Episode summary
Former NEC Director Gary Cohn: The average citizen today is unhappy with their financial position
Summary
Gary Cohn argued that the midterm result was driven less by ideology than by household frustration with affordability. He said the economy can show strong GDP, jobs, and corporate spending while still leaving “the average citizen” unhappy because food, housing, health care, and energy remain under pressure. In his view, the country has moved from a K-shaped economy to something closer to an L, where asset owners are doing well and everyone else is stuck.
On policy, he said there is little Democrats can do immediately because of the Senate filibuster, the need for Republican support, and the lack of a veto-proof majority. Still, he expects President Trump could eventually cut a deal with Democrats. Cohn pointed to two areas where compromise is possible: Social Security reform, including raising the wage cap, and tariff policy, especially codifying tariffs through legislation rather than executive orders.
He also framed AI data centers as a local political and economic issue. Cohn said states will have to decide whether they want the tax base and jobs that data centers bring, and he argued that limits on new buildouts could make existing data-center owners more valuable while forcing big tech companies back toward positive free cash flow.
Key takeaways
- Cohn said voter anger was driven mainly by affordability pressure on food, housing, health care, and energy, not just by growth rates or headlines.
- He argued the economy has become more like an L than a K, with asset owners benefiting while many households remain stuck financially.
- Cohn said Social Security reform could start with lifting the payroll-tax cap, which he said would raise revenue and pressure higher earners.
- He expects tariff policy to be a possible bipartisan compromise, but said tariffs should be written into law rather than left as executive orders.
- Cohn said data-center restrictions could benefit existing operators and push megacap tech firms back toward positive free cash flow.
Notable quotes
“I THINK WE ALL KNOW IT'S THE ECONOMY, STUPID. SO WHEN YOU THINK ABOUT AFFORDABILITY, THE CORE THINGS THAT PEOPLE ARE SPENDING MONEY ON FOOD, HOUSING, HEALTH CARE, ENERGY”
“I ALMOST THINK THE K SHAPE, THE ECONOMY HAS MOVED TO AN L. YOU KNOW, THE TOP GOES UP AND THE BOTTOM JUST SITS THERE AT THE BOTTOM”
“IF YOU RAISE THAT CAP, IT BOTH AFFECTS THE INDIVIDUAL AND IT AFFECTS THE COMPANY. BOTH OF THEM PAY 6.2% OF THAT”
“I THINK THERE'S BECOME A MUCH MORE UNIVERSAL VIEW ON TARIFFS AND WHAT THEY'RE GOOD FOR, AND PROTECTING U.S. WORKERS AND PROTECTING MANUFACTURING AND PROTECTING JOBS IN THE UNITED STATES”
“THE DATA CENTERS YOU HAVE GOING IN THE GROUND ARE ACTUALLY MORE VALUABLE TODAY THAN THEY WERE YESTERDAY”
How the episode opens
Finance reform in this country. — Governor moore, I want to thank you. Congratulations on the win. We look forward to talking to you again very, very soon. Thanks. — Absolutely. Thank you. — You bet. — Joining us now IBM vice chair Gary Cohn. He served in the trump administration as director of the national economic council. How are you. Good to see you.
Good seeing you.
Surreal night obviously. So when you know you passed some of the legislation in the first, or at least were involved with some of it that you would, I think, say it was successful. You probably think the one big, beautiful bill had has paid off in certain ways for the economy.
What do you think the american people were saying last night? Now affordability is an issue. We're up another 3.7% after 25% under biden.
So that's affordability is an issue. But is that it or is it corruption or is it the war that people or it's all of the above?
Look, joe, it's always a combination of issues. That said, I think we all know it's the economy, stupid. So when you think about affordability, the core things that people are spending money on food, housing, health care, energy, you think about where people are spending money.
Those are four areas that there's an enormous amount of pressure in the system. We have seen this. We've been talking about this for the last few months.
How when you get consumer sentiment reports, the michigan consumer sentiment survey is basically at rock bottom. You know, it's telling you that the consuming public, hardworking america, the average citizen today, is unhappy with their financial position. And we saw it.
We talked about the k shape economy. We talked about, you know, those that are asset owners are doing great.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- midterm election takeaways
- state of the economy
- bipartisan compromise
- ai data center buildout
- financial dissatisfaction
Companies and tickers mentioned
- IBM
- IBM
- NEC
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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