Ep 132: Sen. Bill Hagerty on Saving Memphis & Designing Regulatory Frameworks for AI and Crypto

0:00George Soros spent$600 ,000 to back a DA candidate who's come in and basically stop prosecuting crime. He's doing this all over the country. Memphis had the highest homicide rate per capita of any city in the United States of America. As I saw President Trump gaining momentum, I realized things are going to change in America. And things can actually change in my home state. The market is moving to a digital economy. The dawn of a new golden age, if you will, enhanced by AI. My biggest concern is we keep making it legal. You're not going to achieve scale economies if you have patchwork regulation that basically chops it all up.

0:30You've been a major leader in this area, including stablecoin legislation. Making the framework simple, straightforward. that will, again, facilitate U.S. dollar dominance in the new arena. We're going to see an America that is the envy of the world and one that stands for prosperity and freedom and liberty in a way that no other nation possibly could.

0:55Senator Hagerty is one of our most thoughtful leaders in the Senate. He was an ambassador to Japan before. He was very successful throughout his career at PCG and building companies. It's great to have an American leader who understands business, understands the principles behind our country, who's a key leader in the Senate and is stepping up and partnering with President Trump and others to fix crypto, fix crime, and a bunch of other great areas. Excited for you to meet Senator Haggerty. Welcome to American Optimist. Really excited to have our friend Senator Bill Haggerty here. Thanks for joining us, Mr.

1:22Senator. Joe, it's great to be with you. Thank you. You're ambassador to Japan. You're the senator from Tennessee after a successful business career. I'm excited to talk about a lot of topics. Let's jump right into the big thing going on right now. I think we're about a month into a government shutdown, which is a long time for a government shutdown. Is there an end in sight? Sounds like the Democrats, like Schumer's afraid of his far left. What's going on here? Well, I think you've hit the nail on the head in terms of the politics behind all of this. And let me be clear, Joe, this is a shutdown over politics.

1:48This is not a shutdown over some sort of policy disagreement or some great concern about the United States. In fact, Chuck Schumer and the Democrats are willing to basically hold the United States hostage in order to get at certain political goals that they have. I think, frankly, these are intramural political problems because the concerns that have been articulated to me regarding the Democrats have to do with the far left of their party. And you look no further than New York State, where Chuck Schumer and Hakeem Jeffries hail from, deeply concerned there that they are going to elect a communist to be the mayor of New York.

2:21Perhaps by the time this podcast airs, that will have happened. I'm not sure. The other concern, I think, is very personal to Chuck Schumer, and that's the fact that AOC has become more popular than he is in New York State. And were she to primary him today for the United States Senate, many people believe that Schumer would be in jeopardy of losing his job. And the biggest hit that she's had against Chuck Schumer is that he took a knee to Trump, that he caved into Donald Trump because he actually kept the government open the last time this opportunity arose. So I think he's come to a decision that at least it's in their parochial best interest, political best interest, to shut the government down and demonstrate, quote, maximum resistance to Donald Trump.

3:03This is Trump derangement syndrome on steroids, in my view. And what's the net result of this? Let's see. Air traffic controllers just missed their second pay period. You've got people responsible for our nuclear arsenal that aren't being paid. You've got young law enforcement officers. You've got people at our border. You've got military that are not being paid. I don't think many families, Joe, can go two, three pay periods and endure this. And then what's going to happen this weekend is that SNAP benefits are not going to be available. So those people, some of the most vulnerable among us, are going to find themselves unable to access food.

3:40I've got my team working right now on outreach and connectivity, if you will, to food banks and churches and things in local charities that can try to help fill the void. But Chuck Schumer is doing all of this. And I think with an aim to somehow blame this on Donald Trump. If you look at what's happened, the Democrats have voted 13 times to shut the government down since this started about a month ago. Under Joe Biden, they voted 13 times to continue this budget. This is actually their budget that that they're being asked to continue. And they've just decided to shut the government down in a in a temper tantrum of sorts because they I think they just can't stand the success that Donald Trump has been achieving.

4:20And here's one of the piece of it. Initially, I thought they're going to try to do this to to prove a point that they can stand up to Trump. Then I noticed that they had this no kings rally that was that was coming up. I thought perhaps they're going to stay until the no kings rally has taken place. And that would be enough. Well, we're way past that. And now what I'm hearing is that they're going to wait until the election of the New York mayor, the governors in Virginia and in New Jersey. I don't know what the end point is, but here's what I would say. If you look at the projection of the U.S.

4:52economy at the end of Joe Biden's years, the end of 2024, they were looking at, you know, this quarter that we're in to be about a 1.8 percent GDP growth quarter. We're at four. Wow. The economy is doing far better than the Democrats want to see. And perhaps this is their effort to try to take the economy down, too, because if you stop paying air traffic controllers, air travel stops, you can just imagine the knock on effects of that in terms of slowing our economy down. And if that's their goal, I think it's truly, truly despicable that they would put, again, their own parochial political interest ahead of the success of our of our United States and the pain that it's causing American families.

5:30No, it's terrible. And you mentioned you serve on the appropriations committee in the Senate, and you mentioned that they kept extending these things in the past as well. Is there any chance we get back to regular order? Like what has to happen to do these things in the traditional way? So there's certainly a chance to do it. You've got John Thune now that's actually agreed to bring appropriation bills to the floor of the Senate. Chuck Schumer would not do it. And you ask yourself, why wouldn't Schumer have done that? Because Schumer preferred to cut these deals in a back room, not with the benefit of the appropriations committee, not with the benefit of the transparency that that brings, but rather having the Senate leadership come up with what they called an omnibus bill and give us 24 hours to read it, jam it down our throats and say the government's going to shut down.

6:11Now we're going to default on our debt, whatever the threat might be. This is where they hide all those extra things for friends in Africa or like random NGOs and stuff. Exactly. Exactly. So it's a terrible process. Much better that you actually work through the normal appropriations process. We've been trying to do this. We've actually moved three of the dozen bills through the United States Senate. The House has done all of theirs. But we've got to get back to the appropriations process. And you had, again, last week, all the Democrats block us from moving on to the defense appropriations bill.

6:38We wanted to start doing this process even while the government shut down just to get the homework done so we'd be in a better position to execute once the government reopens. Well, it seems they don't want to reopen the government and they don't want to negotiate on appropriations. You don't have to answer this, but I just want to ask a lot of my friends on the left who I talk to. They say, when we're in charge, we're going to get rid of the filibuster. And some of them who are good friends of me, they say, Joe, we don't understand. We're going to get rid of it anyway. Why are you guys keeping it right now and letting all this dysfunction happen?

7:03How should I respond to them? You know, it's it's sad when President Trump first came into office the first term. There were, I think, 33, 35 Democrats who signed on to a letter saying that it would be the ultimate destruction of the Senate were we to do away with the filibuster. And the filibuster requires bipartisanship. Yeah, that's a big difference between the House and the Senate. That's why things don't move as quickly. But it also requires us to consider and work across the aisle to get things done. The Senate slower. We have six year terms. We're supposed to be thinking strategically about the future of the United States.

7:36You compare that to the House of Representatives, two-year terms, presidents, four-year terms. No, in theory, it's a great thing. It's served America well for a couple of centuries. It seems to not be working. Yeah, but the notion that the Democrats would destroy that, I guess, shouldn't be surprising, Joe, because they've destroyed everything else. And it's unfortunate that it was Harry Reid was the first one that did away with the filibuster on judges. That's called the executive calendar. Mitch McConnell took it one step further and said, OK, we'll do that with the Supreme Court as well. Frankly, I think President Trump is so frustrated on the entire judiciary side, he'd be happy to do away with all of this.

8:10Something called a blue slip process that have that blue slip process, which, by the way, the Biden administration didn't abide by it. Wow. But Chuck Grassley is trying to maintain that sort of institutional. He's a traditional guy. He's late 80s. Exactly. Exactly. He's a traditionalist and a hell of a strong voice in the Senate. But Chuck believes that this is an important part of the institution. What's resulted from that, though, is that President Trump can't get any U.S. attorney, for example, appointed in a blue state because that blue slip process breaks apart, falls down. Chuck Schumer is not going to allow it.

8:44For example, Jay Clayton, the former head of the SEC, the former managing director or whatever they call the title, the head of Sullivan and Cromwell, one of the finest firms in the world. a complete Boy Scout, and I mean that in a very positive way. He's not going to be able to be approved to be the U.S. Attorney for the Second District of Manhattan. This is crazy, but that's exactly what's happening. Well, I hope when you guys figure that out in the Senate for all of us, it's a tough, tough thing to have to deal with what's going on with the far left holding you hostage. Let's talk about Tennessee, because you're the senator from Tennessee.

9:11This is an important story that's not getting enough attention. The Memphis Task Force with the president, you guys have, I don't know if surge is the right word, but you've surged into Memphis with a lot of different agencies and you're having amazing results. What's going on there? Something very positive is happening, Joe, and something that I probably wouldn't have imagined when I made the decision to run for the United States Senate. I've been serving in the Senate for five years now. I never even ran for dog catcher before this, didn't run for student government. This is the first time I've ever been in any elected office.

9:37And when my wife and I were talking with President Trump about doing this, I was serving as U.S. ambassador to Japan at the time and got the call that Lamar Alexander was going to be retiring and that President Trump felt I should step up and do this. We didn't know what it might bring, what the opportunity might be. And I remember President Trump explaining to me that he thought I could actually have more of an impact coming to the United States Senate. This is one of those areas. And I'll take you back into my childhood to understand it a bit more. When I was a kid, my godfather went back to seminary and became a priest.

10:12His first assignment was in Memphis, Tennessee as a pastor. And his son, who was my age, looking forward to seeing them, they invited me to come out and visit one summer and spend a couple of weeks. And my parents thought very hard about this. This is when I was about 14 years old. And they decided that I couldn't go. I'm from the middle part of Tennessee, a small town there, because they were concerned about my safety. This is a problem that's been going on. So Memphis has been a dangerous city in America for a long time. Sadly, that has been the case. When I was, I stepped out of the private sector to come in and help a friend of mine who'd become governor to run the economic development portfolio.

10:47I was the commerce secretary in essence for the state of Tennessee and recruited a major employer to bring 1 ,200 jobs from the Northeast to Tennessee. 1 ,200 jobs that paid, again, this is 12 years ago. Salary range was$90 ,000 to$120 ,000 per person. So these were good jobs that were coming in. And And I got a call from the CEO, Joe, and he said, Bill, could you please send us crime statistics for your state that suppress Memphis? He said, I've got people that are worried that they might move from New York, New Jersey, Connecticut, that they're going to be less safe in your state than they are up here.

11:22And I said, that's just hard to believe. It's something that's affected the entirety of our state. Yeah, so it hurts the reputation of everything. So we're making something positive happen. Roll forward. We're in the fourth quarter of 2024. The situation seemed hopeless. It got become much worse during the pandemic in Memphis. George Soros spent$600 ,000 to back a DA candidate from Yale Law School who's come in and basically stopped prosecuting crime. He's doing this all over the country. I know. It's just created a terrible doom loop, if you will, where the perpetrator is arrested and let out.

11:57That demoralizes the police department. The victims won't work with the police to work up the crime. It'll work up the charges because they know that the perpetrator is going to be on their doorstep and they're not going to they're not going to be jailed. So it really put Memphis in a terrible, terrible doom loop. And in 2023, I think Memphis had the highest homicide rate per capita of any city in the United States of America. So deeply troubling. And the question was in the whole arena of defund the police, which seemed to have been the Democrats platform, could we do something about this? And as I saw President Trump gaining momentum, I realized things are going to change in America and things can actually change in my home state.

12:34And I started the conversation back in 2024 with the current mayor of Memphis. Paul Young is his name. Somebody who cares deeply about his city. He's a Democrat. I'm a Republican. And my suggestion to Paul, which I think he took to heart, was that at its most fundamental level, public safety is something that all government servants owe their constituents. And I said, it doesn't matter whether there's an R behind your name or a D behind your name. It's up to us to deliver public safety. And if we can't, we should be fired. And we agreed to start working together. I started the conversation with Cash Patel in December of 2024, Pam Bondi in January, to prioritize Memphis and see if we could make a real dent in the crime problem.

13:19We worked very quietly. Why would you tip off the criminals? We were very quietly put together a task force. The first wave came in at the very beginning of the summer with federal marshals. About 140 arrests took place then. We didn't hear too much about this in the media. There's a reason you didn't hear about it because we didn't want to draw a lot of attention to it. The next wave came with an FBI task force that had some additional DEA people, but we troubled the FBI resources in Memphis. 500 more arrests, Joe. The worst of the worst. When President Trump saw that progress, he said, OK, we're going to provide Memphis the full menu.

13:51And that's the DEA, the FBI, the IRS. Think about it. These criminal organizations have illicit revenue streams. These are gangs. That's why they took down the Chicago Mafia famously, right? Exactly. That's exactly what it took to get Al Capone. And so we've got, I think, in total, 13 or 14 different federal agencies that are on the ground working on this to make certain that when we pick these people up, these criminals, that they're being charged federally. Because that's how we get around the Soros appointed DA. That's how we make sure that they don't wind up in the Shelby County Jail, but they wind up in Leavenworth.

14:24We're taking these people out of our state. And so far, we are now about another thousand that have been incarcerated, that have been arrested now through this next wave. Are most of these thousands tied to gangs or mafia groups? Most of them are hardcore gangs, particularly if you go back to the first effort. The Memphis Police Department has known who these people are. But again, they've been demoralized, they've been understaffed. And that's all changing. And if you think about removing, talk about 2 ,000, 3 ,000 hardcore criminals from the area. It's going to change the area. Exactly. It's going to change the area and it's going to lower the demands in the police department.

14:58And we're going to make Memphis the safest city in America. And my job and my pledge to the to the to the mayor and to the people of Memphis and the governor has been right alongside with me on this is that to the extent resources are necessary long term to sustain this. I'm going to do everything I can to provide the federal resources that are necessary. The governor is going to do everything he can he could do to provide the state resources necessary. And we're going to properly resource Memphis going forward from a public safety standpoint. So it remains one of the safest cities in America, and it will have a transformative impact.

15:30It's a great city, great opportunities. Elon Musk just put the hyperscaling operation XAI there,$70 billion of investment. Ford Motor Company's got the Blue Oval City coming in, a huge investment there. There's so much opportunity and so many things to be optimistic about. And now that we're working on and addressing the public safety concerns, I see nothing but upside from that. I heard you guys found some kids you saved, too, at this operation. Is that right? Joe, the number is extraordinary. The count's probably north of 50 children now that have been returned to their families. These are these are missing children.

16:00It's crazy. It is crazy. And I've spoken with law enforcement there. How could something like that happen? A number of them have been runaways. They get runaway and then they get caught up in something and kind of kept. Exactly. Exactly. And they're back with their mother, their grandmother, you name it. But you think back what happened with the pandemic, the Shelby County School System, that's Memphis, did away with the requirement to attend school. So there's no truancy issues that the police can question a young person about. So they see a bunch of kids on the street corner. They can do nothing about it now.

16:35They don't have to go to school. And so absent a truancy law, these kids have basically been on the street, and they found their way to the wrong places, I think. And so this is all changing. And I think what we're going to see long term is a lot of appreciation. I've had such positive feedback, Joe, in terms of what's happening in Memphis. People feeling safer. Businesses thriving again. People relooking at Memphis as a place they might want to locate their families or grow their businesses and that type of thing. So we're back into a positive feedback loop right now. And it would not have happened had we not been in a position to work with the local mayor and had a had had a administration, I should say, that was willing to step up and stand for law and order.

17:15One part of the Trump EO I thought was interesting, too, that we did a lot of work on was just holding the spend accountable with the NGOs and the homelessness complex and all of that. Is that is that tie into Memphis at all, too? Do you guys have to fix people illegally camping or any of those groups? The extent of that, I'm not I'm not I'm not fully aware of what the extent might be. But again, we're getting the full menu of federal resources there. So they are addressing this as well. And I know that NGOs have been operating there, particularly with the illegal alien community, that their actions have been deeply concerning.

17:44So I don't have the specifics in terms of how it's being addressed there on the streets of Memphis. But I do know that that's one of the items on the menu that are that are being looked at there. It's a big one in a lot of cities, especially L.A., Chicago. These other cities are resisting Trump right now. They don't want to come in. They don't want to fix it. I mean, you're getting people shot every weekend. I think there's more than a dozen people every weekend on average or even higher in Chicago. It's crazy. Are we going to go be able to go in and fix these cities? Do you have to have the governor's cooperation?

18:08Like, what's it take to do more of these? Well, in Tennessee, we definitely do have the governor's cooperation. Clearly, that's not the case in Illinois, California. And what we've seen, this goes back to the whole motive behind the crime at our southern border. You've got these blue states that have situated sanctuary cities inside their states. What are those sanctuary cities designed to do? They serve as magnets. Those magnets actually backfill with illegals the fleeing of citizens from those states. People moving from California, from New York, from Illinois to my home state of Tennessee. They're going to your home state of Texas.

18:43They're going to Florida. They're fleeing because things have gotten so bad. And the way these politicians have decided to backfill this is to attract illegal immigration. Now, let me get to the bottom of this. The reason and the motive behind this crime is that the census counts those illegal aliens for the purpose of allocating congressional districts and for the purpose of allocating electoral votes. At the end of the day, Joe, this is about power. California has more electoral seats than it, quote, deserves because they're able to count. These illegals that gives people who are actually citizens a disproportionate power relative to people that are citizens in my state where we don't have a large illegal population.

19:21So that is something that is a major flaw in the system. I tried to address it legislatively and every Democrat voted to block me on it. Of course, because it's giving them more power. Exactly. But that's the motive behind all of this. And so that's why I think you're seeing the resistance from these governors in blue states is because they don't want to lose their congressional power. They don't want to lose their electoral votes, and they're willing to subject their population to the crime, to the drug addiction, to all of the social problems that come along with this. This is one of those things that would take 60 votes in the Senate right now in order to fix, which is frustrating, obviously, because they're cheating.

19:53Indeed it is. It's a 60 vote issue. We cannot get there with the Democrat Party that is voting in lockstep to maintain this broken system because they figured out how to game it and gain more power in the process. Well, I hope we keep fighting and fix the census and do better. That's important work. I want to ask a little bit about your background. You have an awesome background. I think you started, I think, originally VC and private equity before going into consulting in Japan a little. Well, I'll go back. I actually started my career at the Boston Consulting Group. Oh, God. I attended school at Vanderbilt University.

20:22And coincidentally, that's where the founder of Boston Consulting Group and Bain & Company both attended Vanderbilt. So that was sort of my indirect path to get hired by Boston Consulting Group. What a great experience for a young man like myself. I think I'd been to all of seven states, Joe, before I went to work for BCG, and I wound up working on five continents. Just an incredible experience. And I was at BCG in the early years, so I actually knew the founder, Bruce Henderson, very well. I learned from the best. And to be able to do that around the globe, at the time I joined, Joe, BCG had 250 professionals worldwide.

20:58Now they're 35 ,000. So it was just a great time, formative time to be there. And they were literally changing the world, and I got to be part of it. But they're the ones that sent me to Japan back in 1988. I was there for sort of the apex of that bubble economy. I learned Japanese then, and that was a foundation for me then to go back as ambassador later. On the private equity front, I left BCG to go do a program called a White House Fellowship. The U.S. had just entered the Persian Gulf War. I was in Japan working for BCG then, and I thought, you know, I'd like to find a way to contribute, to give back, to participate in some way.

21:29So I applied for this program and went and spent a year in Washington serving this fellowship. at the time for Vice President Quayle and learned a lot there, had a good experience, then back to the private sector. That's when I went into the venture capital and private equity side. And one of the first deals that I did with my team was to lift out a division of one of my former clients at Boston Consulting Group, R.R. Donnelly, a printing company, had a small division that lifted that out. I'd modeled it to return four times our money. We hit it at just the right time in terms of the whole dot-com era.