Reagan Institute's Zakheim on "Dollar Diplomacy"

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00:00You have so much rich data as to perhaps some of the nuances when it comes to Europe versus U.S.

00:04Why Jamie Dimon cares about defense right now is because it's geopolitically important,

00:10it's economically important, and he's putting $1.5 trillion initiative for the next 10 years, Roger.

00:15What was it that you took away from the event in terms of money coming towards defense,

00:20defense tech in particular? Well, really, we're seeing this renewed dynamism in the national

00:26defense community. I mean, we started the Reagan National Defense Forum over a decade ago,

00:31and you saw over 80-plus corporate partners participating in the event. I would say probably

00:36two-thirds of those companies participating didn't exist five, six years ago. So we're seeing

00:42because of all the innovations you guys cover in the commercial sector, it's also penetrating into

00:48our national defense community. And of course, those technological innovations don't just impact

00:53the United States, it's impacting geopolitics around the world. China, of course, is leveraging

00:58that, and that's a big driver of the competition between the People's Republic of China and the

01:04United States. And it's natural then that Jamie Dimon, the leading CEO in the United States,

01:09iconic bank in the United States, has something to say on the matter and is involving himself in

01:15the matter. And that's what, of course, you covered at the defense forum. Roger, what's really

01:19interesting is we hear yet more and more focus of the administration on policymaking that basically

01:24inspires innovation in artificial intelligence, but perhaps at the sake of guardrails. And we're

01:31talking here about perhaps an EO that might come this week that's going to look for states not to

01:36enact individual AI rules and leave it to federal rulemaking. Is that something you've seen borne out

01:41in the data that the defense tech community but investors and policymakers think that's a good thing?

01:45Well, they want to use AI, and we need to use AI in our defense platforms. That was a big

01:52conversation at the defense forum. And our National Defense Survey, which was released just ahead of

01:56the survey, a forum, excuse me, earlier last week, really captured how Americans are somewhat ambivalent

02:02about this. They don't know. They're concerned. Should we have AI in our defense platforms? And

02:07there's almost a majority of Americans just saying they're unsure. Our leaders, of course,

02:13know that it's entirely necessary. Of course, you have to have a person in the loop, a human in the

02:17loop involved. And we're not going to get there in a fashion we're comfortable with if we're

02:21regulating our way out of it. And I think that was the spirit of what you heard from our defense

02:25leaders, both on industry and from the Pentagon. And I think you're going to see that also out of the

02:30White House with this executive order. Roger, China is worth discussion. On October 10th, Caroline and I

02:38did the show live from Anderil's headquarters. And literally the moment the show started,

02:43the president posted on Truth Social about, at that time, a deterioration in his relationship

02:48with Xi Jinping. And the point that Anderil, as an example, would make is we've been talking about

02:53China as a threat for some time. We're still bracing for China as a threat in the year 2027.

03:00And in your survey, respondents engaged on that point. Give us the data.

03:05Well, 79 percent view China as the adversary of the United States. You know, Russia's in there too,

03:13of course, Iran. But the country that the most Americans, as expressed by the respondents in our

03:19survey, are concerned about, that they view as an enemy, as an adversary, is the People's Republic of

03:24China. And they're right. And the Trump administration, in its first term, named the PRC as the leading

03:29challenge to our national security. Now, President Trump, of course, is engaging in dollar diplomacy.

03:35The national security strategy that came out last week emphasized how he believes economic

03:42cooperation with China will be one of the ingredients towards taking the United States

03:45a $40 trillion economy. But from a national defense standpoint, we're only going to get

03:51what Secretary Hexick talked about. We want to have strength as a driver towards engagement with

03:57China, but without confrontation. We're only going to get there if we are strong, if we're making

04:02these investments. If companies like Anderil are going to make the progress they promised with

04:06respect to autonomy and other new companies getting online, leveraging this new technology,

04:11of course, in part, AI driven.

04:14Roger, I want to go back to Caroline's conversation with Jamie Dimon. If we could end there, please.

04:18There is support for this government taking stakes in strategic industries.

04:23But clearly, the private sector and from a financing perspective, the banks think they have a role

04:29to play here. Is the situation just better now for private industry to do business with

04:35the government directly or co-invest with them? Do you get that sense?

04:39Well, listen, certainly from the Reagan Institute perspective, it is better when our free market

04:44is driven by the private sector, not government. I think if you talk about companies from Anderil's

04:49or new entrants or newer entrant all the way to the Boeings and Northrop Grumman's of the world,

04:54they're trading on the public markets, right? Certainly in the primes. And so government needs

05:00to leverage that technology. They need to go ahead and develop and drive budgets that have growth so

05:06those companies can continue to scale up. That is what's required to scale here. And when you talk

05:11about Jamie Dimon, right, and the banking sector, it can't just be VCs anymore. It can't just be the PE

05:17community. We need major banking institutions to get involved. And that's why Jamie Dimon's

05:22leadership was so essential and was great to have him on stage with you, Caroline.

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