Can a Hedge-Fund Patriot Win a U.S. Senate Seat in Pennsylvania?
David McCormick’s campaign manifesto proposes many worthy policies, but also reflects an establishment GOP blind spot.
Superpower in Peril: A Battle Plan to Renew America, David H. McCormick with James M. Cunningham, Center Street, 309 pages
When Pennsylvania’s John Fetterman beat Mehmet Oz by 5 percentage points last November, many Republicans believed the GOP would have retained the critical U.S. Senate seat if David McCormick had been the nominee. The West Point graduate and 82nd Airborne paratrooper in Operation Desert Storm lost the primary by 950 votes after former President Trump endorsed the television doctor weeks before.
Since last year’s losses, McCormick has shown himself the better man, getting back into the arena and detailing his chops with a campaign manifesto and biography, Superpower in Peril. Indeed, the candidate comes across as more substantive on policy and far more grateful to his country than Mehmet Oz ever did. But the presumptive GOP nominee faces a far tougher contest next cycle against third-termer Senator Bob Casey Jr.—and one more demanding than anything fellow veteran J.D. Vance faced next door to win Ohio’s open U.S. Senate seat last year.
Like the freshman Ohio lawmaker, McCormick agrees the old Republican policy consensus needs to change. But unlike the popular Vance, the more senior warrior-turned-financier hasn’t fully shaken conventional GOP attachments to high finance and globalist trade that have hamstrung the party’s electoral prospects and undermined the very national renewal his book champions. Winning a Rust Belt, battleground state will require putting more economic tangibles on the kitchen table for working- and middle-class voters.
In relating his personal story, McCormick doesn’t sound like a country clubber carrying water for Wall Street. Even though he and his wife (Dina Powell of Goldman Sachs) might pass for the quintessential power couple, he’s much more. Hailing from solidly middle-class Pennsylvania stock, he co-captained his high school football team and was first in his New Deal Democratic family to attend a service academy. He pays generous tribute to his high school coach, lessons about “duty, honor, and country” at West Point, and his deployment in the Persian Gulf War.
Those life-altering experiences have enabled the patriot to grasp the gravity of the crisis the country now faces and the need for statesmen who can, as did Ronald Reagan, “break the cycle of stagnation, disillusion, and decline.” While the aspiring senator notes the parallels between the Jimmy Carter years and President Biden’s administration, his realization of American decline dates to his senior appointments in Bush 43 at Commerce, Treasury, and the National Security Council. In reviewing and restricting tech sales to China, McCormick began to see the Arsenal of Autocracy as a geo-political adversary, not the economic bonanza that players in both parties naively assumed. Not fully in step with the administration, his developing China stance led him ten years later to praise Donald Trump for pulling the alarm on the Communist superpower and calling attention to the economic woes of Middle America.
McCormick shines in detailing China’s threat and calling for action to “achieve global superiority in talent, technology, and data.” But his battle plan—which includes tariffs on “priority sector” products from the Asian power (although not if they pass through intermediary countries)—leaves his center-left flank exposed. Perhaps due to working in the confines of finance (Bridgewater), tech (the software firms FreeMarkets and Ariba), and consulting (McKinsey), he says nothing about re-building our industrial base. He accepts as givens both outsourcing and financialization of the U.S. economy.
Even after crisscrossing Pennsylvania in his first race, seeing firsthand the fallout of deindustrialization, the manufacturing sector remains off his radar—“manufacturing” lacks an entry in the book’s index. He believes global supply chains deliver cheaper goods: cars, appliances, even weapon systems. This shortchanging of domestic production handicaps the candidate against the incumbent, already favored in the polls.
Republican candidates in the Commonwealth face an uphill battle not because conservatives turn off suburban moms, but because the party has brushed aside Pennsylvania’s industrial legacy, seemingly at peace with the closing of the Philadelphia Naval Shipyard, the nation’s first, and the Depression-like contraction of steel production state-wide. The former was a major blow to the Delaware Valley, while the Lehigh Valley and western Pennsylvania continue to reel from the latter. “Eds and meds” offer some relief, but these ballyhooed service sectors cannot by themselves sustain the fifth most-populous state, let alone a superpower. Throughout U.S. history, steel production and shipbuilding were irreplaceable underpinnings of our economic and military might, sectors upon which China has placed its bets as an industrial powerhouse.
McCormick at least adds tech into the education-and-medical mix, understandably proud of running two start-up software firms in Pittsburgh in the late 1990s. Yet the knowledge-sector executive seems unfamiliar with the relationship between innovation and domestic manufacturing; nor does he consider how China’s technological advancement is closely tied to its industrial prowess—or how falling behind in the innovation race correlates with U.S. industrial decline.
He therefore dismisses industrial policy, deeming the Biden Chips Act “flawed and incomplete.” His alternative: a “conservative technology strategy” to incentivize more private capital flowing into certain sectors to boost innovation, citing as precedents Vannevar Bush’s science push under FDR during World War II and, less persuasively, Operation Warp Speed under Trump. His choice sectors are semiconductors, A.I., quantum sciences, and biotech. He wants to double federal R&D spending to $320 billion, or about 1.5 percent of GDP, along with boosting R&D tax credits. He also calls for setting up an American Innovation Fund, a public-private instrument to channel “low-cost capital and liquidity to firms in strategic sectors.”
Boosting R&D spending echoes a priority of economist David Goldman, but Goldman argues that the current tax code already favors tech (in his terms, a capital-light sector) over capital-intensive industries like manufacturing. Goldman is also more bullish on the proven American innovation pipeline, from Ike’s DARPA and JFK’s moon shot to Reagan’s strategic defense initiatives, whereby the federal government spearheaded breakthroughs in basic research but then channeled commercial development to the private sector—an industrial-policy successes that the candidate should endorse unequivocally as the new GOP model of reindustrialization.
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Among McCormick’s sharper policies is his proposal to create an inverse of the federal Committee on Foreign Investment in the United States. This organ would screen all private sector investment in China, while also clamping down on portfolio investment over there. Indeed, he butted heads with the hedge-fund titan Ray Dalio over these issues but was able, as CEO, to restrict Bridgewater’s investments in China to just 2 percent of the company’s holdings.
The former Army officer also warns of a “deep gap” in the U.S. government: No single agency “focuses on the intersection between national security, economics, and foreign policy,” which he first noticed when serving in Bush 43. This absence leaves us bereft of a coordinated strategy to compete economically and strategically on the world stage. He therefore calls for a federal reorganization on the order of the National Security Act of 1947 when the United States rebooted for the challenge of the Cold War with the Soviet Union.
These insights debunk the caricatures of McCormick as a Wall Street globalist, but the underdog will still need to address the missing arrow of his policy quiver: mastery and control of domestic manufacturing. That’s a tall order, as the move means declaring independence from GOP donor-class economics. But, if he can champion that indispensable foundation of a high-wage economy, the promising challenger would give Casey the fight of his life.