All-In PodcastDOGE updates + Liberation Day Tariff Reactions with Ben Shapiro and Antonio Gracias
EVERY SPOKEN WORD
150 min read · 30,117 words- 0:00 – 1:54
The Besties welcome Ben Shapiro and Antonio Gracias
- JCJason Calacanis
Just so you know, everything is archived by the White House right now, so everything we say is recorded.
- CPChamath Palihapitiya
David Freiberg is a (censored) .
- JCJason Calacanis
Chamath, stop. You're being recorded.
- CPChamath Palihapitiya
Good. I, I, well, hope this is discoverable (censored) White House. I just want you to know that.
- JCJason Calacanis
Stupid.
- CPChamath Palihapitiya
Also, he did not pay his taxes in 2016. (laughs)
- JCJason Calacanis
(laughs) Don't... Y- You really want me to start with you?
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
You want me to start? You want me to put this shit in the archives? Oh my God. (laughs)
- CPChamath Palihapitiya
Here, let me put this shit in the archives for you.
- JCJason Calacanis
I'm gonna pee my pants. I gotta pee my pants.
- CPChamath Palihapitiya
I think you need to shut the fuck up is what you need to do. Sorry, White House.
- JCJason Calacanis
I'm gonna pee my pants. He did it. He also has some unpaid parking tickets from 2021. (laughs)
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
You want me to start with you?
- NANarrator
Let your winners ride. Rain Man David Sacks. I'm going all in. And I said we open source it to the fans and they've just gone crazy with it. Love you Betsy. Queen of quinoa. I'm going all in.
- JCJason Calacanis
All right, everybody. Welcome back to the number one podcast in the world. With me again today, Chamath Palihapitiya, your chairman dictator, David Freiberg, our sultan of science, and two guests. Uh, obviously Ben Shapiro, very famous for having the number two podcast in the world. How are you, Ben?
- BSBen Shapiro
Uh, I'm, I'm doing, I'm doing great. I'm just honored to be here, you know?
- CPChamath Palihapitiya
Yes.
- JCJason Calacanis
More work to do. You could exceed All-In in the rankings. No. We, we, we always judge ourselves, Ben, on three things. In the rankings, when we look at how we're doing, what we see is Ben Shapiro, prayer from the Bible, okay, the New Testament, I don't think you've got it yet. You, you have the Old Testament, but you haven't gotten the new, you haven't gotten the sequel. And then number three, murder. Also with us from the White House, yeah, welcome to All-In, where we have a live feed into the White House. Today, my good friend Antonio Gracias
- 1:54 – 4:56
Why Antonio is helping out and what it's like working with DOGE
- JCJason Calacanis
is here. He, uh, is taking... I guess you're taking... would it be safe to say a hiatus or you're from Valor to do a little tour of duty, uh, in our government working on Doge? Is, is that the way to say it?
- AGAntonio Gracias
I'm still doing my day job too, man.
- JCJason Calacanis
Oh.
- AGAntonio Gracias
This is, this is a seven day a week-
- JCJason Calacanis
Okay.
- AGAntonio Gracias
... 60 to 80 hour a day job 'cause I've, I'm, uh, I'm trying to do both. I've got some great partners who are covering it for me and that my firm has been tremendous-
- JCJason Calacanis
Yes.
- AGAntonio Gracias
... in, um, in allowing me to do this. But no, I'm, I'm still trying to do both.
- JCJason Calacanis
Okay.
- CPChamath Palihapitiya
Was it public prior to this week, Antonio, that you were doing this role? Had you announced it anywhere or was, were people aware?
- AGAntonio Gracias
I didn't announce it anywhere. Know that the New York Times had wrote a story about, um, me going to SSA, you know, which is b- y- sort of New York Time style. Not, not right, but I was, I had been there. Yeah, I was out in Woodland, Maryland.
- JCJason Calacanis
40% correct. Yeah. Close enough.
- AGAntonio Gracias
Yeah. Close enough for hand grenades.
- JCJason Calacanis
Close enough. Uh, I'm sure they had no agenda. (laughs)
- CPChamath Palihapitiya
Antonio, how does it, how does it work? So when you volunteered, d- is it that you and Elon and Steve just kind of figure out let's put a senior person at every part of the administration where there's real opportunity? Why did you end up at SSA versus someplace else?
- AGAntonio Gracias
Interesting question, Chamath. And by the way, it's great to see you guys, man. Thanks for having me on. I can use your laughs.
- CPChamath Palihapitiya
Great to see you.
- AGAntonio Gracias
You're, you're, you're... like you really make me laugh, which I, I need.
- CPChamath Palihapitiya
We're really proud of you, man.
- AGAntonio Gracias
Thank you.
- CPChamath Palihapitiya
Really proud of you.
- JCJason Calacanis
Yeah, it's good to see you.
- AGAntonio Gracias
Thank you. Um, so-
- JCJason Calacanis
Suit looks great, by the way.
- CPChamath Palihapitiya
Yeah.
- AGAntonio Gracias
Oh, thank you. Thank you. I haven't-
- JCJason Calacanis
When do you have to return it?
- AGAntonio Gracias
The rental is due at the end of the week.
- JCJason Calacanis
Okay.
- AGAntonio Gracias
Um, so yeah, no, what happened was I had actually volunteered to go to the VA because that's kind of be- h- as you guys know, close to my heart. And, um, Elon said to me, "Look, great, you can do that next, but will you go to SSA first and, and see what's going on there?" 'Cause it's, you know, the biggest internal probe we have. "And, and see what you find in fraud, waste, and abuse." And so of course I said, "Sure, I'll do that." And I ended up out in Woodland, Maryland with the good people at the SSA, the Social Security Administration. And that, that's where I started. That's how, that's how all this started for me.
- 4:56 – 27:59
DOGE's latest findings: illegal immigration, social security, and more
- AGAntonio Gracias
we did. Yeah.
- JCJason Calacanis
So let's get to it. You, uh, spoke at a rally, uh, I think it was on Sunday. And you pulled up a chart. Here is that chart. Maybe you could explain to the American people here what this chart shows.
- AGAntonio Gracias
Yeah. So if I, if I might just step back and say how I got it 'cause I think it's important.
- JCJason Calacanis
Sure.
- AGAntonio Gracias
You know, we map... The, the way we work, y- you guys know very operational at Valor. You... I've worked with all you guys various times.
- JCJason Calacanis
Yeah.
- AGAntonio Gracias
And what we do is we map the entire system from beginning to end. So we, we map the system from enumeration, it's how you get your number, all the way to the end. Went to the offices and saw how the offi- offices operate. And in that process, um, one of our engineers, Peyton, who I mentioned, he found, uh, the data. So we're looking at all the data enumeration, how it works, what, you know, what's going on, the typical stuff you'd look at. And he found this data, uh, called enumeration beyond entry, right? So that is the, that's... And, uh, it, it had this giant ramp to it. You can see their baseline was kind of, you know, 300, 400,000 people all the way up to 2.1 million people. And that just jumped out at us. And we're like, "What is that?" And so we dug into it, and that's how this started.
- JCJason Calacanis
And so what that's showing is Social Security numbers-
- AGAntonio Gracias
Yes.
- JCJason Calacanis
... that were issued-... to non-American citizens or non-citizens. Am I correct? That that's-
- AGAntonio Gracias
Yes, you are.
- JCJason Calacanis
... the number we're looking at? So these are non-citizens-
- AGAntonio Gracias
Yes.
- JCJason Calacanis
... getting security numbers. And for people who don't know, just, like, a little bit of background on the Social Security system, we do this. This is not abnormal for us to give Social Security numbers. This is part of the process, uh, that the government does. The Social Security number was created in 1936 for citizens to track their earnings and in the '90s, we started giving them to non-citizens who were authorized to work in the US so that we could collect taxes from them. And so, if you are not a citizen and you're a Green Card holder, which some people on this program, I think, have been, you have to have a Social Security number in order to work and you pay into Social Security and Medicare, uh, just like US citizens. And then eventually, I think you would qualify for those over some period of time.
- CPChamath Palihapitiya
You can also get a Social Security number if you're a legal immigrant into the United States on a visa. So for example, when I first came to the United States 25 years ago on a TN visa, I was able to get my Social Security number because I had a valid visa to be in the United States.
- JCJason Calacanis
Okay.
- AGAntonio Gracias
Yes.
- JCJason Calacanis
So, we have Social Security numbers being given to non-citizens. That is not controversial, but there's something controversial about this chart. Antonio, tell us what that is.
- AGAntonio Gracias
So, I, I think if you look at the chart, you'll see there's... it starts at, like, 300,000 or so.
- JCJason Calacanis
This is during the COVID period, yep?
- AGAntonio Gracias
Coming right out of it, so we... b- '21's coming right out of COVID, right? So if you go back even a couple years, '19, you'll see that, um, it's about 400,000. Yeah, that, uh, exactly 350-
- JCJason Calacanis
Got it.
- AGAntonio Gracias
... right there. So, um, what happened was this program was designed for... so who we were talking about, you know, people that got visas. This is at enumeration to be on entry, so this is after you're in. Um, there are some people in here that have H-1Bs, green cards, et cetera. And the way we thought about this was that's the baseline number. That's the 300,000 to 400,000 a year you see, and that should be happening. That's ca-... you know, there are, uh, programs for Afghans, example, the translators that came in after the war, right? The people you brought in. They would be in these kinds of programs. And so the baseline number... and, and by... the program goes back, this particular program goes back all the way to '17 and had a, a legitimate use, which was the kind of people you're talking about, people that we want to let in, um, like the care program. I'll, I'll make an example, which are the Afghans. They would be in this number. And so what, what jumped out at us wasn't that this is here because it has legitimate use, it's that... it's the growth. Why did it grow this fast and what happened? And being that, that's what we dug into. And what was-
- JCJason Calacanis
Have you figured that out yet? Is it because of, like, a COVID overhang? The, the one criticism I did see of the chart that I wanted to bring up with you is, hey, people want to see the 10 years, 20 years before this. What would we see if we, we were to look backwards a little bit? And do you have some theories?
- AGAntonio Gracias
Yeah.
- JCJason Calacanis
And is the COVID overhang theory valid or is this just Biden opened the border as we saw... you know, especially, like, in... maybe it was that third year of his term, the-
- AGAntonio Gracias
Yeah.
- JCJason Calacanis
... 2023 year, and this is the overhang of the 2023 surge?
- AGAntonio Gracias
Yeah. Yeah.
- JCJason Calacanis
What are your theories?
- 27:59 – 39:55
Was Biden's open border policy a Dem strategy to expand their voter base?
- AGAntonio Gracias
to come together.
- JCJason Calacanis
Do you believe that there is a Democratic Party motive to increase voter base for the Democrats behind all of this, as has been proclaimed by some?
- AGAntonio Gracias
Look, as I go through the data and I see... It's all about the data, okay, David? And I know you, you, you, you, you love the data. When you... I've just seen a handful of states, man. I'm talking about four states. We looked at the voter rolls. We found these people, thousands of them on the voter rolls, and we found, uh, many of those people had voted, right? In one state in particular, well over 1,000 voted. Yeah, I think this was a, uh, a move to import voters.
- JCJason Calacanis
But really importantly, I just wanna make sure... Because when, when I talk to politicians from the Democratic Party about this, they say there's aspects of human rights, doing the right thing for people in need, that is motivating some of this behavior. Is that a lie, and they actually have a different motive? Or do some in the party think that way, but there are real kind of, uh, kind of call it a small group of highly influential folks at the top of the Democratic Party that recognize that this is gonna grow the voter base, and they're, they're kind of motivating this? What do you think is the construction of what sounds to some to be a conspiracy, and how much of this is really, like, widely understood?
- AGAntonio Gracias
Look, man, here's, uh... I'll tell you what I have seen. I'll tell you the actual information. If you look at Social Security Administration, we set all their faults to kind of max open, no ID requirements, right? You get a Social Security number, uh, before we got here by walking in an office, answering... you know, with, with a, with a, with a medical record and a school ID that had your name and your date, the date of birth on it. That's it, okay? We opened up... We o- set the defaults to open on Social Security. We set the defaults to open on pay, paying people out. And we set the collections to defaults, basically to zero. So, that's how the system looks. That's... I'm just reporting the, reporting the facts. Um, do I think that the, the average person who's a Democrat in the... in, in, in Illinois, or, you know, the guys I knew, I grew up in Chicago, they know this? They don't know this. They don't know this. So, were there people at the top of the system that did this? Yeah. People created this policy. The former administrators of these, of these agencies created these policies. I've seen them. I've read them myself. I've gone to the data myself. They've seen them. Now, this isn't everybody. If you're the average person out there who's a Democrat, and you see what I've seen, you... I believe you will s- you'll conclude what I concluded, which is, "This isn't right. These policies are wrong." They're evil. They're wrong. We gave an incentive for people to get trafficked. That's terrible.
- JCJason Calacanis
I just-
- AGAntonio Gracias
I just don't... I just don't think people know. The reason I'm even willing to do all... You, you guys know me. I'm pretty private. I'm coming on your podcast 'cause we're buddies. But like, man, the reason I'm talking about this is, is not political.It's because it's a human rights issue, and the human rights issue is being confused. It's not... It's we are incenting people to pay traffickers to come to America. We were doing this, right? We got to find better ways to do that. And I just... I don't believe any American, the 80% of the people that Jason's talking about that would say close the border, that's the 80% of people who come together on this issue, which is-
- DSDavid Sacks
Antonio.
- AGAntonio Gracias
... man, we got to take care of people.
- DSDavid Sacks
Antonio, can you talk about what the next big push of effort from you and your team will be? Is there-
- JCJason Calacanis
Hm, good question.
- DSDavid Sacks
... some next chart? I'm not trying to be reductive, but is there something that you can demonstrate that is going to be equivalently as powerful as this first chart, which then helps us start to move these gears towards doing the logical and right thing?
- AGAntonio Gracias
I think the right thing is to figure out who's who, right? Who are the criminals? Who are the terrorists?
- DSDavid Sacks
Yeah.
- AGAntonio Gracias
Number one. And number two, who's mooching off the system? And then number three, the people that are working that Jason's talking about, uh, you know, what we do with them? That's the right answer.
- DSDavid Sacks
Well, I would- I would add a fourth, because I think that there's probably no more electric issue than this idea of voting impropriety, and I think it has become so brazenly partisan that everybody has suspended logic. If it turned out-
- JCJason Calacanis
I agree with that, yeah.
- DSDavid Sacks
If it turns out that there was a manipulated effort in 2020, and there is even a thread of legitimacy to Trump's claims, you would never be able to see the light of day because so many Americans just turned the... turn off, right? And that's because of the rhetoric that they've been fed. This is a really important thing that I would just offer to you, is that if it is true that these people illegally voted, I think it's a thunderclap and I think it opens wide the aperture on voting illegality and voting reform. And I think that irrespective of who you are, you should want to make sure that people who are not allowed to vote are not voting, just to put it simply.
- AGAntonio Gracias
Yeah.
- JCJason Calacanis
Yeah, wow, what an incredible concept.
- AGAntonio Gracias
It's- it's- it's-
- JCJason Calacanis
(laughs)
- AGAntonio Gracias
I mean, it's amazing. I can't, I- I can't, uh... I can't get on an airplane in America without ID, but I can go vote in some states without ID. I think that's crazy.
- JCJason Calacanis
That is crazy.
- AGAntonio Gracias
I think it's totally crazy.
- JCJason Calacanis
That is crazy.
- DSDavid Sacks
Yeah, and we're down to, like... Ben, you know the number. It's 15 states now are the ones that don't have voter ID. So, this is becoming, like, a very obvious issue and a loophole for us to close. I think the best next thing for you to do is actually publish this list of people who voted, get it to The Heritage Foundation, and put sunlight on it. The truth shall make you free, and sunlight is the best disinfectant because I think the whole issue is absurd because if you look at the votes in the swing states, it would take 100,000, it would take tens of thousands, and it's illegal. I- I've spoken to the person at The Heritage Foundation who does this. They found, like, 2,400 cases over 40 or 50 years. The number of people voting illegally is minuscule. In order to swing even but one state, you would need a coordinated effort. Can I- can I say something though?
- JCJason Calacanis
Hold on, let me finish. You would need a coordinated effort. I'm just giving you data, Chamath.
- DSDavid Sacks
Now, what I'm saying to you-
- JCJason Calacanis
I am not partisan. There are-
- 39:55 – 55:26
Tariffs: Liberation Day chaos, reactions, strategy
- JCJason Calacanis
wh- when you talk about this being done right, what do you think is being done wrong and could be done better, I guess would be a, a, a generous way of saying it? What, what could they communicate better?
- BSBen Shapiro
I mean, and not to jump into the, the pile of rakes that is the, the tariff plan, but-
- JCJason Calacanis
Yes.
- BSBen Shapiro
... uh, I, I think that the, uh, I think that the way that the tariff plan was rolled out is about as bad a rollout as you could do. Um, and, uh, you know, th- the reason I say that is not just because of my disagreements on the actual policy. I'll either be right or I'll be wrong on that. But the way that it was rolled out with, with very, with, with essentially kind of a surprise announcement.
- JCJason Calacanis
Hm.
- BSBen Shapiro
Um, I, I don't mind a surprise announcement if what is then rolled out is not replete with, with sort of contradictory justifications, um, you know, statistics that, that are labeled one thing but really are not that thing. Uh, and, and so it just, it opens itself up to all sorts of critiques from every possible side of the... Uh, if you wanna make the argument, make the full s- make the full scale, well thought arg- argument, and then we can argue over whether it's true or not, but there's, there's four or five different claims that are being simultaneously made about the tariffs. One, they're gonna raise revenue. Two, they're gonna re-shore. Three, that you are going to somehow re-trigger the world trading system. Uh, y- uh, some, some of these are mutually exclusive. If you're gonna, if you're going to re-shore, you're not gonna raise as much revenue, for example. Right? Those two things are, are mutually exclusive and they're both being trotted out at the same exact time. If you're gonna put out a giant chart that the president holds up that shows tariff rates plus unspecified, you know, variable, uh, then what I'd like to know is what the actual tariff rate is, uh, uh, as opposed to what the calculation seems to be, which was the trade deficit with a country divided into the imports to that country. Uh, that, that, that has nothing to do with the tariff rate. I mean, just technically speaking, it has literally nothing to do with the tariff rate. And so what that means is now you're boxed in logically. If President Trump wants to do a reciprocal tariff reduction, for example, how do you do that? 'Cause he actually has used a s- a statistic for the tariffs that have nothing to do with the tariff rate and are actually just trade deficits. So the only way to actually rectify that statistic is to have Madagascar buy a bunch of American product, for example, in order to get their, their quote unquote "tariff rate" down. Uh, that, that sort of stuff seems badly calibrated, even if you like the policy, for example.
- JCJason Calacanis
All right, yeah, so let's do this-
- DFDavid Friedberg
Unles- unless, unless from a poker point of view, they spent many months declaring they're gonna do tariffs and everyone thought they were bluffing, and said... everyone said, "There's no way you're gonna do tariffs." It's like someone in poker saying, "I'm gonna play every hand I get. I'm gonna be crazy," you don't believe them, and they actually have to do it in order to get the negotiating leverage that they need to be able to negotiate trade deals ultimately, and they have to look a little crazy maybe. I mean, that, that, uh-
- JCJason Calacanis
So, so you're in... That's your position, Friedberg, they're in the 4D chess, or...
- DFDavid Friedberg
I'm trying to rationalize one kind of rational reason for why a lot of smart people would end up putting that board up, that poster board up where, to your point, Ben, they said that these are kind of the, the tariffs that are being levied upon our country when in fact it is simply the math of imports minus exports divided by imports. That's what the number was, and it, and it, and it was m- and it was maxed out at that number or 10%, and that's what they did. So-They did that basically as a way, in my opinion, it looks like, and I'm just trying to take a read on this, that, um, they're using this as a way to anchor for negotiations going forward, to make the case, we are declaratively, crazily off the friggin' ship, going to do whatever the heck we wanna do here in this administration. Now everyone takes them seriously, now everyone shows up to the negotiating table, and now they can actually negotiate and then announce a series of win after win after win and say, "We got this set of countries to capitulate today. This is the deal we worked out. It's a totally unique deal. This set of deals we worked out today, this set of deals we worked out today." And basically getting all the trade representatives to the table by making the case that they're actually willing to go all the way to the wall on stuff. So, I, that's the only way I can kind of rationalize this roll-out, Ben. That's what it feels like to me. For months, they've been very declarative, "We are going to do tariffs." Besson said it to us on our interview, Luttnik said it to us in our interview, and no one took them seriously.
- BSBen Shapiro
I did. I did, by the way. I will, I will say that I took them totally seriously, so much-
- DFDavid Friedberg
I did as well.
- BSBen Shapiro
... so that I called my financial advisor after the State of the Union address and told them to, uh, rejigger my, my stock and bond ratio in my portfolio (laughs) because I figured that something like this was going to happen. I think-
- DFDavid Friedberg
You went heavy treasuries.
- BSBen Shapiro
Yes. A, A, A, I, I, I went light stocks, I'll say that. Uh, and, and, and the reason for that is because, again, I think that the thing about President Trump is that you, he, he may not, you know, be serious in every single thing that he says, but he is very clear that when he says a thing over and over and over, there is no hidden motivation. And thi- this is the part that I always have trouble with, with sort of the 4D chess reads on President Trump, there's almost never a hidden motivation. He pretty much just says the thing that he thinks, right? It's one of the things that makes him so popular and authentic, is that there isn't a 4D chess game being played.
- DFDavid Friedberg
No.
- BSBen Shapiro
If he, if he says that he wants a thing to happen, it's because he actually wants the thing to happen. Now, the thing about President Trump, he's also a realist. So if a bunch of bad headlines hit him, he may then change his mind and decide that he wants to drive a truck directly through the center of the tariffs because the prices are going up too much on, for example, semiconductors. So, one of the big exemptions from these tariffs is, in fact, in the area of semiconductors. Again, there you see a sort of couple of different justifications that are, that are mutually exclusive that are fighting each other. One of them is the idea we need to re-shore semiconductor production because it's a national security asset, and the other is, it's, we need to raise revenue on semiconductors, so he exempted them, which kind of, you know, kind of bollocks up the logic. And I, I think that the, the, there are a couple of tells that that isn't what's hap- It may... Listen, I think it may end up being the thing you're saying. I think the most likely result of these tariffs is that within the next few weeks, the headlines are not good, President Trump starts driving trucks through the center of the tariffs, and then he starts getting wins from various parties outside that allow him to find an off-ramp on some of these tariffs. Now, a company in, in Belgium says they're going to build a factory in the United States. He has them to the White House, they have a big ceremony, and then he says, "And as a result of this, we're now lowering the tariffs," in sort of the same way he did with, with Colombia, when he said... Not the university, the, the country, when he said he was gonna hit them with tariffs unless you accept these, these illegal immigrants, and, and then they did. So that very well might be the offer. I don't think that's what's going on right now. I think what's going on right now is the strategy that Luttnik has repeatedly expressed, which is that they actually kinda like the tariffs. They actually think that this is good economic policy and that between 1880 and 1910 was an amazing time in American history, and, and so they, they-
- DFDavid Friedberg
Do you agree?
- BSBen Shapiro
Um, I, I think that that is a bad read on economic history because there are a lot of confounds there that are being, uh, ignored. Uh, among those confounds would be the fact that actually-
- DFDavid Friedberg
The Industrial Revolution? (laughs)
- BSBen Shapiro
Yes. Uh, so a, a few. I... Just, just to name a few.
- DFDavid Friedberg
(laughs)
- BSBen Shapiro
The Industrial Revolution, extraordinarily high levels of immigration, by the way, during that period-
- DFDavid Friedberg
Right. Right.
- BSBen Shapiro
So you had an incredibly cheap labor base that was actually coming in, into the United States. At that time, massive expansion-
- DFDavid Friedberg
No income tax.
- BSBen Shapiro
... of the American population. No income tax. A, a-
- DFDavid Friedberg
So free-flowing capital.
- BSBen Shapiro
A newly discovered continent, right? Like, like, truly, like many, many confounds, right? And, and by the way, less international trade generally, so tariffs aren't gonna have the same sort of impact on global supply chains as they would now, where every product that you buy has gone through 10 different countries in 10 different ways. So, so I... No, I don't, I don't think that that is a comp. Um, but that doesn't mean that, that Luttnik doesn't think that it's a comp, for example. And, and I think that the... when, when it comes to, you know, the roll-out, again, a methodical roll-out... I, I totally get the crazy man theory, and I think that sometimes President Trump does that. I'm hoping that that's what he's doing. But a good example of an off-ramp he could have taken, if that's the thing he's trying to do... So yesterday, in anticipation of this, Israel, which had very, very low tariffs on United States goods anyway, announced they'd removed all tariffs on American goods, right? There were no tariffs on American goods anymore. And the administration that afternoon listed their tariff rate at 33% and then hit them with a 17% tariff for a country that has 0% tariffs.
- JCJason Calacanis
When they could have just taken them when and just used them as an example of a great partner.
- 55:26 – 1:13:50
Impact, consequences, and risks for the Trump Administration
- DSDavid Sacks
- JCJason Calacanis
Okay. Chamath, give us an example here and y- I'm trying to get you to paint the entire picture here because- ... the tariff cudgel is not making sense to a lot of folks.
- DSDavid Sacks
Okay. So it's not all good news.
- JCJason Calacanis
Yes.
- DSDavid Sacks
Right? So let's, let's paint the, let's... So I'll give a very specific example. A friend of ours runs a 100 plus year company. I'm just gonna say i- in generic terms so that I don't betray his confidence, but-
- JCJason Calacanis
Sure. No problem.
- DSDavid Sacks
And this is a business that's been built over 100 years, owned by an American family, an incredible family, and they make products that we all know and love. And what did this action do? So in their example, they're in a very difficult position because they have, as David said, a very tight operating margin because they have to compete ferociously against China and they've done everything possible to maintain their capabilities in America, hire American workers in the Heartland, but still compete against China. It's tough. And this action today swings them from profitability to a potential yearly loss in a meaningful order of magnitude, like hundreds of millions of dollars. So Jason, that's the other side of this tariff coin. So we have to find a way of finding those examples and as Ben said, excluding them somehow or giving them reprieve because that wasn't the intention, I think, of what Trump was trying to do yesterday. That's an example of a company that should be winning and should continue to win and fight the good fight against China and try to continue to employ thousands of Americans. But this thing, because they had some capacity in some other countries, not China by the way-
- JCJason Calacanis
Got it.
- DSDavid Sacks
... blows the thing up. And so now you have to fix those things.
- JCJason Calacanis
All right. Ben, let me get you involved here. I'm gonna play you a quick clip from Rand Paul and I want to get your feedback on executive power and then on tariffs themselves and if it's a good idea or a bad idea. Play the clip.
- NANarrator
What's the rationale for getting behind this? Well, one, we should not live under emergency rule. The Constitution said taxes are raised by Congress, most specifically, taxes originate in the House and come to the Senate so I'm against emergency rule. We are richer because of trade with Canada and so is Canada. Whenever you trade with somebody, when an individual buys somebody else's product, it's mutually beneficial or you wouldn't buy it. If the trade is voluntary, it's always beneficial. There is no Canada versus The US. The consumer wins when the price is the lowest price. Tariffs raise prices and they're a bad idea for the economy.
- JCJason Calacanis
Ben, your thoughts on the two issues. Is trade good for consumers? This is what, you know, I g- I think is on top of everybody's (laughs) mind, that- T- the whole Trump presidency and he won in large part due to inflation and Biden economics and that he was gonna reduce inflation and I think a lot of people believe inflation's about to come roaring back. Your thoughts on the two issues.
- BSBen Shapiro
Well, I mean, obviously on a macroeconomic level, I totally agree with Senator Paul. When it comes to the powers of the presidency, I think that it's pretty extraordinary that we should be able to use the trade deficit as a national emergency sufficient to put down what effectively amounts to a $700 billion tax increase on the American people if you're talking about them paying the price of, of the tariffs on, on the other end. Uh, Congress, you know, I think that if things get bad enough, th- th- there are a bunch of, you know, streams obviously here that cross. One of the big things here is that Congress is up for re-elect in a year and a half. And if the Republicans lose Congress in a year and a half, then whatever tricks President Trump is, is trying to pull in terms of being able to rejigger the rate at which we are paying back our, our national debt, all that stuff goes by the wayside because if Democrats win Congress, pretty much everything comes to a crashing halt. And there are a lot of Republicans who are in swing districts or in say, R+5, R+10 districts who are suddenly gonna feel, feel pretty vulnerable. A recession takes everybody with it and it takes Secretary Bessant, it takes the president, it takes J.D. Vance, (laughs) takes everybody with it. R- recessions tend to crush the president who is in power at the time regardless of what their long-term plan is when they say short-term pain f- for long-term gain, uh, a- again, I think that th- there are a few factors here that I would like to see played out. For example, if there is an inflationary effect to the tariffs in terms of, in terms of price, does that mean the Jerome Powell is going to inject additional liquidity into the markets by, by decreasing interest rates? It's hard to see how. I mean, he's holding the interest rates steady right now without decreasing the interest rates despite President Trump basically blasting him publicly since before he was even the president, uh... Formally, he's not just the president-elect at that time. So a- again, it's hard for me to see how all of this squares into what looks like a, a really well-calibrated policy. And, and then beyond that, in the long term, tricks that we play with regard to the rate of interest paying back our national debt are not gonna be sufficient to pay back our national debt unless we have robust economic growth. And so a lot has to be bet on the robust economic growth out, out-earning essentially the, the levels of debt that we are, are currently racking up. And while I love what Doge is doing, these systemic drivers of our national debt are not actually being touched at this point by Doge. I mean, it's, it's the, it's the means-tested welfare programs that are really the systemic long-term drivers o- of our national debt.
- JCJason Calacanis
And military, I think would be number two. Yeah. Military-
- BSBen Shapiro
Milita- military as a percentage of, of the, of the GDP or as a percentage of the budget has been, y- relatively stable and in some cases decreasing since, since the end of the Iraq war.
- JCJason Calacanis
True.
- BSBen Shapiro
But th- but th- that... W- when it comes to the means-tested welfare programs, those continue to grow as a percentage of the budget, and over time are increasingly u- unfunded.
- JCJason Calacanis
Yeah. As our population ages and the population grows. Freiberg, putting aside executive power and the midterms, which yeah, that, that would change everything, what are your thoughts on just inflation and tariffs and the chance that this comes back and explodes, y- in the administration's lap?
- DFDavid Friedberg
Well, I think there are three consequences, not necessarily related to inflation, that are just worth spending time on. One of which I don't think gets talked about enough. The first is just the challenge of tariffs in general. And I shared this clip with you guys over the group chat yesterday from Ronald Reagan talking-
- JCJason Calacanis
Oh, it's so funny-
- DFDavid Friedberg
... about tariffs.
- JCJason Calacanis
... I have it queued up. I actually, we added it. Let's do that. Let's play this clip and get your reaction.
- NANarrator
And today, many economic analysts and historians argue that high tariff legislation passed back in that period, called the Smoot-Hawley Tariff, greatly deepened the Depression and prevented economic recovery. You see, at first when someone says, "Let's impose tariffs on foreign imports," it looks like they're doing the patriotic thing by protecting American products and jobs, and sometimes for a short while it works, but only for a short time. What eventually occurs is, first homegrown industries start relying on government protection in the form of high tariffs. They stop competing and stop making the innovative management and technological changes they need to succeed in world markets. And then, while all this is going on, something even worse occurs, people stop buying. Then the worst happens, markets shrink and collapse, businesses and industries shut down, and millions of people lose their jobs. The memory of all this occurring back in the '30s made me determined when I came to Washington to spare the American people the protectionist legislation that destroys prosperity.
- DFDavid Friedberg
So let me just say three things that I think are gonna be important consequences, one of which doesn't get talked about much at all. The first is the important point about the decline in competitiveness that arises when you use protectionist tactics like import tariffs. So ultimately, in order to be competitive in the market, you need to have a free market to test how good you are relative to your competitors. And if you use tariffs or other taxes or other government intervening systems to distort the natural forces of markets, meaning there's a buyer and a seller, there may be multiple sellers, and ultimately the buyer will choose the best seller, then you're creating a disincentive for American enterprise to be more competitive. We lost manufacturing because we weren't competitive in manufacturing. Putting a tariff on other manufacturing countries does not make Americans more competitive. It basically gives American businesses a crutch. And ultimately-
- JCJason Calacanis
Give an example, David. Yeah.
- DFDavid Friedberg
So let's talk about manufacturing. So if I'm using a traditional assembly line with low-efficiency systems, I'm gonna be more expensive to make a device than a Chinese factory that's built with a lot of automation, high-efficiency systems, et cetera. And so if I'm saying, "Well, to buy the Chinese product, you gotta pay twice as much 'cause there's a tariff now," the American company does not have an incentive to invest in automating or building better technology or adopting new technology to make themselves competitive in the marketplace. So that's the challenge with tariffs long-term, is that they distort economic consequences that arise in a traditional free market system. The second consequence I think is important is under this guise and in the near term, the effect of some of these tariffs is gonna be the loss of revenue for a significant chunk of the American businesses. In particular, I'll use one example. People may not remember this because it wasn't that big of a thing, but between 2016 and 2020 during the last Trump administration, there was a continued kind of tariff and trade escalation between Trump and China. And during that time, China stopped buying American ag exports. And China's the biggest buyer of American agricultural products. As a result, the Trump administration had to issue two support payment checks to farmers that totaled $28 billion in 2018 and 2019, just because of that China stepping out of the buying market. American farmers represent a large amount of the voting bloc for the Republican Party. And so my, I think that the second consequence is gonna be that there is gonna need to be financial support, which means increased government spending-
- JCJason Calacanis
Oh, no.
- DFDavid Friedberg
... if we intend to keep the tariffs in place and the global market stops buying American exports. That's the second consequence. The third consequence, which is the one I am most worried about, which I think about a lot, is China had the State Council meeting a couple days ago. And in that State Council meeting, they announced a series of measures and a series of steps that they would be willing to take on IP infringement in the case of retaliatory tariff escalation in a trade war. What that means is that China may step up and say, "You know what? We are disregarding all of the IP rights held by IP rights holders around the world," and they could steal IP more openly, more brazenly. And because they have a lower cost of manufacturing, they have a larger manufacturing base, a lower cost of power, they could basically take the only thing that much of American enterprise relies on, which is our IP rights, and say, "We're just gonna..." While people might say, "Oh, they already do that, they already do that," they do it to an extent, but imagine if China just made copies of Microsoft Word and started selling it around the world for $5.
- JCJason Calacanis
Yeah. I mean, they did that internally for some period of time, then they started to respect it internally, but they've never done it, great point-
- DFDavid Friedberg
Eh, imagine-
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