Return to Transcripts main page
FAREED ZAKARIA GPS
Special: Interview with Steve Bannon. Aired 10-11a ET
Aired June 3, 2018 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[10:00:25] FAREED ZAKARIA, CNN HOST: Hello, and welcome to this CNN special, THE STEVE BANNON INTERVIEW. I'm Fareed Zakaria in Rome.
Bannon came to worldwide attention in August of 2016 when he was named the CEO of Donald Trump's presidential campaign. After President Trump's victory and inauguration, Bannon was named chief strategist at the White House, reporting only to the president. But for many he was also the chief ideologist of a nationalist, protectionist populism that he championed when heading up Breitbart News. His ambition then and now is nothing less than to remake conservatism not only in America but around the world and thus remake politics.
But Bannon who has been everything from a Goldman Sachs executive to a movie producer was set to have clashed often with other White House officials including the president's family. So not even a year into his job, Steve Bannon was fired. When he was dismissed, Bannon didn't disappear from the public eye. He resumed his post as executive chairman at Breitbart, the conservative news outlet, and continued to give advice to the president.
Then in January, Michael Wolff's provocative inside account of the White House, "Fire and Fury" was published. Bannon was a chief source for the book which painted the president in a less than flattering light. Trump had enough. In a statement he said that when Bannon was fired he not only lost his job, he lost his mind.
After his presidential dressing down, Bannon also resigned from Breitbart but has continued to work to spread his brand of populism and is in high demand all over Europe especially in Italy. He invited me here to Rome to interview him.
Why Rome? For a place that's often been accused of being chaotic, Italian politics are more chaotic than ever. And what's caused all the trouble is a recent election win by Italy's populist whom Bannon has been supporting.
We'll dig into all of that later with Steve Bannon later in the show.
Over the next hour, you will hear his thoughts on the wave of populism rising around the world on the Republican chances in the midterm elections back home and on his former boss, President Donald Trump. Here is my exclusive interview.
ZAKARIA: Steve Bannon, pleasure to have you on. STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: Thanks for having
ZAKARIA: You said that you thought that Don Jr.'s meeting with the Russians in Trump Tower was treasonous.
BANNON: Yes. Yes.
ZAKARIA: And you said somebody should call the FBI.
BANNON: Well, in sense somebody did --
BANNON: I did make a --
ZAKARIA: But I want to ask a question about the issue there.
ZAKARIA: The substance, not the --
ZAKARIA: In a sense Rod Rosenstein called the FBI in the sense that he appointed somebody to investigate, that guy's name is Bob Mueller.
ZAKARIA: Isn't that good and shouldn't that process be allowed to continue?
BANNON: By the way, I've been a big proponent of Mueller. I was the guy that said, don't fire Comey. This thing is petering out. I said it's the -- it's the C block on Anderson Cooper. Nobody is interested anymore. It will be done in 90 days and will be done with that.
ZAKARIA: OK, but I have to protest that lots of people watch the C block of Anderson Cooper.
BANNON: No, no, but I'm saying the energy by the time you get to C block, when Anderson's got something it's in the A block. If you fire a special prosecutor. I've been a big proponent of Mueller, I've gone be part of that as a witness of fact. I've always said, you know, he's a combat Marine, great individual. That ought to play out as it's going to play out.
Now where I have a problem and a huge problem, I was a guy that said publicly that Ty Cobb should be fired, OK. He gave the president I thought terrible advice. And I actually think lied to the president consistently about what the nature of this investigation was and the timing of it and giving overall a dockage.
Remember, unlike all the precedents set with every other president, we willingly went and gave over a million pages of documents and allowed the White House counsel, the chief of staff, the chief strategist, the head of communications --
BANNON: To be -- to expedite this, which I thought was not wise.
BANNON: OK, but here -- I said Cobb should be fired and I also said -- and I was a guy that supported Rosenstein, I was there when Sessions brought him up as the guy -- that he should be terminated. And here is why. Not Mueller but Rosenstein. And here is what I think you really -- the focus ought to now be is that the president of United Sates is the chief law enforcement officer of the country.
He ought to order Rosenstein to do what Devin Nunes did and to release every document associated with Stefan Halper and all these people associated whatever happened in Cambridge, OK. We ought to see -- and by the way, not to CNN, not to the "New York Times," not to "Washington Post" or the White House, to give it to the chairman of the House Intelligence Committee.
[10:05:11] We have to find out all the paperwork, who got paid, what happened when a spy and a recruiter of spies which appears from public things Halper is, OK, and by the way --
ZAKARIA: Let me ask you about --
BANNON: If Rosenstein doesn't do it, he shall be terminated.
ZAKARIA: Let me ask you about Rosenstein's boss.
ZAKARIA: You were instrumental in getting Sessions --
ZAKARIA: -- to endorse Donald Trump.
ZAKARIA: Might people forgot now is the first senior Republican --
ZAKARIA: -- to endorse Donald Trump.
BANNON: Yes, we're very close.
ZAKARIA: Donald Trump now says he wishes he had picked another attorney general. Is Donald Trump right?
BANNON: I think the president is wrong. I think the president has been wrong from the beginning about -- if I can respectfully disagree with the president of the United States, I think that -- I think the whole concept of recusal is not even an issue. I think that Rudy Giuliani or Chris Christie or Jeff Sessions, anybody associated with the campaign would have had to recuse themselves before Grassley's committee even voted him out to go to the floor for a vote. So I think the recusal is an issue. Yes, an issue that was dealt with and had to be dealt with. Whether you picked Rudy or Christie.
And by the way, this thing about Sessions was not the first pick. Rudy was always the first pick. Jeff Sessions and Rudy all wanted the secretary of State, OK. So even Rudy knew at the time there was going to be this issue of recusal. So I think the president is wrong.
I think if you look at what Jeff Sessions has done on immigration, on migration or all the key issues at the Justice Department, I think Sessions has personally done an excellent job. And I think Sessions has done a job of devolving this down to Rosenstein.
Now I think the question was Rosenstein particularly get the Southern District of Manhattan involved this whole Cohen thing. It looks like the Southern District of Manhattan is involved in the Trump organization.
Now they refuse, he refuses to give some sort of leaking to the Gang of Eight. They refused to give these documents to Nunes. I think now that Rosenstein ought to be -- I think he ought to be given a direct order, very simple. You turn every document associated with this spy over in Cambridge and whatever foreign institution was involved, whether it's MI5, MI6 or anybody else. You give whatever the FBI did, you give whatever the CIA did.
You see Clapper and these guys on TV every night and Brennan, they're just bitter old men. You turn over every document. And if he doesn't turn it over you give him 24 hours. If he doesn't turn it over, I would fire him, and that's not obstruction of justice. That's giving a law enforcement officer a direct order to turn over documents to Capitol Hill. And if he doesn't do it I would fire him.
ZAKARIA: Next on this CNN special, Steve Bannon has complained about the preponderance of immigrants from certain parts of Asia in certain powerful positions in America.
(BEGIN VIDEO CLIP)
ZAKARIA: So basically you're saying that there are too many people like me in America, and isn't that racist?
(END VIDEO CLIP)
[10:11:34] ZAKARIA: I want to ask you about immigration.
ZAKARIA: You've said that immigration is the issue on which you are going to destroy the left. You're going to beat the left.
ZAKARIA: You're going to beat progressives.
ZAKARIA: What do you mean?
BANNON: Because immigration is about not just sovereignty, it's about jobs. I remember the first bucket when we got on the Trump campaign, the first bucket was make massive on immigration and legal immigration, the central issue about jobs. A massive illegal immigration is the Chamber of Commerce, right. And a lot of the Republican Party that want to flood the zone because of -- it's unfair competition for black and Hispanic working class. In other words you got so much labor, right, that you have basically in agriculture and in oil field services, et cetera. And the service industries.
If you have this unlimited pool of labor that you're going to draw from, legal immigration at the top the same thing. You're not going to be able to take the Hispanic and black community from the STEM system in grammar school to our best engineering schools, to computer science and the great jobs at Silicon Valley, unless you start to limit this h1b visas and this unfair competition I think they have as an American citizens from East Asia and South Asia.
And it's no hit to the people from India or from China, they're fantastic. But we have to start to carve some space out basically by allowing our citizens to get those jobs. And so that's why I'm saying from day one, the Democratic Party and particularly the progressive part of Bernie Sanders in the labor movement, the reason I think we can carve off, and I've said this, 25 to a third of the Bernie Sanders populist movement, the economic nationalist, is at the end of the day they don't have an answer for immigration. We have to limit massive legal immigration.
And you're starting to see this in the Trump administration. What he's done to limit massive illegal immigration. That's why we have the lowest black unemployment in history, lowest Hispanic unemployment 20 years, and wages starting to rise particularly in agriculture and in oil field services and construction.
ZAKARIA: Is this why Donald Trump has began to go -- particularly with this rhetoric very hard line on immigration? Is this the strategy that will limit the damage on the midterm? Is this the midterm political --
BANNON: I think you got the key. Here's what I think happened is in the first year of administration we clearly had this conflicting voices of the globalist, you know, the Gary Cohn, the McMasters, sort of good guys, but they come with such thing and the nationalist. I think now, as President Trump looks at that -- at the midterm election, right? And the Republican Party, you know, Paul Ryan's quit. The Republican Party has kind of this attitude and we'll fight this congressional district by congressional district, right.
What Trump has done I think is moved aside the chief of staff. He is now -- five or six people directly report to him, OK. He's got a new NEC, he's got a new NEC. Mick Mulvaney on the reports telling him comms reports to him. He is doing what he wants to do -- execute, OK. To execute on his plan. And that plan he sees is the promises he made up until build the wall which I'll get to in a second.
This is clearly playing I think for November 6th of 2018, it's going to be a base plus election, OK. And if you want to limit -- and by the way it's up or down vote on impeachment. Trump is on the ballot in every congressional district. This is not going to be some Democratic congressman versus Republican congressman. This is going to be Donald Trump versus Nancy Pelosi and Tom Steyer.
ZAKARIA: And he is nationalizing it using immigration.
BANNON: You're going to see more of this. You're going to see more of the central beating heart issues. Immigration is definitely going to be one.
ZAKARIA: Speaking about, football players who happen to be black. Is that part --
BANNON: Well no, I think no and actually in the opposite.
[10:15:01] I think as you see in Kanye West. I think what he's doing is that the black America is now understanding, hey, I got the lowest unemployment in history. My wages are finally starting to rise. What this guy is saying is making a lot of sense. We don't -- it's not about a minimum wage of 15 bucks. It may cost $20 to flip a hamburger at McDonald's.
What we have to do is limit this unfair competition. The working class blacks and Hispanic have been hit more than any other segment of our country, OK. And these are some of the best patriots. They're the guys in the U.S. Army, they're the guys in rifle platoons, in the Marine Corps. That working class black and Hispanic have been eviscerated, between the financial collapse in this unlimited competition they have from foreign labor. That got has to stop.
And by the way, Trump, I think -- this is going to be an up or down vote on November 6th. And I think he understands that. That this is going to about impeachment, the tax cuts all the economy will go up in this. But the Republicans have been running these ads on tax cuts alone. It's not going to resonate. This going to be an emotional, you're either with Nancy Pelosi or you're with Donald Trump.
So to a degree, remember, the Democrats have questioned his legitimacy from the very beginning. This nullification project. The one thing that Democrats and the opposition party media, CNN, you guys got one thing right. You're going to get you do-over. Trump's second presidential race will be on November 6th of this year. He's on the ballot and we're going to have up or down vote. Do you back Trump's program, OK, with all is good and all is bad? Do
you back Trump's program or you back removing him? Because that's what Pelosi and Tom Steyer and these guys want.
ZAKARIA: You say you're not a racist, and I take you at face value. But I want to ask you about the policies and the intended or unintended consequences, because they sure as hell attract a lot of people as supporters who are about you racist. And I think about an exchange you have with Donald Trump on Breitbart Radio. It's very interesting.
Trump said that he was in favor of high-skilled immigrants. And you said, well, wait a minute, if you're going to end up with two-thirds of Silicon Valley CEOs being from South Asia.
ZAKARIA: And then you pause and you said, a country is more than an economic community.
ZAKARIA: So basically you're saying that there are too many people like me in America. And isn't that racist?
BANNON: No, no, no. Let's start you with economic nationalism doesn't care about your race, your ethnicity, your religion, doesn't care about, you know, your gender, doesn't care about your religion, doesn't care about what your sexual preferences. It cares about if you're a United States citizen. OK?
ZAKARIA: But those people are all -- in Silicon Valley, they are American citizens, they are --
BANNON: Well, we don't know. We don't -- hang on. We don't know --
BANNON: No, no, we don't know what's coming through by h1b visa or not. What I'm saying is that, we can't get this country sorted out until we've now taken the entire elementary school and made it science, technology, engineering and math.
ZAKARIA: Steve, with all due respect, what that answer implied was that they had come from the wrong culture. If they came from the right culture, if I was white and Christian --
BANNON: Now wait --
ZAKARIA: -- you might have a different --
BANNON: No. ZAKARIA: No?
BANNON: If you're from Asia and you hear second generation, you're American citizen, absolutely no problem. These hb1 visas where you come here and basically that take the jobs of American citizens is just not acceptable, and that's not racist. Americans -- and by the way, the central beating heart of this is that Hispanics and blacks have to get into the high value tech jobs. We're never going do that as long as they have unfair competition. Remember, when Sessions like first start this --
ZAKARIA: And by the way, also going to do that by cutting spending. I mean you're celebrating the deconstruction of the administrative state, but it is all those scholarships and programs and, you know, pre-K and nutrition programs that help poor people rise up. And I don't understand why --
BANNON: Have we -- we just pass a $4.3 trillion budget, they didn't cut a penny. In fact they add it to all the programs. When they added to Defense programs they added to all these other programs. By the way we didn't cut one penny at those programs. We have -- we have. -- and by way it's $1.3 trillion f discretionary spending. We have $3 trillion deficit structurally now --
ZAKARIA: But that's because of $3.5 trillion tax cuts --
BANNON: You know, the trillion and a half dollar tax cut was supposed to be the concomitant part was supposed to be some pretty significant cuts in the budget. And by the way the Republican -- the primary political class failed to do it. When President Trump finally woke up to the fact that he had been sold a bill of goods, remember he's saying that hey, this will never happen again. One of the events to watch in this coming election before November 6th -- September 30th is the end of the appropriations year. He has already said, I'm not kicking the can down the road anymore.
We're not going to have these CRs. And that's why you start seeing on Capitol Hill now. People are talking about we have to get this done before the August recess.
ZAKARIA: OK, I got to get a few more things.
BANNON: Yes. Well, by the way, what I'm saying is that I think the President Trump nationalizing this, the wall is central. The wall is not just totemic. The wall is absolutely central to his program. I believe that what he is going to do is as we come up on September 30th if that appropriations bill does not include spending to fully build his wall, not some 1.6 billion for prototypes, I mean, to build the southern wall. I believe he will shut down the government. I believe the government will actually shut down in the run-up to the election. [10:20:07] ZAKARIA: You've been really nice about Donald Trump in
this interview and yet he calls you "Sloppy Steve." He says you've lost your mind. He says you had nothing to do with his election. What's your response?
BANNON: He is Donald Trump. I think he is doing a fantastic job. Look, every day is going to be different. So you just got to hang -- you got to swing with it. You know, I knew Trump for many, many years before I stepped into the campaign. Not really well.
ZAKARIA: Does he call you to tell you Steve, I'm just kidding?
BANNON: No. Trust me he does not do that. But look, every action he is taking, I am really happy with. I think he's got the right with Larry Kudlow, the right guy at the NEC. I think with John Bolton --
ZAKARIA: Total free trader.
BANNON: Well, but by way, he made -- look what he did. The first interview that Larry -- Larry Kudlow sat down with me --
ZAKARIA: I don't want to --
BANNON: No, no sat down with Peter Navarro, but when Larry Kudlow went on to CNBC and the CNN with his first interviews, he said hey, we have to be tough on China. China has, you know, has cheated us. You said it in your column two months ago. We've got China dead to rights in this thing. You know, they can't happy talk -- they can't go to Davos and give some big speech about globalization on how the world is about free trading when they run as mercantilist society.
ZAKARIA: So why did I come all the way to Rome to interview Steve Bannon? Well Italy's politics were in absolute chaos this week. And Bannon has a lot to say about the subject. Much more on that when we come back.
(BEGIN VIDEO CLIP)
BANNON: We're coming up on the 10th year anniversary of the financial crisis. The fuse that was lit then that eventually brought the Trump revolution is the same thing that's happened here in Italy.
(END VIDEO CLIP)
[21:25:35] ZAKARIA: What a week to be in Italy? I was invited here to Rome by Steve Bannon who has been of an avid supporter of the populist movement here, a movement that has created even more political chaos than Italy usually has.
The trouble stems from the country's March elections. That vote saw the Populist Party surge in popularity, rejecting traditional party politics. The parties ran on an Italy first mentality promising a crackdown on immigration, if that sounds familiar. And the populist coalition also threatened Italy's relationship with the European Union causing grave concerns among many Italians, many Europeans and also global stock markets .
From Italy's own Borsa markets in London and New York, stocks were tumultuous this week based in large part on the turmoil in Italy. Steve Bannon is here to support and learn from those Italian populists.
ZAKARIA: In a sense you think we're in Italy at an unusual moment because this is the future and it might be the United States. So let me set the scene and then you tell me why this is the future. You had a strange left-right coalition, or kind of populist movement with the five-star movement along with the northern league kind of separatist movement of northern Italy. They won a majority in the election.
Why is this the future and what does it mean for the -- you know, politics in the West?
BANNON: We're coming up on the 10th year anniversary of the financial crisis, the financial collapse that happened in September of 2008. As you remember in the presidential election of Obama and John McCain. The implosion of those world capital markets, right, has never really been sorted out. That the fuse that was lit then that eventually brought the Trump revolution is the same thing as happened here in Italy. You've had this kind of stagnant economy. The economy today is actually smaller than was in 2008.
You've had a populist and a nationalist movement kind of formed. One in the north and one in the south. What happened that was so amazing -- the reason I came over here and kind of saw this Trump rally type intensity, you had a full vetting of particularly the center parties, the traditional center parties in this populist and nationalist movement on the right and the populist movement on the left. They won.
And in fact two-thirds of the vote that took place in March was really anti-establishment. They're saying, hey, we want to try something different. What was most amazing they talk about big ideas and they had incredible participation by young people, OK. Young people will engage particularly on the five-star movement which is really an internet based movement.
ZAKARIA: And that's the only populist movement in Europe at least that draws young people.
BANNON: Yes, for right now. I mean, you do have some young people in these populist movements. But the five-star movement is a young person's movement, right? It's quite compelling not just from the south, but it draws young people. They then over that eight-week period, and I was pretty vocal after the election in the media here saying, you know it would really be interesting is they try to put together -- leave the old dichotomy of left and right aside and try to put together a unity government that united north and south.
ZAKARIA: You see this as sort of like Sanders plus Trump.
BANNON: Absolutely. I see this is elements of the Sanders movement and elements of the Trump movement or the Trump base. And what was most important -- and I think for an American audience or world audience is what five star represents is really anti-crony capitalism and hey, it's the political class, the permanent political class that's really forcing this burden upon us. We want to get rid of all these guys. These people are not -- they're not really schooled in government.
I mean, the head of it, Di Maio, is basically -- was formerly a waiter. I think the mayor of Rome, who's a woman, the young mayor of Rome, I think she was formerly a secretary. So this is really people from everyday walks of life and saying, we're the anti-political party. In 80 days what was amazing, they put aside their differences of north and south, right and left, and came together with a government in a 56-page or 60-page document that laid out flat tax, how they -- we're going to do this to guaranteed income, right. But kind of graduated thing.
Really well thought through on the migrant issue, on flat tax, on growing the economy, getting the economy pay back up to 3 percent.
ZAKARIA: Broadly speaking, fair to say that policy was sort of left wing on economics but right wing on things like immigration?
BANNON: Except for the flat tax. The flat tax is a libertarian -- I mean this is the Steve Forbes-Rand Paul dream of putting flat tax around central Europe. Your starting to see Hungary, Poland, some other countries experimenting with it. This would be -- remember, Italy is the fourth largest economy in the -- one of the founding members, I think the eighth largest economy in the world. It's still a major industrial power.
You know, people forget it, this is just not a place for tourism. It's a major industrial power particularly in the north. They were going to the 15 percent flat tax which is pretty radical. But here's my point, it was well-thought-through. This was not wide-eyed. And here is what's most impressive about Di Maio and Salvini, the two leaders. They put their egos aside. They put another guy up, an unknown law professor, as the prime minister, and then they put together -- put a guy, Dr. Savona, who is an expert in the E.U. Now, he's quite controversial because he said from day one, "Hey, this whole thing's a German cage and they've got us locked in, right? France is killing us and Germany's killing us."
But they put him forward as a finance minister. And the central guys rejected it.
ZAKARIA: And how will this come to America? You think American...
ZAKARIA: ... are similarly dismissive? BANNON: I think, after the Tea Party...
BANNON: The Tea Party revolt of 2010, which saw 62 seats go in the House, kind of, petered out a little bit with the Romney campaign and Obama. What I -- I saw in the European elections in 2014 with Nigel Farage, the kind of beginning -- the reinvigoration of this populist movement.
Europe is about a year ahead of the United States. And I think you're seeing now pieces being put together where you see populist nationalist movements with reform, with people who are saying, "Hey, it's the permanent political class and what we have to do is get rid of these politicians, get involved citizens."
And that's, I think, the power you're seeing here. You could begin to see the elements of Bernie Sanders coupled with the Trump movement that really becomes a dominant political force in American politics.
ZAKARIA: Next, on this CNN special, Trump has yet to build his wall and his tax cut disproportionately helps corporations and people who are already rich. Has the Trumpian revolution, as Bannon envisioned it, failed?
I asked Steve Bannon.
(BEGIN VIDEO CLIP)
BANNON: Remember, I was the guy that argued there ought to be a 44 percent tax for the -- for the upper brackets, right? But I was -- that was, kind of, dismissed early on. You have to make manufacturing competitive in the United States. And that's the heart of that tax -- and by the way...
ZAKARIA: But it hasn't come back. Investment hasn't come back.
BANNON: OK, but no, no, no...
ZAKARIA: The estate tax has been -- exemption has been doubled. Steve, .2 percent of Americans pay estate taxes -- .2 percent. This is not the 1 percent...
BANNON: Fareed -- Fareed, I do disagree, because I think sometimes you're caught up in too much process.
ZAKARIA: So you think, at the heart of this populism that you see sweeping the Western world, is a kind of economic populism to take care of these working-class people who have been often left behind. So I wonder, 500 days into the Trump administration, the signature achievement of the Trump administration has been a tax cut that has basically been disproportionately to the wealthy, to corporations. There hasn't been much return of manufacturing jobs.
You gave a speech once where you said there are three things they've got to do. They've got to control immigration; you've got to take care of -- bring back jobs from China; and get out of these wars.
BANNON: Yeah. Yeah.
ZAKARIA: None of that's happened. There's no wall. There's no jobs back from China. We're still in Afghanistan and Iraq.
BANNON: Let's -- let's go with taxes.
ZAKARIA: What we have is a big tax cut. I can't believe you approved of that tax cut.
BANNON: But let's go to the tax cut. Remember, when we first came in, Paul Ryan and guys had been working on it for seven or eight years, the border-adjustable tax. That was very much made on the model of Germany to make us more of an export nation, heavy inducement to manufacturing, 100 percent expensing of capital equipment, period zero.
That blew up in the first 90 days. The Cokes and Wal-Mart and the retailers said "This is going to be a value-added tax; we've got to get rid of this thing."
Then the Trump program was, I believe -- and the center of it, I think, is quite wise. Because what they did is said, "Hey, we can't get anything else done; what we have to do is get competitive with Germany and we have to get competitive with China as far as taxes go and repatriation."
The heart of it -- the heart of it -- and remember, I was the guy that argued there ought to be a 44 percent tax for the -- for the upper brackets, right? But I was -- that was, kind of, dismissed early on. You have to make manufacturing competitive in the United States. And that's the heart of that tax -- and by the way...
ZAKARIA: But it hasn't come back. Investment hasn't come back.
BANNON: OK, but no, no, no...
ZAKARIA: The estate tax has been -- exemption has been doubled. Steve, .2 percent of Americans pay estate taxes -- .2 percent. This is not the 1 percent...
BANNON: Fareed -- Fareed, I do disagree, because I think sometimes you're caught up in too much process. Here's the thing, is that it's a beginning. Directionally, you are starting to see the animal spirit; you are starting to see reinvestment in the country. That's one of the reasons we were 3 percent growth at the fourth
quarter of last year. Now we're 2.2 percent this year, but the projection is up to 3 percent growth. A lot of that is for the reinvestment in manufacturing.
Now, was it a perfect tax cut and is it a perfect populist tax cut? The answer is no. But is it -- a thing that's starting to rejuvenate the American economy and, kind of, gives us an engine to drive, the answer is yes. And I think you're going to see President Trump later in his first term and in his second term start to address some, maybe, the inequalities in our tax code which should have been addressed in the Ryan bill, but that, kind of, blew up very early on in the administration.
ZAKARIA: OK, so then the other part is...
BANNON: But, by the way, one thing about the elites -- here's the thing. I don't believe that people focus enough on what started this. And it's interesting your show started about 10 years ago. The financial crisis of 2008, brought on by the elites of both parties, OK, where they bailed themselves out -- remember, that was when Bernanke and Paulson went up to Capitol -- went up to Bush's White House and said, "We need $1 trillion." This is when Lehman Brothers went bankrupt on the 15th. The administration let it go in. The smartest guys in the room, the geniuses, didn't realize that Lehman Brothers was the heart of the world's commercial paper market.
The whole economy started to blow apart. They go up to Bush and said, "Hey, we need $1 trillion by 5:00 in the afternoon."
ZAKARIA: I got it, Steve, but the point is...
BANNON: No, no, but they took...
ZAKARIA: The same people who bailed themselves out...
BANNON: No, they took care of...
ZAKARIA: ... you're giving them another tax cut? That's what I don't understand.
BANNON: No, no, no.
ZAKARIA: Is that the price...
ZAKARIA: Is that the price you're paying to keep the Republican Party with you?
Be honest, you're paying a price to the Republican establishment?
BANNON: Well, listen, when I first -- when we first got into the campaign, you have to bring -- remember, we're a coalition. We're a coalition of the Republican establishment and this kind of populist nationalist movement. And it takes both to -- it takes both to win. We're very cognizant of that.
I do believe, though, the heart of his tax cut was these corporations to be competitive overseas with Germany and China. I think it's a winner.
My point with the establishment -- the balance sheet of the Federal Reserve in September 2008 was about $880 billion. It's $4.5 trillion today. The same crisis happened in the euro zone. What the elite did was -- was flood the zone with liquidity, to raise assets, right, to inflate assets so there wasn't deflation and a collapse of the financial markets. And so you've had, both in the euro zone here, if you own real estate, stocks or intellectual property, it's the greatest 10-year run in the history.
The working guy has been stiffed the entire time. And that is the revolt that led to Donald Trump and that's what -- that's what you're seeing here in Italy and throughout the rest of the continent.
And by the way, the elites don't have a response. You've seen -- what has stunned me in being over here is the arrogance. If people in the United States think Washington is arrogant to the heartland of the country, it is nothing compared to what Brussels and the city of London are to these individual countries. I mean, they have basically dismissed -- here you had an election with two-thirds of the people who voted anti-establishment parties. Almost 50 percent voted for Five Star and for -- and for the League. And yet they just completely dismissed -- after putting together a government, they just completely dismissed them and said "not acceptable."
ZAKARIA: Stay with me here. I have much more of my interview with Steve Bannon coming up. When we come back, I'll ask him, did Donald Trump take over the GOP or did the GOP take over Donald Trump?
ZAKARIA: So the second part of your program was bringing jobs back from China. And I'm wondering -- again, you look at what is happening with the administration. There's a lot of talk on being tough on trade; there's been very little action. Steve Mnuchin has walked back a lot of the comments. And then the president, your president, throws a lifeline to ZTE, a Chinese company that basically, you know, exists on American technology, and says he's doing it because he's worried about Chinese jobs. You must...
BANNON: You had a column a couple of weeks ago that I could not disagree with more. It was about Trump as a negotiator versus a marketer, OK? Let's step back for a second. We've been told, with the rise of China, both from the cheerleaders, the rational accommodationists and even the hawks, that it was inexorable, the rise of China. Donald Trump has done something extraordinary that Wall Street and the corporatists told us could not be done. He's gotten three weapons, or three tools in his toolbox now. One is tariffs on a massive scale we haven't seen before, the $50 billion we're talking about, but then there's another $100 billion after that and another $100 billion after that -- so maybe up to a quarter of a trillion dollars of tariffs, OK?
Number two is the 301, which, for people, is where China forces us -- not steals our intellectual property -- forces us to give the intellectual property access, the access to (inaudible) -- and the last is these actions like ZTE, where we literally can implode a company by cutting them off from the supply chain.
ZAKARIA: But the actions so far -- you're talking about...
BANNON: OK, no, hold on.
ZAKARIA: The action has been to throw a lifeline to ZTE.
BANNON: No, hang on for a second. OK, but remember, the whole thing about a grand bargain with China -- do we try to set the geostrategic balance with China for the next 50 years? And that's one of the things I think President Trump is working through. On top of that, he's got not just the South China Sea; he's got North Korea. So he's got to balance these two flash points in the world, which probably are the two or the three most intense flash points where war could actually start. In doing that, he has brought -- remember, before...
ZAKARIA: You're just not answering the ZTE, because I know you don't like...
BANNON: No, no, no, the -- Wall Street has told us all we have is the blunt instrument of swift system or cutting off from capital markets. Trump has brought in three weapons at the same time and put China on the back -- remember, Liu He came over here for the simple reason they had a sense of urgency. For the first time...
ZAKARIA: The head of the Chinese economy.
BANNON: Head -- and one of the most brilliant guys in the world, OK? He doesn't get on a plane and come over here with a sense of urgency for nothing. They've always wanted just to tap us along and have these strategic conversations. In there -- and you have obviously a split in the administration. You have more the Wall Street guys with Mnuchin that want to, kind of, accommodate, OK, and to Steven's defense, work out some deal in the short term that can -- and then you've got the hawks, the Lighthizers, the Navarros, the Millers, the nationalists, that say "No, we've finally got China where we want them."
And I think, you know, the president is, kind of -- his negotiating strategy is give a little; take a little, et cetera.
Here's where I think we are. Both in NAFTA and around the world, we're at the beginning stages of a major renegotiation of the economics of the United States and how we are -- you know, how we are treated throughout the world and what our place is in the world. It's at the heart, as you've said a couple of months ago, of the Republican Party and the reformation of the Republican Party. His biggest enemies in this are the Republican Party. And it shouldn't
be lost on people when Liu He came, his first day he went to Capitol Hill. He went to Capitol Hill because he knew that's where the free traders are, right, so he had some -- you know, some basic backing to say, "When I go into these negotiations, I understand that Congress is full of free traders, right, from the Heritage and Cato and also some Democrats, but I've got free traders there."
Trump, I think, has done an amazing job. He has taken us farther than anybody has ever gone with China. He's now got real engagement. And we're going to see -- and it's not going to happen overnight. But you're going to see, in the next six months to a year, I think, a real recalibration of the relationship with China where we really put America first and we're going to stop being treated as a tributary state.
Remember, right now it's barbarian management 101, right? We are Jamestown to their Great Britain. We basically send them raw materials, natural gas, soybeans, hogs, and they send us back -- they send us back, you know, advanced manufacturing.
ZAKARIA: So let me ask you, from the point of view of somebody in the Republican establishment, and I've talked to a few of them, actually, after that column you referenced, and they said, "Look, from our point of view, things are working out fine. Trump talks tough on some of these things. Very little actually happens. The stuff that gets implemented is the core Republican agenda. And what you're going to see is he's going to make some of these attempts at protectionism, but look what the reality is. He's doubled down on Afghanistan. He's doubled down on Iraq. He's more engaged militarily in all those wars that you wanted him to get out of. There is no wall. There is no great tariff war with China right now."
So when they look at it, it seems to me they're saying, "Donald Trump hasn't taken over the Republican Party; the Republican Party has taken over Donald Trump."
BANNON: OK, let me beg to differ for one second. What you have to remember is that what he is doing is the right-wing populism is different than populism you see in Europe. Europe, even at the end of the day, always looked for a state solution. Part of what right-wing populism is, is deconstructing the administrative state, getting rid of a lot of the regulations, opening up entrepreneurial opportunities for working-class people, OK, and getting more of a piece of the action for the working class and the lower middle class.
What Trump has done with judges; what Trump has done with this massive deregulation, which is really, under the surface, it's deconstruction of the administrative state, totally plays to the populist agenda, OK? The one area -- and, by the way, remember, these trade deals are enormously complicated, right? The trade -- in a sense, we walked away from TPP; you've got all these bilateral deals he's trying to do; we're deep (inaudible) with NAFTA. He's started to engage the E.U. We're very deep into it with China and to the fact that we've just laid on $50 billion in tariffs, right? And so -- and, by the way, he's making progress on these every day. Now, let's talk about Afghanistan and the wars. The central thesis of the Trump movement and Donald Trump is America first. It's not America isolationist or America alone. What he looks at is he does this in a very sophisticated way I think the national security community doesn't quite get yet.
He says "Look, the post-War liberal, rules-based order that came after World War II is essentially today, from Europe, the Persian Gulf, the Straits of Malacca and the South China Sea and the Northwest Pacific is essentially that combination of trade relationships, commercial relationships, capital markets and security guarantees and alliances is basically underwritten by the American taxpayer, OK, underwritten by the American taxpayer. And it's the "deplorables" where that tax burden goes. In addition, it's their kids in the Hindu Kush mountains of Afghanistan. It's their kids in the South China Sea. It's their kids on the peninsula of Korea. It's the "deplorables" are saying, "Hey, there has to be a recalibration of this."
It's not that America is backing off from this, but America is more than an expeditionary humanitarian military force that's there to be the world's cop and to pay for it. So, end NATO. That's what he says, "Hey, it's got to be 2 percent," right? It's got to be 2 percent and you have to be an ally; you're not...
ZAKARIA: But that's stuff Obama also said. And the point is -- the point is...
BANNON: But the difference is...
ZAKARIA: There are more troops now and there are more bombs and there's more engagement. But look...
BANNON: No, no no, but this is an important point. This is an important point. Because what he's doing, whether it's in the Northwest Pacific with Japan or Korea, right, he's engaging our allies to say, "Hey, look, this has to work for America overall. So, Korea, I'm going to renegotiate our trade deal at the same time we talk about the security alliance and the same time we talk about the Fed system, the same time we talk about you paying for the Fed system. The same thing in Japan.
And, by the way, it's the foreign policy community that has bifurcated this. Donald Trump has looked at this as a very practical businessman in saying, "You can't bifurcate these; these are inextricably linked, both our trade relationships and our national security."
And that engagement -- so people -- the first thing the opposition party media says about him, "He's an isolationist; he wants America just to go alone" -- it's the exact opposite. If you look at everywhere, it's engagement, including in Iran. Remember, in Iran, it's the front-line nations of Saudi Arabia and the United Arab Emirates, Egypt, Israel and Jordan and Bahrain that are the ones that are the biggest cheerleaders for what he's done. So if you look around the world, it's the exact opposite as it's been -- as he's been portrayed. (END VIDEOTAPE)
ZAKARIA: America seems to be deeply polarized under Donald trump. European countries are also being torn apart. How would Steve Bannon end this wave of polarization and bring people back together? I ask him when we come back.
(BEGIN VIDEO CLIP)
BANNON: I keep saying, if Bernie Sanders had been more confrontational and had more stones, he would have been the nominee and we would have had a real fight with Donald Trump.
(END VIDEO CLIP)
ZAKARIA: The studies show that America is more polarized today than at any point since the Civil War.
ZAKARIA: And I wonder, your style of politics, the intense polarization, the battle, the sense in which people are now warring tribes -- isn't it -- I mean, that might win working in politics, but how do you -- to quote Lincoln, how do you "bind the wounds" of the country back together?
BANNON: We don't have the wounds yet. I think what we have -- I think it's healthy. I think it's healthy, like it was here in Italy. Here's why I think it's healthy. And you guys see it from your ratings. People are more engaged in these topics now than they have ever been. These are the great issues of the day. We're trying to -- this is why I keep saying this theory of history I abide by, "the fourth turning" -- we're in a fourth turning. The country's going to be one thing or the other. This battle between nationalists and globalists, OK, is at the fundamental roots of what America is and what America will be.
I welcome it. I love the confrontation. In fact, I keep saying, if Bernie Sanders had been more confrontational and had more stones, he would have been the nominee and we would have had a real fight with Donald Trump in the run up to '18 -- or '16 -- not Hillary Clinton. What I think is that this is very healthy. And by the way, for folks at home, I think this is going to go on for a long time. I think it's a long time before we bind up the wounds. We've got a lot more fighting, a lot more fighting and a lot more scar tissue to go over.
ZAKARIA: Steve Bannon, pleasure to have you on.
BANNON: Fareed, thanks for having me.
ZAKARIA: And that's it. Thanks to all of you for watching. Don't forget, you can catch "Fareed Zakaria: GPS" every Sunday at 10 a.m. Eastern and Pacific in the United States. International viewers, check cnn.com for your local air times. Ciao from Rome.