Rahm Emanuel: Trump's Foreign Policy, China, Europe's Decline, Immigration & DSA vs Democrats

Summary

• Rahm Emanuel’s core China play is a bloc, not tariffs: aggregate Australia, Japan, South Korea, Taiwan, the EU and friends in Latin America to “isolate the isolator,” then use that shelter to rebuild what the US let atrophy. His premise: Xi’s “win-win” pitch “was never a win-win” — China wants everyone dependent on it while staying independent of everyone (cut off US soybeans, buy from Brazil and Argentina) — and its biggest export is “the domestic economic dysfunction of China,” dumping overcapacity worldwide while its auto industry exports more cars even as profits fall 20%.
• Research funding is national security, and Washington is unilaterally disarming. His COVID case study: Operation Warp Speed produced a 90%+-efficacy vaccine in roughly twelve months versus China’s ~60% in eighteen to nineteen; Xi answered by massively investing until China was “pari passu” in life sciences within five years — while Trump proposes a 40% NIH cut in every budget. Rahm would double NIH/NSF/DARPA research dollars, funded by a 10% levy on all predictive markets and online sports gaming.
• Defense is a five-year rebuild story for the entrepreneur-VC-DARPA complex — if incumbents don’t strangle it. “You give us five years” of new technology, entrepreneurs, venture capital and DARPA research, “as long as we don’t let Lockheed, Raytheon, and General Dynamics kill it, and the Pentagon nurture it.”
• Taiwan risk is three scenarios, not one — economic quarantine, a 96-hour invasion, or seizing three small offshore islands — and China has historically used all three strategies with different countries. The Iran war has made the White House “a one-ball juggler” while Chinese aggression rises now (Philippines, the Senkakus, a live missile fired near Australia); Rahm says the South China Sea must be defended now rather than waiting for a Taiwan scenario, and “our deterrence piece is very weakened right now.” Japan is the “long pole,” and even the yen backstop is partly “self-interest” given pressure on US Treasuries from the debt load.
• The Merkel exchange is the episode’s best fight: Friedberg blames Europe’s “suicide” on leftist policy; Rahm counters that the open border and nuclear shutdown were decisions of the conservative CDU. “Don’t tell me this is from the left. You’re wrong.” His alternative diagnosis: “people don’t like disorder,” Brussels regulation “suffocated innovation,” and Germany losing 5-10,000 manufacturing jobs a month to Chinese pressure should be a US recruiting opportunity that Trump squanders by meeting the AfD and attacking Meloni.
• On immigration he endorses the Dignity Act — 23 Republicans, 23 Democrats — as the compromise nobody else will touch, plus Canada/Denmark-style lessons and up to 20% full-fare foreign students to subsidize three-year BAs. He hits both sides: Trump reneged on “green card on every diploma” and the Dreamers, while his own party’s 2020 hand-raising on free healthcare for illegal crossers was “foolish… Forget the immigration policy. The value system.”
• Friedberg’s fiscal frame — $7T spend against $5T revenue, $40T debt, roughly $2T a year in interest — forces revenue onto the table, and Rahm targets the step-up basis and a code that “rewards wealth preservation” over wealth creation. Fighting two wars with two tax cuts was “never been done in American history, and it proved to be stupid”; he’d cap overall spending for five years and shift $8B of the $38B detention-center budget into 1,200 community colleges.
• He rejects the DSA’s separate-party strategy. “You’re not Democrats. You’re a separate party. I’ll see you in November.” Trump is the “existential crisis,” not Obama, Pelosi or Jeffries; the man who flipped 31 districts is “not into turning a blue district midnight blue.”

Deep dive

1. The Clinton-Obama lesson: government must prove it can run a one-car parade

• Rahm’s precondition for any progressive agenda: “you can’t have progressive policies if people think that the government can’t run, organize a one-car parade.” Rahm says the last net positive was under Clinton — the balanced budget helped, but the shift came “when he signs welfare reform.” Clinton’s unique skill was “three-dimensional chess” integrating “policy, politics, and press.”
• His retort to left-wing critics of both presidents: “Is it the peace or the prosperity you don’t like most?” Post-Reagan, Clinton’s economy grew the most, jobs grew the most, income disparity shrank the most; Obama inherited an economy near depression that was losing 800,000 jobs and transitioned it to creating 200,000, while getting America out of two wars.

2. The two superpowers are exporting their own dysfunction

• Previewing his WSJ op-ed ahead of the Xi-Trump meeting — he’s labeling it “the summit of disruption” — Rahm’s thesis: “Xi’s largest export is not autos or electronics. It’s the domestic economic dysfunction of China.” Rahm says China has more WTO cases than any other country, citing Chile’s steel plant, Indonesia’s garment plant and Brazil’s four blast furnaces as cases against China, while refusing to deal with a popped real-estate bubble and “a consumer that’s flat on their back.”
• America’s mirror image: exporting political and cultural dysfunction — the vice president meeting the AfD nine days before the German election, exacerbating race tensions in Britain. “The two superpowers are holding the world hostage.”
• Against Friedberg’s suggestion that Obama-era culture export opened this door, Rahm lays out his four-tool national-security kit — military power, political persuasion, economic statecraft, cultural attraction — with universities, national labs and research as economic statecraft. “Now that America’s brand under Trump is in the toilet, that actually hurts America… That’s not how I see the point of origin.”

3. Beating China: isolate the isolator, then rebuild behind the bloc

• Friedberg’s setup is stark: China heading toward eight terawatts of electricity while the US hovers near one and struggles to hit two by 2040, twenty times the US manufacturing square footage, and open-source AI threatening to eliminate the US capacity to compete in knowledge services and IP.
• Rahm’s COVID parable: Warp Speed’s twelve-month, 90%+-efficacy vaccine versus China’s slower, ~60% product that even Chinese leaders quietly skipped for Pfizer and Moderna — a Global South opening America “squandered.” Xi’s response — a life-sciences investment surge to parity in five years — is the pattern to learn from; instead, Trump proposes 40% NIH cuts every budget (Republicans hold it to 15%), even as an NIH-funded pancreatic drug looks likely to address three or four other cancers.
• The blame is bipartisan: “we allowed a commercialization of our national security” as the Business Roundtable and Chamber of Commerce watched supply chains move offshore; and Rahm says the US got so enamored with the War on Terror that it lost sight of battlefield transformation — “Neither Iran nor Ukraine has a navy, and they both control waterways near their fronts. That tells you everything you need to know: You’re not fighting two wars; you’re fighting two different types of wars.”
• The playbook: form an economic bloc (Australia, Japan, South Korea, Taiwan, EU, Latin America — “don’t declare war on Brazil”), “isolate the isolator,” and use the time to stand up the defense base via entrepreneurs, VC and DARPA — five years, if primes don’t kill it and the Pentagon nurtures it.

4. Middle East realignment: the octopus is degraded and the Gulf joins the bloc

• Rahm identifies three trends beneath the Strait of Hormuz headlines. First, UAE, Bahrain and Kuwait are staying with the US, while Saudi Arabia, Egypt, Pakistan, Turkey and Qatar are hedging; the India-Middle East-Europe economic corridor is meant to pull the region closer economically and politically, including around his “23-state solution.”
• Second, Iran’s forty-year, $40B+ proxy “octopus” is collapsing: Hamas “degraded to defeat,” Hezbollah cornered with the Lebanese government working with Israel, Damascus lost, and a non-Assad Syria discussing a security agreement — meaning all three Six-Day-War fronts reach some resolution with Israel. “Massively different. Strategically different.”
• Third, Rahm points to semiconductor chips and other economic links as part of the bloc. Syria could even host a Basra-to-port energy pipeline sending energy around the Strait of Hormuz; yes, major Gulf players belong in the bloc.

5. Taiwan is three scenarios — and the contest is already on in the South China Sea

• First, a correction to “strategic ambiguity”: the One China policy keeps the politics ambiguous, but on kinetic force changing the status quo “we’re not ambiguous.”
• The Iran war’s hidden cost: “when there’s a war, the White House becomes a one-ball juggler,” and China has pumped up aggression accordingly — sharper confrontation with the Philippines, moves around the Senkakus, a live missile fired from a submarine near Australia. The message to Korea, Japan, India, Australia, Singapore and other allies: “Look, your protector? No more.” To those citing 2027: “You don’t get to wait. It’s happening now” — and the Philippines, a treaty ally that won its 2016 case, cannot be left undefended while everyone waits on Taiwan.
• On Taiwan itself, Rahm outlines three possible strategies: an economic quarantine that suffocates the island; an invasion designed to end in 96 hours — America’s job is to make it “96 days”; or seizing three islands off the mainland coast (“a rock, a butterfly, and a tree, and a fisherman”) and daring the world to start a war over it. He says China has used all three strategies historically with different countries. “Our deterrence piece is very weakened right now.”
• Japan is “the long pole”: the largest single-country US military footprint, the only place in the world where an aircraft carrier is permanently based, and five straight years as mutual #1 direct foreign investor. Its PM publicly called a Taiwan move a national-security threat — what US diplomacy sought for thirty years — and is now absorbing Chinese economic coercion and military intimidation; even the welcome yen intervention, Rahm notes, carries “a lot of self-interest” given debt pressure on Treasuries.

6. The Merkel fight: Europe’s decline wasn’t leftism — it was disorder

• Friedberg argues Europe’s “irreversible decay” flows from leftist policies — gutting German nuclear, open borders draining welfare. Rahm pounces: “Put on your seatbelt. I’m enjoying this right now… It’s like therapy.” Merkel came from the conservative CDU; when one million people came out of Syria, she said, “We can handle this,” and she shut down nuclear after Fukushima. “Don’t tell me this is from the left. You’re wrong.” Friedberg’s fallback — “nowadays I would say far right” — gets dismissed as “crap you’re selling.”
• Rahm’s actual diagnosis: “People don’t like disorder. They don’t like it on the border, and they don’t like it on the streets of Minneapolis” — Stockholm and Berlin looked “totally out of control,” and Brussels “suffocated innovation, entrepreneurship, and competitiveness.” He endorses the Draghi plan; if you want a bloc, “you don’t want hangers-on.”
• Trump’s error is exacerbating allies instead of recruiting them: Germany is losing roughly 5-10,000 manufacturing jobs a month to Chinese pressure — “That should be an opportunity for us” — while the administration courts the AfD and attacks Meloni. Why? “This president punches down and kisses up… Putin and Xi… think he’s a joke… Everybody is looking at the emperor wearing no clothes. There’s no strategy to this. This is all his insecurities.”

7. Immigration: pass the Dignity Act, copy Canada and Denmark

• His twin principles — “we’re a nation of laws and a nation of immigrants” — come with enforcement credentials (he designed Operation Gatekeeper and Operation Safeguard for Clinton). He endorses the Dignity Act with its 23 Republicans and 23 Democrats: “Is it a bill that Rahm Emanuel would write? No. But does it achieve the goal? Yeah… Pass the Dignity Act. Don’t mess with it.” Trump, by contrast, “never really following through” — on Dreamers, on “green card on every diploma” — and kicking out foreign-trained scientists who now lead China’s life sciences “like fools.”
• On Jason’s points-based question: Japan (98% homogeneous, an island) isn’t the analogy — Canada and Denmark are. His university lever: let colleges take up to 20% full-fare foreign students, using the revenue to subsidize three-year BAs that save parents a year of tuition.
• His sharpest shot lands on his own party: the 2020 debate hands raised for healthcare for illegal crossers, while American families “suffocate under healthcare costs” — “Forget the immigration policy. The value system… At every level, that was foolish.”

8. The subsidy-inflation debate: “kids drop out of college in third grade”

• Friedberg’s contention: over thirty years inflation averaged 2.5%, but housing compounded at 5%+, education over 6%, healthcare 5.5% — precisely the categories with ~$300B, ~$200B and nearly $2T of annual federal support; unrestricted student loans are “fuel for the fire,” so should government “get the F out of the way”?
• Rahm’s rebuttal: the GI Bill built mass homeownership, agriculture and energy are subsidized too — “your analogies are wrong.” Housing inflation is largely local: he’d benchmark Chicago’s zoning, building and permitting codes against Dallas, Houston and Phoenix — “if you can’t justify it, get it the hell out of here” — and target the first-time-homeownership gap stuck since the 2008 meltdown.
• His education record anchors the plan: Chicago graduation rates from 56% to 83%, and Stanford’s Sean Reardon called it the “single best” education system among the top 100. The agenda: universal pre-K, rebooted teacher training, accountability, no diploma without an acceptance letter (college, community college, armed forces or vocational school), B-average earns free community college, a goal of 100% graduating with college credit, and free college under $200k income.
• The reframe that flips the exchange: “You know when kids drop out of college, David? Third grade.” With 50% of kids not reading at grade level, “college cost is not your problem. We’re gonna compete against China with fifty percent of our kids not reading?” — and the skills gap is concrete: 500-600,000 electricians short just for data centers, submarines unbuildable for lack of pipe fitters and plumbers. He says 80% of jobs require at least two years of post-high-school education, while the high-school years have not been revamped since Teddy Roosevelt.

9. The fiscal reckoning, and divorce papers for the DSA

• Friedberg’s math — $7T spend, $5T revenue, $40T debt at 5% implying ~$2T in interest — meets Rahm’s origin story: from Clinton’s surplus, “we tried to fight two wars with two tax cuts. Really stupid. Never been done in American history.” From the man who coined “never allow a good crisis to go to waste”: this crisis will force revenue as well as cuts, because “you can’t get to the fiscal sensibility you want just talking about cutting.”
• The five-point growth agenda: pre-K-to-BA education, the Dignity Act, energy modernization (“Texas is the best example”), a 10% levy on all predictive markets and online sports gaming earmarked to double NIH/NSF/DARPA research funding, and a tax code that rewards wealth creation over preservation — “the step-up basis is a way to avoid all taxes when everybody else is working for a living.” Plus a five-year overall spending cap and reallocating $8B of the $38B detention-center budget to 1,200 community colleges: no $50,000 ICE bonuses when carpenters and electricians matter more than “some masked man running around the streets of Minneapolis.”
• Jason’s conversion on minimum wage — studies at $12-$20 show no hardship or job loss — draws an easy yes: raise it, index it annually as Chicago did, and couple it with a robust EITC merged with the child credit into a single family credit. “That’s what makes work pay.”
• The closing salvo at the Democratic Socialists after their Chicago convention: “You’re not Democrats. You’re a separate party. I’ll see you in November.” Citing a Justice Democrat who admitted no interest in beating Republicans: “I think Donald Trump is an existential crisis. You think Barack Obama, Nancy Pelosi, or Hakeem Jeffries are an existential crisis. I don’t.” The man who flipped 31 districts to make Pelosi speaker is “not into turning a blue district midnight blue.”