America is in Peril, Can Dave McCormick Save Us?

0:05Hello, I'm Anthony Scaramucci and this is Open Book, where I talk with some of the brightest minds out there about everything surrounding the written word, from authors and historians to figures in entertainment, neuroscientists, political activists, and of course, Wall Street. Sorry, I can't resist. Before we get into today's episode, if you haven't already, please hit follow or subscribe wherever you get your podcasts and leave us a review. We all love a review, even the bad ones. I want to hear the parts you're enjoying or how we can do better. You know I can roll with the punches, so let me know.

0:38Anyways, let's get to it.

0:46If America is heading in the wrong direction, what do we need to do to fix it? How should we tackle China? What needs to be done to fix our economy? The questions go on. Ultimately, we have a duty to our country and we need to act. My guest today, David McCormick, has a plan.

1:12So joining us now on Open Book, a dear friend and just an incredible all-around person, David H. McCormick, a bestselling author among many other things in his life. He's the former CEO of Bridgewater Associates, a candidate for the U.S. Senate in Pennsylvania, a great conservative leader, and author of the new bestseller, which was a great read, Superpower in Peril, a battle plan to renew America. There's so many great things in this book, David, and of course, it's great to have you here. But first of all, I want to talk about your background because I think it's so interesting. You're born in Washington.

1:48You use wrestling as a path to get into military, but you also spent a good part of your life in Pennsylvania on a Christmas tree farm. Take us back for a moment before we get into superpower in peril. Hey, Anthony, thanks for having me. It's great to be with you. And yeah, I was born, as you said, I was born in Washington, Pennsylvania, right outside of Pittsburgh. And I grew up in northeastern Pennsylvania, outside of Scranton. And my folks had a farm, a small farm, and we had Christmas trees on the farm. And my dad worked at the college, local college. And, you know, it was a great rural upbringing.

2:21It's the kind of place that on the Monday after Thanksgiving, the entire school would be shut down because it was the first day of deer season. And we baled hay and trimmed Christmas trees. And sports got me into West Point. And that was the path to the Army. All right. What was the weight class, David? Okay. Share with all of your fans out here. What was your weight class in high school? 155 in high school, 167 in college. Okay. God bless. Okay. I haven't seen those numbers. It's 1980, by the way, just so you know, okay? Maybe you have to divide by two for me to get to one of those numbers. But so, you know, Scranton, obviously, I don't know if you know this about me.

2:59My family's from Plains, PA. My dad went to, you know, he was, you know, that's sort of in that triangle, Hazleton, Wilkes-Barre, Scranton. And so, you know, I used to spend all my summers out there. I've been up to Harvey's Lake. I learned how to water ski there. You know, we've had guns in our family my whole life because of that. The Friday after Thanksgiving was a big deal for us. We were, you know, four o 'clock in the morning, we were pushing deer, sort of always found that bizarre. We were walking towards the other hunters as we were pushing the deer. I'm like, I'm going to get killed. He's like, relax, these people are not going to shoot you.

3:32You know, you had that orange vest on. But anyway, I get the upbringing, but why the military, David? Why, you know, you had good academic background. Why go into the military? Because we're roughly the same vintage. My dad was in the army and implored me not to go in the army. Some days I regret that when I registered for the selective service. Obviously, I didn't get drafted, so I didn't volunteer, but you did. Tell us why. You know, it was a little bit in an indirect way. I got recruited to play football and wrestle at West Point and I didn't want to go. You know, we didn't have any family in the military, any immediate family.

4:07And my dad said, apply, just apply. That's you can make your own choice, but just apply. I had dreams of being a Penn State football player. And I applied and I got in. And then what happened is my small town just embraced this. It almost became a done deal because nobody had gone to the academies for years, decades, really. Right. And and and so I really started to think seriously about it and when. And this was just in the beginning, Anthony, of the, you know, the coming back of the military under Ronald Reagan. And so I went to West Point in 1983. And that was the beginning of morning in America.

4:41And the military, which had been in really rough shape after Vietnam, was on this rise. And I became part of what was the most admired institution in America. And if you remember those days, you and I are old enough to remember Lee Greenwood, proud to be an American. And that was the song of the day. And it was a it was a great awakening. Yeah, listen, he he created an American renewal in our youth. I think we both fell in love with Reagan. I think he's the reason why I'm a Republican. There's another weird fact about my life. My dad's union was controlled by the Republican Party in Nassau County.

5:13It was like an obscure thing. There were probably three counties in the United States where unions were controlled by Republicans. So when I signed up for the draft and registered to vote, my dad insisted that I register as a Republican. But then once Reagan came into office, it became very easy to be a Republican. It's a little harder to be a Republican now, David. OK, and I've read some of your Wall Street Journal editorials, which are fabulous. Look, I'm a huge fan of yours because I think you see the world clearly. You're an American patriot. You love the country. You've written about some of the erosion in our recruiting efforts in the military and some of the cultural things that we need to think about from a civic point of view.

5:54But let me start there for a second. Where is the Republican Party right now? Is Trump right? Trump says that the Reagan Republican Party is dead and it's over. It's now an American first working class party. And you better embrace that and forget everything else about former Republicanism. Is he right, David, or is he wrong? Or what say you about the future of the Republican Party? Yeah, well, that was, you know, that that was really the purpose of writing the book. Superpower in Peril really addresses that question of what is conservatism today. And it starts with a recognition that I and I saw this in Pennsylvania on the campaign show, Anthony, every VFW, every diner, every fire hall, that the American dream and what we know about America has not been available for many, many millions of Americans.

6:43And they're angry. So the economy is in decline,$31 trillion of debt, record high inflation. The ability to be born into one socioeconomic class and get to the next, much, much, much more difficult. We're being challenged by China globally. And then this spiritual decline, Anthony, which I talk about, the progressiveness that's chipping away at our institutions, our schools, our military. The army had a climate change strategy under President Biden before it had a warfighting strategy. So all of that is leading 80 % of Americans to think the country's headed in the wrong direction. 75 % living month to month, two-thirds thinking their kids aren't going to be better off than they are.

7:19So let's start with that, because that, in my mind, explains a lot of President Trump's success in 2016, because he tapped into that anger. And what I say in the book is that, listen, the Republican Party was sleepwalking when we were talking about China and globalization and open markets and free trade and open borders. We weren't really understanding what that was doing to America. So President Trump is right, in my opinion, and the populist pulse is right in terms of addressing those problems and making sure the American dreams are available for everyone. At the same time, there's core conservative principles that I believe as a country and as a party, we should remain true to.

8:01Small government. America's exceptional. The role of government should be limited. America's leadership in the world's critical to protecting our liberty at home. These are basic premises. And so what I try to lay out in the book is an agenda that reflects those traditional conservative principles, but also is adjusted to reflect the challenges of our time and to make sure the American dream is available for everyone. Are there enough people, David, in the Republican Party? I mean, look, you got me. I mean, that's exactly when I read your book. I'm like, this is exactly where I live from a spiritual philosophical view in terms of where we need to go directionally.

8:41I love your long term thinking. We are lacking public servants that have long term thinking. You're talking about a long-term plan to renew America, to return to its super status power, and to restore pride that our fellow Americans have in America. But I'm wondering about the fracture. I'm wondering about what you just said. We took families that you and I grew up with that were aspirational, working-class aspirational families. We turned them into economically desperational families. I'm wondering, you know, if there's just too many now, have we fractured this thing or is there a way to knit it back together?

9:18And how do we do that, sir? Yeah, I think we do. I think there is a way to knit it back together. I mean, the book is very stark. You showed the cover. It's like these red bold letters, superpower and peril. That's because I think we are. We're at a tipping point. But it's also an optimistic book, as you mentioned. And the reason it's optimistic is because this is the American story. We get to the edge of the cliff. We pull ourselves back. We've we've had incredible moments of fracture and divide in our country where the future looked very, very uncertain. And and we've been able to renew ourselves and continue to be the great America that we all love.

9:55And that happened in my lifetime. It happened in your lifetime, Anthony. We were just talking about Reagan. But let's take a minute on it. So 1979, I remember it. Well, I was 14, going on 15 and stagflation, 15 percent inflation, the economy's in recession. We had gas prices that were through the roof. We had odd days and even days for gas. You had to be an odd day or even day. I remember standing in the gas lines with my dad or in the gas lines in our country squire, which was a station wagon like a half a block long with wood on the side. We had Desert One where we lost eight service members on the sands of Iran trying to rescue our hostages under under President Carter.

10:32And 80 percent of Americans, just like today, thought the country was headed in the wrong direction. Incredibly divisive moment. Four years later, I'm at West Point. I'm walking along those beautiful pathways. I'm in the Hudson Valley looking down over that incredible point, which was so critical in the Revolutionary War. And it's morning in America. The economy's on fire, inflation's in check. We're in the middle of a military buildup, which ends the Cold War six years later without a shot. American confidence is on the rise. You could feel it in the air. That's leadership. That's forward-looking leadership.

11:04So I think at this moment, we have to look forward, not backward. I think we need leaders who are first and foremost about America and looking forward above self. and I'm optimistic that in these moments of crisis that we'll find our way through it. And that's what I'm trying to do with this book is to at least help the conversation by painting a path. Okay, I mean, it's brilliant stuff, but we now have a guy on the stage, Donald Trump. He's given me a hard time in life. He's given you a little bit of a hard time, okay? He has said way worse about me than you, okay? Although you are a nicer person than me.

11:39I fight back with the son of a bitch. I call him the fattest president since William Howard Taft, you know, just to irritate him. But you don't. But he says that you are Wall Street, not Main Street. He says you're soft on China, not tough on China. You're a globalist, not America first. Weak, not a fighter. He said that you, this is pissing me off about him. You were in the military, a combat veteran. He had bone spurs. That doesn't make it to the military, but you're weak, not a fighter. OK, and you'll fold like the other establishment Republicans. OK. Now, I mean, it's a bunch of bullshit. We both know that.

12:12OK, but his bullshit is very effective, David. So how do you respond to that? Are you going to stay in the political theater? Obviously, I hope you do. I'm hoping this book is a precursor to that. But how do you combat him where other politicians have had not success combating that sort of nonsense that he's spewing? Well, you know, listen, the thing you learn, the thing you learn in plea boxing, you know, the mandatory class is plea boxing. And there was this old boxing coach named Herb Creighton. It's kind of like Mickey on Rocky. And the first thing he says is you can't win unless you're willing to get punched in the face.

12:46And that's that's modern day politics. You got to be in the arena. You got to be in the ring. And so, you know, when you get in the ring, I had lots of people say bad things about me when I was in the ring and you have to fight through it. And so in the book. I talk about what you just described. And I essentially just tell the story. I defend myself and say, this is what I am. And I'll always do that. I'll always stand true and fight for what I believe in. And I think that's what's required in this moment. I think if all the people who have been successful in life, you know, by the way, the founders didn't think that we were going to have career politicians.

13:23They thought people like me would go out and have successful careers and then come back and serve. If people are afraid to be in the ring because they're going to get a mean thing said about them or thrown at them, then I think we're lost because the country's not going to have the right people. I agree with that. I mean, listen, what other people think of you is none of your business. We have to teach our children that, particularly in the age of social media. Otherwise, you know, the bullying and all that nonsense. But let me rephrase the question, okay? We are selecting our leaders through a popularity contest now that has elements of reality television, this is no longer a hiring decision, okay?

14:01As an example, you know, John Kennedy and Richard Nixon in their debates were talking about Kimoi and Matsu, which are two small islands off of Taiwan, and whether the United States would defend those two islands in an attack on Taiwan from communist China, okay? And the level of detail in the debate was extraordinary. Now we're talking about tired this, low energy that. How do you get through that with somebody with your policy background and your chops? How do you get through that, David? You know, I just think authentically, honestly, with honesty. So I think that a couple of things, you know, I got more confidence, not less, the more time I spend on the campaign trail.

14:48I think people want leadership. They want a path to the future to solving those problems. I think to give President Trump his due, I think the thing that he did is he put his finger on these frustrations and the fact that the government wasn't serving their needs. And I think that that's been a problem for many decades. And so I think from my perspective, if I'm going to be successful in the political arena, what I need to do is essentially make sure I'm connected to the future, not the past, to those problems and giving authentic leadership. And I think the more we're confronting crisis, the more voters are going to say, hey, we need serious leadership to take us forward.

15:25And and we'll see. You know, it didn't work for me last time. I'm obviously considering running again, but I haven't made any decisions. But but really, the future of the country depends on getting serious people in office who can help solve these problems. And and I'm confident we'll get that. I listen, I listen. It's a great message. you're this this book superpower in peril is a message of optimism i've encouraged everybody that listens to open book to buy superpower in peril to just hear a rational voice about necessary change necessary reform and an honest discussion about different things so so let's go to china it seems to me and again maybe i'm wrong this is the only thing david that the democrats and the Republicans seem unified on, right?

16:10They're both upset with China. Tell us your view of China. You write in the book that you visited China in 1992, been back obviously many times. Ray Dalio, your partner at Bridgewater, close relationship with the Chinese government. Tell us about your views of China. Where do you think the U.S. relationship is going with China? How do we make things better? Well, I'm not sure we can make things better. The reason I try to go back to that history is, you know, when I traveled through China in 1992, it was rural. You know, So I was traveling on this dilapidated train through the Chinese countryside.

16:39And I went to Beijing and Shanghai. There was a couple of skyscrapers, you know, two currencies, very rural, undeveloped economy. And when I went back 15, 16 years later, when I was in the government, I mean, skyscrapers everywhere, cranes. It was a remarkable evolution in the Chinese economy. And there was a bet that Republicans and Democrats, the consensus was also there at that time in the mid-2000s or even early 2000s, a consensus that if we engage with China, we get great opportunity for American businesses because there'd be reciprocity in terms of open markets. And China would be a more benign, the evolution of China would be benign, and that China would become a potential, not ally necessarily, but not a rival.

17:22And really the opposite happened. We didn't get reciprocity from China. We didn't get access to their markets, despite them having access to U.S. markets. But worse than that, China orchestrated a strategy of stealing intellectual property, of really advancing their capabilities in their military and technology in a way that went counter to U.S. interest. And it was a little bit like this, Anthony, where our interest diverged over time. And then 2014 happened and President Xi came into office and that divergence became much more extreme because Xi had a vision of techno-authoritarianism that went directly counter to U.S.

18:01interest in the world. And so we now confront a true rival, a true adversary in China. And the strategy I lay out in the book is one of leadership. First of all, go to the gym at home, build muscle, build our own capability and our education system and our technology and our data, because right now we're lagging. And the American dream is not available at home in part because of our weakness at home and the things we haven't done. But then we need to confront China abroad by reducing our dependency, strategic decoupling, by holding China accountable for things like COVID. Seems madness that we couldn't actually have a real conversation for years, that the Wuhan virus may have originated in Wuhan, in the labs in Wuhan that did such research.

18:42It seems like an obvious possible connection. We need to restrict investment in China that's going directly to supporting the Chinese military, of the Communist Party. And we need to have alliances around the world that are blocking China's advances. And if you have any question in your mind of China's geopolitical challenge to America, just look a couple of weeks ago. In the same week, two front page pictures, you probably saw it, Xi in Russia with Putin and the Chinese foreign minister brokering a deal between Saudi Arabia and Iran. China is an adversary. We need to find a way to coexist with China, but from a position of strength.

19:17And that's what my book argues. So give me three things that we could do. And again, these are not short term things. So these are three long term, long range things that we need to do as a country to sort of build that muscle that you're describing. Well, the first one is we've got to educate our people. I mean, it is a disaster what's happening in our education system. We're 22nd in the world among industrialized countries. We're teaching our kids. We're not teaching our kids how exceptional America is. They're learning to be ashamed of America and the notion that America was conceived in sin.

19:50Mass science and engineering is in decline relative to the rest of the world. We've got to fix that with school choice. Conservatives have been saying that for 20 years or longer. This is the moment post-COVID where we can really break open our education system and create competition. We've got to have skilled worker training that allows our technologically advanced businesses to be able to draw on American workers to support them. We need to stop the flow of illegal immigrants at the border, but we need to combine that with skilled immigration reform that advances our economy. So talent's a big piece of it.

20:24That's one area. The second area we need to decouple in areas where we're highly dependent. I was shocked during COVID to learn how dependent our pharmaceutical supply chains were on China. I didn't know that. I knew but didn't see it in action how dependent from a semiconductor standpoint we are. 90 % of the semiconductors we need are manufactured 90 miles from mainland China. That dependency is completely unsustainable. It's madness. And we let that happen. So that's the second thing we need to do is decouple in areas that make sense. Third is we need to double down on investing in technology.

20:58China, there's an article in the Wall Street Journal three or four weeks ago, Anthony, may have seen it. An Australian think tank did an analysis of 44 critical technologies to economic vitality and national security. It concluded in 37 of the 44, China was in the lead. These are things like artificial intelligence, satellites, robotics, and so forth. Hypersonic missiles. Hypersonics. This is incredible, right? Right. So we need to double down on basic R &D. We spend about half of what we spent in 1950 as a percent of GDP. And we need to bring market forces with policy, tax benefits, and co-investment into those areas of technology that are most critical to America's leadership in the world.

21:38artificial intelligence is at the top of the list. Those kinds of policies, they don't fit an easy, you know, they're not libertarian. They're not traditional conservative. They are policies that support the challenges of our moment. And that's what's required if we're going to lead into the next century. Wilson, it's brilliant stuff. I want to test something on you, get your reaction, OK, we come out of the Reagan era with some deficit spending. We're producing guns and butter. We know it's going to cripple the Soviets. It does. They collapse. Again, these are my theories, so I'm going to go with it.

22:18George Herbert Walker Bush does a good job not embarrassing the Soviets on the world stage as they decline. And so now there's no bloodshed in the aftermath of the Soviet Union. He then comes up with a pay as you go strategy. Dick Dorman and him. They put guardrails on the Congress. If you want to raise social services, fine, but you have to raise taxes. If you want to cut taxes, that's fine, but you have to have something in the budget. He goes, unfortunately, into the Gulf War, which you participated in as a combat veteran, and he now has to raise social services because we're in a recession.

22:51He raises taxes. He says no new taxes in his campaign speech, and so now he loses the election to Bill Clinton. But he sets the United States up with these guardrails. Bill Clinton adheres to those guardrails in the 90s. We end up with a$240 billion budget surplus. The campaign Al Gore versus Bush, Bush number two, is about that surplus. The CBO says it's going to be a$5 trillion surplus by the end of 2010. Gore says he'll spend it on the environment and education. Bush wants to give it back to the taxpayers. He wins the election. He cuts taxes in March. But unfortunately, David, we go to war in October of 2001 as a result of 9-11.

23:32It is the first time in U.S. history we go to war without a tax increase. We go to war with the opposite, a tax cut. Bush and Cheney say go to the shopping mall. Don't worry about it. And the deficit spread starts. We hit the cataclysm of 2008. It widens. And let me give you these numbers. George Washington to George W. Bush, seven trillion dollars of deficit spending. Barack Obama, through Donald Trump and Joe Biden, twenty five trillion dollars of deficit spending. What's your reaction to all that? How did we lose our way? Can we put guardrails back on the Congress and see if we can right size that?