Steve Hills:
I want to start off, it's really a pleasure to talk with Tom Nides. As Willy introduced earlier, Tom is an extraordinary person. Normally, politics and business don't really mix. They often have contempt for each other, sometimes tolerance. But Tom is a remarkable person who's been able to succeed really to extraordinary levels in both of these different venues.
So, Tom, your path was very interesting. You went from Capitol Hill to Fannie, Fannie to Secretary Clinton, Clinton to Credit Suisse, Credit Suisse to the State Department, State Department to Morgan Stanley, Morgan Stanley to Ambassador to Israel, and Ambassador to Israel to Vice Chair of Blackstone. The first question is, why can't you hold down a job? What's going on? Talk about that.
Tom Nides:
Is that before I did Everest twice? Willy, you forgot that I did Everest twice.
Willy, this is remarkable how you could actually be involved in bringing an audience down from what we just witnessed on the cameras. I told everyone I was going to go back to my house before I decided to show up after watching. That was an extremely unbelievable story. So, Willy, congratulations to him and his achievements. And I know they're going to do a Netflix series on me, given the fact that I gained 10 pounds when I was Ambassador to Israel. I can hugely see the trajectory here. And the reason I've had all these jobs is that I have not had a chance to fully read Steve's book, The Alpha Trap, which really means how to stop taking new jobs and assuming your success of where you had it. And I can't wait for that to come out, where to talk a little bit more about his book later. He thought he was interviewing me. I'm going to interview him.
Listen Willy knows this really well, because I've known Willy for a long, long time. And I hear Mallory and Diane are here, too. Are the Walker’s here? Oh, hi, guys. Hi, Diane. Diane, you're not paying attention to me. Will you tell her I said hello to her? But I've known the Walker’s for a long time, and I've adored the family, and obviously Willy and I are very close friends. And I've seen what this company has... There are very few three-generation companies, as they refer to them as the 3Gs. Very hard to do this, hard to keep them together. But the idea that Willy's grandfather, and then his father, and then Willy has been able to put together this institution is a testament to the family and the values. And Willy, I'm honored to be here and to be part of this.
And listen, I've been really lucky, like many of all of us in this room, we got the lucky gene. I've had all these opportunities and been able to go from politics to business to diplomacy to foreign policy. That's kind of cool. And we all have, kind of, I don't get to climb Mount Everest, but I've been able to, like, serve the government in a whole variety of different ways. And I like making money. I'm more than happy to say I'm a great capitalist, so I like doing that as well. It's better to do these jobs in government when you're not poor, so you can pay your American Express bill. I've been able to achieve both. That's sort of why I can't keep a job, because I like twitching around all the time.
Steve Hills:
Well, let's talk about that. So, I mean, in seriousness, and we'll get to Iran off the bat, because there's some things going on there that are pretty important that you have a unique knowledge of. But what do you think has made you successful? What are the different skills that are required for success in politics versus required in business? What degree are they similar, and what are the things that are unique?
Tom Nides:
Listen, I think it's not just similar to all of you in this room. You can't take yourself too seriously. I mean, listen, we're all smart. We're all lucky. We're all probably brighter than the other person. But if you actually start believing that you got to these jobs because you're the best of the business, you're going to be a loser. And I think ultimately, for me personally, one of the skill sets I have been able to do in both these worlds, both in business and in politics, is not take myself that seriously, and more importantly believe fundamentally that both business and politics have a lot more similarities than people recognize.
People always say to me, hey, Tom, how can you go from being the chief operating officer of Morgan Stanley to being the deputy secretary of state? Isn't that kind of a pretty difficult thing? Not really. In most cases, the people in government think most people in business are kind of only selfish and only care about themselves. And people in the business world believe fundamentally that people in the government just screw up and waste your money.
When you have people that have both these experiences, it's just great for humanity. You can explain to people, no, not everyone in government are a bunch of jerks and want to ruin your life, and people in business aren't a bunch of sleazebags. And the combination of having both those skill sets, I think has made me a better executive on Wall Street and in business, and it's certainly made me a better government official. I don't know. I think it's really a mindset about how you look at people in jobs. And if you treat people with respect and dignity, regardless if you're the COO of Morgan Stanley or the vice chairman of Blackstone or the ambassador to Israel or whatever, or the president of The Washington Post, Steve, you know this better than most. You've got to understand your role, but you're only going to do this if you actually believe that the people around you are what make you succeed.
Steve Hills:
Well, diving into the current events, Iran. Talk about your thoughts about how, I know you don't necessarily believe that Bibi Netanyahu sort of forced us into this, but how do you think we got into this? How do we get out of it?
Tom Nides:
Well, in diplomatic terms, this is what we've referred to as a shit show.
Steve Hills:
Thank you, Tom. That's the kind of extraordinary insight that we can expect from Tom.
Tom Nides:
A lot of experience of being able to articulate that in a very sophisticated way. Let's step back for a minute. One thing about foreign policy, a lot of things can be true at the same time. Make no mistake, Iran is a cancer in the Middle East. This hasn't changed since the Shah left in 1979. They have spread their tentacles of hate and destruction to the region since that, and it continues today. And they've done it not only through the development of their attempt to create a nuclear weapon, but that's beyond the point. It's their ballistic missiles, it's their proxies. They fund every evil empire inside the Middle East. It's Hamas, the Houthis, Hezbollah. The amount of cancer that the Iranians have spread through the Middle East should not in any way be diminished or discounted in any way. That is 100% true.
It's also true that every single president I have worked for, and I've worked for Clinton, and I've worked for Obama, and I've worked for Biden, and Trump won, and actually going back to Bush, every single president has faced the issue about how do you stop Iran from obtaining a nuclear weapon. And Bibi Netanyahu, to his credit. I have a lot of bones to pick with Bibi Netanyahu, but to his credit, for 40 years, he has been talking about the threat of Iran to the state of Israel.
In his office, in the prime minister's office, you walk into his office, and on the wall of his office is not a map of Israel; it's a map of Iran. He has been consistent about this. Everything else is secondary. He has been consistent about the threat to the state of Israel has been Iran. And he has attempted to try to convince each and every president to do what President Trump has done. What has happened here is that the president was convinced, and again, to be clear, I'm not going to be particularly political here. I mean, obviously you realize I'm a Democrat, but I don't find it necessary to talk about foreign policy in political terms. I will say, however, when we did this thing called the, again, most of you don't dine on this nonsense like I do, but when we did the original nuclear deal, the JCPOA, which basically stopped the nuclear programs, it wasn't a perfect deal by any imagination, didn't deal with ballistic missiles, didn't deal with the proxies, it didn't deal with a lot of stuff, but it was a deal that Obama did. And the idea was to basically stop the nuclear program and begin a negotiation.
When President Trump decided to rip up that agreement, presidents have prerogatives; he ripped up the agreement, and he made a commitment that he was going to basically stop the Iranians from getting a nuclear weapon after he ripped up the agreement. Unfortunately, this is where we are today. And the problem is, in my humble view, recall the Strait of Hormuz, which everyone is talking about, wasn't closed a year ago. We're now fighting to open something that was never closed in the first place. And so we've got the president, unfortunately, for good or for bad, is in a cul-de-sac. He did a lot of good by diminishing their ballistic missiles, getting rid of some of the gray nuclear dust, which is a little bit absurd, so it wouldn't be partisan, nuclear dust. But the reality of this is that the president now, the Iranians understand that the president wants to end this war. He's made it very clear he wants to end this war. The Iranians know that. Trump is trying to end the war, but the Iranians won't let him end the war.
And so we are in a very, very, very difficult place. And I'm scared. I was in Israel a couple of weeks ago. It's very dangerous for the Israelis. The Israelis are very unhappy right now in the current situation. They're the victims of this. They're very unhappy. They want Trump to keep going. Trump can't really keep going because of oil prices and the midterm elections. We're in a very dangerous place because, as we all know, my biggest fear is some huge accident is going to happen, or something on purpose is going to happen, meaning one of these drones is going to hit one of our bases in Bahrain or Qatar or Kuwait and, God forbid, hurt a number of our military. That hasn't happened yet. But when it happens, all hell is going to break loose. At that point, it's going to unleash something that I think none of us have yet to see. And that scares the hell out of me. We're in a very, very dangerous place. And my hope is that cooler heads will prevail. The Iranians will come to their senses. President Trump will stop saying things on Monday and change his mind on Tuesday and change his mind on Thursday. I hope we'll get some reality put in place here to begin getting this resolved. But this is a very, very dangerous place to be in.
Steve Hills:
Taking a step back, can you talk about why the Israel relationship is so important to the United States? And has this war strengthened or weakened that relationship?
Tom Nides:
Listen, I'm a Zionist. I saw some of my fellow Orthodox Jews in the audience. I don't know where you guys went, but I saw you walking. There you are. Hi, guys. There are very few yarmulkes here in Sun Valley. I'm glad to see you here.
This crushes me. I was coming in here, and someone had just shown me a poll that 82% of Democrats have a negative view of Israel. I mean, really? And I saw a poll that 35% of Republicans also share that view. There's going to be a vote today in the House about cutting assistance out of Israel. As a Zionist, as someone who cares deeply about the State of Israel, deeply about the security of the State of Israel, it sickens me. We're in a very, very difficult place right now for the bilateral relationship. I gave a speech in Miami a couple of weeks ago at the AJC, I've now become a professional Jew. But at one of these groups, and I said, they didn't like this, but I said, we have to be like alcoholics. And they're like, what do you mean? We have to admit we have a problem before we can deal with the problem. And we have a problem. But I said, we're Jews, we can figure this out. And we're going to have to figure this out, because if you're 30 years old today, or younger, the only thing you know about Israel right now is the Gaza War and Bibi Netanyahu. And that's unfortunate, because the magic of Israel is this little country that was created in the 1940s. It is the only democracy in the Middle East. You can stand in the middle of the street in Tel Aviv and hold a sign and say, I hate Bibi Netanyahu. Bibi Netanyahu should go to jail. That's not my... It's just saying what the sign would say. And you will not get arrested in Israel. This is a democracy. This is the only democracy. It is our only true friend in the Middle East. They are our friends everywhere in the Middle East. This is the startup nation. It is a country of 9 million people, of which 2 million of them are Arabs. We've lost that whole narrative. And someone who cares passionately about Israel, cares passionately about the security of Israel, we have a huge problem. And I think we're going to have to spend a lot of time... And by the way, it's not just the liberal Democrats. Some of my more conservative Jewish friends will say, oh, it's all you liberals who hate Israel. That's just actually not true. Tucker Carlson, last time I checked, is not a liberal Democrat. And so, we've got a big problem. And we'll get through it. I believe we need new leadership in Israel. I think we need to get through this. But the security of Israel is paramount. We need to make sure Israel has the security it needs to protect itself. But we are in a very, very dangerous place.
It's interesting. One little footnote. Iran has not shot missiles into Israel over the last 10 days. They do not want to get Israel sucked into this again, because they know the amount of terror in which Israel will bespoke on Iran if they have an opening here. So, it'll be a very interesting dynamic here in the next 72 hours, and how far this goes. But it's getting precariously close to this thing tipping over into a complete chaos.
Steve Hills:
And it's part of the problem that you have four different groups that are distinct with some overlap. You have the Israeli people, the Jewish people. You have the Israeli government. You have the Palestinian people, and you have Hamas. And people as long as conflate those, and people talk about criticizing the Israeli government as viewed as being anti-Semitic, but whereas if you go the other way, you're an enabler. Is that part of the problem?
Tom Nides:
It's disgusting. I tell people I'm one of the few people that admit that they have friends at AIPAC and at J Street. I'm very close to the Palestinian leadership.
I mean, I'm not ideological. I mean, yes, I'm a liberal Democrat, but I came to Israel, and I was like, listen, guys, I'm not a religious guy. I'm a liberal reform Jew from Duluth, Minnesota. I'm the youngest of eight kids. I mean, my parents were like community leaders. They were the head of the UJ and the Temple and all sorts of stuff. I came there without a bias one way or the other. I had a lot of friends from the Haredi community. I had a lot of friends in the real hard left. And the reality is Israel is a melting pot. I mean, the reality is people don't know that Arabs work side by side with Israelis in Israel. I mean, they've lost that whole set of narratives. I mean, go to a hospital, a school, an educational facility; the Arabs are at the heartbeat of the country. In fact, if it hadn't been for the Arab parties, the last prime minister, I had three prime ministers when I was ambassador — I had Bennett, I had Lapid, and I had Netanyahu. The only reason Bennett and Lapid were actually prime ministers is because the Arabs voted for them. The reality is people don't know all that because it's too confusing and they hear all this stuff.
The reality is the people talk about a two-state solution, like we've got to have a two-state solution. I talk about it all the time because you have to. You have to say it, and I hope it will happen. But put that aside for a second. What Israel needs to do is treat the Palestinians with dignity and respect. And things like housing and education and healthcare and parts of the West Bank need to be implemented. We lose sight because everyone uses all these rhetorical terms. Oh, we need a two-state solution. I believe we need a two-state solution. In the meantime, people need schools and healthcare. When I was ambassador, I spent a lot of time on the little things. It's like your business.
It's the little things that make your business. It's not that if you're in a servicing business, in a mortgage servicing business, it's making sure those mortgages get serviced. It's not the kind of overall arching idea of interest rates that is great, but in your business, in my view, we need to do more for the Palestinian people.
Hamas is a terrorist organization, and they should be destroyed, but everyone in Gaza isn't Hamas. We get stereotyped. Every idea that every Palestinian is a terrorist, that's just complete nonsense. It's like everyone in Gaza is a member of Hamas. It's complete nonsense. Not every Israeli hates Palestinians. That's nonsense. It's the small minority that creates the chaos for the rest of us. It's a small minority of people who create the insanity in which all these wars begin, and we have to understand that.
Steve Hills:
You are uniquely suited to look at the Middle East, take a bigger view of the Middle East. How do you think things have changed with the UAE, with Saudi Arabia, the Abraham Accords? How do you see that? How has that evolved, and how do you see it evolving going forward?
Tom Nides:
First of all, I give the Trump administration huge credit for the Abraham Accords. I don't know how many of you understand it or are involved like I was, but Jared Kushner and Trump's first administration, I like Jared. I think he's a really smart guy. I'm not sure he should be doing this either full-time. This idea you have a private equity fund, and you're doing diplomacy is a little bit... I wish I knew that. I would never have given up my stock at Morgan Stanley. Just kidding, of course. I'm not trying to be partisan.
To his credit, he formulated something which he really should have gotten, I don't know about the Nobel Peace Prize, but something close to it. It was the first time a negotiation occurred that Morocco, the Emirates, UAE, and Bahrain recognized the state of Israel. It was referred to as the Abraham Accords.
This was a big deal because even after October 7th, after October 7th in Israel when Hamas did the atrocities on the state of Israel, those three countries stuck with Israel. They never broke relations with Israel. This is what could be.
We were so close to getting the Saudis involved in the Abraham Accords. I was telling some reporter this yesterday. I did some TV interviews yesterday. Lindsey Graham, I love Lindsey Graham. He was sort of nuts, but I really love Lindsey Graham because he wanted to do the right thing. He always wanted to do the right thing. I was sitting in the hotel lobby of the King David Hotel. Lindsey Graham, I knew Lindsey Graham because he had called me when I was Deputy Secretary of State to ask me for a favor. You love senators who call you and ask you for favors, especially when you need them to help you on something else. It's sort of like Wall Street. He called me, and he asked me for his head of constituent that had some sort of textile problem. I didn't know what it was. I asked one of my staffers to take care of it. Again, I hope it was legal.
One day he called me later. He goes, Tom, Lindsey, I'll never forget you, what you did for my constituent. He was really, really my best friend. I still, to this day, have no idea what I did, but he single-handedly helped me get confirmed in the Senate twice. He literally called Republican senators, made sure I was confirmed unanimously, both for his Deputy Secretary and as Israel, so he was my guy. I couldn't tell my liberal friends that because they'd be really mad. I'm standing in the King David Hotel, and as you recall, the MBS, the leader of Saudi Arabia, as you know, sort of had a bad day when he unfortunately was involved in the Khashoggi killing. As you remember the Washington Post op-ed letter, you probably knew Mr. Khashoggi, and there was a lot of hatred towards MBS for being involved in that untimely death of Khashoggi.
And President Biden pledged during the campaign that the Saudis were basically terrorists, and he would never see MBS, and he would never spend time with MBS because he was a killer. And so Biden was coming to Israel for his 10th visit right in the middle of COVID when I was ambassador, and he pushed Biden to go to Saudi Arabia and mend fences with MBS, or not mend fences, but have a meeting, and by going there would, by nature, so I'll get to the Lindsey Graham thing in a minute.
We convinced Biden to go because we thought, you can't be fighting with everyone, we're right before the midterm elections; we've got to make sure oil prices are stable, and you know, it's all, every life is politics. And Biden, to his credit, agreed to go, but he said, I'm not going to shake his hand. It was right in the middle of the COVID thing, so we practiced fist bumping. And so he fist bumped MBS, so we didn't have a photo of him greeting, it was all kind of nonsensical, but that's what you do. Anyway, so I'm sitting in the lobby of the King David Hotel with Lindsey Graham, and Lindsey Graham, just like Biden, was trashing MBS, kept saying all sorts of nasty things about MBS, and but he said Tom, I think there's an opportunity to normalize Saudi Arabia with Israel. I said, well, but Senator, how are we going to do that? You've been trashing MBS too. He goes, Tom, wait to see what I do. He said, I'm going to do an interview in about an hour with George Stephanopoulos in the lobby of the King David Hotel. Just watch what I do.
And that guy sat in that chair, and he reversed himself on his hatred of MBS, basically said I think I can do business with that guy, MBS. And from that moment on, for the next two years before October 7th, Lindsey Graham spent all his energy working on getting normalization between Saudi Arabia and Israel, working with the Biden administration. He was totally into it, and then obviously it all fell apart after October 7th, because the Saudis couldn't talk to Israel, and the whole thing fell apart. But I say this because Jared Kushner created the platform of this thing called the Abraham Accords, and then layered on top of that was the potential of Saudi Arabia. If we can get back to that, it'll be dreamy. Now we're dealing with a war in Iran, so who knows? And I think ultimately, I don't know how this is all going to shake out for the rest of the Middle East, but the reality is the Saudi piece of it could be really important. The Abraham Accords were exceptionally important, and we should use that as a foundation.
Steve Hills:
It just shows how difficult these conversations are, because when I hear about an employee of the Washington Post who was killed and chopped up with a bone saw, we kind of think that guy isn't a great guy, but you have to think of the bigger picture. These are tough conversations.
You talked about October 7th. You were watching a preseason basketball game in Dubai, an NBA basketball game, and Jack Lew had been named but not confirmed as your replacement as ambassador to Israel, and you found out about October 7th. Can you take us through what that was like? What happened? What were you asked to do?
Tom Nides:
It's even worse than that. In the Timberwolves, we were playing the Dallas Mavericks in the first exhibition game in Abu Dhabi, and Miriam Adelson had just bought the Mavericks. I knew that, but no one else knew that, and she invited me, and we can get into the whole Miriam Adelson schtick in a minute, but she invited me to come to Abu Dhabi for the game, because Timberwolves, I'm from Minnesota, so I said, this is going to be cool.
We're sitting at dinner in Abu Dhabi with all the players from the Mavericks and the Timberwolves, and I have all the diplomatic corps from the Middle East, and I have a bunch of Jews from Israel, and I've got the UAE ambassador who was instrumental in the Abraham Accords, Yousef Al Otaiba, and I stand up, and I'm toasting the success of the Abraham Accords and long live the Abraham Accords and blah, blah, blah, and I'm like going on and on and on, probably too long, and two hours later, our phones start lighting up that there's something really crazy going on in Israel, like really crazy, like crazy like we've never seen before crazy, and it just was the beginning of what we saw play out, and so all of us left, none of us obviously went to the game the next day, we all got on planes, I flew back. I felt terrible because I'd just left a month earlier, my wife runs CNN, so she was like, your next wife can follow you to Israel. I was like sort of going up like Mount Everest, but she didn't want to go, and she visited me, however, but so I left early, and I felt terrible because my DCM, my deputy was in charge, and she was a really great diplomat, and happens to be now the ambassador to Bahrain, so she was dealing with what arguably was the biggest crisis the state of Israel has had since the beginning of the country. I mean, the amount of just terror, I mean, I had three or four friends who lost their kids at the festival, and for all of you to remember, I can't imagine all of you spend much time thinking about this, except for my friends back there, but the reality is what happened on October 7th, since no larger number of Jews were killed in a single day since the Holocaust on that day, on October 7th.
And it wasn't just the killings of the Jews and Arabs, by the way. On October 7th, the kids that were in that concert, it was like Burning Man. They went to this concert to show you could have a concert at the wall, the fence dividing Israel to Gaza. It was a bunch of kids having a fun time. These were not protesters. These were kids getting high and having fun and listening to music. It's just sickening on what Hamas did on October 7th, and then not only the brutality of the number of people that were killed, but the brutality of ripping all these people and bringing them to Gaza and shoving them into tunnels, and it is beyond anyone's imagination, and for all of us, I think all of us in this room have had tragedy. All of us have had some sort of tragedy. We all have it. This is a level of tragedy that I don't think any of us could ever, and God forbid, ever endure.
I spent a lot of time with the hostage families who basically woke up every day just trying to get their kid back, and then I had my friend Ruby Chenz, who all he wanted was his kid's body back. He knew that the kid was dead. He just wanted his body back to bury him. You can't, again, I don't mean to get on this, but so the level of what happened on that day will change Israel forever, forever, and that's what for me as the former guy, I felt a little bit like, so I basically then spent the next six months just working on behalf of the community and trying to raise money and do the things you do when you can't be there on the ground to help. Thank you.
Steve Hills:
Shifting gears a little bit, thinking about DOGE, and you obviously were the Deputy Director of the State Department, and you've seen what's happened. 300,000 federal workers cut in just the first year and a half of the Trump administration. Only 28 of the 150 ambassadorships are filled. For people on the right, they might say, well, we've discovered massive inefficiencies because the world seems to be working fine. Have these inefficiencies been uncovered, or are there things that we're going to regret later on? What's your view on this?
Tom Nides:
Again, I'll try to be disciplined here. I think Elon Musk is a brilliant guy. Listen, SpaceX, what he's done on Starlink, what he did on electric cars, I mean, no one will take away from him, but I thought what he did on DOGE was disgusting. Now, I don't blame him. I blame how they did it. To be clear, the President of the United States that cut more civil service jobs than any President of the United States was Bill Clinton and Al Gore. Al Gore was in charge of reinventing government. I was involved in this. He actually replaced more government employees than Elon Musk.
There's a way to do this, and there's a way not to do it. Is there waste in the government? 100%. Is there waste in a bunch of your companies here? Yeah, probably. I mean, maybe. I don't take that personally, but just hypothetically. There is a way of doing this, and there's a way of not doing this. The reality of this is to pick on the civil service of our country, it makes me sick to my stomach. The men and women who wake up every day want to do the right thing. Are there bureaucrats who slow things? Sure, but the vast majority of the people that I work with want to do the right thing. And do I believe we can do things better and faster? 100%.
Let's just take an example. USAID. USAID reported to me, I was a Deputy Secretary of State. What people don't understand about USAID, which is not perfect and needs reform, I get all that. But USAID represents our country's soft power. You know what soft power is? Hard power is our military might. Soft power is what makes America America. It is what distinguishes us from China. It's what we do in countries and how we make countries better. And it's not just what George Bush did with using USAID to eliminate AIDS in parts of Africa. It's everything in between. It's water, it's democracy building, it's community building. The guys who are the biggest advocates for USAID, the U.S. Military.
I used to call Dave Petraeus. Every time I had to testify in the Congress, I said, General, I need your help. " He goes “Count on it.” I will go and sit next to you and advocate for the support of USAID because my strategy is very simple. The military can clear. They can clear enemies out. But to hold them takes the guys in short pants. The soft power guys. That's the only way. And by the way, we're learning this lesson right now in real time in Iran. The only way we're going to end this thing in Iran is you can blow the Jesus out of them, but we're going to have to have a diplomatic response. That's the only way you can get, at the end of the day, long-term peace is through diplomacy. You can't bomb your way into peace. You can get them to the table, but you better have a program. We learned that after World War II. We've learned that historically. We've learned this everywhere. The idea you come in, and you say, you know what? USAID sucks. Let's just shut it down. Really?
I think ultimately reforms need to be needed. To be clear, I have no problem with doing reforms. Listen, I have sadly fired many people in my jobs that I've had running several financial institutions. I get how to do this. I know it's not perfect, but I think how they conducted themselves and how they did this, I think, will be paying a price for this for a very long time.
Steve Hills:
Are there particular, as USAID is one, are there particular areas where you think the cuts are going to bite us?
Tom Nides:
Listen, I go back to, again, people's like, I don't care about Voice of America. Who cares? Well, I'm telling you guys, when you wake up, and you realize where the staining of America is around the world, some of this is yes. Part of this is somewhat of President Trump's style. It's somewhat different than some other presidents. I appreciate that. Some of it is the pressure he put on rightly on NATO to spend more money on their own defense. Totally support that. But I think the reality of this is that if you look across our government and the things that we do internationally, I'm on the board of a thing called the IRC, the International Rescue Committee. The job is basically to help refugees who resettle here in the United States and help refugees in countries in war-torn countries. The budget has been dramatically reduced because obviously we're not letting refugees come in the United States anymore, and how we use those money is overseas. These organizations are really, really important, guys.
At the end of the day, what made America was we are the shining light on the mountaintop, as Ronald Reagan used to say. That's what made us who we are today. Again, I'm not being critical about the administration, but I do think ultimately we've got to get back to a little bit of that. Maybe we went too far, maybe we were too open, maybe we were too. But I think ultimately for our country to have the strength that we need, we need the soft power as much as we need the hard power.
Steve Hills:
Speaking of things generally viewed as helpful, we ask NATO countries to spend more on defense, and then they're doing that. Does that make us safer or less safe with a more militarized Europe?
Tom Nides:
Listen, look what's going on here. We have a raging war going on in the Middle East. Do I want to remind any of you we also have a massive problem with Russia-Ukraine. We're not talking about it very much, but it is, quite frankly, that is a bigger threat to the security of our European allies than the Iranian capacity to get a nuclear bomb. We're not talking about it because it was supposed to be resolved in the first few days of the Trump administration, but sadly these things are really, really complicated. And the Ukrainians aren't giving up, and the Russians aren't giving up, and the more the Ukrainians push the Russians, there's a chance that Putin may say, I've got to go much more aggressive, and then all bets are off.
Do I think a unified NATO is helpful? Yeah, I do. I mean, I didn't like the idea. I really didn't like the idea that when President Trump picked up the phone and called Macron and Starmer in the UK and Macron in France and said, I need your help on Iran at the Strait of Hormuz, that he got basically the Heisman.
I don't like that. I think the American president, when he picks up the phone, this is what our NATO allies are supposed to do, are supposed to help us, and I think this may be the future that we're at, and much of this is, for a whole variety of reasons, it's fighting around things like Greenland, it's about Iran, it's about Ukraine, Russia, it's about Zelensky, it's very complicated, but at the end of the day, a strong European allies, a strong NATO is good for the United States. Make no mistake, yes, we pay too much; they need to pay more, no question about it, but we need their help, we need their support, and we need to be working collectively together. Breaking up NATO is a terrible idea. Weakening NATO is a terrible idea. At some point, the United States needs the support. It may not be military support, but we need the support of our NATO allies.
Steve Hills:
How confident are you in the alliance structure, being able to survive, and related to that, what do you think the chances are of a military conflict involving Taiwan?
Tom Nides:
Well, listen, again, not to be political, but President Trump will only be in office for two more years.
Steve Hills:
Not clear, but probably true.
Tom Nides:
I could actually give you the hours, but I don't think even the next Republican president, if a Republican becomes president, he's taking a very unusual position vis-a-vis NATO, personalizing relationships in a way that might be, I don't think that any Democrat or Republican president necessarily is going to follow it. Now, he set the standard on the idea of them paying more for the defense, and I appreciate it. The thing about President Trump is that people have this Trump derangement syndrome, like everything he does is terrible.
That's not true. And I've tried to be somewhat balanced. That is not true.
But the problem is he does things, and then he goes one click too far, and that kind of, like, dilutes some of the good that he's doing. And getting NATO to spend money on the defense was quite good, I think. Ultimately, the personalizing his relationships with some of these NATO leaders and demeaning them, probably not so good. But we can talk about that later.
China. In every security meeting I was in, it was clear the Chinese have a goal of taking over Taiwan, make no mistake. They believe it belongs to them. We've had a very delusional idea of how we talk about Taiwan. All of our assessments were that in 2027 that the Chinese would, in fact, go in and try to take Taiwan. That was basically the assessment during the Biden administration. I'm not expressing anything that hasn't been reported, I don't think, or I'm going to go to jail. But I think that was clearly the intention of the Chinese.
A lot of things have happened since then. One was obviously COVID, and the COVID shutdown had huge financial implications on the Chinese. The Chinese real estate market completely collapsed and had a huge impact. President Xi purged his whole security apparatus because he felt that the military operations that were around him weren't efficiently loyal to them and focused. I think ultimately President Xi has an enormous amount of desire to take Taiwan. I do not believe he will do this in the next year or even the next two years. The reason for it, in my view, and by the way, I certainly could be wrong, he needs to fix his own fiscal house. You saw the GDP numbers today in China drop dramatically from last quarter. He has an aging population. He obviously wants to do what he wants to do: succeed in AI. He's probably doing a better job on thinking about jobs around AI than we are in the United States, but that's still a hugely significant issue. I think ultimately his desires are clear.
The real question is, will he take Taiwan now because he thinks there's an opening because he has Trump? Maybe. Do I think when Trump was in Beijing four weeks ago, when he was in the middle of this whole Iran negotiation, they didn't have a little pull-aside that said, listen, President Xi, buddy, I need your help on Iran because he knows that the Chinese, the Iranians only care about the Chinese because they're the ones who buy their oil. Do I think at the same time, do I think that President Xi said, big guy, I need your help on Taiwan, meaning don't sell them the arms that they already had, Congress already approved them? I think both those things are true. Ultimately, I think that he will not go to Taiwan in the short term, but the desire is there.
Steve Hills:
One thing I'd love your thoughts on is the theory the Supreme Court has of this powerful executive, that the president should be more powerful, and the recent things with the election committee where the president can now fire bipartisan, basically fire all the Democrats in certain committees, there are certain protections still, but do you worry that in terms of predictability, I think about your role in real estate investors, and investors want predictability, and our allies want predictability. Is there a problem with more powerful executives that we could just have pendulums that swing back and forth, and people, business people, and our allies can say, I don't know, I may trust you, but I don't know what's going to happen in four years. How do we recover the trust of allies, and how do we deal with this?
Tom Nides:
Listen, Willy and I have had this conversation before. This is problematic. Good news is, the court did step in on the Fed. I don't think Trump is going to necessarily stop his badgering, I think, quite frankly, in my humble view, I think Kevin Warsh is going to be very similar to Jay Powell. They have the same temperament, the same ideal. I think they're going to have, basically, Trump is going to regret the idea that somehow Kevin Warsh is going to browbeat the Fed governors to lower rates any time before he believes it's ready, and obviously, the Fed's certain goal is to keep inflation in place.
Kevin Warsh basically has said that. Ultimately, I'm sure the rhetoric is going to get cranked up even more so with President Trump when he realizes that probably Kevin Warsh is going to actually march to his own drummer, and I think it was reinforced by the Supreme Court's decision that they couldn't fire Cook, and ultimately, I think that's good for all of us. It's good for humanity. By the way, it's good if the next Democratic wins the presidency. I think that's really important.
I think this whole issue of presidential powers is one of the issues that no one's really talking about because here's what's going to happen, folks. If a Democrat wins the White House in 2028, guess what they're not going to do? They're not going to say, oh all those presidential powers that Donald Trump gave, I'm going to give them back. I'm going to give them back to Congress because I don't really believe in a strong presidency. BS, okay? The next Democratic president is going to basically take those powers and do the things probably that many of you in this room are not going to like because they're going to say, we're going to have to reverse a lot of the stuff that Trump did.
I think this is the one little thing that people don't talk about because I've seen this happen. Listen, Biden did a lot of executive orders when he became the White House to a point that people were like, oh, I think he actually had done more executive orders than Obama had done in the Trump first administration, and now Trump obviously doubled down on that in his second term. I worry about presidential powers because we need balance. I mean, we need balance. I would, again, I can't say this to my friends, but I don't think having a Democrat president, a Democrat Senate, a Democratic House is necessarily great. You need people who have checks and balances, and this is why I think ultimately if the House gets into Democratic hands, which I predict will happen, I think it's better to have some checks and balances.
Now, it's not going to make Trump particularly happy, but I do think there is some of that, but I do think this issue about presidential power and his ability to fire anyone is not great, especially in these jobs like the FCC and the FCC and you basically, the idea of having some bipartisanship is important, and because they disagree with you, you fire them. I don't think it makes our business any easier because you're 100% right. These massive swings, you can't do a five-year business plan when you're not sure exactly who's going to be running the regulatory agencies that you guys are trying to manage through, so I don't think it's great for your business. I don't think it's great for humanity, but I don't see any idea that this is going to change under the next president either.
Steve Hills:
Shifting gears, because we have a real estate audience, you are vice chair of one of the largest real estate owners.
Tom Nides:
The largest.
Steve Hills:
The largest. Who's counting?
Tom Nides:
Just saying.
Steve Hills:
Just saying. You don't sit directly under you, but you talk to investors a lot, and so what are people saying? Where do you think the big opportunities are? Where are the problem areas? How worried are you about private credit? I know you have a balanced portfolio, but what do you think?
Tom Nides:
Well, okay, so step back. You guys are real estate guys. You know Blackstone's positions. Obviously, we had a very tough four or five years in our business. There was a lot of anxiety among our investors, liquidity, and everyone thought the world was going to come to an end. Since we are the largest real estate owner in the world, obviously we have huge exposure to multifamily, single-family, and commercial properties. We have only 5%, just saying, 5% of our portfolio is in offices. Sometimes it's better to be lucky than smart. We have a massive exposure around the world.
We got through that period of time, like many of you in this room. We got through the period of COVID, and we've now seen a huge uptick in our real estate, not only inflows of cash coming in, but even the performance of some of those assets. Yes, we have plenty of assets still needing to be worked through, but ultimately the fundraising in our big funds has dramatically increased. We are very much focused on hard assets. As you know, we are the largest developer of data centers in North America. We own a company called QTS, which is massive. We took a public company, turned it private, bought it for like $20 billion. We now probably are worth $100, $125 billion. We bought a company in Australia called AirTrunk. We are very much focused on hard assets, not just data centers per se, but our infrastructure fund, which includes everything from ports to airports, and then, of course, the energy to drive those data centers. Natural gas, the alternatives. We own a big alternative wind solar company in Illinois. We are very focused on the surround sounds on the platform. We feel pretty good about the real estate business today. As it sits, obviously, we would like rates to come down. It would make our business even feel a little bit better so we could actually sell some of these assets, but we feel quite positive.
On private credit, it's funny. It's sort of like the bee reed of it all. When everyone's crapping over the bee reed, since we are the largest private credit player in the world too, it's sort of like someone gets a cold and we get the flu or something like that, I guess. Ultimately, you all know, guess what? Private credit isn't going anywhere. I know that's shocking to people. It's been around for 20, 25 years. As long as private credit performs better than traditional fixed income assets, we're going to be doing just fine.
Are there going to be disruptions in the private credit business? Sure. We have exposure to software companies like everyone else does. We have a smaller percent of it, but we've seen a little bit of disruption. I like to remind people, and I want to be disciplined here, maybe, but the people who have been screaming about the private credit business and that the hair's on fire and the world's going to end were the big banks. They're my friends. We love all the big banks. I love Jamie Dimon. I think he's a phenomenal executive. He's done a great job. He's been the biggest drummer of the beating of the private credit business bubble. One of the reasons is he wants to get back into the business.
As you know, the banks were pushed out of the private credit business during CCAR, and the cost of doing that business became very difficult for them. They want back in. I think ultimately the private credit business, as you've seen, inflows. The people who hit the sell button of private credit were our retail clients. Many of you in this room, I'm sure, got a little bit panicky. The people who stuck with it are the institutional players. They like the returns. They like the stability. We feel pretty good about private credit, but like everything else, it'll come back, and things will get stabilized. When you have a company like Blackstone, which has 1.2 trillion of assets under management. They have all these different asset classes from everything from data centers to Jersey Mike's. It's not a bad business to be in, and it's all about diversification.
Steve Hills:
Willy talked yesterday about this idea of who's going to win the stock market or the consumer. The idea is that the consumer confidence index is the lowest level it's been in 60 years, and yet the stock market goes up and up. We see the famous stat that 37% of Americans couldn't handle a $400 surprise, and yet over the last year and a half, their costs have gone up $6,000 to $12,000, and wages haven't kept pace.
There's this massive income inequality. There's this change. There's a shift.
You see this, not surprisingly, with this kind of disparity of rich getting richer, poor getting poorer. You see these socialist waves of this kind, some of them crazy socialists, the woman in New York who says she's not sure that murderers should be incarcerated. How worried are you about income inequality, and what do you think about the political ramifications of that?
Tom Nides:
It's a problem, but it's been a problem for the last 50 years. This is not unusual, guys. I think where it's going to manifest itself is how they deal with AI. I'm sure you've done a bunch of AI stuff at the conference, but to me, that is really where this is going to manifest. It's certainly already been manifesting people's distrust about data centers. Now, most people don't know what a data center is, because it's this machine, they think. There was this poll done last week by Pew that said that more people are likely to want a nuclear power plant next to their house than a data center.
That is not about the data centers. That's about people's anxiety about AI, about what's going to happen to their job. It's not about blue-collar jobs. I worked in the Clinton administration. I did NAFTA, and everyone was worried about Ross Perot calling me and saying, oh, here's a sucking sound of jobs from the US to Mexico. It's not about blue-collar. Now it's about white-collar jobs. It's about kids who are graduating college. Many of you in this room are fearful of what your kids are going to do, and it's people trying to figure out what AI implications it's going to have. We all talk about productivity. Productivity is a shorthand. We're doing more with less, and less is a lot of people in this room, or people who work for us. That is, to me, this is what's going to be the number one issue in the 2028 election. It's not going to be Israel. It's going to be how politicians talk about AI and talk about what we're going to do. That's going to manifest itself in this whole issue about economic inequality, job anxiety. That's all people care about.
Yes, they care about Iran, and they care about Afghanistan. They care about Ukraine, and they care about — At the end of the day, they care about their family. They care about their food. They care about their education. They care about buying a house, and they're worried, and they're really worried about what this thing, what AI is going to mean for their lives, and how people, and so politicians are going to have to wake up, and we're going to need regulation around this in a way that people will feel more comfortable around it. That's how it's going to manifest itself, but yes, 100%. Richer people are getting richer. We've all had a very good, great few years. That is not new, but how you talk about it is going to be really important. That is, by the way, how Donald Trump got himself elected.
Donald Trump got himself elected by convincing people that he was going to fix the economy, that Joe Biden was too old and too feeble, and he was going to do it two ways. He was going to bring down inflation, make the economy better, and he was going to stop illegal immigrants coming in and taking your jobs away, and he was really successful in articulating that, and that is why he's at 35% approval rating, because people are not sure that's actually happened yet, so this is going to be the fight, and by the way, the fight with the Democrats are going to be the left saying we should do way, way more, and the moderate parts of the Democratic Party said, if you do that, you're not going to get electable, and that's going to be the big fight among the Democrats, and I have no idea how it's going to come out.
Can we do one thing before we do — I do want to just spend a second talking about your book, because I think it's, for me, and I know I wasn't supposed to do this, but I want to do it anyway, your book is about how like alpha people, people who are like us in this room, are successful business leaders, how we transition from being successful business leaders to being fulfilled individuals, so I haven't obviously read the book, but you have a lot of people who wrote blurbs about the book. Just spend a minute talking about your book for a minute.
Steve Hills:
This is how Tom became a politician.
Tom Nides:
Because I'm done with this, I've done talking, but I'd like to hear — let’s talk about the book.
Steve Hills:
I'm going to owe him a favor after this.
See how it works?
Tom Nides:
Just talk about your book.
Steve Hills:
It's a little bit like what Albert Brooks was talking about. If you want to check it out, there's thealphatrap.com. You can go there and actually do an assessment of to what degree you're an alpha, and to what degree you potentially have what aspects of your life you can fill in. I interviewed about 100 people, all sort of alphas. Willy was one of them, and talked about what's made you successful, and looked at the biology of it, what's made people successful over time, and then what gets in your way of connections, of happiness, of fulfillment, and sometimes those same drives actually don't serve us well, particularly in sort of the second chapter, and so it also talks about people, and examples of people, what they've done, specific practices of how people have done that. If you want to go to thealphatrap.com.
Tom Nides:
What are the couple things you'd recommend people to do? Let's assume hypothetically. All of us cannot be as successful as Willy is, but hypothetically some of us are somewhat successful. How do you do that?
Steve Hills:
One thing is there's a thing on this website you go to. It's a wheel. It identifies what are the gaps? Are there gaps between your current state and your desired state? Is it about health? Is it about your relationship with your friends? Relationship with your spouse? Contribution? Inner peace? Trying to first identify where the gaps are, and then practically, how do you close those gaps?
The tendency is even though maybe success and status and money aren't what we need more of, we're so used to trying to achieve those that we keep striving against the same things as opposed to looking at things that offer more balance.
Tom Nides:
There's a guy, by the way, just a record, who was the president of the Washington Post. An unbelievable success. My kid took a class from him.
He teaches at Georgetown. The best class my son has ever done. Also writes music. Also sings. Now writing a book. He's got this down. You better buy the book when the book comes out.
Steve Hills:
You're very kind. I'll just ask Tom one last question. Or a couple of questions.
The first is, do you have a frontrunner for 2028 on the Democrats and on the Republican side? Do you have any predictions?
Tom Nides:
I'm going to make a prediction. On the Republican side, first, Dave McCormick is going to run for president. I don't know. But I'm just telling you, Dave McCormick will be very interesting. I know everyone talks about J.D. Vance and Marco Rubio. I don't even know if he's going to run. But I'm telling you, I think Trump's going to be there today in Pennsylvania doing an event with McCormick doing something else. He'll be a very interesting candidate. Former Marine Ranger from Pennsylvania. He'll shake up the Republican primary.
Think about that. You won't remember I told you that. But when it comes true, you'll say, I don't remember that guy.
The Democrats on the Republican side, who the hell knows? We're going to have 18 people running on the Democratic side. You're going to have six governors. You're going to have the governor from Pennsylvania, from Illinois, from Kentucky, potentially from Maryland. You're going to have four or five senators. You're going to have people like Rahm Emanuel. You're going to have who knows, Mark Cuban. You're going to have all sorts of people getting on the Democratic side. And there's going to be a fight on the Democratic side, as I just mentioned, between the people on the left. There's going to be someone on the left. There's going to be someone like AOC or someone like that who's going to flurry around and get a lot of attention, and ultimately I don't think that person will emerge as the nominee. But you're going to have a big fight among the Democratic Party. And you're going to have a big fight in the Republican Party. Because J.D. Vance is going to believe that it's his to get because he's J.D. Vance. Marco Rubio, very clever. I predict that Marco Rubio by the end of this year, you're going to see stories in the New York Times saying Marco Rubio is thinking about what he needs, he's exhausted. He needs to spend more time with his family. He needs to step back from being Secretary of State and National Security Advisor. And he's going to leave to spend more time with his family. Which means he's going to end up running for President because he's got to get out of the administration. I think you're going to have a lot of interesting dynamics. And just remember this one thing. Every election is a reflection from the last election. Who the Democrats or Republicans pick will be a reflection upon what people believe Donald Trump did or didn't do going into the next election.
Steve Hills:
Well Tom, thank you for your extraordinary wisdom, your thoughts. We appreciate your time.
Tom Nides:
Thank you guys very much.
Steve Hills:
Thanks, Tom.
