Bloomberg Businessweek Debrief: Tom Barrack

Trump Knows Exactly What He’s Doing: Tom Barrack on the President

The real estate lion and close friend of POTUS talks with Bloomberg Businessweek Editor Megan Murphy about taxes, tweets, tradition, and disruption.

Thomas Barrack, founder of Colony Capital and executive chairman of Colony NorthStar, was interviewed on June 6 in New York City by Bloomberg Businessweek Editor Megan Murphy. Following are excerpts from their discussion, which appear in the June 12-18, 2017, edition of the magazine.

Megan Murphy: When I called you to discuss what we wanted to talk about, you said, “Well, no one really wants to hear from me about the yield curve. Everyone wants to talk about Donald Trump and the administration.” So let’s cut to the chase. Is there a method to the madness we’re seeing in Washington right now?

Tom Barrack: No. Is there a method? The first year of any administration is chaos, right? If you look at what happened to President Reagan, President Clinton, President Obama. Just finding the electrical outlets is difficult, right?

In Washington, the mantra is, “Lay claim to victory after it’s won.” Great politicians say, “I’m not setting the agenda. The agenda’s being already established by 660,000 bureaucrats, 535 congressmen.” If you want to be a great politician, you just claim victory after it’s already been won. Nobody really knows who’s responsible or who’s not responsible.

If you look at it from his point of view, he already had a celebrity show. He already had power. He already had money. He knew how to get things done, but he managed by chaos. So his management style was, “I have so many things to get through. Rather than look at a cup of coffee, a cappuccino, and look to the bottom and say, ‘I’m gonna analyze the espresso. I’m gonna find out where those beans came from. They came from Colombia. They were farmed organically. They were roasted in this environment.’ ” He looks at the foam on top of the cup. He says, “Meg, what do you think about that cappuccino?” And he listens to you. Or Jim, John, Tom. Out of that, he kind of curates instinctively what he thinks is the answer. But he has 150 of those to do a day. Now, he’s sitting in the Oval Office. You have 17 important agencies. You have 535 congressmen. And he has 3,000 Schedule C employees that the president appoints. So you say, “OK, who are his troops?” Out of the 3,000 presidential appointments, by the way, he selected 50. Twenty-five are confirmed. There’s no lieutenants. You need undersecretaries, you need deputy secretaries, you need assistant secretaries, you need deputy assistant secretaries, and there’s no ambassadors in place.

So when you look at the efficacy of what’s happening, you sit in the Oval Office, and you write an executive order, you say, “Valet, Tom Barrack, come in here. Take this piece of paper and execute.” You take it into a bureaucracy, and the bureaucracy sits and laughs. [But] the effect of continuing to chip away at all of these things over time will take its toll. Then as a deal guy, he will then curate.

The Paris treaty, many of us said, “Why do this?”


Why exit, right? You’re just going to alienate a whole constituency. The smart political move would’ve been to say, “Look, appoint a blue ribbon, take your best guy. Take the vice president”—who’s out of central casting, right? ... So appoint a blue ribbon commission. Take Leonardo DiCaprio, Senator [Dianne] Feinstein, people who are on the other side, put them together, let ’em analyze it with your people. Take four months. Let them all come up with a conclusion. If you don’t want to be there, then it’ll look like it’s more considered, thoughtful.

He rightly said, “No. I’m gonna do it directly. I’m gonna save $3 trillion of wasted funds.” He looks at it like a union contract. If he had a hotel, instead of going in and saying, “Let’s sit down, and we’ll slowly negotiate this transaction,” he goes in and says, “I’m gonna close the hotel, it’s over. Come back to the table and we’ll talk about something else.”

Exiting the Paris Agreement leaves us alongside only Syria and Nicaragua—and Nicaragua didn’t think the deal was tough enough. Do you really think this is like going into collective bargaining and renegotiating it from the start?

Look, my personal opinion is I think he’ll be amazingly ... he’ll be successful. I wasn’t in favor of him doing it, ’cause I don’t think he needs any more drama, right? He’s the titanium man. It doesn’t bother him. He thinks he was sent there to do that.

His focus is, “I’m here to keep chipping away at the system. The metrics of what I’m doing are not health care, are not the tax bill. It’s not whether [Andrés Manuel] López Obrador’s gonna be president of Mexico.” The Middle East? “I’m gonna try and calm it.” Terrorism? “I’m gonna chip away at it.” I mean, how do you calibrate any of this in the Middle East today?

Every other president has gone to Canada and Mexico first, their first trip. So with the chaos that’s going on with radical Islam and kind of turning on a dime on his position, which he’s very good at doing, he thoughtfully took his first trip to Saudi Arabia, Israel, the Vatican. This is an arena in which the tribes and flags have been warring for 4,000 years. He’s in the marketplace, and he’s testing what the right answer is. And he’s allowing it to be handled in their way. It’s confusing to all of us. And on the heels of that, we have chaos. That chaos probably is a good thing. His analysis, for somebody who didn’t have real foreign affairs expertise, was amazingly insightful. So I think he’s doing an amazing job in an unbelievably difficult environment.

One of the things that’s continued to define this White House is the lack of loyalty internally. The number of leaks we’ve seen. You’ve even been rumored to go in and perhaps take over as White House chief of staff. You can feel free to tell us if that’s going to happen. Why is it that he’s been unable to get a grip on that? Is it because of the difficulty of adjusting to Establishment Washington? Or is it that he refuses to change his own rules of the game?

My perception is he wants it the way that it is. In other words, death by 1,000 leaks is a consequence of attacking the institutions. When you attack the CIA and you attack the FBI and you attack Congress and you attack the diplomatic corps, all the bureaucracy can do is protect itself.

Within the White House, things are actually running pretty well. Jared [Kushner], at 36, is an unbelievably … considered, thoughtful mind and a trusted adviser to the president. Gary Cohn, you couldn’t have a better adult in the sandbox, right? Reince Priebus knows the hardware and the plumbing of Washington. And Steve Bannon is the vicar of a philosophy, whether we agree on it or not. He’s like a Buddhist monk, right?

That’s the last time you’ll hear Steve Bannon described as a Buddhist monk.

But he’s very smart, and he’s very bright, and he’s very capable, and he has a point of view. So all these leaks come from this theory of management by confusion, because there’s no command and control. The command and control is the president. To give you an example, the president goes to [the architect] I.M. Pei and says, “I wanna design a building.” So I.M. Pei says, “Well, great, what do you want me to do?” He says, “I don’t really want you to do anything. I wanna use your name, and I’m gonna design a building.” True story. Then he goes and gets Tishman Speyer, and he says, “I want you to build it. But the only thing is, I don’t really want you to build it. I need your bond, and I’m gonna negotiate the drywall contract.” And he has the drywall contractor come in, he has the plumber come in, he has electrical. Today, you walk into the White House, you walk into his office, there’s no differentiation between him and what’s happening in all the spheres, because that’s how he manages.

Death by 1,000 leaks is a problem. It’s been a problem in every administration. It’s the only tool the bureaucracy has besides the budget to get back at everybody. And that eventually I think will evaporate once the president gets his troops in place. It’s going to take another three or four months to get that reservoir of troops.

Think of the reservoir of troops. First of all, when we talk about Forever Trumpers, there were probably three: Jared, Ivanka, Melania. There was nobody who, at the beginning, really thought this president was going to have a chance. And he had no resources—unlike Hillary or unlike President Obama, or even the Republican side that had teams of people that had governed, that had actually been in politics, who were available to come into these positions.

Remember: A great position pays $125,000 a year. Can you imagine going into the government at this point in time? You have a president who’s under fire. You have five investigations going on, and you say, “I have a great job for you. I want you to be assistant secretary. Give up your $1 million-a-year job. I’m gonna pay you $119,000. You have to go through the Office of Government Ethics and five FBI clearance checks and 17 press interviews.”

They’re learning on the job how to govern. That it takes compromise on all of these things, at the same time as doing what he’s doing for his base. And what’s happening is, this president is now looking and saying, “My base is all of America. It’s not the Trumpers, it’s not the Forever Trumpers, it’s not the Never Trumpers. It’s the American people.”

He’s changing his points of view on things. They’re softening on some things. He’s very focused on some of the ardent things. And the tweeting makes everybody crazy.

Photographer: Cait Oppermann for Bloomberg Businessweek

You told Bloomberg’s Erik Schatzker that “his tweets shouldn’t be taken as off-the-cuff, because he’s actually thought through them more than people think.” Do you still believe that?

Absolutely. He’s the Uber of the presidency. He’s the WeWork of the presidency. He’s the Amazon of the presidency. He’s found a new way of communicating, which is unsettling because presidents usually have this cadence and this political balance of never saying anything. Say something beautiful, and everybody will nod. Everybody will say, “That was so poetically voiced,” and it means nothing. So this president’s sending shock waves. It’s not off-the-cuff. When it’s off-the-cuff, he’s doing it for a reason.

Do you think it’s appropriate for the president of the United States to tweet criticism of the mayor of London in the immediate aftermath of a terrorist attack?

Personally, if it were me, why do it? There’s just no gain in doing it. Why does he do it? Because it’s how he feels. He’s communicating to the world, “I’m gonna tell you how I feel. You can like it or not like it, but I’m gonna tell you how I feel.” It’s part of what you get with the man. He’s not politically correct.

The president of China comes for the first time to Mar-a-Lago. Can you imagine the moment? Sitting there right in between steak and chocolate cake. [H.R.] McMaster leans over to the president and says, “Mr. President, we’re locked and loaded.” And the Chinese president thinks that must be some other form of dessert, locked and loaded. He’s saying, “What could this be?”

And then the president nods to McMaster and says, “Continue.” And at that moment, he decides he’d better tell the president of China what’s happening. He leans over and says, “Mr. President, we’re 189 miles off of the coast of Syria. We’re gonna launch 58 ballistic missiles that are gonna go in the front door of a few of these hangars. I want you to know.”

The president of China looks at him, reaches over to his translator, and says, “Repeat.” Can you imagine that moment? Never in history has something like that happened. It was one of the warmest moments for me, because I hate to see him get beat up because he’s doing the best job that he can. Whatever anybody thinks, he’s relentless.

That day changed everything. He became the commander-in-chief that day.

And the generals saluted him up and down the military ranks. The thoughtfulness he put into that, the way he approached it: It wasn’t knee-jerk. They spent two days in two situation rooms analyzing everything. And he felt it. He felt a responsibility to that moment. He felt the terror of wounded people and sensed how lives could be affected by one decision. I saw the man step into a role that he now owned. I think that’ll happen to him all the way along the way.

Let’s talk about the legislative agenda. And tax. I think the market’s still feeling optimistic on that.

I am, and I’ll tell you why I’m optimistic. There’s no better secretary of Treasury, in my opinion, in history, than Steve Mnuchin. So it’s the congressional battle to solidify these issues and get something sensible on both sides of the aisle through quickly. It’s low-hanging fruit for everybody. I’m the most encouraged by a workable and usable tax bill, as I am for everything, because everybody wins. Everybody will win. Health care is much more complicated. So I’m optimistic about a workable tax bill.

It won’t be as great as people hope. It won’t be as bad as the naysayers think. This Congress has got to do something.

Why is our stock market doing what it’s doing? In a business sense, optimism, hope, boldness, transparency. Central banks have now become the governors du jour. Ten years ago, nobody cared who was the central banker in any of these countries. Even in our country. Now, they dictate the pace. We’re almost in the 10th year [since the global financial crisis].

Everybody wants to fix interest rates. It’s an amazing phenomenon. Everything is getting cheaper.

America is the best spot in the world for preservation of capital from everywhere. This protectionist notion that the president has is the best global elixir that we could have. What he’s doing by saying, “I only care about America,” is driving global growth in a more meaningful way.

That’s what his rhetoric is. And he has the best team in the world. Rex Tillerson, Wilbur Ross, General [John] Kelly, General McMaster, General [James] Mattis, Steve Mnuchin, Gary Cohn, Dina Powell.

But a cabinet that has yet to have a legislative accomplishment they can show. Health care, a disaster. He sees his base as America. But without any effect on their pocketbooks, without any meaningful job creation, without a view of America as a strong leader again in the world, that’s going to come back and haunt him in 2018, don’t you think?

Yeah, you’re right. You’re always so picky. I think America’s a strong leader. But at the end of the day, you’re absolutely right. The average American wants to feel $200 or $300 a month more in their pocket.

And that’s why they voted for him.

Absolutely. And homeownership is the lowest it’s ever been. People have to use emergency rooms as health care. Public schools are in shambles. And our military needs to be rehabilitated. There’s no magic elixir. I think for sure that the president sits and says, “It’s much harder than I thought.” The White House is finding itself. It’s got great people. It’s balancing all of these issues as it learns to govern in the first six months. But I think for us, we have hope because you have a team that is capable of doing the job.

Be honest. What grade would you give the administration—A to F—so far?

I wouldn’t give it a grade yet. If you sat back, and you said, “Look, let’s be real. Is there a health-care bill? No. Is there a tax bill? No. Where are we on foreign policy?” We’ve made a lot of chips into things, and we’re doing a great job. But it’s too early to bring the report card in. I would give it an A for saying that what they intended to do was to come and turn things upside down for us. It wasn’t status quo. You can’t stand status quo. We can’t live with status quo. So I would take a sabbatical from the grades. I’d say, “Let’s look at it in a year. Let’s look at it as we approach these midterms. And give him a chance.”