Evil Empire 2.0: Tom Cotton on Europe’s Path to Peace and China’s Dangerous Hegemony

US and Ukrainian officials will meet on March 12 to talk peace in Eastern Europe; a new US approach to China may or may not be in the works; and the Trump administration’s gas-brake approach to imposing tariffs on trade partners has a Hoover economist baffled. 

Arkansas senator Tom Cotton, chair of the Senate Intelligence Committee and author of Seven Things You Can’t Say About China, joins Hoover senior fellows John Cochrane and H.R. McMaster to discuss the latest in Ukraine and his concerns over China’s military, economic, and cultural hegemony. After that: The fellows dig deeper into the economic and strategic ramifications of Trump’s tariff ploys, followed by a “lightning round,” including the merits of a US “crypto strategic reserve”; the renaming an army fort in Georgia (H.R. having known the late general whose name was removed); the creator of Hamilton refusing to play a “Trumpier” Kennedy Center; plus what the two would give up for Lent if so inclined.   

Recorded on March 7, 2025.

Episode Transcript

>> Ronald Reagan (00:00):
High tariffs inevitably lead to retaliation by foreign
countries andthe triggering of fierce trade wars.
The result is more and more tariffs,higher and higher trade barriers and
less and less competition.
So soon, because of the pricesmade artificially high by tariffs
that subsidize inefficiency andpoor management, people stop buying.

(00:20):
Then the worst happens.
Markets shrink and collapse,businesses and industries shut down and
millions of people lose their jobs.
[MUSIC]

>> Bill Whalen (00:30):
It's Friday, March 7th, 2025 and welcome back to GoodFellows,
a Hoover Institution broadcast examiningsocial, economic, political and
geopolitical concerns.
I'm Bill Whalen,I'm a Hoover distinguished policy fellow.
I'll be your moderator today, joinedby two of the wisest gentlemen I know,
we call them the Goodfellows.
That would includethe economist John Cochrane,
former presidentialNational Security Advisor, H.R. McMaster.

(00:51):
We are not joined todayby Niall Ferguson and
that's a shame because he would have likedto have been here because of our guest.
Joining us today is Tom Cotton,
second term US Senator fromthe great state of Arkansas.
Senator Cotton is the chairman ofthe Senate Intelligence Committee.
He is also the chair ofthe Senate Republican Conference,
which makes him the numberthree Republican.
He is also a talentedauthor in his own right.
In fact, he has a book out.

(01:12):
It's calledSeven Things You Can't Say About China.
We're gonna talk about that today.
Senator Cotton, thanks forcoming on GoodFellows.

>> Tom Cotton (01:18):
Hey, Bill, thanks for having me on, it's good to join you all.

>> Bill Whalen (01:21):
One thing about our show, which is a challenge, Senator,
is the world just kinda keepsmoving faster than we can record.
And our last episode was a great example.
We put it to bed, the next day we hadthe ill fated meeting in the Oval Office
between President Trump and VicePresident, Vance and President Zelensky.
A few days after that, there is thepresidential address to the joint session

(01:42):
of Congress which you were sitting in.
A lot happened on the terror frontwhich I know John wants to talk about.
Yesterday, President Zelensky announcesthat a Ukrainian delegation will
go to Saudi Arabia next Wednesday, March12th, to meet with the US delegation.
Sitting in on the US side are Secretaryof State, Marco Rubio, presidential
National Security Adviser, Mike Waltz,he has General McMahon, old job.

(02:02):
And White House envoy, Steve Witkoff.
My question to you, Senator Cotton,
if you were sitting in that conferenceroom in Riyadh with the US delegation,
what would you wanna ask toyour Ukrainian counterparts?

>> Tom Cotton (02:13):
Well, I think what President Trump has been clear that he
wants to do is to get tonegotiated into this war.

>> Ronald Reagan (02:19):
And I wanna get this thing over with.
You see the hatred he's got for Putin,
it's very tough forme to make a deal with that kind of hate.
He's got tremendous hatred.

>> Tom Cotton (02:26):
It's fairly obvious that at this point there's not gonna be an end to
the war on the battlefield witha decisive victory either way.
Russia has made some very incrementalgains in recent months, but
I mean, very,very incremental on the front lines.
And if a war doesn'tend on the battlefield,
then it has to end through negotiations.

(02:46):
President Trump sees that in our interest.
He also sees it inthe interest of Ukraine.
They're a smaller country, economically,
they're not nearly aslarge as Russia either.
The sooner there's some kind ofarmistice or cease-fire or truce,
that stops the killing,that stops potential Russian advances.

(03:07):
It allows Ukraine to start to developits economic future, hopefully,
with deeper ties with America,like through this minerals deal.
I think he believes that'sin everyone's interest.
So I suspect that delegation is gonnawanna ask, what the appetite for
that kind of deal iswith the Ukrainian side.

(03:27):
It seems that President Zelensky,
after the unfortunate meetingin the Oval Office last week,
recognizes where the president's tryingto go and wants to try to get there.
Obviously, he and his government has tothink about that future of Ukraine and
to make sure there's not a thirdinvasion of Ukraine in the future for
which it's ill-equipped.
But I'm hopeful that coming out ofthe meeting next week in Riyadh

(03:52):
will be a framework thatUkraine can support.
And then it really getsput on Vladimir Putin and
whether he's willing to acceptthat kind of framework.
Whether he's willing to stop the kind ofindiscriminate bombing of civilian targets
and infrastructure in Ukraine, orwhether he insists on keeping it going.
As President Trump said earlier today,if that's the case, then he's prepared

(04:16):
to lower the boom on Russia throughsanctions and banking sanctions and
tariffs and other actions, much as hedid in his first term as president.

>> H.R. McMaster (04:25):
Good job, great, is great to see you.
Hey, I went back and I looked at yourMarch 2022 speech at the Reagan Library,
which I'd recommend to our viewers.
And in that speech,I think you really made the case right for
a Reaganesque kind of foreign policy,especially, vis-a-vis Russia.
And that had a lot to do with support forUkraine.
As you're advising President Trump,having discussions with him,

(04:49):
what do you think he most needsto know about Vladimir Putin.
And the approach with Putin that mightwork and approaches that might not work,
given Putin's track record, right?
He's been in office since the year 2000.
So what would you share with our viewersabout what you think is feasible
in terms of an outcome to the Ukrainewar and how to go about it?

>> Tom Cotton (05:12):
Well, I think President Trump actually used Ronald Reagan's old
formulation this week to trust but verify.
You have to try to establish some levelof trust with a counterpart in any
negotiation, even if they're an adversary,but you never just take their word for it.
And I think that's particularly true withsomeone like Vladimir Putin or Xi Jinping,
is, you may have to sit down and negotiatewith them just like Ronald Reagan did with

(05:35):
Gorbachev four times in three years.
But you don't expect them to breach abargain out of the goodness of their heart
or because you've established somelevel of rapport, trust with them.
They're gonna do it what they think isconcretely in their nation's interest and
in their own personal interests,as a strongman tends to do.
I think President Trump understandsthat HR, he also understands that

(05:58):
[COUGH] every American presidentsince Vladimir Putin came to power,
has aspired to have a betterrelationship with Russia.
And it never quite seems to work.
And I don't think that's because ofa repeated failure on America's part.
It's because Vladimir Putin doesn't reallyview himself as a friend or an ally or
a partner of the United States.

(06:20):
He still views America,as they used to say in the old KGB days,
as the main enemy.
And perhaps you can reach a rapprochementon this or that particular issue,
as we did in the early days of the globalwar on terror with President Bush.
Or have a cease in the fighting in this or
that place if Vladimir Putinviews it as in his interests.

(06:41):
But I would strongly second the Reaganwisdom that President Trump cited
earlier this week to trust but verify.

>> John H. Cochrane (06:48):
So let me express the,
I'm just a little economist,so I got to say things.
And you can say,here's why all that's wrong, John.
But that might be useful since a lotof people seem to be wrong with me.
You said there's no way to end thiswar in victory but that's our choice.
Russia's economy is bigger than Ukraine's,but it's smaller than Italy's.
So if NATO decided to take a George Bushone's approach to Iraq to this and

(07:13):
say, you're rolling backto the Russian border,
we could do that in a matter of days,if not weeks.
So no victory is our choice, that'sa choice we might choose to make for
some reasons.
But this seems to leave, let's suppose,we stop with sort of a cease-fire.
Putin's promises are worthless.

(07:33):
Our promises aren't that great eitheranymore, guys, let's face that.
Or we guarantee the territorial integrityof Ukraine if you give up your nukes,
well, so much for our promises.
So what are we gonna get?
We're gonna get a pause in the fighting,and then both sides rebuild and reassess.
I don't think Ukraine's thatinterested in invasing Russia, but

(07:54):
Russia's pretty interested inbringing this one to a second round.
Or maybe Lithuania-Latvia Estonia,now maybe you'll say this
was such a disaster for Putin that hehas no more interest in expansion.
He just wants a face saving way out andretire and die in his bed someday,
rather than the waydictators typically go.
But that's a lot of hope in that one.

(08:17):
So, you sort of see six months to a yearof pause and then bad things happen again.
And this sends a horriblesignal to Xi Jinping.
The new world order is, you grabwhat you can, you rattle your nukes,
you wait a couple years forstern denunciations, and
then we have a ceasefire andyou get to keep what you want, Taiwan.

(08:38):
[LAUGH] So that doesn't seem likea great way of doing things,
is this perhaps Nixon in Vietnam?
Well, we have a deal, we have a ceasefire,we have peace with honor.
Whoops, two years later, it goes back.
And what we've done in the meantime,the president kind of blew a hole in NATO.
So, one of the best things we were talkingabout last week is Europe seems to be

(09:01):
finally serious about, whoa,we're on our own here.
But it's not clear, it's in USinterest for Europe to be on its own.
For example, if you have goneto cozy of the China, well,
we got less to say about it,if they have their own defense force.
So there's a way of looking at this thatsays this is not the greatest way to go
about it.
And instead giving stuff up to Putinahead of time might have been a mistake.

(09:22):
And we should have turned the screws firstand come to the negotiating table later.
So why am I wrong?

>> Tom Cotton (09:28):
Well, first, John, I wouldn't say you're wrong that there
was a time when Ukrainemight have won this war,
might have been able to push Ukraine orRussia back.
Not just to the lines as theyexisted before February of 2022, but
out of Ukrainian territory entirelyback to where it was in 2014.
That time, I think it was in 2022,Ukraine fought and valiantly won what

(09:50):
you might call the Battle of Kyiv,in the first couple months of the war.
Thanks in no small part to allthe anti armor weapons that
Donald Trump had shipped to Ukraine,that Barack Obama had refused to do.
And they had pretty significantbreakouts in the fall of 2022
in the Northeast and in the south.
But it's clear that Joe Biden's policy andstrategy always was to allow

(10:14):
Ukraine to avoid losing, butalso to restrain them from winning.

>> John H. Cochrane (10:18):
Exactly.

>> Tom Cotton (10:19):
He pussyfooted around for three years, he was a day late and
a dollar short, andthings change on the battlefield.
And what might have been possible in 2022just does not seem possible in 2025.
In the early days of this war,
I often likened it to the Winter Warbetween Soviet Russia and
Finland, from November of1939 to March of 1940.

(10:41):
Russia made almost the exact samemilitary mistakes in this war as they
made in Finland in the end of 1939,and paid the same kind of prices.
Unfortunately, I think where we are now[COUGH] in Ukraine is not where Finland
was in November and December of 1939.
Where they were valiantly and pluckilyfighting off the Russian invader, but

(11:04):
where they were In March of 1940.
[COUGH] The point where they'd been grounddown, Russia's vast advantage and mass.
As has often been the case now in history,was pressing on them and
they needed to have some kind of armisticethat prevented a complete victory of
Russia eventually on the battlefield.
I'm sure HR as a military historiancan give us 17 more examples of why

(11:27):
the Winter War andthe war in Ukraine are similar.
But I do think that that'swhere things stand now.
It's not just that defensive lineshave been dug in so deeply and are so
hard to penetrate, but also the advancein technology on both sides.
Where you now have many more deaths andcasualties on the battlefield coming from
drones, not coming from long rangeartillery fires, for instance.

(11:50):
And if I were in President Zelenskyy'sposition or anyone else in Ukraine,
I wouldn't just be trusting the goodoffices of Western leaders.
As you pointed out,
they had promises made to them inthe Budapest memorandum from 1994.
I would be trying to get the concreteassurances that I need in
terms of weapons manufacturingof probably European troops,

(12:14):
most likely French andBritish in the country.
Economic cooperation withthe United States to give
the United States a concrete, durable,lasting interest in the country, and
more economic integrationinto Western Europe.
I think Ukraine hasalways badly needed that.
They need an economy [COUGH]that does not look to the east,

(12:34):
but rather looks to the west.
And like the countries on itswestern border, Slovakia and Poland,
Hungary become a part of thoseWestern European supply chains.
That raises per capitalstandards of living,
gives them more political stability,therefore reduces the levels of
corruption and makes them moreeconomically viable in the long term.

>> John H. Cochrane (12:55):
Yeah, all of which makes it even more of an attractive target
for Russia.
I think more of the analogy of early 1918when the Western Front was collapsing and
the Germans were winning untilall of a sudden they weren't.
There's plenty of signs thatRussia is not doing that well,
spending half its economy on the war.

(13:15):
It's not clear how longwith sustained pressure,
with us finally allowingUkraine to attack,
say Russian energy facilities,that it was quite so hopeless, as you say.
And, we've sent a prettystrong message to Xi Jinping.
Some of it was, well, we can't fightthis war cuz that risks World War III.

(13:36):
Well, then we can't fight in Polandcuz that risk World War III.
And we certainly can't fight in Taiwanagainst a much superior adversary with,
China's got to be 10 timesmore of a threat than Russia.
Didn't we just hand Taiwan to China here?

>> Tom Cotton (13:52):
No, I don't think so at all.
Well, first, there is a difference youmissed mentioning Baltic nations as well.
There is a difference between the Balticnations in Poland versus Ukraine,
those are all part of NATO.
They have an express securityguarantee in the United States.

>> John H. Cochrane (14:04):
Does that really matter, I mean,
when you say Putin has nukes,and it might be.

>> Tom Cotton (14:10):
We need to take into account, of course,
that Russia has the world'slargest nuclear arsenal.
I mean, Saddam Hussein launchedan unprovoked war of aggression across
an international border in 1990.
And there were like H.R.
MCMaster and 500,000 of his closestfriends went there to expel him.
And one reason we did that is not only areour interests more deeply implicated in
the Middle east at the time thanthey are right now in Ukraine.

(14:32):
But also Saddam Hussein didn't havethe world's largest nuclear arsenal.
So, I mean, as a matter of prudence,we have to take these things into account.
The matter of Taiwan, I mean, it'sa different kind of military operation.
It would look different than what the warin Ukraine looked like, whether in 2014 or
in the skirmishing that lasted between2014 and 2022 and then the war since then.

(14:53):
But I also think the President has beenvery clear that some of what he's doing in
Europe and in the Middle east.
Is an effort to increase the attention and
amount of resources we can dedicate to theWestern Pacific, our interest there, and
maintaining the peaceful statusquo across the Taiwan Strait.

>> Bill Whalen (15:10):
Senator, one way you get people's attention is to take away their
intelligence.
And so I'm curious as to yourthoughts first of all, on whether or
not we should be sharingintel with Ukraine or
if you use that as a leverage tohelp move forward the peace process.
And I'm sorry for cutting you off HR,you have a question.
But also our relationship, threeEuropean allies, which John referenced.
And if there are hard feelings in Franceand Germany and Britain or so forth,

(15:31):
is that going to reverberate inthe intelligence communities?
Are they gonna withhold informationfrom us or am I hopeless, naive?
Are they gonna start spying on us?
Do you see ramifications here?

>> Tom Cotton (15:40):
Yeah, the CIA director, John Ratcliffe,
confirmed this week that intelligencesharing had been paused.
He said that he thought that pausewould be temporary and brief.
That's part of the broader administrationpause on other kinds of aid to Ukraine
as well.
I do think that was in part to try to getthe attention that President Trump is
serious about this.
He wants to try to bringit to a resolution soon.
He doesn't want it to drag on forsix months on either side.

(16:02):
I think that's why he said today thatRussia could be facing severe sanctions
and tariffs if they're not seriousabout trying to negotiate.
For our European friends, look,
it's a simple fact that they needto do more to protect Europe.
They have to care more about your at leastas much about European security as we do,
and they have to bewilling to invest in it.
They cannot expect the American taxpayerto be more committed to underwriting

(16:26):
European security thanEuropean taxpayers are.
They can't expect American parents todedicate, potentially their kids to
a battle for European securitythan they're willing to do.
And fortunately, you're startingto see some action on that front.
Not just the willingness of PresidentMacron or Prime Minister Starmer, but
to put troops into Ukraine as a kindof tripwire after a ceasefire.

(16:48):
But also, Brussels and
Berlin talking about spending upto $150 billion more on defense.
That's a good start.
They need to spend a lot more,but that's a good start for
European nations to be investinga lot more in their common defense.
John pointed out that Russia'seconomy is smaller than Italy's.
Well, just imagine when youcompare it to the EU's economy.

(17:09):
The EU's economy is, I don't know,15 or 20 times the size of Russia's.
There's no reason that Europeannations cannot largely provide for
their own security with certain kinds ofadditional support from the United States.
It's not a matter of economic ormilitary limitations,
it's a matter of political will forEuropean nations.

>> H.R. McMaster (17:29):
Hey, Senator, I mean, you led soldiers in combat, right?
And you understand as wellas anybody that what's so
most important is confidence, right?
Confidence in your ability to prevail iswhat allows you to kind of suppress your
instinct for self preservation andto fight aggressively against the enemy.
Are you concerned about sort of some ofthese kind of psychological blows that

(17:50):
are being delivered to the Ukrainians, ata time when they're struggling, certainly,
but Russia's struggling [LAUGH], you couldsay is even more difficult circumstances.
What I'm concerned about is like this.
A lot of these actions, suspensionof intelligence and so forth and
suspension of other assistance,it actually is affecting, could affect

(18:11):
the morale of the Ukrainians whilebolstering the morale of the Russians.
I mean,is that something you're concerned about?

>> Tom Cotton (18:19):
Well, first,
I welcome President Trump's commentsearlier today about the tough stance he's
going to take on Russia if they don'tappear to be serious about negotiations.
And I believe that John Ratcliffe wasright when he said the pause not just on
intelligence sharing, but all forms ofaid will be temporary as a way to try to
concentrate the mind of Kyiv onthe need to meet next week and

(18:39):
Riyadh on negotiations.
I can tell you that from my observationon the Armed Services Committee,
on the Intelligence Committee, onconsulting with Ukrainian leaders who have
come through, like the chief of defense orthe head of their intelligence services
over the years,they are very battle hardened.
They are very confident in their abilityto fight and defend their territory and

(18:59):
their morale andmotivation is very high as well.
I mean, you would kind of expectthat after what Ukraine went through
in the 20th century, the Ukrainians whosurvived under Soviet domination and
World War II were not the shrinkingviolent types and their kids and
grandkids probably aren't either.
And so much so, there's a joke, as youprobably heard in the early days of this

(19:21):
war when the topic of NATOmembership came up and
Ukrainian soldiers said that Ukraineno longer seeks membership in NATO,
but NATO is welcome to seekmembership in Ukraine.
And that just gives you a sense ofthe confidence they have and the drive and
the will they have to stand up anddefend their territory.
So I don't think that'sgonna be diminished at all.

>> H.R. McMaster (19:41):
So can I just ask you too, just because our audience, I'm sure
reflects kind of the debate that's goingon in terms of the sustained support for
Ukraine.
I think there's a lot of disinformationout there associated with where
the money spent that's provided toUkraine and the nature of the assistance.
And then also relevant to thisexcellent book that you just produced,

(20:03):
The Seven Things YouCan't Say About China,
kind of the connection of the competition.
John alluded to this, the connectionto the competition that's going on in
Ukraine, to the broader competitionwith the axis of aggressors.
So, I mean, I think that,what's important for
the American people to understand is the,so what?
Why do we care?Why is this important to us?
Can you maybe counter some ofthe disinformation about it and

(20:23):
explain the rationale forsustained support for Ukraine?

>> Tom Cotton (20:26):
So most of the aid we provided to Ukraine over the last three
years is military aid in two large kinds.
First, giving them things that we have, so
giving them Javelin missiles likeDonald Trump did and his first term.
And then the expendituresare reflected in our military,
replenishing those stockpiles in some way,that's a good thing.

(20:47):
A lot of the munitions we've beenproviding Ukraine, for instance,
are many years old.
There's been several more updates,mods, as they're sometimes called.
So it's a good thing for us to besending older versions to Ukraine and
getting the latest updated,or mod, if you will.
So that's one big bucket of spending.
The second big bucket is money that we areallowing Ukraine to buy our weapons with.

(21:09):
So the kind of missiles that are beingbought or being made in South Arkansas
with American tax dollars, andthen those are being shipped to Ukraine.
Those are the two big buckets ofaid that we provided Ukraine with,
the vast majority of it military.
I've been in Poland at the staging ground.
Many of these things are trackedelectronically down to the point of use.

(21:31):
They have cell set up,since American troops are not in Poland,
to do things like not just accountability,but maintenance and
training on them over zooms like this one,for instance.
That does raise the broader point of howwe support not just Ukraine, our friend,
like Israel, but our own needs inplaces like Europe and Middle East,
especially the Western Pacific.

(21:52):
The war in Ukraine has not causedthe brittleness of our defense industry.
It's not depleted our stockpiles,it's exposed that brittleness and
exposed the depletion of our stockpiles,especially after our military was
strained after somany years of war in Iraq and Afghanistan.
So it's a very reasonable concern.
I know the President has this,as do some skeptics of Ukraine aid.

(22:14):
It's a concern of mine as well that wedon't produce enough stuff right now.
We don't produce enough things quicklythat we can use to defend ourselves and
support our friends around the world.
And that's one of the high prioritiesof Donald Trump and his key aides is,
is increasing the rate of production.
We're not talking about cuttingedge scientific breakthroughs here,

(22:34):
although we do that as well.
We're talking about simply increasing therate of productions on fairly basic things
like high Mars rounds, interceptors forPatriot missile batteries, the standard
missile that our Navy uses both foroffenses and for defensive purposes.
These are things that we make already.
They're obviously a lot more sophisticatedthan they were 40 years ago, but

(22:56):
that we should be able tomake at a much faster rate.
That's one of the things we'retrying to do in Congress,
in the budget bills that we'regonna pass is appropriate for
many years out to ensure that defenseindustry knows that there's gonna be
a steady flow of funds sothey can recapitalize their factories.
Adeline maybe build a new factory.
Same thing that Secretary Rubiois gonna try to do at

(23:16):
the State Department by streamlining theability of our friends and allies around
the world to buy all those things wemake to give another source of demand.
And in that regard,these fights really are linked.
Whether it's deterrence againstChina supporting Israel,
the support we've provided to Ukraine.
It all comes back to American industrialmight, which simply is not as not as sound

(23:37):
as it needs to be and hopefully willbe much better after these four years.

>> Bill Whalen (23:42):
Senator Cotton, HR Mentioned your outstanding book on China,
Seven Things You Can't Say About China.
Thank you, HR doing the jobthat a moderator should do.
Thank you for doing that.
The seven things you can't sayare China's an evil empire.
Two, China's preparing for war.
Three, China's waging economic world war.
Four, China's infiltrated US society.
Five, China's infiltrated US government,six, China's coming for

(24:04):
our kids, and seven, China could win.
So here are seven things you can't say.
Senator, is one of theseno no's paramount.
Does it stand above all the others orthey all carry equal weight?

>> Tom Cotton (24:15):
Well, the first chapter is that China is an even empire.
And the reason I led with that obviouslyharkening back to what Ronald Reagan said
of communist Russia andsaying about communist China.
So I think it is very importantthat you understand that
the nature of a regime to understand notjust how it's gonna act internally and
towards its own people,but externally as well.
China is an evil empire, Mao is the worstmass murderer in human history,

(24:39):
worse than Stalin, worse than Hitler.
China has never repudiated Mao the waySoviet Russia backed away from Stalin.
I mean, literally, his body isstill entombed for the public and
his giant visage standsover Tiananmen Square.
Xi Jinping is an avowed Marxist-LeninistMaoist thinker, he probably hopes that
one day people refer to China's leadersas Marxist-Leninist joist thinkers.

(25:02):
They are committing genocideagainst the Tibetan people,
against the Uyghur people, a religiousminority in Northwestern China.
They persecute Christians, with China asone of the largest Christian nations in
the world, up to 100 million people.
They brutalized a harmless Buddhistspiritual movement called the Falun Gong.
They broke the promises that theyhad made to Great Britain and

(25:25):
the civilized world byrolling into Hong Kong and
cracking down on it in 2020under the guise of the pandemic.
They probably invaded and
attacked their neighbors more thanany other country in modern times.
So I think it's important that youunderstand the evil malignancy that's at
the heart of Communist China tounderstand why it's such a threat to us.
Why it's economic world war.

(25:46):
Why its military buildup is sucha threat to the United States.

>> John H. Cochrane (25:50):
Now one could say much the same thing about Russia.
So it's not clear why we wanta relationship with Russia and
not one with China.
I will be curious to hear howjust how China has waged economic
war on the United States,sending us cheap stuff.
Walmart sends us cheap stuff,
we don't consider that economicwar on small town America.

(26:11):
And the larger question, war.
You said the two words deterrence andwar, and
this is something we keepbatting around on Goodfellas.
Are we at the stage with Chinawhere what we want is deterrence?
Deterrence means don't do X, yeah, there'sstuff internally we're unhappy about.
But let's just don't do,don't invade Taiwan,

(26:34):
say we wanna make it costly for you todo that, we want relationships with you.
China still really depends ona lot of exports, well, guys,
invade Taiwan and that's gonna blow up.
Now, of course, if we cut Taiwan,cut China off economically,
then they lose that incentive to be with,so deterrence war.
When you move from deterrence to economicwar, then I'm gonna hurt you even if it

(26:58):
hurts me, andI'm just gonna do stuff to hurt you.
And it's not clear to me whether a lot ofour policy towards China is we're just
gonna hurt you even if it hurts us.
That's fighting a war or is it deterrence?
We wanna keep you involved and
make it clear to you that it is to youradvantage not to do certain things.
[CROSSTALK]>> Tom Cotton: Yeah,

(27:19):
on the economic world war point, I wouldsay China has been waging an economic
world war against the United States fordecades.
It's just that the United States finallydecided to join the war in 2017 when
Donald Trump became president.
Well, there's two main ways, as I write inseven things you can't say about China.
One is through the massiveamount of support and

(27:40):
subsidy it gives to its own companies.
We support and subsidize, you wanna know what our support
to the mortgage industry, to the carindustry, to the electric vehicle
industry, I mean, no, there's lots ofsin here on support and subsidies.

>> Tom Cotton (27:52):
And every government, every government underwrites certain favored
industries orpolitically powerful constituencies.
No one does it to the extent thatCommunist China has done over the last 40
years through direct subsidies,through state ownership,
through tax rebates,through environmental degradation,
nobody does it to the extentthat Communist China does.

(28:12):
That's what they do internally tounderwrite their own companies externally.
They really use what you mightcall gangster tactics against
America's companies.
They use traditional espionage toput spies inside of companies,
try to steal intellectual property,
they break in through cyberattacks into those companies.
They force companies into joint venturesin China with Chinese companies,

(28:34):
force them to transfer the technology,only to cease the joint venture and
then kick them out of China, so->> John H. Cochrane: It's good say no
if they don't like it.
Both supporting their own companies and undermining ours, and
that's what has allowed them to buildup their economy over the last 30 or
40 years, and now they use thatas a source of great leverage.
Both countries thatare dependent upon China for

(28:56):
Chinese exports in their countries andalso countries and
industries that are dependenton access to the Chinese market.
They do that not against us, butagainst other countries as well.
They got in a dispute with Australia a fewyears back cuz Australia wanted to study
the origins of COVID andthey cut off Australian beef and wine and
other products.
They got angry, I think it was atCzechia for some minor slights,

(29:20):
because some Czech officialstraveled to Taiwan.
They decided to cancel an entire orderof Czech pianos going to China simply to
bankrupt the company.
So they've been doing this for30 or 40 years,
it's just that we only joined it recently.
Now, the question about deterrence, one, Ithink President Trump wants to stop a lot
of these practices,he wants to level the playing field.

(29:41):
He understands that there are certaingoods that we really should not and
cannot rely on China for anymore.
Whether they're cutting edgeelectronics and high tech or
whether they're fairly basic but
essential goods like active pharmaceuticalingredients or generic pharmaceuticals.
It's one thing for us to depend on Chinafor artificial Christmas trees and

(30:01):
Christmas decorations,which we largely do.
But we could probably get bywith a lot of the economic
interconnections that we have with Chinacuz they're not in strategic goods.
But for strategic goods thatare critical to the health or safety or
prosperity of our country, we reallyneed to get away from our response or
our dependence on China andget out of any kind of, even limited,

(30:26):
but especially sole source relationship.
And then more broadly, deterrence,I mean, I think a sound China policy for
President Trump will be handing the reinsover to the next president in January of
2029 without any conflict over Taiwan,certainly an invasion, but
even a blockade or quarantine.
Taiwan's military is stronger thanit is now, our military is stronger

(30:49):
than it is now, and we are moreeconomically independent from China.
And China has Chinese influence becauseof that economic interdependence has
diminished in our society.
That's what I think a successful Chinapolicy would result in come January 2029.

>> H.R. McMaster (31:04):
Hey, Senator, welcome to the long standing debate here between
John and usually me and Niall, thanks fortag teaming in with, on us with this.
And I would just add, Xi Jinping wantsto weaponize his economy against us.
The dual circulation economy,the military, civil fusion,
every company has to act by lawas an extension of the party.

(31:26):
And I think it's really important forAmericans to read your book, so
we understand the natureof the competition,
because I think John raises points thatare on the minds of all Americans.
But, hey, can I bring you toa closer competition here at home?
Because I'm sensing that there isa competition going on between competing

(31:46):
visions for conservative foreign policy,conservative national security strategy.
And when I read what you say andwhat you write,
I couldn't agree with you morein terms of your regulatory.
Approach of peace through strength.
But there is this tension that I see nowwithin the party among those who are in

(32:08):
favor of retrenchment and disengagementfrom complex challenges abroad.
Many of them are frustratedby problems here at home.
And think, hey, what are wedoing over there when we should
be solving our problems here at home?
Many of them were frustrated by the lengthand difficulty of the wars in Iraq and
Afghanistan.
And they kind of blame the neoconsas they lump them together,

(32:31):
whatever that means,more than they blame our adversaries for
some of the challengeswe're facing abroad.
And then this group kind of overlapsthe retrenchers, they're the prioritizers
who just wanna focus on China andplay like little kids soccer there.
But then there are alsothose who are advocating for
big cuts in defense,which is like anti-Reagan esque.

(32:55):
And so that debate's goingon within the party, I know.
Could you maybe make the case foryour vision and
maybe describe the natureof this competition?
Cuz I think it's important to understandthe other's point of view and
take that into consideration.

>> Tom Cotton (33:12):
Yeah, so, well, first off,
I wanna say that I think sometimes thesedifferences are a bit overplayed by part
persons who don't have governingresponsibility, as you once did.
People who make their living onsocial media or television or,
no offense, podcasts have an incentivein many cases to drive engagement,

(33:33):
to call one side isolationist or callthe other side globalist or what have you.
What I see in Congress, what I see on mycommittees in the Armed Services Committee
and the Intelligence Committee, butalso interactions with the administration
are people who have some differingviews on this or that policy question.
This or that part of the worldwhere our interests lay, but

(33:55):
people who believe in Americanstrength and competence.
Yeah, that may lead todifferent conclusions,
obviously about the degreeto which we support Ukraine.
It doesn't always lead tothose different conclusions.
Most people across our party are alignedin support with Israel against,
not only Hamas, who committed terribleatrocity against Israel on October 7th,

(34:18):
but Hezbollah and Iran as well.
And we have pretty broad alignment onthe threat that China poses as well.
Many of our differences I see are reallylike you say, HR trying to balance those.
And some people do act likefive year olds playing soccer.
When it gets to the China threat,I understand that cuz it's the most severe
threat, but it's also a threat thatplays out in other parts of the world.

(34:40):
As President Trump has made plainabout Chinese investment and
intrigue in Latin America and
has already had a big win on itwith BlackRock announcing this last
that they're gonna buy the two big Chineseports on either side of the Panama Canal.
That China is working closely with Iran,for instance,
to undermine sanctions againstIran's oil industry so
they can get oil at a cut rate and soIran gets more money to support it.

(35:02):
So these threats are interconnected and
one reason is that we'rethe global superpower.
And I saw that in my first days in theCongress, in the House of Representatives,
after President Obama walked awayfrom the so called red line in Syria.
I was in East Asia a few months later andI was surprised to hear so
many people talking aboutthe Syrian red line.

(35:25):
You don't think that officials in Seoul or
Tokyo would be all that concerned aboutwhat's happening in the Syrian civil war.
But when it's America that underpins thesecurity order in every part of the world,
of course they're gonna be concerned.
Cuz it's not just about American militarymight, it's about America's will as well.

>> John H. Cochrane (35:45):
Let me add a last economic potshot here, we talk about jobs.
Well, we have a 4% unemployment rate.
I'm curious just how many more jobsChina did posse could have stolen us.
If you had a number,how much has US GDP been hurt by China?
How much wealthier would we be overallif China remained desperately poor,

(36:09):
$200 a person GDP rather than $20,000?
And how does 25% tariffs againstCanada and Mexico possibly help?
And I wanna put that ina foreign policy way.
If we want a geostrategic long-termeconomic competition with China,
I would think we want friends.
And we want Mexico and Canada to make thehard choice of well, we'll buy the more

(36:33):
expensive car from the US not theamazingly cheap car we can get from China.
We would want Europe, which isstill in its various green phases.
We want Europe to turn down thosecheap Chinese solar panels,
electric cars, and so forth.
Europe doesn't really care about Taiwan,we want friends.
And just how in the worlddoes 25% tariffs on our

(36:57):
closest neighbors makesense in that context?

>> Tom Cotton (37:01):
So on the first question, John, I'm not gonna predict down to
the percentage point how differentour GDP would be or how much of-

>> John H. Cochrane (37:09):
10th of a percent,
1% or 10% is good enough for me [LAUGH].

>> Tom Cotton (37:12):
What's the old joke about economists?
They use decimal points becausethey have a sense of humor.

>> John H. Cochrane (37:16):
Exactly [LAUGH].

>> Tom Cotton (37:17):
But I will say there's no doubt that you can look at not
just companies, but entire industriesthat have been hollowed out,
really, over the last 25 years or so.

>> John H. Cochrane (37:25):
Other industries gain,
the way trade works is stuffwe don't do well, they do.
And then we do stuff better,so the overall economy,
yes, industries have been hurt, but->> Tom Cotton: But
we're not an economy with a country,we're a country with an economy.
And we should care aboutall of our people, and
it's not just simply a GDP mark.
We shouldn't just bea GDP maximized machine,

(37:46):
we should think about the health of allof our people in all of our regions.
Poorer but more equitable,
it's almost sound like a Democrat here.
We're poorer cuz we have China, butit's more equitable population.

>> H.R. McMaster (37:59):
I think what we're talking about,
I think where we bring this together,though, is the social good of
not being dependent for criticalsupply chains or manufactured goods
on a hostile state that can use thatdependency for coercive purposes.

>> John H. Cochrane (38:16):
So we're poor.

>> Tom Cotton (38:18):
No,- >> John H. Cochrane
we're poorer.
You need a healthy and balanced economy to have a strong country.
You can't have an economy where, again,no offense, where everyone makes
a living appearing on each other'spodcasts or reviewing each other's books.
You need people to grow your food andto make your stuff and to deliver it.
I mean, you have to have a healthy,balanced economy.

(38:39):
And there's a lot of voters inplaces like Arkansas and Ohio and
Michigan who look at what has happenedover the last 25 years since China got
permanent Most Favored Nation status andgot admitted to the WTO.
And thought, gosh, we were promisedthis was gonna make us better off.
And it sure doesn't seem that way whenyou drive by shuttered factories or
towns that have almostshriveled up entirely.

>> John H. Cochrane (38:59):
Unemployment rates 4%, and they all have found other jobs,
and you both kind of said,well, we're worse off.

>> Tom Cotton (39:05):
And the labor participation rate is still much lower than
it should be, so.

>> John H. Cochrane (39:09):
Well, there's a lot of reasons for that.

>> Tom Cotton (39:10):
So, anyway, your second question.
I mean, what President Trumphas done with Canada and
Mexico obviously is different cuzthey are allies, unlike China.
I would just point to the cooperation wereceived from Mexico over the last month
and a half on crackingdown on the cartels.
They extradited a large number of seniorcartel officials, cartel leaders.
Leaders are going to hiding,

(39:32):
they're scared to death of whatthe United States, Mexico might gather.
Illegal crossing at the southern border-.

>> John H. Cochrane (39:40):
A threat to get them to do stuff.

>> Tom Cotton (39:41):
I mean, I don't do that, I mean,
Donald Trump says that all the times.
[LAUGH] It's not me doing it,he's very open about what he's done.
And look, you had months in the Bidenadministration where 300,000 people were
crossing our southern border.
In the first full month of the Trumpadministration, it was fewer than 9,000.

>> Bill Whalen (39:57):
Senator, I have to jump in here because we have more than used
up your time.
But I do have one last question foryou and
let's see if you can do it very quickly.
I'm guessing that on Tom Cotton'sphone there is not a TikTok app.
And I'm guessing that because I readyour book and here's what you say,
quote, if your kid uses TikTok,I urge you to stop reading now and
immediately delete the account.
Well, Senator, we're in the middle of the75 day reprieve on the TikTok ban right

(40:18):
now, I think that ends on April 5th.
What's the outcome gonna be and
what's that gonna say aboutour view toward China?

>> Tom Cotton (40:24):
Yeah, I would encourage you to delete TikTok if you have it on
your account.
I suspect the three of you don't,
maybe HR does cuz he likes topost videos of himself dancing.

>> H.R. McMaster (40:34):
Hey, senator, I was the funkiest national security advisor,
just in case you're wondering whatdistinguished me from the others [LAUGH].

>> Tom Cotton (40:42):
I did, another reason to get rid of TikTok.
I understand a lot of Americans useTikTok, they don't see what the issue is.
It is a severe threat.
It's a social media platform like Facebookor X or Snapchat or what have you, but
the difference is TikTok is underthe thumb of the Chinese Communist Party.
I hear people saying, well,it's just kids data, what does it matter?

(41:05):
Well, it's not just kids data,there are a lot of adults who use it.
But also kids grow up.
Kids grow up and they join the military,they join the intelligence community,
they take sensitive positionsin cutting edge companies.
So that is a threat.
I also hear people saying, well,the content on TikTok is harmless,
no big deal.
Cat videos and how to videos about homerepair cooking and HR McMaster dancing.

(41:29):
Where's the harm in that content?
And you're right,most of the content on TikTok is harmless.
But there's a lot that's very harmful.
And TikTok, if you look at the evidencethat state attorneys general have produced
in lawsuits against it, will intentionallytarget teenage boys with graphic
violence or obscene pornography.
Teenage girls with eating disorder contentor body image content, both with content

(41:53):
that's glamorizing drug use oreven suicide, even when you're asking for
happy content to counteract yourdepression or your sadness.
And sadly, as I write in the book,
some teenagers have committed suicideafter viewing that kind of content.
And finally, it's also a tool forChinese communist propaganda.
You can't learn about TikTok just like youcan't learn on Deep Seek, the new AI chat

(42:15):
from China about Tiananmen Square or aboutthe Uyghur genocide or about Falun Gong.
On the day that the House wasconsidering this legislation last year,
TikTok sent push notices to allof its users saying click here,
call your congressman andtell them to vote against that.
What would we do if TikTok used that samefunction if Donald Trump was threatening

(42:36):
60% tariffs, not 20 tariffs or in a momentof tension against or over Taiwan.
So these are all the reasons why TikTok issuch a threat to the well being especially
of our kids andalso our national security.
Why Congress passed a law that didn't say,once again I wanna stress, ban TikTok.
It said that its parentscompany has to sell TikTok and
break ties entirely with China if TikTokis gonna continue operating here or

(43:01):
in the future if any similarapp controlled by another
foreign adversary is goingto be operated in America.

>> Bill Whalen (43:07):
Senator, we've kept you seven minutes longer than we promised so
your time is up.
Thank you for joining us.
The book again is 7Things You Can't Say About China.
Senator Cotton, thanks foryour time, come back to GoodFellows.

>> Tom Cotton (43:17):
Thanks gentlemen, it's good to be on with you.

>> H.R. McMaster (43:18):
Thanks Senator.

>> John H. Cochrane (43:19):
Pleasure, thank you so much.

>> Bill Whalen (43:22):
For our second block we're gonna stick with the tariffs conversation
and dig deeper into it.
John Cochrane, here's what President Trumpsaid in his joint address to Congress and
I quote, tariffs are not justabout protecting American jobs,
they're about protectingthe soul of our country.
Tariffs are about making America richagain and making America great again,
he likes that word, great.
It may be a little bit of an adjustmentperiod, but bear with me.

(43:43):
So John, are you bearing with thePresident and let's talk about tariffs in
two regards, John, the sheer economicsof it but also HR as a diplomatic use.
It strikes me that Trump is basicallyengaging in gunboat diplomacy,
whereas Teddy Roosevelt use a great whitefleet Donald Trump is parking tariffs off
nation's coast and trying to get his way.
Use that John, let's start withthe economic side of things, terrorists.

>> John H. Cochrane (44:04):
So I'm trying to be sensible here [LAUGH], your economist
union card says tariffs are bad,rent control is bad, so forth.
But as the Senator said, there'sa national security game going on here.
If you're using tariffs as a threat to geta better behavior on security issues or

(44:24):
better economic behavior,that would be great.
I'm a little dubious because the averagemugger says give me your wallet.
He says exactly what he wants andwhen he wants it.
So I wasn't really clear whenthese tariffs gonna end.
It's not really clear that what we wantis complete free trade with countries and

(44:45):
this is a means to an end,
as you quoted nicely,all the wonders of tariffs by them.
Tariffs do seem to be here like an answersort of wandering around in search of
a question.
And there's a lot of economic, I'mtrying to find a polite word, fuzziness,
that I hear, I really haven't heard anyreasonable defense of these tariffs.

(45:09):
If you don't like trade, let me put this,suppose you don't like trade deficits.
Trade deficits are a terrible thing.
Well then you ought to love foreign aid.
You ought to love tax Americans,
give foreigners the money cuz what do youdo with dollars, you buy American goods.
So if you don't like trade deficits,you'll love foreign aid.
If you think tariffs are a great idea toraise revenue, well, why don't we have

(45:32):
tariffs between California and Nevada orbetween San Francisco and Oakland?
Well, that's clearly a bad idea.
And in fact, Canada and Mexico,we joke about 51st state,
they were kind of on the way to 51st and52nd state.
They threw their lot inwith us under NAFTA.
They became extremely dependenteconomies on US trade the same

(45:55):
way Florida is dependent on U.S. trade.
And that's how Europe kind of is,
is working its way toUnited States of Europe.
And we just kind of said you're onyour own, this was a huge mistake.
So I'm finding it even with an open mind,tariffs are costly, economically costly.
There must be benefit.
Now economists would say aircraftcarriers are costly and economists don't

(46:18):
get the jump to so don't buy aircraftcarriers cuz as HR would tell you, tanks.
Sorry, HR tanks,come in handy every now and then.
But I have not hearda coherent economic or
national security argument forthe kind of tariffs we're putting in.
And HR has this beautifulessay by the way,
well done on the new version ofthe economic statecraft essay laying

(46:43):
out narrow tariffs headed forspecific national security reasons.
But we want friends, we want Mexico andCanada to say no to China.
I do not understand where the currenttariff policy is coming from.

>> Bill Whalen (46:55):
But I see a pattern here HR twice now the President has said there
will be hell to pay in the Middle Eastif the hostages aren't released.
He said it before he was elected andhe said it the other day,
there'll be hell to pay.
And now he is on a couple occasions nowimposed tariffs, but wait a second,
once he imposes him,he backs off on like TikTok.
There is a stay on the execution and
right now we're waiting to see April ifthe Mexico, Canada ones will come through.

(47:19):
He's also put tariffs on China,it's just to be seen,
isn't this how Trump goesabout doing things HR?
It's just he likes to take sortof cudgels as a means to the end,
the end being getting a deal.

>> H.R. McMaster (47:29):
When he sees a situation that he's not happy with, right?
He tries to disrupt that situationsometimes with what some people regard as
outlandish statements, sometimesit's with announcement of tariffs.
I mean, there are a whole range of,of tactics that he uses.
But I think what's important, though,is with the point that John's making is I
think it should be important it was tostate upfront what the objective is.

(47:51):
He does that on occasion,sometimes it's not quite as clear.
Is it reciprocity in trade andmarket access?
Is it trying to get others to stop whatwe would regard as unfair trade and
economic practices through subsidies oroverproduction,
or in the case of China now, offshoringto evade US Tariffs and so forth.

(48:12):
And to violate kind of what wewanted to achieve with the USMCA
with rules of origin and everything.
So, I mean, what is the objective?
Is it border security, is it fentanyl?
And I think it's always clear what I triedto do [LAUGH] for that period of time when
I was national security advisor is whenwe had these debates, I try to say,
okay, hey,what is it that we're trying to achieve?

(48:33):
And if the fundamental problem is China,John alluded to this, then it doesn't
really help a lot to go after our alliesin a way that they see as hostile,
because ultimately it would be beneficialif we had the same approach toward China.
So China couldn't do a divide andconquer, for example.
So, I used to say to President Trump,hey, Mr.
President, if we shoot all of ourallies to get to China, China wins.

(48:57):
And so I think it's important tohave those kinds of discussions with
the president, but really acrossthe departments and agencies within
the White House, with the NEC andthe NSC, to, hey, what's the objective?
And then to assess, right,kind of war game out.
If we take these actions,what what do others do next,

(49:18):
are we making progresstoward our objectives?
So it's not always clear withPresident Trump up front, but
what he's doing is trying to address whathe sees as a fundamental problem that
needs to be disrupted.
And I think that's why we're in thisphase of tariffs at this level, maybe
that level, maybe suspend for 30 days,what happens after 30 days, we don't know.
And of course, he does follow the markets,though, and John,

(49:41):
I don't know what your thoughts are abouthow the degree, at this degree of
uncertainty is affecting markets andwhat the president, people around him.
Scott Bessant andothers who are from that world,
what they might conclude aboutthis kind of disruptive approach.

>> John H. Cochrane (49:57):
Yeah, I think we're seeing fairly clearly
that the uncertainty.
Companies are putting investmentplans on hold until they know
what the situation's gonna be like.
And the actual tariffs themselveswould be pretty damaging,
especially cuz they weren'tparticularly well crafted.
This issue of a car part can crossthe border eight times before the car

(50:19):
is actually made.
So you charge eight times the tariff.
Well, that would have been an easy one tosay we only charge tariffs on the net.
But they didn't think to do it thatway and then they had to back off.

>> H.R. McMaster (50:31):
And you've got USMCA renegotiation coming up too.
It's probably startingthe next couple of months.
There's an opportunity if you do havesome real issues on how USMCA is being
followed or not followed or is inadequateto achieve what you wanna achieve,
that renegotiation is gonnahappen in the next year.

>> John H. Cochrane (50:51):
But I'm a lowly economist, so
four dimensional chess of geostrategyI leave to bigger minds like you.
But there is, I think a danger thatwhen you're trying to blow things
up to kind of get to where you want,you really piss people off and
make it less likely to enter intothose difficult long running.

(51:14):
Yeah, Canada, they have tariffsagainst US dairy, that's silly.
We have tariffs against Canadian wood,that's silly.
They got a lot of wood,we got a lot of cows.
This is not a hard one, we wanna kindof stir things up in many, many areas.
We've been stuck in things for20, 30 years, so.
But the blowing things up has a cost,the Canadians are really mad and

(51:36):
any sort of goodwill is gonnabe hard to re establish.

>> H.R. McMaster (51:40):
And just one last thing here.
I think what's missing guys is likea positive agenda with these countries,
with these allies, right?
Think about how much wecould get done with Canada.
Hey, North American defense, right?
President Trump is prioritizingthat missile defense.
Hey, guess who our bestpartner is on missile defense?
Canada, because they reach allthe way up to the Arctic Circle, and
that's where you needyour defensive systems.
We already have the North American defensesystem, NORAD, that needs a refresh.

(52:04):
We could have Arctic security.
I mean so many, so many agenda itemswith Canada, with Mexico obviously.
And I think what's missing a lot oftimes is, is that positive vision,
the positive agenda to work togetherin a mutually beneficial way.

>> John H. Cochrane (52:23):
And on Canada, we can have our arguments about strategic
competition with China and so forth,but Canada, it's right next door.
And the long run vision for trade withCanada has to be trade with Canada should
be about as hard astrade with North Dakota.
And, it's obvious they're our friend,they're our ally.

>> H.R. McMaster (52:41):
Energy dominance that item on the president's agenda,
total alignment with Canada,especially if there's a conservative.

>> John H. Cochrane (52:48):
I love what you just said, stay where we're going.
And where we ought to be going iscontinents in northern American,
complete free trade,sort of like Europe has.
That would be a great, and we want tobe your ally and your friend, and yes,
absolutely, say where we're going.

>> Bill Whalen (53:04):
So, you know who has a bad job in Washington right now is
Howard Lutnick.
He is the Commerce Secretary, and for thepast several days, he's had to go out and
try to make sense of the tariff policy,what's in, what's out,
what's gonna happen.
He said something very interestingthe other day, he said that the goal of
the administration is to createan External Revenue Service which would
collect the tariff money.
But then, John, he said the Trumpadministration goal is to create,

(53:24):
quote, to abolish the Internal RevenueService and let all the outsiders pay.
Now, John, here I turn to the grumpyeconomist because the grumpy economist
likes to talk about the tax system and
what the grumpy economistwrote in January, and I quote.
The current income tax system isan abomination, burn it and start over.
John, we're in the middle of tax seasonright now where everybody's thinking
about this.
Just give me two minutes onwhat should be done here.

(53:46):
Forget about the External Revenue Service,what about the IRS and what about taxes?
Just a couple minutes here, quickly.

>> John H. Cochrane (53:51):
I don't think Lutnick has a hard job cuz I think he believes it.
Scott Bessant has a hard job cuz he has tosay nice things about stuff he doesn't.
Yeah, in two words, if you askan economist what is the right tax system,
if what you want to do is raise money forthe government at minimal economic damage,
the answer is a flat consumption tax.

(54:13):
Even Paul Krugman would have to admitthat he might be spitting up about.
I wanna ask a different question, butif that's the question, that's the answer.
The income tax is an abominationas you can see in front of you,
income isn't really a meaningful quantity.
And income tax has led to allthese horrendous distortions and
Swiss cheese of exclusions andso on and so forth.
So, once you throw out the income tax,you've also thrown out the income

(54:37):
tax deduction for all these politicized,quote, nonprofits.
You throw out the mortgageinterest deduction, you throw out
the healthcare deduction and all the otheroriginal sins of American tax policy.
That's the right answer, get rid ofthe income tax, estate tax, corporate tax,
put in a tax only on consumption.
What about the rich,get them down to the Porsche dealer.

(54:57):
What about redistribution,send them checks.
That would be a muchmore efficient system.
Now I'm always blue sky, butI think it's important to say blue sky.
If you just say, if you only say,how are we gonna tweak the code and
the depreciation schedule andthis, that and the other thing.
If you never talk about the promised land,you never get to the promised land,
that is the.

>> H.R. McMaster (55:16):
We need to get John a gold plated chainsaw is what I'm thinking,
is what [LAUGH].

>> Bill Whalen (55:26):
HR many, many Aprils ago I was having a conversation with
Arnold Schwarzenegger.
I'm not gonna name drop on purposecuz I will lose that battle with you,
but it was April and I said to him,you must hate this time of year.
And he said why?
I said because you mustpay a lot in taxes.
And looked at me and he goes,I love paying taxes.
And I said what?
And he goes, I love paying taxes cuzthat means I make a lot of money.
So I put it to you, HR as our in houseoptimist, do you like paying taxes?

>> Ronald Reagan (55:51):
[LAUGH] Hey, well, I mean apparently I'm in California, right?
I mean, our whole family moved out herebucking the trend to pay the maximum
amount of taxes we could.

>> John H. Cochrane (56:00):
But taxes, so I got one economist insight.
We should not ever say just taxes,there's tax revenue and tax rate.
And the crucial idea of economicsis to square the circle and
make more tax revenue,while lowering the tax rate.
And the way you do that is youget rid of all that Swiss cheese.
Why?
Cuz of incentives.

(56:21):
I move to California like HR paya lot of taxes, but what I compute,
if I take a consulting job,how much do I actually keep, right?
Know that number and the answer isbetter than consulting jobs [LAUGH].

>> Bill Whalen (56:33):
Yes [LAUGH] All right,
gentlemen, we'll leave itthere a great conversation.
We're gonna play a littlegame that we call- Big deal,
little deal or no deal at all.
[MUSIC]
So question one, John Cochrane.
The Trump administration has createda digital assets working group which is
tasked with creating a quote,

(56:53):
cryptostrategic reserve along the linesof existing US reserves of gold and oil.
John, big deal, little deal,no deal at all?

>> John H. Cochrane (57:01):
So depending on the size of it, big or little silly deal,
most governments throughouthistory have taken to printing
fiat money rather thanbuying fiat money [LAUGH].
As Mr. Trump,in his own personal finances,
has been issuing coins, not buying them.

>> Bill Whalen (57:20):
All right, if you gentlemen lived in Washington DC,
good luck seeing the musical Hamilton.
And that's because the show's creator,
Lin-Manuel Miranda has pulled the plug onat the Kennedy center saying, and I quote,
we're not gonna be part of it whileit is the Trump Kennedy Center.
So, gentlemen, big deal, little deal,
no deal at all that the presidentis at war with the arts?

>> H.R. McMaster (57:39):
I just think it's kind of a little deal,
in the grand scheme of things.
It's too bad cuz Hamilton isa fantastic musical, by the way.
And it's fundamentally a patrioticmessage, that if that's the only
way you can get to help young peopleunderstand, the miracle of our founding.

(58:00):
And this radical idea thatsovereignty lies with the people.
And to appreciate those who werewilling to sacrifice everything,
for our freedom and liberty andthis great country, then it's regrettable.

>> Bill Whalen (58:16):
John?

>> John H. Cochrane (58:17):
I would say, the arts are at war with the president, and
it's kind of sad that the arts havebecome a predictable left-wing politics.
I'm glad to see some returns,but I was in DC recently, and
went to see the fantasticWorld War I Memorial.

>> Bill Whalen (58:32):
Yeah.

>> John H. Cochrane (58:33):
Glad to see some classical art coming back.
The arts community isjust sort of predictable,
it's not even shocking anymore.
It's not even courageous to have sort ofpredictable left-wing partisan politics,
they're kind of makingfools out of themselves.

>> H.R. McMaster (58:54):
I think art in general has tremendous potential to bring
us together, andto celebrate our common humanity.
And to reverse some of the divisions and
polarization we see inour political lives.
So it's just regrettable when art movespeople in the opposite direction.

>> John H. Cochrane (59:12):
Yeah, and I would add we need to go back to a tradition in
America which is respect the office.
He is the President of the United States,so you may not respect the man or
his policies, but respect the office.

>> Bill Whalen (59:25):
I think you're right on little deal in this regard.
Hamilton debuted in August of 2015,it's been around for almost 10 years.
This is not the same as Taylor Swiftpulling the plug on concerts.
So I think the publicwill somehow survive,
you can even find Hamiltonon YouTube if you want to.
HR question for you, the Pentagonis renamed an army base in Georgia,
once Fort Moore,now once again, Fort Benning.
The catch being that Benning nowhonors a World War I soldier, and

(59:47):
not a Civil War general.
The loser in all this HR isArmy Lieutenant General Hal Moore,
who served with the 7thCavalry in Vietnam.
He's the author of We Were Once Heroes,which is both a great book, but
also a terrific movie starring Mel Gibson.
HR your thoughts,I believe you knew General Moore.

>> H.R. McMaster (01:00:03):
Yeah, I think it's a big deal, I think it's a big mistake.
This is again, kind of the tendencyto define policies and
to make decisions mainly in oppositionto those who went before you.
The renaming of Fort Benning,of the post that I commanded,
to Fort Moore was really a smart decision.
Benning was a traitor [LAUGH],he was ineffective.

(01:00:26):
The original Henry Benning that wasnamed for, and they changed the name.
And I think the name changes were alsoimportant to understand in context of when
those changes happened.
When those name changes happened topost with, for Confederate generals,
for example, and why they happened.
And I think it's clear from our historythey happened to accommodate between

(01:00:50):
Northern and Southern whites,largely at the expense of Black Americans.
And Black Americans who weregoing to war in World War I and
coming back from World War I.
So I think that's a valid reason,to change the post, and to name it for
a real hero,a hero of the battle of Ia Drang.
Fantastic book by Hal Moore andJoe Galloway, We Were Soldiers Once And

(01:01:11):
Young, and the movie.
And also what's regrettable,it was the only post that was named for
a husband and wife team.

>> Bill Whalen (01:01:19):
Right.

>> H.R. McMaster (01:01:19):
And it was how Moore's wife was appalled at the way the next of
kin were being notified, about the deathof their spouse, or loved one in Vietnam.
They were just deliveringWestern Union cables from cabs.
So then she organizes thiseffort to identify those cabs as

(01:01:40):
they come on to Fort Benning,where they were stationed.
And to grab those telegrams andto notify people in-person,
which of course,is how the army does it now.
Very officially and respectfully, and
to try to provide asmuch comfort as possible.

(01:02:00):
That's just one of manystories of Hal Moore's and
his wife's tremendous leadership.
So, it's kind of a big deal to me,
you get wedded to the name of the placethat you came up in in the army.
So Fort Benning, it had a place inmy heart, maybe not a good place for
my early days going toranger school there.
But I get that part of it,the nostalgia for the old names.

(01:02:24):
But these name changes, by andlarge, Cavazos in Texas,
these were really good people to emulate,and
to motivate youngergenerations of soldiers.

>> Bill Whalen (01:02:36):
Okay, you've got Lynyrd Skynyrd on your social media feature.
We're doing a one-on-oneGoodFellows this summer,
we're gonna have a conversationabout what all you subscribe to.

>> John H. Cochrane (01:02:43):
That's just what the algorithm fed me, it also feeds me earth,
wind and fire.
So I'm in with HR mcMaster was recently.

>> Bill Whalen (01:02:49):
Now you're showing a respective agency.

>> John H. Cochrane (01:02:50):
Just how great they were.

>> H.R. McMaster (01:02:52):
But Leonard Skinner came out against Wallace and
segregation, right?

>> John H. Cochrane (01:02:56):
Exactly.

>> Bill Whalen (01:02:56):
Right. >> John H. Cochrane
a confederate flag inthe background [LAUGH].

>> H.R. McMaster (01:02:59):
I know, yeah.

>> Bill Whalen (01:03:00):
Okay, final question gentlemen, I don't see smudges on your
forehead, so I'm guessing you don'tpartake, but Lent began this week.
So hypothetically, if you did observeLent, what would you give up for
a month, HR?

>> H.R. McMaster (01:03:11):
Gosh, I think what I need to do is give up being
distracted by just emails and everything.
I just feel like that these days I'mnot as productive as I could be,
because of the kind of the mundane tasks.
But let me think of something that,I should give up for Lent.

(01:03:33):
Maybe I should give up red wine forLent, or maybe I'll do that, but
maybe not also, maybe not, [LAUGH]>> John H. Cochrane: [LAUGH]

>> Bill Whalen (01:03:41):
Okay, John take us home.

>> John H. Cochrane (01:03:42):
Yeah, well, one is tempted to, I'll give up emails, and
FaceTime, andall the other distractions of life.
But of course->> Bill Whalen: That's work.
Part of being, why do we do it?
I spend half my day answering emails,and the other half is showing up at
seminars andevents that I'm not that interested in.
Well, you're doing it for FaceTime, you'redoing it to be kind to your fellow human.

(01:04:04):
So maybe that's not the kindof thing to give up on.
Maybe the thing one should focus on ina Lenten spirit is how to be a better
person, and give up on thingsthat you feel that you've done,
that have been hurtful to other people.

>> Bill Whalen (01:04:19):
I would probably remove the YouTube app from my TV, and
I shouldn't say thissince we're on YouTube.
But ever since I went to streaming onmy TV, YouTube is killing my sleep, and
it's gonna be a cause of my early demise.
And that I start watchingthat thing late at night and
I start going down rabbit holes,I watch HR and John and Niall.
I start watching random things onthe British Navy, random things on

(01:04:40):
how Beatles videos were made, andbefore it's 2 in the morning, it's death.

>> John H. Cochrane (01:04:44):
I feel like, yeah, I should say I give up my X habit.
But then after three pointless videos, and
come some new piece ofinformation that I hadn't seen,
like that wonderful essay that I just sentHR last night that came in over Twist so.

>> Bill Whalen (01:05:01):
All right, let's leave it there gentlemen great conversation.
We can survive without Niall Ferguson fora week or so I guess we proved that.
So Niall, if you're watching,we missed your buddy come back soon.
A viewer's note,we will not be back until late in March,
we're taking a little bit of a break.
I think Amy Zegart,our colleague here at Hoover,
who's an expert on AI is gonna join us.
Also our fifth year anniversary ofGoodFellows is fast approaching that's

(01:05:24):
April 1st, 2000.
So, maybe we're gonna do a littleretrospective on the show, and
talk about how the world haschanged the past five years.
I would note we are doing a Mail show,a viewer of questions show in April, so
this is your cue to startsending us questions.
If you have a question forHR, John, Niall, or
any combination of the GoodFellows,send it to us.
And you do that by going to the followingwebsite, Hoover.org/AskGoodFellows.

(01:05:50):
So we repeat that again,Hoover.org/AskGoodFellows.
On behalf of the Goodfellows,John Cochrane,
HR McMaster the absent Niall Ferguson,our guest today, Senator Tom Cotton.
We hope you enjoyed the show,till next time, take care.
Thanks again for watching.
[MUSIC]

>> Presenter (01:06:10):
If you enjoyed this show and are interested in watching more content
featuring HR McMaster, watch Battlegroundsalso available, @ hoover.org.
[MUSIC]