Leader McCarthy joins American Compass to discuss his efforts to reach out and grow the Republican coalition, what it takes to build a GOP that is better attuned to the concerns of working class Americans, and where he sees the party going in the coming years.
Oren Cass: Good afternoon, everyone. Thank you very much for your patience. We are delighted to have you this afternoon for our conversation with Leader Kevin McCarthy. Obviously, there’s been a tremendous amount of conversation in recent months about the future direction of the GOP and Leader McCarthy is at the heart of those deliberations and in his communication with his constituents and other members of the Republican caucus. So we’re delighted to have him with us today and looking forward to hearing his thoughts on where the Republican party is going to go from here. So, thank you very much, Leader McCarthy, for joining us.
Leader McCarthy: Thanks for having me.
Oren Cass: No, our pleasure. We really appreciate you making some time. And I guess I think a really terrific place to start would just be, of course, Congressman Jim Banks, the chairman of the Republican Study Committee had a memo a couple of weeks ago, really underscoring what he saw as the importance of the GOP focusing more on the working class and developing a policy agenda that would focus in that direction on. And so I’d love to hear your reactions to it and how you see that likely to play out going forward.
Leader McCarthy: Well, Jim Banks and I are very, very close and I thought it was an excellent document. It’s something we’ve been talking about even before Banks did the document. I think you’d find some of my writings and some of the stuff I talked about where president Trump was able to move the party. Especially policy-wise, that we are able to open ourselves up. That if you really look at things today, corporate America’s Democratic Party. The American worker is the Republican Party in essence. And Jim Banks, what he did, we were traveling. I was flying up to do an event in his district and we were flying on the plane and he goes, “Look, I’ve been thinking about this.” Putting it together and handed over to me, and exactly what we were looking to doing. How do we take our gains and expand them even further, right?
If somebody sat back and they said, “You know what? I disagreed with President Trump.” Or, “I didn’t vote for him.” They would say they agreed with his policies. If they ever had problems, they’d say something about personality, right? But those policies united people and it unites the party at the same time and it expands the party. Think for one moment in the last election. We won in Miami. Of the 15 Democrats we beat, every Democrat lost to a Republican woman or a minority. California, where the president didn’t compete because he couldn’t win California. He loses California by 5 million votes, but we defeat four Democrats. All four districts, three of them, he loses by double digits. But it’s the policies that made us win in a state that he wasn’t even competing. California was actually our best state for Republicans.
And in Congress, when you think about it, everybody thought we were going to lose 15 seats. So the first time since 1994, no Republican incumbent lost. And it’s only two times in the history of America that the party lose the White House and actually gains seats in the House, in 1892 and 1992. And both times, they won the majority two years later. So I think what Jim is saying, let’s look at our successes and let’s expand on it. And the way you expand on it is you expand on the policy that we just started. And it’s reached more people, it’s made the party more diverse, reflecting more of America. And I think that is an excellent roadmap to start with. We’re actually going to our retreat next week, and I’m putting together seven task forces. We’ll have members all assigned to different ones. And we’re going to be working on our policy doing exactly that, building it out further for big tech. When you think of big tech, there’s two major issues, privacy and competition. And to me, it’s not sitting back, are you Republican or Democrat? But from the aspect of this competition, these big industries are just squashing any entrepreneur or small business who wants to start up. Then we’re finding the privacy of ourselves.
Leader McCarthy: And why don’t we just sit back and think, we believe in private property. Why don’t we apply that same thing when it comes to big tech? And at big tech, when you think about it, if you go onto Google, people say, oh, they give all these free products. No, no, no, no, no, no, no. Anything free on the internet, you are the product. It’s your data is what they’re selling. So why don’t we make it like private property, that you have control of your data. They have to tell you what they’re taking. You have the right to move it, you have the right to delete it. And if they’re monetizing it, you have a right to get part of that. You have the choice. If they want to monetize your data, you could say yes, but you get a piece of that. And maybe that’s a gift card. Maybe that’s financial resource. Maybe it’s some other product. But you have the choice. Again, you’re in control.
Oren Cass: Yeah. And so, I think the idea of sort of the task force is really interesting. And you described, this comes down to policy. Is one of those task forces a sort of working class or worker focused task force? And what do you see as kind of the policies that are for workers and maybe focus differently on workers than the Republican party would have in the past?
Leader McCarthy: Well, let’s look for instance what we would go through. We’re going to do a number of different task forces, and they’re going to be built upon the China task force that we just did. A Jim actually served on that. And let me give you a little background behind that. I had worked with Pelosi for eight months and the Democrats to try to get a co-equal number taskforce about China, because we have no policy when it comes to China. That’s a big challenge for us for the next century. And why create one party or the other? Let’s take American policy about China. Pelosi finally agrees and agrees to the number equal. We went so far as to ready to name them. We had the Washington Post interview, they’re ready to do the story and she backed away. So I went forward with it anyways.
And with all the different issues that would come upon China, it’d be the military, could be from technology, it could be from what they’re doing in our education system, I put people from all those different committees and they came up with solutions. Two thirds of them were bipartisan. I had Democrats coming to me telling me they wanted to be a part of it. So I would see that all these different elements go into that. Immigration would be something about workers. Here we are with the Biden Administration, just by a stroke of a pen, changes the course of what’s happening on the border. And what really concerns me here with the Biden Administration, they never take into consideration by just opening up a border, what does it do to the American worker for their jobs? What’s it do with COVID that’s happening right now? What does it do to society itself on the expense and others of what’s going forward? That basis that I think people should have to have input to and have a policy about.
We were actually successful the things we were doing along the border, and now the president’s fundamentally changed that. And it wasn’t by legislation itself. And what is it when it comes to education? To me, everybody will sit back and so many people think, oh, you got to be a doctor or a lawyer to be successful. I don’t believe that to be the case. Everybody should have opportunity for whatever they believe is successful. I think we have an education system that’s more than 100 years old trying to deal at a 21st Century idea. And these universities pricing yourself out of the ability. I look at a couple of different areas when I look. Sebastian Thorn, he created … What’s the name of his? Udacity. Okay. Have you ever heard of Udacity?
Oren Cass: Sure.
Leader McCarthy: So I found Udacity, my son, he was going to college and I started paying for this Udacity, $200 a month. Said, “what is this?” He goes, “I’m just getting this other education too, dad.” So I go and see Sebastian. And Sebastian’s brilliant guy, invented the driverless car. Stanley that’s in the Smithsonian. Google hires him, and while he’s out at Google, the thing he wanted to do out there is teach a course at Stanford. So unbeknownst to Stanford, you know what he does? He offers his course for free online. 140,000 people sign up. Even people in our military who was out in theater. So here he has these 20 brilliant Stanford kids, they get to see them in person. And he assumes they’re 1 through 20 when the grades come out.
They’re not. The very brightest kid that’s in there at Stanford that’s seeing him in the classroom is like 550th. So you know what he does at your Udacity? You pay $200 a month. Maybe he’s changed it, I don’t know. Once you get the course done, you get half your money back. And he had at the beginning, you get a Nanodegree. But once you get the Nanodegree, if you don’t have a job in six months, you get your full tuition back. Could you imagine a university doing that? Instead of just saying, I’m going to put you all in debt and you’re responsible, but I’m not responsible for getting you a job or anything else.
Oren Cass: No, that’s really interesting, I think, and points to just the amount of innovation there’s the potential for here. I’m struck in, sort of as you were describing some of the issues you’re focused on. You mentioned the question of sort of corporations and the degree to which corporate America seems to be on the other side on a lot of issues at this point. And we touched a little bit on tech and on globalization with China as well. Where, if at all, does Wall Street fit into the picture? And do you see them and sort of Wall Street versus Main Street as also an area where Republicans are rethinking things?
Leader McCarthy: I mean, think about in 21st Century. I mean, I was just on CNBC the other day. And here you have Yellen putting together a climate change person. She’s very proud of that, inside the Federal Reserve. I look at FinTech. I look at Bitcoin. I mean, here we are moving into 21st Century, and I think it’s the Republicans out there that have led the charge. When we crafted the bill for COVID relief and others, we allowed FinTech, we allowed credit unions, we allowed your community banks all in. Before you had to just do this one little entity. Now it’s where the people go. Let them prosper what’s happening. And where capital is king, jobs are created. And before Wall Street, they had a monopoly on capital so you just go to them. Let’s disperse it out where anybody could provide the capital and the risk. Just so you understand my background, I wasn’t born into the Republican party, I chose to be in this party. I have a family who are all Democrats.
My family is not wealthy. I get out of high school, I don’t have the grades that I can get a scholarship. And my folks can’t send me away to college, they don’t have the wealth so I go to community college. But I always had a strong work ethic. That’s what my family believed in. And so I worked jobs, just like every job you would think about, from behind the meat counter, to boxing groceries, and you name it. Firefighter seasonal. But I meet a guy that owns a liquor store that has a car dealers license. I talk them into taking me to the LA car auction. It’s not far from my hometown, two hours. And I started buying and selling cars, and I’m flipping them to pay my way through college. While I’m doing this, when you’re at community college, you go visit your friends who are away at college.
I have friend at Stanford, friend at SD, some friends at San Diego State. So I’m going to go visit some buddies at San Diego State. This is probably before you were born. This is 1985. So I go to the grocery store to cash a check. Not to the bank, but to the grocery store, so you can understand my wealth. When I cash the check for money for that weekend, the day before lotto started in California, so I bought a lottery ticket, and I won the lottery. True story. I’m 20 years old. It’s Friday night. I just won $5,000, the most you could win in 1985 money. And I ended up 10 minutes from Tijuana. So I come back, take my folks to dinner, give my brother and sister each a hundred bucks. I take the majority of the rest of money, I put it all in one stock.
Because one thing you’ll learn about me, I’m a risk taker. I made 30% of my money in six weeks. So I go out and I try to buy a franchise, but no one’s going to sell me a franchise because I’m 20 years old. I go to the bank, where’s my business plan? They’re not going to loan me any money. So I opened up my own deli. I sell my stock. I refinanced the cars I was trying to sell, and I put money on a credit card and I take a risk. And I opened this deli, and there’s three lessons I learned that have never left me from any of my small business. I was the first to work, I was last to leave and I was last to be paid. And you know what? I was pretty successful. So at the end of two years, I didn’t have enough capital I could pay my way through college without working.
So I sell my business. I’m going to college. And there’s an article in the paper to be a summer intern in Washington, DC with my local congressman. Don’t know him, but think he’d be lucky to have me. So I applied. You know what he did? He turned me down. But you want to know the end of the story? And now sit in the congressional seat I could not get an internship for. Only in America could that happen. But was that Wall Street loaning me money? Was that the local bank loaning me money? No. I took a risk. So in today’s world for capital, why does government put all these restrictions? What if I knew somebody that had capital that wanted to invest? What if I had other ways of selling shares within there? Let’s unshackle our ability for people with ideas and people who are willing to take risks, because you know who it’s going to help the most? It’s going to help a person that has probably less money. It’s going to help more minority communities with opportunity zones and others.
That’s the way Republicans should be thinking. So they’re going to go in communities that they normally don’t vote Republican, but our policies are going to lift them out of the idea of what government is today. We’ll just give you a paycheck, or we’ll give you housing, or we’re going to give you childcare. What Americans truly believe, they want self worth. They want to do it themselves. But just don’t put these obstacles up where I can’t get there. These corporations that come out now and say, oh, Amazon, I’m for raising the corporate tax rate. Well, they don’t pay the corporate tax rate because of some loophole they take off. But you know what Amazon does? Amazon competes. They sell tools now too. So they also compete against the Milwaukee tool that they actually sell on there. So they don’t kill. But you know what? That small business that make that tool, they’re going to pay the 28%.
So what we’re finding is these large corporations, they like more government regulation. Why? Because it keeps the small guy out. It keeps the competition away. We should be fostering more competition, because if you really sit back and think, who should have been Amazon first? Sears and Roebuck. They had the catalog, they sold everything. Just the efficiency, they weren’t there. But we should allow the next Amazon to come and the next Google. And yeah, they should start in the garage. But when you become big, you shouldn’t be able to wipe everybody else out that you can’t have competition. And that’s what I’m seeing happening today.
Oren Cass: I think the point about getting capital out to small businesses and entrepreneurs is incredibly important. And it’s funny to hear your description of the challenges you saw in the 1980s, which I think a lot of people would describe as probably a lot of the same challenges they would face today. And yet in the meantime, obviously we have a financial sector that’s much, much larger than it used to be, but that’s concentrated in other kinds of activities, whether that’s private equity, hedge funds, you mentioned Bitcoin and some of the cryptocurrency.
Leader McCarthy: Everybody’s got a SPAC.
Oren Cass: That’s right. I saw Shaquille O’Neal is advising a SPAC. And I was wondering, who put their money into that one? Is that a related problem? Or do we have too much of that and not enough of the good stuff or you let Wall Street do what it wants?
Leader McCarthy: Well, I’m not into letting Wall Street do what it wants. I don’t want Wall Street to control, because what you’re finding today is… Think about this. When people retire, they get their 401ks and others. Let them invest, let them have the ability. But many of the rules are arcane and 100 years old, they gave an advantage to Wall Street. You don’t need that much anymore. So, let’s let others spur it off because what happens, when you create a small business and you create it successful and you have others, locals invest in it, they reap the benefit. Well, they become angels and have those angels, and they redevelop an entire community and it only fosters from within.
And in today’s world, you can do it anywhere. You and I are talking, we don’t have to be in person anymore. So I don’t have to live in Silicon Valley. I don’t want to have to be on Wall Street. And so now any community could have the benefit and anybody living anywhere. I don’t have to have the library that I have to go into, I could get it downloaded to me. And that could change my education. It could change my opportunity. It could change the investment. It changes my ability to sell. It changes the competition. I’ve got better quality. I’ve got the ability to reach more market. I could do more market share. Who wins in that? The consumer wins in that. The entrepreneur wins in that. So we’re all at a benefit.
Oren Cass: That certainly makes a lot of sense. I think I have time for maybe one more topic and I’m reflecting on how, as is often the case in these types of conversations, we’ve focused a lot, ultimately on the entrepreneurs and the job creators.
Another issue that’s been in the news a lot, also related to Amazon, is unions and labor. And I think particularly the Republican party, for both political and economic reasons, has not been a fan of big labor by any means. But on the other hand, I think there are some folks who have at least expressed an interest in saying, “Well, what could we give workers?” Workers don’t especially seem to want what big labor is offering, but they might want more than nothing. And so I’m curious as you think from the worker’s perspective, do you see any interest or opportunity to think about what else could they have that’s not a labor union, but that’s more than nothing? Or what else, at all, can public policy offer to workers as they approach the labor market?
Leader McCarthy: That’s a great idea because in today’s workplace, all unions are not equal. I’ve watched them grow and change over time. Some of the biggest unions today are government employee unions. And they’re just fighting to carve out more of a pension than others. But when you think of unions where they’re created in others that are almost a manual labor working in that process, that they got lost in the shuffle.
I look for a prospect at this. If I’m going to invest in something, I want the return for it. If I’m a worker, I want accountability, I want the reason why I’m providing resources from my paycheck, what is it going for. And you raise a good issue here, we should rethink almost everything we do, is it the best use of what we’re doing? Looking at a union today, is there a better way to provide it? Especially, you could have greater technology today, so you have greater accountability. You could provide more service for less fee. And could you empower the worker themselves?
So let’s take from a philosophical approach. If we believe within healthcare, we can pool because it would help us, more people pool together to save money within our insurance, well, we have the choice. If we look from our cable, well, we got choice. We don’t have to go with one cable company like we did in the 80s, whoever was wired. And we could create a package, right? I could get the Dodgers and the Lakers, but I could have HBO or something else that I want.
Why can’t we have that competition when it came to unions? And it’s not thinking from a negative point of view about unions. What I’m looking at is the worker themselves, because who’s providing the money to the union, the workers. So the power for the workers is, who’s giving me the greatest return on my money? So maybe this other one will have better healthcare, charge me less, or provide a better service. Why can’t we open them up then? Because then that’s competition. And we’re using our philosophy and our principles that benefit the worker that they’re empowered greater to have a better option for the future. We should rethink. And that would have to change labor law to allow them to do that. And instead of looking after the one person at the top, we’re looking at the bottom of the pyramid. Let’s empower them.
Oren Cass: Yeah, no, I think that’s a really good way of putting it. The point about it coming down to worker choice in a lot of cases. And whereas the historical view has been, maybe the business would just be best off if there was just no union.
Leader McCarthy: They have that choice. I mean, why are you forced into something? Just as an American themselves, I don’t want to have to be forced into anything. Let me make my choice. I think I’m smart enough to fail or succeed on my own. And if I earned it and I worked for it, let me decide what I’m going to do. And if I think it’s worthy to have one, I can choose to be in one, but I could have a choice of many.
Oren Cass: And do you think, is our economy ultimately better off if workers do find unions that they’re happy with and represent them or in a world where the managers are in charge and you don’t have the union on the scene?
Leader McCarthy: Think about the gig economy, right? It’s growing so big. I live in California, the first thing they did, they watched Uber and everybody else grow. Well, think about Uber themselves. Here you are. You may have another job, your refrigerator breaks. I can go drive for Uber for a little while. I make enough money, buy a refrigerator. Or I could drive whatever I wanted and I can earn enough money to take my kids to Disneyland. I may be retired and I want to do something for my grandkids. The worker has the choice then. But what do they do? They go and put in a union, try to force it upon them, where they wouldn’t be able to succeed. We had to do an initiative to change that.
If you’re going to have an economy of the 21st century, it’s not going to be successful if you have ideas of the 1950s. And that’s the basis of what a union looks like today when an economy totally changes. They never thought of an Uber. They thought of a cab company. You got to buy a medallion. But think about what an Uber allows you to do. I can rate my driver. I can tell them when they come. They can rate me. I could find out what’s cheaper. I could take an Uber share. I am empowered.
So why don’t we take that same philosophy to government? Why wouldn’t, if you were a veteran and we hear all these problems about veterans trying to get appointments, why can’t they make an appointment on their phone? Why can’t they rate their doctor? I mean, think about what that would do. It’d be more efficient. It’d be empowering the veteran for the care of best where to go. You’d have a rating system to know who’s good, who’s not. I mean, we could transform it, but we can’t live in the 1950s being in the 21st century.
Oren Cass: No disagreement there. And I think it certainly lays out a terrific framework for the work that you’ve described that, that you and your caucus will be doing. So I think we’re out of time. We really appreciate you joining us and we are looking forward to hearing about the task forces and the policy work to come. So thank you very much for all your leadership.
Leader McCarthy: I love that Rockwell behind you. Do you know the story of that Rockwell?
Oren Cass: I do actually. I am in the town north of where Rockwell painted.
Leader McCarthy: It was a school board meeting, right?
Oren Cass: Yes. That’s exactly right. I’m delighted you’re familiar with it as well.
Leader McCarthy: Well, great to see you. Thanks for having me. Look forward to continuing talking to you.
Oren Cass: Thank you very much, Leader McCarthy.