371. A Free-Trade Democrat in the Trump White House

Episode Summary

Executive Summary: The episode profiles Gary Cohn’s improbable rise from a dyslexic, underachieving kid in Cleveland to Goldman Sachs president and Trump White House economic adviser. It focuses on his role in shaping the 2017 tax cuts, his opposition to tariffs and chaos in policymaking, his uneasy but functional relationship with Trump, and his broader defense of globalization, immigration, and data-driven economic policy.

Main Topics: Gary Cohn’s unlikely personal and professional rise (Priority: 5/5): Cohn describes overcoming severe dyslexia, a poor academic record, and low expectations to build a career in markets, Goldman Sachs, and public service. Inside the Trump White House (Priority: 5/5): Cohn explains what it was like serving under Trump, emphasizing his results-oriented approach, frustration with disorder, and willingness to leave once his main mission was complete. Tax reform as the central achievement (Priority: 5/5): The discussion details Cohn’s role in negotiating the Tax Cuts and Jobs Act, especially the corporate rate reduction and the SALT cap, and how he managed congressional and presidential dynamics. Trade, tariffs, and the China dispute (Priority: 5/5): Cohn strongly criticizes tariffs as economically harmful while acknowledging shared concerns with Trump about China’s intellectual property theft and market access barriers. Goldman Sachs, compensation, and public perceptions (Priority: 4/5): He defends Goldman’s business model as a service and intermediation industry, pushing back on the idea that it is inherently rent-seeking despite huge compensation and public backlash. Globalism, immigration, and labor-market realities (Priority: 4/5): Cohn argues for open markets and immigration, using job openings and workforce shortages to contend that the U.S. needs more immigrant labor, not walls or protectionism. Federal Reserve, markets, and political pressure (Priority: 3/5): The conversation touches on Trump’s influence on markets and interest-rate policy, while Cohn says he was never suited for the Fed and hopes policymakers follow data, not pressure.

Key Arguments: Cohn says he succeeded because influential family members encouraged him and because he eventually found a numerically oriented path despite dyslexia. He accepted work for Trump because the president of the United States asked him to serve, and he believed his oath was to the Constitution, not to Trump personally. The tax law was a major success in his view because it lowered the corporate rate, encouraged investment, and was negotiated to fit political and arithmetic constraints. He argues tariffs are effectively a consumption tax that raises costs for American consumers and worsens trade deficits rather than fixing them. Cohn believes the White House failed when process broke down and people bypassed normal decision-making channels to push tariffs directly with the president. He says the U.S. labor market has more openings than workers and therefore needs immigration to fill jobs and sustain growth. He maintains that Goldman Sachs provides legitimate financial services—liquidity, advice, intermediation—rather than merely extracting rents. He credits Trump for pursuing growth, deregulation, and tax reform, while still rejecting his trade and process style. He suggests Trump’s trade posture was partly political theater aimed at constituencies such as coal and steel workers. He believes China policy could still produce a better outcome, but not through tariffs alone; enforcement and market access matter more than rhetoric.

Data Points: Birth year: 1960 - Cohn was born in the suburbs of Cleveland in 1960. Goldman tenure: 27 years - He spent 27 years at Goldman Sachs. Goldman presidency/COO tenure: last 10 years - He served as Goldman Sachs president and COO for the last decade of his tenure. Compensation in 2007: $72.5 million - His Goldman compensation during the first year of the financial crisis. Corporate tax rate after reform: 21% - Cohn says the Trump tax plan settled at 21% after debate over higher and lower rates. Initial corporate tax proposal: 15% - Trump initially wanted a 15% corporate tax rate. Alternative rate Cohn says he could live with: 20% - Cohn says Trump would have accepted 20% and that the final compromise was close. SALT deduction cap: $10,000 - The tax law limited state and local tax deductions. Projected economic growth increase: 1% - Cohn says the tax plan aimed to raise growth by about one percentage point. Trade deficit with China and globally: All-time record high in 2018 - He cites Commerce Department data as evidence tariffs did not reduce deficits. U.S. trade deficit: $891 point-something billion - Cohn references the 2018 U.S. trade deficit as a record high. Job openings in the U.S.: 7.3 million - Cohn uses JOLTS data to argue the U.S. needs more workers, including immigrants. Unemployed people in the U.S.: 6.3 million - He compares unemployment to openings to support his immigration argument. Coal miners in the U.S.: less than 50,000 - Cohn contrasts coal employment with solar employment to explain why coal-focused policy is outdated. Solar panel installers in the U.S.: more than 350,000 - He cites this as evidence of where future labor demand is growing. Potential remaining lifespan: 50 years - Cohn jokes that living to his grandmother’s age would leave him 50 years. Grandmother’s age at death: 106 - He mentions her age while discussing longevity and future plans.

Pivotal Quotes: "I treated the President of the United States the way I would have liked to have been treated." — Gary Cohn: He explains his approach to working with Trump and managing conflict in the White House. "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." — Gary Cohn: He describes why he ultimately left the White House and why he valued formal decision-making. "I am known as the globalist in the White House." — Gary Cohn: He embraces the label used by Trump allies and critics to describe his pro-trade worldview.

Implications: The interview underscores that policy outcomes in the Trump era depended as much on personality and process as on ideology. It also reinforces the case for data-driven trade, tax, and labor policy over slogans, while showing how difficult it is to sustain that approach in a high-chaos administration.