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Episode Transcript

Stephen J. DUBNER: So your life story, I guess, is pretty remarkable.

Gary COHN: Thank you.

DUBNER: You were not destined for—

COHN: For Wall Street.

DUBNER: For Wall Street.

COHN: Any street.

Gary Cohn was born in 1960 in the suburbs of Cleveland. He had severe dyslexia and was a terrible student. As a consequence, he bounced from school to school. If there were an award for “least likely to succeed,” Cohn might have qualified. His parents were worried he wouldn’t make it through high school. His grandparents ran an electrical-contracting business, where Gary worked after school. He was a whiz with inventory and anything else numerical.

COHN: As the rest of the world was telling me, “You’re going to be a disaster, you’re a failure, maybe you’ll be lucky to drive a truck,” my grandparents — who I really admired, who’d built the family business — they kept saying, “You’re going to be fine.” And they were great people in my life, really influential.

Cohn did make it through high school, and college — at American University, where he programmed computers and became obsessed with the financial markets. But back home in Cleveland, the best he could do was a sales job in the home-products division of U.S. Steel. On a work trip to New York, he stopped in at the commodities exchange, hoping to somehow land a job there. He hitched a ride to the airport with a stranger — a guy who’d just been put in charge of the new options-trading desk at his brokerage firm. He admitted to Cohn he didn’t know anything about options. Cohn replied that he knew everything about them. Which was a lie. But it got Cohn an interview, several days later. By then, it was no longer a lie: Cohn had read the definitive book on options trading four times over — an act of extreme stamina for a dyslexic. He got the job. Several years later, in 1990, Cohn was hired by Goldman Sachs. He wound up working at Goldman for 27 years, the last 10 as president and C.O.O. But it was the job he took in early 2017 that would make Gary Cohn a household name: director of the National Economic Council under President Trump. How did a Wall Street rationalist deal with a Fifth Avenue hyperbolist?

COHN: I treated the President of the United States the way I would have liked to have been treated. That’s how I dealt with him.

*      *      *

I spoke with Gary Cohn the first week in March. It was starting to look like the trade war between the U.S. and China might be moving toward a peaceful conclusion — although, that hasn’t happened yet. Also: there’d been yet another report of behavior unbecoming the President of the United States — this time, a New Yorker piece alleging that in 2017, Donald Trump had instructed Gary Cohn to get the Justice Department to block a media deal that Trump disliked. Cohn reportedly told chief of staff John Kelly, “Don’t you f—ing dare call the Justice Department. We are not going to do business that way.”

DUBNER: Have you communicated with the President since you left the White House?

Gary COHN: Yes.

DUBNER: Can you tell us anything about that?

COHN: We have a very amicable relationship. We usually talk about the economy. Sometimes about personnel. We’ve talked about personnel, and when he’s had to fill a job or two, I’ve talked to him.

DUBNER: I’m a little surprised to hear that you’re on such good terms with the President still, mostly because I read Fear by Bob Woodward. And you’re kind of the star of that book, or one of the stars of that book. The most famous story concerns you removing a letter that somebody drafted for the President to sign, a letter to the President of South Korea that would have terminated KORUS, the U.S.-Korea Free Trade Agreement. So let’s hear your version of that. Is the reporting in Fear essentially true, and did you participate?

COHN: I’m not going to comment on that.

DUBNER: Do you want to comment on whether you participated in the writing of the book. Did you talk to Woodward or—

COHN: I’m not going to comment. I’ve said all I’m going to say on the Woodward book. And as far as I’m concerned, it’s sort of come and gone.

For the record, here’s what Cohn had to say when Fear was published: “This book does not accurately portray my experience at the White House. I am proud of my service in the Trump Administration, and I continue to support the President and his economic agenda.” But, also for the record: in Fear, Cohn calls Trump “a professional liar.” And in a meeting over steel tariffs, which Cohn vehemently opposed, here’s what he reportedly told Trump and Peter Navarro, the President’s favorite economist. “If you just shut the f— up and listen, you might learn something.” So how can it be that Cohn and the President are still on speaking terms?

COHN: I think the President is about results, and when he looks back at our time together, I was part of a team that got a lot done. We got tax reform done.

It also says something about the kind of businessman Cohn was: a team player, and not a backstabber; eager to debate the facts but quick to forget a fight; and a man who exercised substantial patience. At Goldman Sachs, he was heir apparent to the C.E.O., Lloyd Blankfein, for many years.

COHN: So the story is: when I was asked by Lloyd and the board to become president, chief operating officer, Lloyd called me and Jon Winkelried into a room. We were co-s at the time and said, “Guys, will you give me two years? I got to know you’re committed for two years.” And I said, “Lloyd, I’ll give you two. Two’s not hard. But you’ve got to understand, I think these are seven-to-10-year jobs. I don’t think these are lifetime jobs.”

DUBNER: And you did it for 10, correct?

COHN: I did it for over 10. And literally at seven years, I started getting a little antsy. Lloyd, at that point, ended up getting sick. And I wasn’t going to rattle the boat or rock the boat at all in year seven or eight, or maybe it was eight, nine—

DUBNER: He was treated for cancer. I don’t know if you were technically acting C.E.O. but you were essentially—

COHN: I did whatever I did to protect the firm. I went when I needed to go, I did what I needed to go. And to me the most important thing for Lloyd was for him to get healthy. We had worked together our whole life. But at that point, I was letting the board know that I wasn’t going to be here forever. So I sat down, and I made it clear that I would be gone by the end of the year.

DUBNER: Oh, regardless?

COHN: Yeah, I was going. And the Trump thing was pure lucky coincidence.

We should note two things here. The first is that Gary Cohn is a registered Democrat — although, to be fair, a Goldman Sachs Democrat isn’t exactly an Elizabeth Warren Democrat. Cohn did make a lot of campaign contributions to Democrats over the years, but also to lots of Republicans, including a political action committee called Every Republican Is Crucial. The second thing to note is that Donald Trump was the sort of businessman, prone as he was to bankruptcy and hyperbole, that Goldman Sachs avoided doing business with. According to William Cohan, who’s written a definitive history of the firm, “Goldman determined never to do business with Trump and conveyed that message to its new recruits.” Keep in mind this is the same Goldman Sachs that until recently was happy to do bond deals with the government of Venezuela. In any case, by the fall of 2016, Trump had emerged as the Republicans’ nominee for President.

COHN: So if you remember, after the convention in Cleveland, the first debate in September at Hofstra was supposed to be an economic debate. And remember, the operative word there is “supposed to.”

That’s when Cohn got a phone call from Jared Kushner, Trump’s son-in-law and adviser.

COHN: And said, “Hey, we’re preparing the nominee for the economic debate at Hofstra. Can I come in and talk to you about what’s going on in the U.S. economy?” We had a mutual friend.

DUBNER: And what was your initial response to whatever the Trump economic ideas were at that point?

COHN: I clearly support deregulation. I clearly support lower taxes on corporate repatriation, redoing the tax system. So there were a lot of big, high-level things I supported on the economic side.

TRUMP: You are going to approve one of the biggest tax increases in history. You are going to drive business out. Your regulations are a disaster. And by the way, my tax cut is the biggest since Ronald Reagan.

DUBNER: Then on the other hand, there was trade and tariffs and immigration and so on.

TRUMP: NAFTA is the worst trade deal, maybe ever signed anywhere.

COHN: On the flip side there were things that I support on Hillary Clinton’s side, and things that I didn’t support on Hillary’s side. And it was interesting, when Jared called, I walked down three offices to the chief of staff of the executive office of Goldman, John Rogers, a political veteran, and I said, “Hey, John, should I meet with him?” And he’s like, “He’s the Republican nominee. If the Democratic nominee called you’d meet with her too right?” I go, “Yeah. Okay.” “So go meet with him.”

DUBNER: Were you not put off at all by the fact that he was considered by a lot of people to be, whatever adjective you want to use — I mean, the most anomalous major party candidate we’ve had probably ever.

COHN: But he was still the nominee.

DUBNER: Right.

COHN: He was still the Republican nominee for president.

DUBNER: But I’m asking you if you were put off as you — reputationally, for Gary Cohn or for Goldman — whether that was a consideration.

COHN: And that’s why I went, and I asked John Rogers who really is one the most astute political guys I knew — had been in and around Washington forever, been in the Treasury, been in the White House. I said “John, should I do this?” He goes, “What are you asking me? Of course you’re going to do this. If any nominee for president calls you from one of the major parties you’re going to meet with them.” And I didn’t meet with him. I met with his advisers.

Once Trump was elected, Cohn did meet with him. The meeting went very well — even though Cohn is what Trump calls a “globalist,” a believer in free, fair, and open trade. Trump had essentially run against that position. But Cohn’s views on deregulation and tax reform — especially lowering the corporate rate — they were exactly what Trump wanted to hear. Cohn also tried to pitch Trump on preparing for the huge disruption that automation will bring to labor markets; and the need to maintain a strong flow of immigrants.

According to the Woodward book Fear, Trump was so enthusiastic about Gary Cohn that he offered him a number of jobs then and there: deputy secretary of defense; director of national intelligence; secretary of energy; director of the Office of Management and Budget. “You know what?” Trump finally said. “I hired the wrong guy for treasury secretary. You would be the best treasury secretary.”

This must have been a bit awkward: as Woodward reports, Trump’s pick for treasury secretary was also in the room — Steve Mnuchin, another Goldman Sachs alum. Cohn didn’t accept any post at the meeting. But some time afterward, he was offered the role formally known as Assistant to the President for Economic Policy and Director of the National Economic Council. By this time, remember, Cohn was already on the way out at Goldman Sachs.

COHN: The meeting with Donald Trump happened after I’d already made my decision. So I was in motion.

DUBNER: Did anyone say to you, however, “Gary, this president is anomalous, and he is a human third rail, and what are you thinking about?” Did anyone say that to you?

COHN: Of course.

DUBNER: And what did you say?

COHN: I said, “The President of the United States has asked me to work for him. I am going to go in and serve and do the best I can for my country.” Remember, I am taking an oath to the Constitution of the United States to protect and defend, not an oath to the President of the United States. And I am going to go serve the people of the United States.

The Trump White House turned out to be stranger than Cohn, or anyone, could have imagined.

COHN: The White House in itself is an amazing organization in many ways. It’s the craziest organization under any presidency, and it’s an amazing organization under any presidency.

Under Trump, workflow was unpredictable. Protocol was ignored. Turnover was endemic. People started calling Gary Cohn “the adult in the room”: disciplined, focused, and most of all dedicated to tax reform, a goal he shared with the President. Even if their numbers didn’t line up.

COHN: This is not a secret that at one point he wanted a 15 percent corporate tax rate. And I just told him a 15 percent corporate tax rate will not work.

DUBNER: Will not work — will not raise enough money, or politically?

COHN: It just a) politically and b) algebraic. I mean, when you start understanding the numbers of what a 15 percent tax rate means, we’d have to manipulate so many other things in the code. So, I personally would have settled for 25. The corporates would have settled for 25.

He then said, “Okay. I could live with 20. But if you —” and he was talking to Mnuchin and I at the time, he said, “If you guys start at 20, you’ll end up going higher. I know you. I know you can’t negotiate that well.” I said, “If we start at 20, we’ll end up at 20, we’ll hold it. We’ll hold it.” And we were holding 20. He was the one that kept willing — he was willing to go higher.

DUBNER: So what did it end up, 22?

COHN: Twenty-one. Yeah, 21.

Cohn also helped manage the political process, making sure the President’s habit of insulting people via Twitter didn’t undermine Congressional support for the tax plan.

COHN: When we were really working taxes hard, there was no way I could deal with the president going after any one of those Republican senators — I need every one of their votes. I don’t have a spare.

DUBNER: So did you steal his phone? What did you do?

COHN: No, no, no. We and Secretary Mnuchin and others, we kept reminding him. That was one of the reasons that we didn’t do anything in tariffs in the first year, is because a lot of our marginal voters are free-traders. And we didn’t want to give anyone an excuse to hold up a tax vote because they were going to retaliate on trade in the tax vote.

While putting together the tax plan, just eight months into Trump’s term, came a white nationalist rally in Charlottesville, Virginia.

MARCHERS: Anti-white, anti-white, anti-white.

MARCHERS: Jews will not replace us. Jews will not replace us.

There were counter demonstrations as well, and violence. Trump’s response is now infamous.

TRUMP: You had some very bad people in that group. But you also had people that were very fine people, on both sides.

And it did nothing to ease the tension; Gary Cohn, by the way, is Jewish.

DUBNER: From what I’ve read, you were ready to resign then, and kind of had to be talked out of it. You were talked out of it.

COHN: Yeah, we had had two or three, I would say, very intense, very open, very honest discussions. And it boiled down to the president asking me, as his leader of tax reform in the White House and the person that he felt could help him get it done, to please stay on through tax reform.

DUBNER: All right.

COHN: And I did agree to that.

Trump signed into law the Tax Cuts and Jobs Act of 2017 on Dec. 22 of that year. It got through Congress without a single Democratic vote. In addition to lowering the corporate rate, it also incentivized U.S. firms to repatriate money they’d parked overseas, and to invest some of that money here. It also lowered personal tax rates across the board, including a dip at the highest income level. The Joint Committee on Taxation projects the new tax law will be very generous to the very wealthy. But Cohn — who is himself very, very wealthy — he argues with that perception. Indeed, some of the new provisions hurt high earners: a lower cap on the the mortgage-interest deduction and a new $10,000 cap on the State and Local Tax Deduction, or SALT, which is especially punitive to high earners living in high-tax states — states, by the way, that did not vote for Trump in 2016.

COHN: There was a very big tech company in California I was at two weeks ago, where all the senior management was bitching at me because how much their taxes are going up. I said, “Please tell Nancy Pelosi, because she was the first one that came out and said this was a tax cut for the rich.” Well, it was not a tax cut for the rich in San Francisco and it was not a tax cut for the rich in New York City or in Illinois. One of the ways that we made the tax tables work, and we pushed money down into lower-income brackets, is you have to find revenue. We found revenue in this deduction, which if you see who it affects, the vast majority of the people it affects are the high-income earners.

DUBNER: Big question: it’s been a while now, too early for big macro results, but how do you think your tax plan is working so far?

COHN: I’m glad you say that, that it’s too early, because it’s amazing how everyone wants to take a 10-year tax plan and judge it after one year. We talked about increasing economic growth by one percent. And I think in essence we did that in the first year. We went from sort of two to sub-two percent to three and just below three-percent growth. We finally have real wage growth, wage growth in excess of inflation in the United States. It’s still not as high as we’d like to see it. We’re seeing job creation. We’re seeing movement in the labor force. And I do think that we’ve seen that disposable income in the system.

So when you look at corporate earnings and you look at what’s going on in the stock market, a lot of that’s being driven by excess disposable income because of the tax rates. And I will be happy to be criticized if I’m wrong in the tax system, but we won’t know for five-plus years. We gave companies 100 percent of capital-expenditure expensing for the first five years, trying to get companies to make a long-term investment in the U.S. economy. And all we’re hearing right now is how U.S. companies aren’t paying taxes because they’re using that opportunity to invest in capital to manage their tax rate down. That is going to pay dividends for the next 20, 30 years.

*      *      *

Gary Cohn spent 27 years at Goldman Sachs, the massive investment bank and financial-services company. He never got the C.E.O. job he thought he’d get, but you probably shouldn’t feel too sorry for him. In 2007 alone, the first year of the financial crisis, Cohn’s compensation was $72.5 million. $72.5 million. In 2007. Goldman came through the crisis relatively well because of what came to be called “the big short,” a bet against the mortgage market whose collapse left so many other firms, and individuals, in big trouble.

DUBNER: Goldman hedged itself really well and really smartly. But for the average, let’s say, American voter, they look at Goldman and say “What are the goods and services that they provide? What value are they to me and why is a Gary Cohn, why is he making $72.5 million that year when the U.S. economy, the global economy, were starting to totally crater?” And many people really do think of Goldman as the giant vampire squid sucking the lifeblood out of anything that they can. So persuade me that the activities of a firm like Goldman are not essentially rent-seeking, and that the profits of such activities are not out of line with how we generally think of a society like ours, which creates opportunity for all.

COHN: I completely understand the question. I’m not offended. You can see — I get the question completely. The service we provide, and we are in the service industry, no different than other services that people pay for. And we are a service economy. We’re in the service of giving advice, intermediating, providing liquidity. And that’s what people were willing to pay for. And when we talk about that rent-seeking, it’s interesting because you even said it yourself in asking the question. The vast majority of the time we’re selling a bond. So on one hand, we’re representing Venezuela selling the bond, on the other hand, we’re finding buyers. So we literally have to do both sides of the transaction. And we are not taking a principal position in there. We are finding a buyer that will buy a Venezuelan bond at a certain interest rate. We’re talking to the Venezuelan Central Bank or the Treasury saying what rate will you issue at, and trying to find a meeting of the minds. And getting paid a fee in the middle which is fully disclosed to both the buyer and seller to do that.

DUBNER: We should say in that one case, Goldman may have been the last party to have been paid by the Nicolás Maduro government. Right? Isn’t that true. Probably.

COHN: I’ve been out there for a couple of years, but you may be—

DUBNER: I mean, it was a $90 million payment by Maduro. I think it was the last money that was made available for that kind of—

COHN: I’m not going to argue with you. You may be right.

To all the voters in 2016 captivated by Donald Trump’s promise to “drain the swamp,” a man like Gary Cohn was the swamp, at least its New York outpost: the ultimate insider, wealthy beyond belief — and worse yet, he did not even share Trump’s nationalism.

COHN: It’s no secret, I am known as the globalist in the White House. Thank you Breitbart for putting little globes next to my name every time you print my name. It’s one of my crowning successes in the White House that I’m now known as a globalist, not a nationalist.

DUBNER: I don’t think it was a compliment, by the way, when they put it next to you.

COHN: It wasn’t a compliment for Breitbart. It was a compliment for me, though! It was a compliment for me though. So the fact that I’m a globalist, also I — that’s a synonym for realist. Because I believe we live in a globalized world and we’re not putting that toothpaste back in the tube.

The president ran on coal and coal jobs. I remember vividly having a conversation with the president on coal jobs versus solar-panel installers. We ended up putting tariffs on solar panels, which I didn’t understand either. And I did turn to him one day and I said, “Mr. President, how many coal miners do we have in the United States and how many solar-panel installers do we have?” And I said, “I’m not here to trick you up — the answer’s — I’ll make it simple: less than 50,000 coal miners in the United States and more than 350,000 solar-panel installers. And by the way, 10 years ago we had no solar-panels installers. It’s a growth industry in the United States. In fact in California now, you cannot build a house without solar panels. It’s an industry that’s going to continue to grow. And we have to recognize where this country is going, not where this country has been.”

DUBNER: And was his connection to that, what most people would consider an outdated belief, was that political, was it intellectual, was it just kind of spiritual?

COHN: I think it was all the above. I think during his formative years growing up, coal might have been an integral part in thinking about the energy sectors, but clearly in states like West Virginia and parts of Pennsylvania, he understood, and he was a bit of a marketing genius on this. He understood in West Virginia, and southern Ohio and Pennsylvania, you better go talk about coal. And he understood in certain steel towns, when he looked at the empty steel mills, he should talk about bringing back steel jobs.

The Trump plan to bring back steel jobs included placing tariffs on foreign steel and aluminum — along with solar panels and washing machines and hundreds of other imported goods, especially those made in China.

COHN: And when you put tariffs on goods that people in the United States consume every day, it’s a consumption tax. So all the tariffs did is they made products that Americans were going to buy more expensive. And in fact we got the final trade data numbers this morning for what trade deficit looked like for last year in the United States. And lo and behold, we hit an all-time record-high trade deficit globally, and with China.

DUBNER: Despite the best efforts of the White House.

COHN: Tariffs don’t work. If anything, they hurt the economy because if you’re a typical American worker, you have a finite amount of income to spend. If you have to spend more on the necessity products that you need to live, you have less to spend on the services that you want to buy. And you definitely don’t have anything left over to save. So we should try and make the goods as cheap as possible. And we don’t produce the goods in the United States; we import the goods from other countries. And if we could produce the goods as cheaply as other countries do, we would produce them in the United States.

DUBNER: Now, every Ph.D. economist that I’ve ever come across would agree — I would say, probably 99.5 percent — with what you just said.

COHN: No, I think 99.99999.

DUBNER: But the one that doesn’t, is in the White House, which is Peter Navarro, is that right?

COHN: There’s only one in the world. That we know of.

Peter Navarro is director of the White House National Trade Council, a position and office that Trump seems to have created specifically for Navarro. According to Bob Woodward’s Fear, Navarro referred to Gary Cohn as a “Wall Street establishment idiot.” Navarro’s other ally on tariffs was Wilbur Ross, the investor Trump had chosen as Commerce Secretary.

COHN: I was losing the war on tariffs every day with the President. I knew I wasn’t convincing him I was right. I was not going to take a 74-year-old man who’s believed something since he was 30 and convince him that I was right. Believe me, I tried. Don’t think I didn’t try. Don’t think I didn’t use every example I could try and use, from windows and buildings, to steel and buildings, to the bike manufacturer in Detroit. I used every example I could come up with.

DUBNER: We know that Trump has his ways of thinking. He admits that he’s not that interested in changing. We’ve read a lot about how you and others tried to educate him on things, give him new options, but at the end of the day it didn’t work. So what does that say about, I guess, either the president or the ability of our political system to absorb the best information?

COHN: Well, it definitely makes a statement about the power of the Executive Office and the presidency. And ultimately, everyone in the White House works at the pleasure of the president. And I was more than happy, I was actually excited to go in and fight with Peter Navarro every day and I was happy to be on the 99.9999 percent of the equation and explain and use real-life examples to what would happen.

DUBNER: And what would his defense be? Because it’s hard to defend — and, to be fair, there have been people in history, Copernicus, who were outliers, but they were right. Okay. Maybe that’s Peter Navarro’s view. What would his defense be?

COHN: Well his defense would be that he was the Copernicus, that he would be right. I don’t think you or I will live long enough to ever see him right. And the data just came out for last year that proves that so far he’s completely wrong. So far he’s been unable to show anyone any facts that he’s right.

DUBNER: And when the president sees these data, why does he not have a change of mind?

COHN: I don’t know. I mean data is data. Data — numbers really don’t lie. Yes, you can manipulate numbers, but these are numbers put out by his own Commerce Department. These are not your numbers, these are not my numbers. These are his numbers. His Commerce Department put out a 2018 trade deficit of $891-point-something billion. That’s an all-time record high. And the China number in there was the biggest single number, at an all-time record.

DUBNER: That number, however, coincides with a newly, I guess, resurgent stock market you could call it. Really, that’s not even fair. It had a brief downfall.

COHN: Yeah.

DUBNER: It had a one-month decline.

COHN: We had a bad December.

DUBNER: It was a bad December.

COHN: Bad December.

DUBNER: We happen to be speaking now in early March, let’s just pretend for a minute that there’d been a bad January and bad February, too. And let’s say the market had fallen 25, 30 percent overall. Do you think that would have substantially changed the President’s view on tariffs and trade, particularly on China? Because I can see how it might be easy to not worry about the deficit numbers when the markets are doing well.

COHN: You’re asking a really good, fun question. Yeah, what are the benchmarks for success of the presidency? The stock market is the most obvious, most transparent, most talked-about-by-the-president benchmark of success. We can debate how much the president should be accountable for the stock market going up or going down. I mean that’s an interesting debate.

DUBNER: All right. How about on the count of three, we both say a number, one to ten, how influential we think the president is overall, stock market. All right. I’m going to think of my number. You got your number?

COHN: Yeah. I got my number.

DUBNER: Okay. One, two, three.

COHN: Four.

DUBNER: Three. All right. So you’re even more cynical than I am.

COHN: Okay.

DUBNER: So that said, this president really uses it.

COHN: He really uses it. And he uses it more when the stock market’s going up, by the way, than he does when it’s going down. By the way, everyone does that.

What led to the strong market recovery after that bad December? Cohn attributes it to a number of factors: the end of a month-long partial government shutdown; indications that the trade war with China was moving toward a détente; and a decision by the Federal Reserve to stop raising interest rates.

DUBNER: It’s interesting because usually the chair of the Fed is, as we know, wildly independent. But here was a case where the president pretty much came out and said to Jay Powell, the chair of the Fed Reserve, “I would really prefer that you stop doing what you’re doing, and stop talking about raising interest rates.” What’s your view of that? And let me ask a two-part question. I know there was — I’ve read at least, that you were interested in that position at one point. I don’t know whether you were under consideration or not. You’re shaking your head no.

COHN: I am totally not the person to be the chairman of the Fed. That would be the worst position you could give to Gary Cohn.

DUBNER: Because you’re too excitable, or why?

COHN: No it’s a real, real, real academic position sitting with Ph.D. economists all day long and debating the economic tilt/slant micro of the U.S. economy. It’s not my skill set. One of my successes in life is knowing what I’m good at, and more importantly knowing what I’m not good at. I would not have been good at that job.

DUBNER: Okay. I totally take you at your word there. That said, did you consider it — and I don’t mean to assail Jay Powell here, but was it essentially — a “cave” is a strong word, but was it a capitulation based on the President’s wishes, and should the Fed work that way?

COHN: I’m going to hope it wasn’t. I’m going hope it wasn’t. I’m going to hope that Jay Powell and the Fed governors in seeing all of the data they see — I mean, they’ve got more Ph.D. economists than anyone else. They talk to all the companies in the world and the United States, and the regional Fed system is designed to bring them real-time data from the local economies. I surely hope, and I almost pray, that what the Fed did was in reaction to what they were seeing in the data, that they felt that there was an actual slowing of the economy and they were in the wrong place.

After a year in the White House, with tax reform done, Gary Cohn decided he’d had enough.

COHN: The chronology goes something like this: We signed tax reform on Dec. 22, it was a Friday.

DUBNER: 2017.

COHN: 2017. President left for Mar-a-Lago for vacation. I left with my family for vacation. We all came back in early January. And I sat down and had a one-on-one lunch with the President. And I was at the point now where I was getting ready to move on. And I said “I want to work with you to make sure there’s a smooth transition, that you hire someone. I’m happy to work with you to transition that person and I’ll leave as soon as you need me to, or I’ll stay as long as you need me to.”

DUBNER: And was this with the understanding that you were essentially losing the war on the trade war?

COHN: No, no. It really wasn’t. It was with the understanding that my main mission of getting tax reform had been done.

Cohn’s replacement was named: Larry Kudlow. And Cohn received a pat on the back from the President.

TRUMP: This is Gary Cohn’s last meeting in the cabinet and of the cabinet. And he’s been terrific. He may be a globalist, but I still like him.

Just to be clear, Cohn was losing the war on the trade war. But he says the reason he left the White House was because of how he was losing.

COHN: The most important thing to me — and this is the way I’ve always lived my life, whether I was at Goldman Sachs or I was at the White House — is you have to have a set of policies and procedures to debate issues. And as long as you abide by the sets of policies and procedures to debate the issues, and everyone gets their ample opportunity to express their point of view in an open forum, that’s a perfectly legitimate environment to work in.

DUBNER: The best idea wins.

COHN: And you’re never going to win every argument. You’re never going to win every fight. But you’re part of a team. And when the team decides you’re going to do X versus Y even though you passionately think that Y is right and X is definitely wrong, you have to be a team player. When I worked at Goldman Sachs for 27 years, it is the most team-oriented place in the world. So I believe in that team-oriented approach. What happened in the White House is we got to a point, unfortunately, where one or two people decided that they were going to no longer be part of a process and a debate. And they were going to use a direct connection to the president to set up a meeting and call in C.E.O.s of aluminum companies and steel companies to announce steel tariffs and aluminum tariffs without there being a process and a procedure to set up that meeting; without the chief of staff knowing there was a meeting; without the Office of Legal Counsel having written an executive order or a memo or anything to sign. And they created that meeting without anyone knowing it.

DUBNER: These were [Peter] Navarro and Wilbur Ross? Are those the two people?

COHN: Yes. Those are the two people. When the process breaks down, then you’re, sort of, in my mind, living in chaos. I don’t want to live in a chaotic organization. I’ll live in an organization where people vehemently disagree all day long, as long as there’s a policy to vehemently disagree. When people start end-running the process and start trying to take over, that’s not an organization that I wanted to be part of.

Since Cohn left the White House, a pattern has emerged: the Trump administration uses tariffs, or the threat thereof, to leverage trading partners to renegotiate an old deal, like NAFTA, or substantially reconfigure the trading dynamic, as is the case with China. When I spoke with Cohn, there was a lot of talk that a new Chinese deal was potentially close; that sentiment has since receded. Still, I asked him: is it possible that a better U.S.-China trade deal will come about, and that it wouldn’t have been possible without the tariffs he despises?

COHN: There’s absolutely a possibility that that happens. The one thing the president and I completely, 100 percent agree upon is the Chinese stealing of intellectual property, the forced technology transfer into China, the market access for businesses into China. That has been a huge issue for the United States for years. And the president and I completely agree on the biggest problem with China. I’m not here defending China and China policy and China tactics. I have been on the other side of the store Chinese issue for a long time, I just differ on how we get to a conclusion.

DUBNER: What would you have proposed that’s different? Again, nothing’s been resolved as we speak. But basically, tariffs were used as a threat, essentially. That may have—

COHN: Here’s my problem with this. So tariffs were used as the threat. Did it hurt the Chinese at all? We had record trade deficits.

DUBNER: So why do the Chinese seem to be, at least at this point, amenable? Or is that a smokescreen?

COHN: I think the U.S. is desperate right now for an agreement.

DUBNER: An agreement or headline?

COHN: The president needs a win. The only big open issue right now that he could claim as a big win that he’d hope would have a big impact on the stock market would be a Chinese resolution. Getting the trade deficit down I will never say is easy, but of the issues on the table, that’s relatively easier. Getting the intellectual property, the forced technology transfer and the market access — much more difficult. I think market access, the Chinese will give because they’ve been close to giving it for a while. But how are we going to stop the Chinese from stealing intellectual property or not paying for it? How are we going to stop them from copyright infringement? What is the enforcement mechanism and what are the punitive damages if they don’t stop?

On balance, however, Cohn remains essentially a fan of President Trump’s economic agenda.

COHN: The president has come in and looked at the tax system, and looked at the economy, and looked at the regulatory environment, and said, “Hey can we, can we as a federal government, can we help stimulate economic growth?” Something that the prior administration had tried for eight years and never really got. So the president did come in and say, “I do believe in creating a stronger America. I do believe in creating jobs at home. I do believe in wage growth. And I do believe in making America more competitive.” And so those are things that he has executed on. And you have to give him credit. We continue to have a pretty robust market, a pretty robust economy. There’s a couple things going on in the U.S. that don’t really get the attention they deserve. There’s one report that everyone in Washington, the geek world, sort of hangs on. It’s called the JOLTS report, it’s jobs open, jobs lost. We have 7.3 million job openings in the United States. These are like $50-, $60-, $70,000 jobs with benefits.

DUBNER: So this points to you — you’ve always been pro-immigration generally, anti-wall.

COHN: Yep.

DUBNER: Did you try hard on that fight with the President, or—

COHN: I tried a little bit, but honestly I tried to stay in my lane of the economy. If I had bullets to shoot, I want to shoot them on the economy.

DUBNER: I mean it’s pretty easy to argue that immigration is a major part of the economy.

COHN: So we have 7.3 million jobs openings in the United States. We have 6.3 million unemployed people. If all those people were capable of working, which they’re not, we still have a million more jobs than people to fill them. So we need a million immigrants today just to balance the equation. So this is pretty simple to me.

And then I think back — think about my grandparents. They’re all immigrants. They were the ones that helped build this country. This country was built by some natives, but we had a huge immigrant population that came in. And were really all the construction in this country. All the homes, all the bricklayers, the electricians, the plumbers, most of them were immigrant labor and were willing to work 60, 70, 80, 90 hours a week. And willing to get dirty and work and most of those people built good businesses and did very well for their families.

Cohn’s grandmother, he told me, recently died, at age 106.

COHN: If I live to my grandmother’s age, I’ve got 50 years left.

DUBNER: All right, so, do you have a plan for your remaining half-century?

COHN: I don’t know if I have a plan, but I’m doing lots of interesting things.

DUBNER: So you’re investing.

COHN: Yes.

DUBNER: You’ve always done a lot of philanthropy and you’re doing that now. You’re teaching some.

COHN: I’m teaching.

DUBNER: What about politics, per se?

COHN: I mean, I’m not an elected official and I never intend to be an elected official. Let’s make sure about that. I don’t think I would ever — I know I would never run for anything. If I could serve my country again, I would never rule that out. I think it’s one of the greatest honors that you can have is to serve your country.

DUBNER: Treasury Secretary, maybe?

COHN: I’m not gonna say yes, I’m not going to say no. But there’s lots of ways to serve your country.

DUBNER: You went in obviously with your eyes open, knowing that there would be substantial disagreements or differences. What — did your expectation—

COHN: Let me stop you there. Because you don’t know that, right?

DUBNER: Even on trade and tariffs you didn’t—

COHN: I knew we would fight. But again, I’m not sure I knew for sure that the Donald Trump that ran for office would be the Donald Trump I got when he got to the White House. I didn’t know. I didn’t know if he was going to moderate. I didn’t know if the pressure of McConnell and Ryan and McCarthy was going to be able to move him. I just didn’t know for sure what was going to happen.

DUBNER: Give yourself a grade.

COHN: Oh, that’s a good question. I never got an A in my life so I can’t give myself an A now. I got a lot of D’s. I think I’m moving out of the D category. I’ll give myself a B. That’s a good grade for Gary Cohn.

Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Zack Lapinski. Our staff also includes Alison CraiglowGreg RippinHarry Huggins, and Corinne Wallace. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple PodcastsStitcher, or wherever you get your podcasts.

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  • Gary Cohn, former Director of the National Economic Council and former president and chief operating officer of Goldman Sachs