American colleges?

2:53Overlaying all of this is a more fundamental question. What happened to Jewish students on American campuses after October 7th? And what should the federal government do when universities fail to protect those students? Josh Grunbaum is a managing director at Valor Equity Partners and a senior advisor to the Board of Peace. He found himself right in the middle of the Trump administration's effort to address campus antisemitism. He came to government from a career in finance and joined the administration through DOGE, the Department of Government Efficiency. He served as the commissioner of the Federal Acquisition Service, which is under the GSA, and then was thrust into the fray on a task force he served on combating antisemitism.

3:37On today's episode of Call Me Back, he takes us into a much bigger debate over anti-Semitism, federal funding, university governance, and the future of American higher education. This conversation was recorded before last Tuesday's election, but the broader lessons remain as true as ever. My conversation with Josh Grunbaum right after this message. Hi, I'm Daniel Hartman, president of the Sholem Hartman Institute in Jerusalem. And I'm Yossi Klein-Halevi, Senior Fellow at the Shalem Hartman Institute. What's more important, to be feared by your enemies or morally true to yourself? Should Israel strive to be a nation among nations, or should it accept the fact that it is now a fortress apart?

4:22What do Israelis and diaspora Jews owe each other? If you're Jewish. Or a friend, an ally. These questions have been gnawing at you these past few years. For some of you, like for us, these questions have been keeping you up at night. And for some, they've been simmering in the background, waiting for answers. But dilemmas don't always have clear answers. What they do deserve are honest and respectful debates. And as it happens, Yossi and I love to challenge each other to get to the bottom of things. We look at current events through a lens that speaks to us most deeply, a Jewish lens. So if today's Jewish dilemmas are on your mind, tune in to our conversation on For Heaven's Sake, a partnership between ARK Media and the Sholem Hartman Institute.

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5:58I hope to see you tomorrow.

6:03And I'm pleased to welcome to the podcast for the first time, Josh Grunbaum. Josh, welcome to Call Me Back. Dan, thanks for having me. Long time listener, first time caller. And long time friend. And long time friend. All right, Josh, I want to start by just give us a snapshot of what is happening right now, if you just to describe, and then I want to rewind the tape and understand how we got here and have a conversation about where things are going. But just right now, what is happening in the debate over the reform of higher education? There has been a question called in this country by the American constituents, American taxpayers, as to the credibility and as to the value of a four-year higher education degree.

6:47If you look at recent polling, Gallup actually ran two polls. Credibility with respect to the institutions themselves, the presidents, the leadership has dropped from somewhere around 60 percent to sub 40 percent. Over what period of time? Over, I believe it's like a five-year horizon, three, four, five-year horizon. Wow. And then I think the further overlay, as we're all recognizing, you know, this, what we're calling this artificial intelligence or super intelligence now, as the president calls it, revolution and this step change in, you know, how people are going to educate themselves, experience life, the democratization of information.

7:22Is that$80 ,000,$90 ,000 a year, four-year college degree, is it worth it? And Gallup ran a similar poll there. And over the same horizon, it's dropped from somewhere in, you know, again, the 50 high 50 percent range to now sub 30 percent change. So what's really happening right now is this question of our American taxpayers, both as donors and grantees to these grantors to these institutions and parents who are paying for the degrees of these institutions, are they getting their money's worth? Is this the right relationship? And do we have to, you know, re-examine exactly what this looks like?

7:59And you're saying that's right now. And then again, I want to get to how we got here. You think that the conversation on higher education right now is focused around that question. Is it worth it? I think it's a question of, is it worth it? Is it worth it for parents, for students? You know, the trade school question comes up. And then is it the responsible use of taxpayer money when we think about the overall grant portfolio for the federal government? So it's a twofold question. And it really drives at the kernel of what is the value proposition and what is going on on our campuses? OK, so now I want to talk about your lens into this exact question and the work you've been doing over the last number of years.

8:39You're a guy from the private sector. You were working in private equity at KKR. Suddenly you find yourself at the beginning of the Trump administration in this role where you are one of the architects of this. some would say a campaign of enormous pressure or agents of chaos, whatever you want to call it, that really shook up higher education and introduced these questions that you're talking about here. How did you wind up doing this? Yeah. So again, right. I was a private equity executive. I was spending my time in like, you know, distress, special situation, investing, restructurings, corporate turnarounds.

9:14And I think like many of us, the 2024 election was something that we paid particularly close attention to. It was off the heels of October 7th, and it obviously had a step change and a dramatic difference for a lot of the American Jewish community just post what happened over in Israel and what was happening in Gaza. And I've always been politically inclined, but I was more particularly focused. And then you overlay that with Elon Musk coming out with this idea of creating a department of government efficiency. And when I thought about department of government efficiency, to me, this was something where that's kind of what I do as a professional, right?

9:48I think about corporate balance sheets, value maximization, and the idea of being able to go and lend that skillset and those experiences to this country spoke to me and I thought it was really interesting. So what I really did was Doge had tweeted for their first time, it was November 14th of 2024. I remember that day just because it was my anniversary. I was sitting in KKR's offices. So I was on the 78th floor where KKR has this beautiful barista and I was surrounded by a bunch of my colleagues. and you know this doge concept was getting a lot of play particularly for the private sector business world because what elon was really trying to do was he was trying to have this call of duty of private sector professionals to come and help on this mission and so i said to my colleagues hey should i do this and they're all like yeah you'd be great but like i didn't really think much of it i didn't know the elon orbit from before so i literally cold direct message the doge twitter account and i just said hey i'm a 10 plus year uh professional i went to law school business school, I've been doing this stuff.

10:44Here's my CV. Long story short, I got a phone call a couple of weeks later. I was asked to download Signal app, which I had no idea what it was prior. And I ended up in SpaceX's office in DC meeting this whole team and going through this recruiting process. I get asked, Elon and the team asked me, given my business background, to run this sub-agency within the General Services Administration. So that's the GSA, right? I actually didn't know. And what is the GSA? It's a good question because I actually didn't know what it was when I accepted the job. So the GSA is basically the back office function of the federal government.

11:21Now, what's really interesting about the back office function in the federal government is in the private sector, that's kind of a pejorative, right? Everybody wants to be in the front office. In the federal government, the actual power and the keys to the palace, so to speak, actually reside in the back office functionality. Now, why is that? Well, because the GSA has two main operating businesses within it. It has something called the PBS, the Public Building Service, and it's got something called FAS, the Federal Acquisition Service. The PBS runs the entire federal real estate footprint for the U.S.

11:54government. And by the way, that is the biggest landlord in the entire world. It also runs about$300-plus billion of spend through the Federal Acquisition Service. Now, that's procurement for anything as mundane as building services or IT. and then obviously as things got more interesting with artificial intelligence and just the relationship with different contractors and vendors who serve and sell into the US government. So I was asked to lead FAS, the Federal Acquisition Service, given my background. And so what that put me in was the executive branch and the federal government and the Doge playbook.

12:32And the reason for that was I was liaising with every single agency throughout the US government with respect to the dollars they were spending from a contracting perspective. And if you remember what the whole concept of Doge was, Doge was about calling the question of, are we being good fiduciaries for Americans and to their taxpayer money? And what we did in FAS, in the GSA, is we ran this entire whole-of-government contract auditing process where we would review contracts line-by-line every single day with report cards coming in every single week. And we would terminate contracts if we felt that the American taxpayer was not getting, you know, the value or the services that were expected for the money it was spending.

13:20We basically brought common sense business to the federal government. So that makes sense. And I know there's a lot of waste in the federal government. So it makes sense that this process and this body was the logical place to start asking this question. But how did the university and the debate over higher education get thrust into this? Right. So I'm living in New York City still. We moved down to D.C., but for the first six months of the admin, I was in New York because my wife had just given birth. So, you know, we're going on. I'm a first time dad. We're sitting in the hospital on the Upper West Side at Mount Sinai West.

13:55I want to say it's February 5th, the day after my son was born. and the president announces this executive order where he's going to create a task force and the purpose of the task force is to combat antisemitism. And I see this executive order, I've now got all these relationships across the federal government. So that's at the Department of Justice or at the Health and Human Services at HHS, the Department of Education. And I'm reading this executive order and the executive order names the very obvious agencies that you would think should be part of this task force. So it has the Justice Department because of their prosecutorial hammer.

14:30It's got the Health and Human Services because that's the largest grant making agency across the federal government, given they have NIH inside of it. And then the Department of Education, obviously, because most of the concerns around the Civil Rights Act violations. So that's, you know, Title VI, which basically says any single institution that has a relationship with the federal government and takes money from the federal government cannot discriminate on the basis of race or national origin and also has the relationship through Title IX, which expanded that to any sort of education grants for any institutions that are discriminating on the basis of gender.

15:06So the obvious agencies are all mentioned in this executive order. And I'm kind of looking at this and saying, but here we are at Doge in the GSA deploying the real leverage, which is the power of the purse, which is the wallet, right? And calling to task many of these private sector companies and saying, are you doing the right thing for the American taxpayer? And my thinking was, we ought to be asking that same exact question to the presidents of these universities, to the trustees of these universities and say, are you using the grant money that is coming in from American taxpayer wallets? Are you using that correctly?

15:43So I'm looking at this and I'm thinking that there is probably a real angle where the Doge playbook or the GSA playbook could be deployed and help this task force in its efforts. So I send a few emails to contacts at the DOJ and at HHS and Ed, and I say, listen, I'm a member of Doge. I'm a member of the GSA. This is an issue. Anti-Semitism in this country is something that has really touched me on a personal level, particularly post-October 7th. I want to get involved. I think that could be helpful, and I think I can open up a tool within the toolkit that could potentially accelerate and add a dimension to the effort to really bring the universities to the table to have meaningful discussions.

16:24Okay, so I just want our listeners to understand, because I think people don't appreciate this. Like when the federal government, when the administration started cutting grants with universities and using this as a real tool, I think people didn't fully appreciate the degree to which the U.S. taxpayer, the federal government, is one of the largest sources of funding to American higher education. I don't want to get too granular here, but if you were to just kind of give us a big picture so we can all understand how much the university system, both public universities and private universities, depend on federal tax dollars.

17:04How would you paint that picture? Yeah, listen, the U.S. government doles out a trillion dollars plus of grants a year. And by the way, the compounding point on that is they're oftentimes multi-year grants. So, you know, we'll get into it. But when we were looking at some of the universities, for example, Harvard University, and this goes across all their institutions, I mean, they were recipients of nine billion dollars of taxpayer money through the federal government. And here's an institution that, you know, Dan, we were trading a text this morning. They just announced that their endowment now has been marked to market this year, you know, given its investments to over sixty five billion dollars.

17:38Wow. So here's a question of you've got this like you have an institution that ostensibly is kind of like a hedge fund that just happens to be as a side gig running an education program, taking billions of dollars from American taxpayers with no accountability, with the perception before this effort really took place that it's no strings attached. So the university has this expectation that on an annual basis, it just puts its hand out and Treasury just sends them and cuts a check for these institutions with no information rights, no accountability. And it really is, you know, this one way street of a relationship and nobody's defending the American taxpayer.

18:16OK, so and again, I just want to underline this point because we often hear, well, it's one thing there are state universities, meaning they're state funded, but they're funded by state governments. and then there are private institutions, leave the private institutions alone because they're not funded by government. And I think this is a very important point. Even private and self-described private institutions, like some of the ones you're citing here, still get government money. So the truth is none of them are truly private is the point I'm saying. Right, and that's correct. And not only still get government money, I would argue they get the preponderance of government money.

18:49You know, we should get into this in terms of what the reforms that we're looking at in the administration. But when you think about who has the advantage when you apply for a grant to the Department of Energy, the Department of War or to HHS and NIH, it's these very, very well endowed institutions that have advantages with certain faculty coming to their campuses. And there's a major, major dichotomy in this country where the smaller schools, forgetting even the trade schools, but the smaller schools don't get the benefit of the U.S. government. So as the U.S. government, when we were kind of going down this strategic path, the way we really thought of it was you could be in one of two buckets, right?

19:27You could be in the bucket of we take even a dollar of American taxpayer money. But these Ivy League schools were most of these Civil Rights Act issues. The Title VI's and the Title IX issues were taking place. And so they were just completely, completely in contravention of their obligations from a federal law, Supreme Court cases. you have obligations and it should be a two-way street, but you have to actually act as a responsible counterparty and understand that there is this relationship that is expected and needs to be honored to American taxpayers. Or you could be a university, a college like Hillsdale who doesn't take a single dollar from the US government as a policy because they wanna go and be able to adjudicate and run their institution without those strings attached.

20:12But the point is you cannot have the cake and eat it too. So if you're going to take the money, then the strings are attached. And if the strings are attached and there's a fiduciary obligation and what we were doing in Trump 47 was exploring what is the health and hygiene of that relationship. OK, so you described to me when you were working on this that the administration's approach then, given these relationships as taxpayer grantors to the universities, you had this like what you called a three part shock and awe in dealing with the universities. So can you describe what that was and what you were trying to accomplish?

20:49Yeah. So, and I think it's important for everybody to just remember what we had inherited and what we were walking in from a backdrop, right? So we were kind of walking into our campuses ablaze in fire, right? There were protests, there was harassment, there were encampments. Columbia University kind of became the poster child for that, given what had happened. And this was all off the heels of those congressional testimonies in 2023, where I think the American people for the first time saw the absolute abject failure of leadership, you know, by these presidents and purported leaders of these institutions.

21:25But we were walking into Hamilton Hall being occupied. Right. And Jewish students in Columbia University, where Jewish students weren't able to access their classrooms or study for finals. You had the Deering Meadows settlement in Northwestern where a group of this ragtag, intimidating thugs on campus was able to negotiate a bilateral agreement with the leadership of Northwestern to allow them to have certain types of encampments on campus that ran totally afoul of civil rights acts and also were not in line with time, place, and manner requirements under the Constitution for what First Amendment allows you to do.

22:02So that was the backdrop that we were walking into. And the way, you know, we tried to set this up is we had this three stage strategy that we deployed over the course of a year in intervals of, let's say, three months, you know, for the first portion, then another three months, and then the back end of the year. And the way we described it was stage number one was the shock and awe moment. That was kind of like deploying this Doge playbook and bringing a real hammer of unrelenting grant cutting if universities weren't going to come to the table and have meaningful discussions. So in the shock and awe stage, we had focused our attention initially on Columbia University, and it was the first time the federal government had terminated grants on the basis of not comporting to civil rights violations.

22:53And what we did with Columbia, and then it ended up being Harvard and Northwestern and Penn, was just an unrelenting pressure on, we are reviewing your contracts with the federal government, we are reviewing your grants with the federal government, and we are going to cut and terminate for convenience or for not being in line with administrative policies if we can't get to some sort of understanding and agreement to stop the chaos and stop the harassment, intimidation, and terrorism that was taking place every single day on our universities. So that was shock and awe. Got everybody's attention, right?

23:26We were having meaningful settlement negotiations with Columbia. We actually got to a deal with them. We had meaningful conversations with the University of Penn. We got Northwestern to actually reverse the Deering Meadow agreement. So, you know, as crazy as it sounds to not allow students to run rampant violate civil rights laws and First Amendment rights. We had Cornell come in for a settlement. And I think what that set up was, was this administration meant business, right? We were going to really take the issues of civil rights concerns on campus very seriously. But naturally, that created an extremely caustic relationship between the federal government and these universities.

24:05And these universities actually are quite important to the national complexion and the strength of our country. They do do important research. This is the way our children get educated. And so we needed to figure out a way where we weren't just going to kind of always be in the standstill of hostility. We saw what happened with Harvard. The U.S. government's still in a lawsuit, an unsettled lawsuit with Harvard University right now, which is, you know, partly very politically driven. We had to deal with that as well, where the Penny Pritzkers of the world would not settle with Donald Trump just for the sake of.

24:38Just Penny Pritzker was the president of the board of trustees to the harvard corporation does she's harvard business corp exactly yeah so we as a team recognized that we needed to kind of shift ourselves out from under just this like fire and brimstone and constant cutting and constant pressure campaign so what stage two the way we kind of thought about it was and i will have to um you know two people on this uh jared kushner had called me while this effort was going on and he said something very shrewd and astute to me at the time. He said, listen, it's very easy to destroy and take down a lot of things when you're in the federal government, but what's really hard to do is to build something up and to actually create something durable that could have a lasting effect.

25:23And he said to me, you know, you really ought to speak to Mark Rowan, the CEO of Apollo, about what you're doing because Mark, who's a trustee down in the University of Pennsylvania, if you remember, I mean, in his brilliance, he didn't stop sending dollars to the University of Pennsylvania after October 7th as a concerned donor, the way a lot of people across the country did, he actually sent the University of Pennsylvania a single dollar so that they understood and knew that it wasn't just forgetful why he didn't send a check, but that he was making a statement. He was developing this thing, this concept called the Compact for Excellence in Higher Education.

25:59And so stage two, what it amounted to was the administration getting a lot of good advice from the Mark Rowans of the world, different institutes and think tanks that we partner with as thought leaders, but trying to create this off-ramp of some element or some concept where the universities could get to an agreement, a holistic agreement that wasn't bespoke, didn't go campus by campus, but generally just called on universities to accept their obligations as a counterparty to the American taxpayer dollars and honor their obligations to make our institutions excellent and to commit themselves to rigor and research and really stay in their lane of a free marketplace of ideas and education.

26:46So stage two was kind of this like calm down. And then what stage three was, I think a lot of the feedback we got from stage one was it actually is not all that appropriate for the administration to push these universities into precise and prescriptive language how they should commit to the American people. We weren't there to write curricula or to hire specific faculty members. We kind of just more had a policy point. But the expression of those commitments vary campus to campus and should really come from the universities themselves who are in the business of education. And so what stage three kind of took was the concept of stage two, of having this sort of settled understanding and an answer to the American people, but in fact now coming from the voice of the universities themselves.

27:37So what Secretary McMahon did was she took all the pressing issues and kind of said, listen, we've had a year full of shock and awe, compact where we want to kind of, you know, have the administration involved in this. But now what we're really saying is we're going to throw you guys the ball. Here's the pen. You owe the answer to the American people. We are going to be their unrelenting fiduciary and make sure grants are considered through this lens, but you ought to be the ones expressing it in your own words. And the you here, Josh, is, because I think there's been a question about who runs these actual universities.

28:11So you mentioned that the congressional hearing where the presidents of MIT, University of Pennsylvania, and Harvard kind of shook the American public, that hearing. It was one of the most viewed congressional hearings in, I think, American history, at least viewed on television and on social media. and people are like, who's in charge of these places? So who is in charge of these places? Yeah, it's an excellent question. And what Elise Stefanik did with her whole team, I mean, they really got the ball rolling here. And I think we picked that up through the executive branch. And I would say that probably the most shocking thing for me in this whole process, when we got involved very early with Columbia and we got involved very early with Harvard was exactly that question.

28:52What does your organizational structure look like? Like map out to me who actually can make a decision. We would get far down the path with Columbia. And then all of a sudden we would find out that they have seven or different vehicles or entities, which, by the way, are actually controlled by faculty member on campus and in particular departments. So we're talking about the humanities and the social sciences who have effectively co-opted the governance and the org structure of Columbia University. And this was true across, you know, the entire nation. Every single campus kind of had their own flavor of their org structure.

29:27But what it amounted to was nobody really knew who was in charge. And the world that I come from, right, where you have actually hygienic corporate governance and you think about enterprises is you have a C-suite management team. They're tasked with day-to-day operations. They report into a board. A board has a chairman at different committees. That board and any of those committees are able to direct the management team how to change or progress in certain operations. And that board ultimately is answerable to shareholders, right? That is how we all experience institutions. It's clean, it's dotted, and it's direct.

30:01But when you get onto these campuses, these campuses that are running tens of billions of dollars, that just leaves you with the answer of why we got to this place was totally lack of leadership. So Josh, give me an example of how you saw this play out in very practical terms. Yeah, so I think the one that comes to mind the most for me is our experience with Columbia University. Now, Columbia, when we got into the administration, a woman by the name of Dr. Katrina Armstrong was sitting in the acting president seat for Columbia University. And that was basically our counterparty along with her board and her advisors.

30:38And what really, really shook me, I had the experience of sitting at HHS at one of her depositions and hearing US government lawyers asking her questions, how she was running her university, how she deals with discipline, what happens when complaints come in, and the staggering lack of response, lack of accountability. I remember the one thing she said, somebody had asked her, So what was your experience? What did you see that Jewish students on your campus actually experienced? Like, how would their life get any better or any worse under your tenure? And all she said was, she said, you know, it looks like it might have been a little difficult and maybe a few of them lost some friends.

31:21That was her takeaway of everything that was going on when students were actually being spat on and pushed, physically intimidated. I mean, we were getting calls and texts from students on campus sending us real time pictures of their inability to walk classroom to classroom. And here I am sitting in a deposition with the purported leader of the university. And all she thinks is some people might have lost friends along the way. And I almost fell off my seat, but it was a critical recognition that the real core crux of the issue here is you have inept and unable or unwilling leaders who could take a stand and actually discipline and enforce their own campus laws and the federal laws that they were required.

32:05So you have also mentioned to me that, and I've heard this also from administrators, chancellors, presidents of universities, that they would say kind of quietly, you know, between the lines that, yes, you all brought a sledgehammer to this debate and this relationship between institutions of higher education and the federal government. But for some leaders, professionals within these organizations, they welcomed what you were doing, however controversial and however heavy-handed, some would say, the tactics you were using, they welcomed it, quietly welcomed it. Why? Yeah, I mean, this was truly remarkable.

32:43And I will say, I could think off the top of my head, four or five specific instances of big name presidents of super prestigious universities and trustees who were around this situation. And what they basically said to us was, and remember, we're coming off of a world of cancel culture, the Black Lives Matter, Right. So they basically admitted to us that, yes, they recognize what was going on. I mean, you just need to use your plain eyes. It wasn't rocket science to figure out what's going on in these campuses. Yes, we see what's going on, but we are actually being held hostage and captive by the faculty on our campuses.

33:23And in some instances, the students, but more so the faculty and more so the faculty in the humanities and in the social sciences. And they did not know a way out. But it felt as though on some of these calls, these presidents and trustees were almost blinking in a way where a hostage would blink to try to give a message. And they were essentially saying, thank you. Thank you for giving us this cover so that we could go back to our board. We could go back to our faculty senate and say, listen, the gig is up. It's not us. But if we don't make a change here, we are going to lose all of our funding for whatever sort of research.

33:58And I think, again, it's wild that it had to come to that, that the org structure and the hygiene of governance got to a point where the people who were actually in charge were no longer in charge and needed a way to figure out how to retake over the asylum. We'll be right back with Josh Grunbaum. You're going to hear me ask for something here, and I'll be up front. I don't love doing these reads. But the truth is, the kind of conversation we have on this show only works if we're not chasing an algorithm or softening what we think just to avoid offending people. We get to have these conversations because the only people we answer to are our listeners.

34:37So if this show is valuable to you, consider becoming an ARC Plus member. You can join ARC Plus at ARCmedia.org. dot org. Ever listen to Call Me Back and think to yourself, this would be so much better if a meet went on a rant about the latest celebrity who said something stupid about Israel. Or if Nadav ranked every member of Knesset by how hot they are. Tune into our show, Chosen People Problems, for the real news. Yeah, because that's what the world needs, more Jews in media. Yeah, like more Jews with strong opinions about things. I think we should do it one more time. I don't want to do yeah.

35:11I can't stand. You could say it. I just don't want to say it. What did I say? We both did. Yeah. Like we're not. Why are we doing that? It sounds so. Sorry for those listening and editing this. It's going to get worse from here, by the way. Listen to our show. Chosen people problems. This should actually be the intro. OK. Chosen people problems. We're like a meat and a dove, but more so. Please tune in or Dan Senor will be mad at us. You can find Chosen People Problems wherever you get your podcasts. You can also listen ad-free and get access to our weekly exclusive bonus episode by joining ARK Plus at ARKmedia.org.

35:49I'm back with Josh Grunbaum. Okay, I want to give you three, I want to get a little bit of a lightning round because I want you to address some of the criticisms I've heard. And I'm going to just rattle these off one after the other. First, many of the problems you've described in this conversation today were problems that existed in the humanities and the liberal arts departments of these universities. But most of the funding relationships that the federal government had were not with those departments, but were with science, research, medical research. And funding was getting cut off, including very important, in some cases, life-saving medical research and scientific research.

36:26and you guys were just tearing up these contracts and cutting off funding and punishing these incredible researchers doing this incredible work. And the humanities where the problems actually occurred that you were trying to address were flourishing and they got to keep doing what they were doing and they were not beneficiaries of this federal largesse and yet they didn't feel the pain of the federal funding being pulled back and you were punishing the wrong people in the wrong places in these universities. How do you respond to that? That's probably the most prominent critique we got during this effort and this strategy.

36:57And it's well taken. And it's not something that we as a team didn't really pour over and debate, right? This wasn't some haphazard cutting exercise. We tried to be as thoughtful as we possibly could. And what that meant was really going line by line at the agency level with career staff, figuring out where was this research going. Now we full well recognize that you're never gonna get it perfect and there will invariably be baby with bathwater. That's like, you know, table stakes. We can't fight that hypothetical. But what we tried to really do was to be as surgical as we possibly could. So I would push back on, and this was actually very, very empirical from Doge.

37:35If you actually go line by line, even though it might look like a research grant going to Columbia's, you know, medical school or Harvard's medical school or Penn's medical school, if you actually get into what the research is going for, some of these, you know, descriptions and use cases are absolutely preposterous. There was a lot of fat in there to start. That's what I would say as an outset. Then when you get into the question and the concern, which we had on the baby with bathwater, our perspective was that a university and the community that it creates is responsible in the totality. You have research professors from science labs and medical schools pushing back on the faculty senates or the faculty in the humanities and in the social sciences and basically creating this internal pressure of stop doing what you're doing because you are actually affecting real important research that we're doing.

38:24And that's a positive, right? That's accountability from a community perspective. But our view was exactly that. This is a community. You are all responsible to one another. You're all walking on campus. You're seeing the encampments. And the fact is you're under the same umbrella. And therefore, you know, we viewed it as associated. We viewed it as a way in some ways complicit. And we viewed it that, you know, from a reform perspective, it needed to be holistic and involve everybody. Okay. Next question. Next criticism. You guys are stoking chaos on these universities, albeit in response to chaos, but you're stoking your own chaos.

38:59And this is all contrived by complaints from the Jews. The Jewish community is upset. And here the Trump administration is taking a wrecking ball to these universities. And the Jews are going to get blamed for the destruction of these research relationships and these, you know, the stymieing of important medical research, as I mentioned earlier, that the Jewish community is kind of going to own the collateral damage of this reform effort. Again, I'm not saying I agree with this or that it's fair, but it's just something I heard, including from people within the Jewish community. I think like many times when it comes to civil rights issues, sadly, anti-Semitism ends up being that canary in the coal mine.

39:38And it's a leading indicator. As we adjudicated this strategy and these different settlements and negotiations that we were in across the country, this wasn't just about only anti-Semitic behavior. Right. We had issues. If you look at the settlement that we have with the University of Pennsylvania, that was actually about Title IX. So if you kind of look across, if you look at Cornell, right, a lot of the focus there was actually on foreign funding, right, and Section 117 and the influence of dollars from China or from Russia or from Iran coming into our systems and then either stealing IP or influencing our campuses.

40:10So unfortunately, yes, there will always be that pushback and it will always be, you know, what the kids say now, the Jews, the Jews, right? That's always going to be the response. But in reality, this strategy and this focus ran the gamut and the North Star was fiduciary for American taxpayers and following basic civil rights laws. Third charge I hear is it's fine. I'm supportive. I'm sympathetic of what the Trump administration was accomplished. You guys discovered some new tools that hadn't been used before to try to change higher education. But a Republican or conservative administration isn't always going to be in power.

40:44and when the AOC or Abdul al-Sayed administration succeeds the Trump administration, they're going to say, wow, we have these same tools that the Trump administration discovered for us, except we have different objectives. We have different ideological objectives. And we're going to use the same tools to not only roll back what the Trump administration accomplished, but actually take things in a much more perhaps extreme direction than they already were before Trump attempted to do what you guys did with these reform efforts. And so you've established a precedent now that can be used, and these tools can be used in a very problematic way depending on what you view as how you regard the objectives.

41:25Yeah, listen. First, I would say, you know, God forbid we're talking about an AOC or an LCE at present. I think we're in a really, really bad place if that's the conversation we're having. With that said, right, in every one of these strategy decision meetings that we had as an internal team, you always kind of have to steel man the 2028, right? Like, if we do this, you know, I think that the two most important questions we always asked were, are we being constitutional, especially in this effort, right? First Amendment is a is our party, right? Right. The Republicans, that is sacrosanct to us.

41:57And we want to make sure we weren't stepping on people's, you know, constitutional free speech rights. So that was always question number one that we debated. And then the second question was, how could this be used nefariously? If we're doing it correctly, how could it be used nefariously against us, against our policies, or against what we think is best for this country? And what I would say is really interesting, at least as it relates to this effort, is you actually don't have that problem. Now, why do you not have that problem? Because when you go and review the grant database, it's really a disproportionate one-way ratchet.

42:26What you see is very much DEI, woke-focused grant efforts and research efforts that we were kind of taking away. So I actually don't have the concern that they're going to be able to turn this on Republican efforts. I have more of a concern of they're just going to turn this back on to what they've been doing. Well, is there a way you can change the way grants are made that would make it harder for a future administration to do some of the things that I may be concerned about? Yeah, so I think what we've done more broadly is we have really tried to market the entire grant making process and portfolio to the top of the conversation, not only to put us in 2026, where there's new technology and new needs of research, but also to almost clean up the relationship between the U.S.

43:17government, who's standing for the American taxpayers, and these universities. So first, I think the most important thing is we debated, should we even be in this business at all? Should the US government, this is a post-World War II effort that was put in specifically, coming off of the victory after World War II and how are we going to energize our industrial base? There's a moment as America's becoming the superpower, have an intelligence and a research advantage and that was something that FDR kind of put in place, which by the way, right, you could ask a question, That was 1940 whatever. Is that still appropriate today with the capital markets, how they've evolved?

43:55This administration took the view as, yes, we do not want to get out of the business. We see the criticality of research, of partnering with our prestigious universities. But just because we see the importance of the relationship and we're deciding to continue doesn't mean we shouldn't actually make the portfolio smaller. So in the first instance, what we're really trying to do is we're trying to empower at At the agency level, the way their grant making processes work, the way they bid out different research projects, how they evaluate it, different things you need to certify and acknowledge.

44:27And many of those new certifications are going to reflect the questions that Secretary McMahon put in her letter, the ideas that were expressed in that compact for excellence in higher education. So step one is kind of just, it's a KYC sort of thing, right? Like know your client, try to really get to know who you're giving a research grant to. The second thing that we're doing is we're trying to really make sure that we're democratizing and allowing different, you know, not just the 10 top Ivy League pristine universities, you know, to be the beneficiaries of this big program, but trying to bring in some of the smaller schools across this country who might not have the same, quote unquote, corporate structure.

45:06And the way we're doing that is, and this has been a big topic of debate in this administration. If I were to ask your audience or ask you, Dan, how many cents on the dollar do you think when a federal dollar goes to one of these universities, how much actually goes to the research and how much goes to their administrative costs, i.e. their, you know, their faculty or their, you know, their support staff? No idea. It's 55 cents. So you're talking about you send a dollar out and 45 cents actually goes to the research. And so what we've really been trying to do, and that, by the way, that benefits these large schools, right?

45:39So if you're Harvard and you have this big org structure you need to support, well, the U.S. government and the taxpayers are paying for that. And therefore, you become eligible and you're able to continue and attract the best talent. And what we're really trying to do is we're trying to say, no, no, no, we're going to put a cap on that. So there's been a lot of talk about putting a ceiling that only 15 cents, one five cents could go to administrative costs. And I think that will really shapeshift who actually gets the research grants. The two other things that I'd really point to is in the one big, beautiful bill, as controversial as it might have been.

46:10But what something was really important and it actually gets glossed over is starting to make trade schools beneficiaries of these grants, because as we're talking about the value proposition of education, many, many great careers are going to be in the engineering. We're talking about re-industrializing our manufacturing base. So giving those sort of schools an opportunity. So holistically speaking, in many different ways, this effort catalyzed this, how do we bring, how do we refresh and mark to market what the grant making process and the grant making distribution should look like? And I think if we get that all right, and many of these efforts have been solidified and are underway, we will be able to push back on that one-way ratchet of just trying to turn the machine back on.

46:55Okay, so Josh, I wanted to then end with a very contrarian question, which is basically, are we just having a conversation about rearranging the deck chairs in the Titanic? There's enormous disruption occurring right now in our society, in our economy, in the labor force, in the knowledge economy. AI is beginning to overtake part of the product that universities have traditionally sold, which is knowledge. And if the original cost of transmitting knowledge is collapsing, you mentioned students are paying, families are paying$80 ,000 or$90 ,000 a year to receive a college education. Isn't there a bigger question here than what you were working on, which is what exactly, this system is like at the cornerstone of our upward mobility, America's model of upward mobility.

47:44And is it actually collapsing before our eyes. I'll answer your question. I'll actually put a little bit of a twist or a corollary to it is, you know, something I had to struggle during this process was, can these institutions actually be saved? I came in, you know, much more bright-eyed, bushy-tailed, having all the respect in the world for Harvard and Columbia and Penn and Dartmouth, but is the rot so deep? Have the patients so overtaken the asylum that we actually can't even get ourselves out of this. And it's a question I struggled with and I still struggle with. And there were many folks on our team that kind of just said, burn it all down.

48:24That we should just burn it all down and start again. And I think like, you know, where I come out on that and I think many of my colleagues came out on it is like, no, we're not gonna burn it all down because these are important brands and these are important institutions that have led our country to the superpower that it has become. And I think what we owe ourselves is to fight and to actually make these institutions strong again and get them to commit to that academic research rigor that they ought to be inspiring our students and our children to grab. But I do think that what's interesting to your question is there's another forcing function that's forcing these presidents and these trustees to really grapple with how do we get this right?

49:07Because they are seeing their value proposition changing. And we see every day a new model comes out, whether from Anthropic or OpenAI or Grok or Gemini, and you see, oh my gosh, all of a sudden this thing could get a 1600 on the SATs in a nanosecond and it passes every single CFA test. And you're looking at these bots that are actually able to teach students in a more coherent and tailor-made way. Like, you know, there are folks on this effort, Joe Lonsdale's doing this over down in the University of Austin and Joe Lamont is doing this in alpha schools, right? Really, how do you use AI technology to be able to create a better education experience.

49:44And I've discussed this with a lot of trustees and a lot of presidents. And they're going through that struggle right now. And I saw recently the University of Chicago Law School is trying to change their curriculum. How do you have writing class that has no AI at all, but then you have writing classes that actually incorporate AI so you could be more efficient? And so I think that's the right question, but I actually believe that this is a positive forcing function for the total effort that we undertook, which is times are changing. And it seems as though you're still living in 1990 in a very privileged way.

50:17And that privilege is over. That privilege is over because the American people have called the question and they're fed up. And that privilege is over because your value proposition, the product you're selling is no longer the same valuable product it once was. All right, Josh, we will leave it there. Thank you. This was a this was a tour de force taking us through a myriad of complicated issues. that I think as a parent of a student that's about to enter the U.S. college system, I know it's foremost on a number of people's minds. So I appreciate you taking us through this and look forward to having you back on.

50:53Dan, thanks very much for having me. Great conversation and obviously a very critical topic.

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