February 6, 2025 • 22 mins
Nine days after his swearing in, Scott Bessent sat down with Big Take DC host Saleha Mohsin at the US Treasury Department.
They discussed topics in his purview dominating the headlines — Elon Musk’s DOGE efforts, tariffs — and his plans for taxes, trade, the Fed and more.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Seventeen days into the
Trump presidency and just nine days after his swearing in,
Treasury Secretary Scott Bessant sat down with me inside the
historic cash room at the US Treasure Department.
Speaker 2 (00:19):
I'll turn it over to my colleague Saliah Mosen, who
is live at the Treasury Department with the new Secretary,
Scott Beston.
Speaker 3 (00:24):
Selia. Thank you, Kayley.
Speaker 1 (00:26):
I'm here with US Treasure Secretary Scott Besson in Washington
in his first days on the job. I wanted to
ask him about the topics in his purview dominating the
headlines like Elon Musk's doge efforts and tariffs, and about
his plans for taxes and debt management. Across the conversation,
Bessant presented himself and his department as a source of
(00:46):
stability for global markets, for businesses, and for American taxpayers.
Speaker 2 (00:51):
People shouldn't be concerned that at Treasury we moved deliberately
and we fixed things. That's the way we work. So
everyone should know that all the payments are going to
be made, they're going to be in good order, and
at the end of this review, they're going to be
substantial savings for the American taxpayer.
Speaker 1 (01:15):
This is the big take DC from Bloomberg News. I'm
Saleamosen and today on the show, my full interview with
the seventy ninth Secretary of the Treasury, Scott Pressant, on taxes, tariffs,
government spending, and more, plus a couple of extra questions
I asked him after the camera's cut away.
Speaker 3 (01:39):
Mister secretary, thank you for joining me.
Speaker 2 (01:41):
So good to see you.
Speaker 3 (01:43):
Mister Secretary.
Speaker 1 (01:44):
We are inside the cashroom at the Treasure Department. It
is almost impossible to overstate how important the work that
is done in this building is to the US financial system.
Yet right now there is widespread concern about the DOGE
team's access to sensitive payments systems. Are you worried at
all that that access and that tinkering of the payment
(02:06):
systems could affect the Treasury's market or cause any disruption?
Speaker 2 (02:09):
Good well, Seliah, thank you for asking me about that,
because there's a lot of misinformation out there. First of all,
when you say the DOGE team, these are Treasury employees,
it are two Treasury employees, one of whom I personally
interviewed in his final round. There is no tinkering with
the system. They are on read only, they are looking.
(02:31):
They can make no changes. It is an operational program
to suggest improvement. So we make one point three billion
payments a year. And this is two employees who are
working with a group of long standing employees.
Speaker 1 (02:49):
The letter that the Treasure Department sent earlier this week
talked about how the team currently does not have access
to change the system. Have they, at any point this
year had the ability to make changes.
Speaker 2 (03:02):
Absolutely not. This is no different than you would have
the at a private company. And by the way, the
ability to change the system sits over at the Federal Reserve,
so it doesn't even lie in this building. So they
could make suggestions on how to change the system, but
we don't even run the system.
Speaker 1 (03:21):
And if they ask for if they request the ability
to change the system.
Speaker 3 (03:25):
Would you grant that.
Speaker 2 (03:26):
No. Again, they have no ability to change the system.
I have no ability to grant that change. That they
could make suggestions, then it would go to the Federal
Reserve and just like any large erp system, there would
be tests. There would be this, there would be that,
and then the Fed will determine whether these changes are
(03:48):
robust or not.
Speaker 1 (03:50):
As the Secretary of Treasure you also oversee the IRS.
Do you know what kind of access the team has
to IRS data or individual taxpayer data?
Speaker 2 (03:59):
Well, glad you I asked that too, because look that THERIRS,
the privacy issue is one of the biggest issues and
under over the past four years we've seen a lot
of leaks out of there. The IRS systems are quite poor.
When I started in college in nineteen eighty, I learned
the program in Cobal. I think there are twelve different
(04:22):
systems at the IRS that still run on cobyl. But
as of now, there is no engagement at the RS.
Speaker 1 (04:30):
And if they request that access, would you sign off
on that request?
Speaker 2 (04:34):
They haven't, so we'll take that when it comes to it.
I think there is a lot to do there, but
the president was elected with a big agenda and to
the extent that getting the IRS in better shape is
part of that. Sure, because look, with the IRS, what
(04:55):
am I concerned about? I am concerned about collections, I'm
concerned learn about privacy, and I am concerned that the
system is robust and customer service.
Speaker 1 (05:08):
But do you think that if they ask for access
that is something you would consider signing off on.
Speaker 2 (05:13):
There are a lot of things I'd consider but look,
we're in the middle of the tax filing season right now.
We even with the government buyouts that are being that
expire at midnight tonight, we have the mandated that the
IRS customer facing employees that they're not eligible for that
until May fifteenth. So I don't imagine anything's going to
(05:36):
go on at the IRS until then or beyond.
Speaker 1 (05:39):
Elon Musk just a few half an hour ago tweeted
out that Treasury needs to stop approving certain payments. Has
your staff tried to block any payments here at Treasury?
Speaker 2 (05:49):
We have not, and I'm glad you asked that too.
And just to put in perspective, Elon and I are
completely aligned in terms of cutting waste and increasing accountability
and transparent guarrancy for the American people. I believe that
this DOSE program, in my adult life, is one of
the most important audits of government or changes to government structure.
(06:12):
We have seen that. When I was in my twenties,
we had the Grace Report, and there's some great suggestions
that came out of that never implemented under Clinton and Gore.
I think it was to government efficiency or reduce government.
Nothing happened. So President Trump came in. There's a big agenda,
(06:34):
and I think that there are gigantic cost savings for
the American people here, and I think it's unfortunate the
way the media wants to lampoon what is going on.
These are highly trained professionals. This is not some roving
band going around doing things. This is methodical and it
is going to yield big savings.
Speaker 1 (06:56):
At any point, would you heed what Musk just tweeted
and stop payments from coming through.
Speaker 2 (07:02):
Treasury, Well, most of that happens above us, that it
comes from the Department and the agencies. We are doing
a complete review and I want to emphasize to you
and everyone watching that it is an operational review. It
is not an ideological review. We want to make sure
(07:23):
that the American people are getting the best practices, and
I don't think that's happening right now.
Speaker 1 (07:29):
The systems here at Treasury they're known to be a
little antiquated, but very very sensitive, but also they're working.
I'm hearing you at Bloomberg, we hear a lot about
investors being concerned that this could hit markets in some
way or start to cause a loss of confidence. What
as a long time hedge fund and investor, like, do
(07:51):
you have a response to those concerns.
Speaker 2 (07:54):
People shouldn't be concerned that at Treasury we move deliberately
and we fix things. That's the way we work. So
everyone should know that all the payments are going to
be made, they're going to be in good order, and
at the end of this review, they're going to be
substantial savings for the American taxpayer.
Speaker 1 (08:16):
Mister Secretary, you have experience in currency markets, and now,
as in your new role, you oversee US currency policy.
Speaker 3 (08:24):
I'd like to ask you what does a strong dollar
mean to you.
Speaker 2 (08:28):
Well, first of all, the strong dollar policy is completely
intact with President Trump, and I am very happy at
his Economic Club of New York's speech in August when
he re emphasized the importance of maintaining the dollar reserve
currency status. But let's think about what does a strong
(08:51):
dollar mean. It really means four things. One that when
we think about a fiat currency, a piece of paper
is credibility. So a strong dollar is credibility and a
rule of law that is backing it up. Two, it
means a composite price in the screen the Bloomberg Currency Index,
(09:13):
that is the dollar moving up against that. Three, it
is a bilateral price. So what's important to remember is
the dollar is either weak or strong versus something else.
So we want the dollar to be strong. What we
don't want is other countries to weaken their currencies to
(09:37):
manipulate their trade. And then fourth that we want to
have the best policies that create the environment for a
strong dollar.
Speaker 1 (09:47):
Let's talk about other nations and how they manage their currencies.
The President has asked for a tariff study from several
of his cabinet officers or incoming cabinet officers do April
first and the Treasury pe So that is to assess
how to handle when foreign nations manipulate their currencies. Do
you see any evidence of manipulation in foreign exchange rate
(10:08):
markets right now?
Speaker 2 (10:09):
Well, we'll wait till the study comes out, but I
think just intuitive, Well, you and I could agree that
when you see the accumulation of these large surpluses, that
there is not a free form trading system that's going.
It could be due to the level of the currency.
It could be due to trade restrictions, it could be
(10:33):
due to some interest rate repression policy. So it could
be any of those.
Speaker 1 (10:39):
Are there any countries that you're monitoring or watching specifically
right now. I know the President in the past has
labeled China as a currency manipulator. Do you see any
other nations that need to be closely watched.
Speaker 2 (10:49):
Well, I think we'll see on April first. And as
you know that China's the most imbalanced unbalanced economy in
the history of the world, and they are and a
deep recession right now. Their experience in deflation and they're
trying to export their way out of that, and we
can't allow that. We want fair trade and part of
(11:13):
that is taking a strong position on the currency and
the terms of trade.
Speaker 1 (11:21):
More from my interview with Treasury Secretary Scott Besson. After
the break, I sat down with Treasury Secretary Scott Besson
and one of his first interviews is being sworn in.
That conversation continues now. Yesterday the Treasure Department had its
(11:42):
first quarterly refunding since you were confirmed.
Speaker 3 (11:46):
Do you have any.
Speaker 1 (11:47):
Plans of looking at how the Treasury's debt issuing strategy
comes together?
Speaker 2 (11:53):
Well, I think the good news is that the trajectory
of the borrowing is dropping, so I was very happy
to see that that. It's one of the few good
surprises I was left by the previous administration. So the
trajectory is good and the government's well financed into the
(12:15):
third quarter. And I believe that as it becomes apparent
that the President's agenda is working, that we'll see a
great deal of non inflationary growth and I think that
that will help us calibrate what the debt policy should be.
But I don't see any changes in the issuance for
(12:38):
the foreseeable future.
Speaker 3 (12:39):
And what about the process.
Speaker 1 (12:40):
Do you think that tea BAC is the most effective
way of getting feedback from markets?
Speaker 2 (12:45):
Well, I want to think all the members of tea
BAC who are here this week. They are a very
elite group. I think that maybe over time we need
to think about the style of engagement. It is turned
into more of a research think tank than direct market engagement,
(13:07):
and that's going to require some changes from both sides.
I believe when TEBAC was originally started, it was supposed
to be a market feedback mechanism, a little less of
a think tank, and we've been assigning research projects, So
I think there's some recalibration on both sides. But I
think that whatever we do, tea BAC will still exist.
Speaker 1 (13:31):
Mistress Secretary you said yesterday in an interview that the
Trump administration is more focused on long term gields than
what the Federal Reserve is doing, which is a bold statement.
I want to ask, how do you plan to keep
a lid on yields considering the deluge of debt issuance
that is coming down the pike and also some of
the inflationary risks that are ahead.
Speaker 2 (13:53):
Well, one of the things I wanted to emphasize is
that we are not focused on the whether the Fed
is going to cut not cut. What we are focused
on is lowering rates, So we are less focused on
the specific of rate cuts and how do we get
the whole curve down. I mentioned that the tenure I
(14:14):
believe is the important price to focus on its mortgages,
it's long term capital formation. So and look, I think
with the President's policies of energy, dominance, deregulation, and non
inflationary growth, I think that the tenure is going to
(14:36):
naturally come down. And then look on top of it,
what if we do get some big savings on the
spending side from the dose programs, Like let's think of
a naive formula government equals spending minus taxes for my
entire career and beyond, maybe even back to pre FDR.
(15:00):
Are the government equal spending, moneys, taxes, the s The
Republicans we like spending. We just wanted to raise it less.
The Democrats want to raise it more taxes. Democrats want
tax increases. We want tax cuts. What nobody's singing about
is what if the S actually went down? What if
(15:23):
it actually goes down because of everything we're doing right now?
Speaker 1 (15:26):
But what about the inflation concerns that are stumming from
the tariffs and tariff threats.
Speaker 2 (15:31):
Look that I'm not sure that where this narrative the
tariffs for the country putting on the tariffs is inflationary,
that we could have a small one time price adjustment
that as we saw in Trump one point zero, that
the deregulation and the other policies, we stayed right around
(15:53):
the Fed's target level. So I'm unconcerned about that. You know,
I think especially the China now given all their excess capacity,
will no matter the level of the tariffs, will end
up eating quite a bit.
Speaker 3 (16:09):
There's a lot of uncertainty around tariffs.
Speaker 1 (16:11):
We see them threatened or signaled and then they're taken back.
It appears as if this administration might be unfriendly to businesses.
Speaker 3 (16:22):
Is that right?
Speaker 2 (16:23):
I really, I think it's just the opposite. I think
this is the most pro business administration in history, and
everything we are doing is going to increase the after
tax return capital and as a result, working Americans will
have very high real weight growth. That what we've seen
(16:47):
over the past four years is the government and government
adjacent sectors providing the employment growth. And why have we
experienced the supportability crisis? First there was a massive spending
met by increase regulation which caused inflation, and then government
and government adjacent jobs do not call real wage growth
(17:07):
because they move up at CPI. So I think that
we are going to not only be business friendly, but
very very friendly for working Americans.
Speaker 1 (17:18):
We're seeing companies already under some stress from the tariff threats,
China is investigating Google, and also, as you know, are
well aware that business is like to be able.
Speaker 3 (17:27):
To plan ahead.
Speaker 1 (17:29):
But with so much policy uncertainty, that predictability factor is gone.
That all points to a little bit of a tougher environment.
Speaker 2 (17:35):
Well, look, I think the best thing we can do
for predictability is make the tax cuts and job back permanent.
That would be the single best thing we could do
for predictability. We can go back to the one hundred
percent expensing and add some new features that I think
business is going to be very happy with. But again,
the most important thing is that it filters down to
(17:59):
work wages, which is what we saw the President Trump's
first administration. Hourly workers did better than supervisory workers.
Speaker 3 (18:09):
Well, let me ask you about the tax plan.
Speaker 1 (18:10):
Then, on the campaign trail, Trump floated no taxes on
tips and cutting the corporate rate and a lot of
other proposals. How are you going to juggle which campaign
promises are high on that the priority list for the bill,
considering how costly everything would be.
Speaker 2 (18:28):
Well, that we're just starting the process now and that
we'll do what President Trump will give us his priorities.
But I can tell you the real priority is fixing
this affordability crisis for the American people. And when you
think about no tax on tips, no tax on Social Security,
no tax on overtime, potentially putting back in auto loan deductibility,
(18:53):
all of those benefits accrue to the bottom fifty percent
of income earners in America. They have really taken it
between the eyes for the past four years and that's unsustainable.
Speaker 1 (19:07):
Before I let you go, mister secretary, I want to
ask you if you have had your traditional weekly meeting
with FED Chair Powell.
Speaker 2 (19:13):
Yet we did. I did an away game over the FED.
We had a very nice breakfast. Chair Powell and I
don't know each other well, so it was very constructive.
Speaker 1 (19:24):
How do you view that relationship involving the two agencies
and buildings are supposed to work very closely together, and
you've had some criticism in the past of.
Speaker 2 (19:32):
His work, and as I said at my hearing, everything
I'm going to talk about is things FED the Fed's
done in the past, prospectively. Monetary policy I will not
comment on, and I'm sure he's going to do the
right thing so there'll be no criticism.
Speaker 1 (19:48):
All right, Well, mister Secretary, thank you so much for
joining Kaylee back to you.
Speaker 3 (19:54):
Is there anything that you can share on.
Speaker 1 (19:55):
Plans to when and how you would release Fanny and
Freddie from Conservative.
Speaker 2 (20:02):
Right now, the priority is tax policy. Once we get
through that, then we will think about that. The priority
for a Fannie and Freddie release. The most important metric
that I'm looking at is any study or hint that
mortgage rates would go up. So anything that is done
(20:25):
around a safe and sound release is going to hinge
on the effect of long term mortgage rates and just.
Speaker 3 (20:33):
On the debt ceiling.
Speaker 1 (20:34):
The political theatrics of it is something that you're going
to be dealing.
Speaker 3 (20:37):
With this year at least.
Speaker 1 (20:40):
Do you think that it's time to talk to bond
owners about how they view this ongoing saga in Washington.
Speaker 2 (20:47):
So that's a prescient question because one of the things
that our market's desk, who interacts with our large debt
holders is speaking to them about is the the debt ceiling.
And I want to get the data. I have an
opinion on it, but I'm not sure how our large
(21:10):
debt holders feel. On one hand, it's kind of a
mia culpa, or it's a confessional that we have to
do forgive me, we've overspent, We'll never do it again.
And then on the other side, there's an unthinkable tail
risk that there could be an accident, and so people
(21:32):
get very worked up about it. But I can tell
you the United States of America is never going to
default on its debt.
Speaker 3 (21:37):
All right, Thank you so much, sir.
Speaker 1 (21:40):
Thanks This is the big take DC from Bloomberg News.
I'm Salai Emosen. This episode was produced by David Fox.
It was edited by Chris Anstey and our senior producer
Naomi Shapin. It was fact checked by Audrey and Atapia
and mixed and sound designed by Alex Suguira. A Special
Thing so Tyler Ken, Shaquilla Mari, and Peter Kher. Our
(22:03):
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If you like this episode, make sure to subscribe and
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It helps people find the show.
Speaker 3 (22:18):
Thanks for listening.
Bloomberg Audio Studios, podcasts, radio news. Seventeen days into the
Trump presidency and just nine days after his swearing in,
Treasury Secretary Scott Bessant sat down with me inside the
historic cash room at the US Treasure Department.
Speaker 2 (00:19):
I'll turn it over to my colleague Saliah Mosen, who
is live at the Treasury Department with the new Secretary,
Scott Beston.
Speaker 3 (00:24):
Selia. Thank you, Kayley.
Speaker 1 (00:26):
I'm here with US Treasure Secretary Scott Besson in Washington
in his first days on the job. I wanted to
ask him about the topics in his purview dominating the
headlines like Elon Musk's doge efforts and tariffs, and about
his plans for taxes and debt management. Across the conversation,
Bessant presented himself and his department as a source of
(00:46):
stability for global markets, for businesses, and for American taxpayers.
Speaker 2 (00:51):
People shouldn't be concerned that at Treasury we moved deliberately
and we fixed things. That's the way we work. So
everyone should know that all the payments are going to
be made, they're going to be in good order, and
at the end of this review, they're going to be
substantial savings for the American taxpayer.
Speaker 1 (01:15):
This is the big take DC from Bloomberg News. I'm
Saleamosen and today on the show, my full interview with
the seventy ninth Secretary of the Treasury, Scott Pressant, on taxes, tariffs,
government spending, and more, plus a couple of extra questions
I asked him after the camera's cut away.
Speaker 3 (01:39):
Mister secretary, thank you for joining me.
Speaker 2 (01:41):
So good to see you.
Speaker 3 (01:43):
Mister Secretary.
Speaker 1 (01:44):
We are inside the cashroom at the Treasure Department. It
is almost impossible to overstate how important the work that
is done in this building is to the US financial system.
Yet right now there is widespread concern about the DOGE
team's access to sensitive payments systems. Are you worried at
all that that access and that tinkering of the payment
(02:06):
systems could affect the Treasury's market or cause any disruption?
Speaker 2 (02:09):
Good well, Seliah, thank you for asking me about that,
because there's a lot of misinformation out there. First of all,
when you say the DOGE team, these are Treasury employees,
it are two Treasury employees, one of whom I personally
interviewed in his final round. There is no tinkering with
the system. They are on read only, they are looking.
(02:31):
They can make no changes. It is an operational program
to suggest improvement. So we make one point three billion
payments a year. And this is two employees who are
working with a group of long standing employees.
Speaker 1 (02:49):
The letter that the Treasure Department sent earlier this week
talked about how the team currently does not have access
to change the system. Have they, at any point this
year had the ability to make changes.
Speaker 2 (03:02):
Absolutely not. This is no different than you would have
the at a private company. And by the way, the
ability to change the system sits over at the Federal Reserve,
so it doesn't even lie in this building. So they
could make suggestions on how to change the system, but
we don't even run the system.
Speaker 1 (03:21):
And if they ask for if they request the ability
to change the system.
Speaker 3 (03:25):
Would you grant that.
Speaker 2 (03:26):
No. Again, they have no ability to change the system.
I have no ability to grant that change. That they
could make suggestions, then it would go to the Federal
Reserve and just like any large erp system, there would
be tests. There would be this, there would be that,
and then the Fed will determine whether these changes are
(03:48):
robust or not.
Speaker 1 (03:50):
As the Secretary of Treasure you also oversee the IRS.
Do you know what kind of access the team has
to IRS data or individual taxpayer data?
Speaker 2 (03:59):
Well, glad you I asked that too, because look that THERIRS,
the privacy issue is one of the biggest issues and
under over the past four years we've seen a lot
of leaks out of there. The IRS systems are quite poor.
When I started in college in nineteen eighty, I learned
the program in Cobal. I think there are twelve different
(04:22):
systems at the IRS that still run on cobyl. But
as of now, there is no engagement at the RS.
Speaker 1 (04:30):
And if they request that access, would you sign off
on that request?
Speaker 2 (04:34):
They haven't, so we'll take that when it comes to it.
I think there is a lot to do there, but
the president was elected with a big agenda and to
the extent that getting the IRS in better shape is
part of that. Sure, because look, with the IRS, what
(04:55):
am I concerned about? I am concerned about collections, I'm
concerned learn about privacy, and I am concerned that the
system is robust and customer service.
Speaker 1 (05:08):
But do you think that if they ask for access
that is something you would consider signing off on.
Speaker 2 (05:13):
There are a lot of things I'd consider but look,
we're in the middle of the tax filing season right now.
We even with the government buyouts that are being that
expire at midnight tonight, we have the mandated that the
IRS customer facing employees that they're not eligible for that
until May fifteenth. So I don't imagine anything's going to
(05:36):
go on at the IRS until then or beyond.
Speaker 1 (05:39):
Elon Musk just a few half an hour ago tweeted
out that Treasury needs to stop approving certain payments. Has
your staff tried to block any payments here at Treasury?
Speaker 2 (05:49):
We have not, and I'm glad you asked that too.
And just to put in perspective, Elon and I are
completely aligned in terms of cutting waste and increasing accountability
and transparent guarrancy for the American people. I believe that
this DOSE program, in my adult life, is one of
the most important audits of government or changes to government structure.
(06:12):
We have seen that. When I was in my twenties,
we had the Grace Report, and there's some great suggestions
that came out of that never implemented under Clinton and Gore.
I think it was to government efficiency or reduce government.
Nothing happened. So President Trump came in. There's a big agenda,
(06:34):
and I think that there are gigantic cost savings for
the American people here, and I think it's unfortunate the
way the media wants to lampoon what is going on.
These are highly trained professionals. This is not some roving
band going around doing things. This is methodical and it
is going to yield big savings.
Speaker 1 (06:56):
At any point, would you heed what Musk just tweeted
and stop payments from coming through.
Speaker 2 (07:02):
Treasury, Well, most of that happens above us, that it
comes from the Department and the agencies. We are doing
a complete review and I want to emphasize to you
and everyone watching that it is an operational review. It
is not an ideological review. We want to make sure
(07:23):
that the American people are getting the best practices, and
I don't think that's happening right now.
Speaker 1 (07:29):
The systems here at Treasury they're known to be a
little antiquated, but very very sensitive, but also they're working.
I'm hearing you at Bloomberg, we hear a lot about
investors being concerned that this could hit markets in some
way or start to cause a loss of confidence. What
as a long time hedge fund and investor, like, do
(07:51):
you have a response to those concerns.
Speaker 2 (07:54):
People shouldn't be concerned that at Treasury we move deliberately
and we fix things. That's the way we work. So
everyone should know that all the payments are going to
be made, they're going to be in good order, and
at the end of this review, they're going to be
substantial savings for the American taxpayer.
Speaker 1 (08:16):
Mister Secretary, you have experience in currency markets, and now,
as in your new role, you oversee US currency policy.
Speaker 3 (08:24):
I'd like to ask you what does a strong dollar
mean to you.
Speaker 2 (08:28):
Well, first of all, the strong dollar policy is completely
intact with President Trump, and I am very happy at
his Economic Club of New York's speech in August when
he re emphasized the importance of maintaining the dollar reserve
currency status. But let's think about what does a strong
(08:51):
dollar mean. It really means four things. One that when
we think about a fiat currency, a piece of paper
is credibility. So a strong dollar is credibility and a
rule of law that is backing it up. Two, it
means a composite price in the screen the Bloomberg Currency Index,
(09:13):
that is the dollar moving up against that. Three, it
is a bilateral price. So what's important to remember is
the dollar is either weak or strong versus something else.
So we want the dollar to be strong. What we
don't want is other countries to weaken their currencies to
(09:37):
manipulate their trade. And then fourth that we want to
have the best policies that create the environment for a
strong dollar.
Speaker 1 (09:47):
Let's talk about other nations and how they manage their currencies.
The President has asked for a tariff study from several
of his cabinet officers or incoming cabinet officers do April
first and the Treasury pe So that is to assess
how to handle when foreign nations manipulate their currencies. Do
you see any evidence of manipulation in foreign exchange rate
(10:08):
markets right now?
Speaker 2 (10:09):
Well, we'll wait till the study comes out, but I
think just intuitive, Well, you and I could agree that
when you see the accumulation of these large surpluses, that
there is not a free form trading system that's going.
It could be due to the level of the currency.
It could be due to trade restrictions, it could be
(10:33):
due to some interest rate repression policy. So it could
be any of those.
Speaker 1 (10:39):
Are there any countries that you're monitoring or watching specifically
right now. I know the President in the past has
labeled China as a currency manipulator. Do you see any
other nations that need to be closely watched.
Speaker 2 (10:49):
Well, I think we'll see on April first. And as
you know that China's the most imbalanced unbalanced economy in
the history of the world, and they are and a
deep recession right now. Their experience in deflation and they're
trying to export their way out of that, and we
can't allow that. We want fair trade and part of
(11:13):
that is taking a strong position on the currency and
the terms of trade.
Speaker 1 (11:21):
More from my interview with Treasury Secretary Scott Besson. After
the break, I sat down with Treasury Secretary Scott Besson
and one of his first interviews is being sworn in.
That conversation continues now. Yesterday the Treasure Department had its
(11:42):
first quarterly refunding since you were confirmed.
Speaker 3 (11:46):
Do you have any.
Speaker 1 (11:47):
Plans of looking at how the Treasury's debt issuing strategy
comes together?
Speaker 2 (11:53):
Well, I think the good news is that the trajectory
of the borrowing is dropping, so I was very happy
to see that that. It's one of the few good
surprises I was left by the previous administration. So the
trajectory is good and the government's well financed into the
(12:15):
third quarter. And I believe that as it becomes apparent
that the President's agenda is working, that we'll see a
great deal of non inflationary growth and I think that
that will help us calibrate what the debt policy should be.
But I don't see any changes in the issuance for
(12:38):
the foreseeable future.
Speaker 3 (12:39):
And what about the process.
Speaker 1 (12:40):
Do you think that tea BAC is the most effective
way of getting feedback from markets?
Speaker 2 (12:45):
Well, I want to think all the members of tea
BAC who are here this week. They are a very
elite group. I think that maybe over time we need
to think about the style of engagement. It is turned
into more of a research think tank than direct market engagement,
(13:07):
and that's going to require some changes from both sides.
I believe when TEBAC was originally started, it was supposed
to be a market feedback mechanism, a little less of
a think tank, and we've been assigning research projects, So
I think there's some recalibration on both sides. But I
think that whatever we do, tea BAC will still exist.
Speaker 1 (13:31):
Mistress Secretary you said yesterday in an interview that the
Trump administration is more focused on long term gields than
what the Federal Reserve is doing, which is a bold statement.
I want to ask, how do you plan to keep
a lid on yields considering the deluge of debt issuance
that is coming down the pike and also some of
the inflationary risks that are ahead.
Speaker 2 (13:53):
Well, one of the things I wanted to emphasize is
that we are not focused on the whether the Fed
is going to cut not cut. What we are focused
on is lowering rates, So we are less focused on
the specific of rate cuts and how do we get
the whole curve down. I mentioned that the tenure I
(14:14):
believe is the important price to focus on its mortgages,
it's long term capital formation. So and look, I think
with the President's policies of energy, dominance, deregulation, and non
inflationary growth, I think that the tenure is going to
(14:36):
naturally come down. And then look on top of it,
what if we do get some big savings on the
spending side from the dose programs, Like let's think of
a naive formula government equals spending minus taxes for my
entire career and beyond, maybe even back to pre FDR.
(15:00):
Are the government equal spending, moneys, taxes, the s The
Republicans we like spending. We just wanted to raise it less.
The Democrats want to raise it more taxes. Democrats want
tax increases. We want tax cuts. What nobody's singing about
is what if the S actually went down? What if
(15:23):
it actually goes down because of everything we're doing right now?
Speaker 1 (15:26):
But what about the inflation concerns that are stumming from
the tariffs and tariff threats.
Speaker 2 (15:31):
Look that I'm not sure that where this narrative the
tariffs for the country putting on the tariffs is inflationary,
that we could have a small one time price adjustment
that as we saw in Trump one point zero, that
the deregulation and the other policies, we stayed right around
(15:53):
the Fed's target level. So I'm unconcerned about that. You know,
I think especially the China now given all their excess capacity,
will no matter the level of the tariffs, will end
up eating quite a bit.
Speaker 3 (16:09):
There's a lot of uncertainty around tariffs.
Speaker 1 (16:11):
We see them threatened or signaled and then they're taken back.
It appears as if this administration might be unfriendly to businesses.
Speaker 3 (16:22):
Is that right?
Speaker 2 (16:23):
I really, I think it's just the opposite. I think
this is the most pro business administration in history, and
everything we are doing is going to increase the after
tax return capital and as a result, working Americans will
have very high real weight growth. That what we've seen
(16:47):
over the past four years is the government and government
adjacent sectors providing the employment growth. And why have we
experienced the supportability crisis? First there was a massive spending
met by increase regulation which caused inflation, and then government
and government adjacent jobs do not call real wage growth
(17:07):
because they move up at CPI. So I think that
we are going to not only be business friendly, but
very very friendly for working Americans.
Speaker 1 (17:18):
We're seeing companies already under some stress from the tariff threats,
China is investigating Google, and also, as you know, are
well aware that business is like to be able.
Speaker 3 (17:27):
To plan ahead.
Speaker 1 (17:29):
But with so much policy uncertainty, that predictability factor is gone.
That all points to a little bit of a tougher environment.
Speaker 2 (17:35):
Well, look, I think the best thing we can do
for predictability is make the tax cuts and job back permanent.
That would be the single best thing we could do
for predictability. We can go back to the one hundred
percent expensing and add some new features that I think
business is going to be very happy with. But again,
the most important thing is that it filters down to
(17:59):
work wages, which is what we saw the President Trump's
first administration. Hourly workers did better than supervisory workers.
Speaker 3 (18:09):
Well, let me ask you about the tax plan.
Speaker 1 (18:10):
Then, on the campaign trail, Trump floated no taxes on
tips and cutting the corporate rate and a lot of
other proposals. How are you going to juggle which campaign
promises are high on that the priority list for the bill,
considering how costly everything would be.
Speaker 2 (18:28):
Well, that we're just starting the process now and that
we'll do what President Trump will give us his priorities.
But I can tell you the real priority is fixing
this affordability crisis for the American people. And when you
think about no tax on tips, no tax on Social Security,
no tax on overtime, potentially putting back in auto loan deductibility,
(18:53):
all of those benefits accrue to the bottom fifty percent
of income earners in America. They have really taken it
between the eyes for the past four years and that's unsustainable.
Speaker 1 (19:07):
Before I let you go, mister secretary, I want to
ask you if you have had your traditional weekly meeting
with FED Chair Powell.
Speaker 2 (19:13):
Yet we did. I did an away game over the FED.
We had a very nice breakfast. Chair Powell and I
don't know each other well, so it was very constructive.
Speaker 1 (19:24):
How do you view that relationship involving the two agencies
and buildings are supposed to work very closely together, and
you've had some criticism in the past of.
Speaker 2 (19:32):
His work, and as I said at my hearing, everything
I'm going to talk about is things FED the Fed's
done in the past, prospectively. Monetary policy I will not
comment on, and I'm sure he's going to do the
right thing so there'll be no criticism.
Speaker 1 (19:48):
All right, Well, mister Secretary, thank you so much for
joining Kaylee back to you.
Speaker 3 (19:54):
Is there anything that you can share on.
Speaker 1 (19:55):
Plans to when and how you would release Fanny and
Freddie from Conservative.
Speaker 2 (20:02):
Right now, the priority is tax policy. Once we get
through that, then we will think about that. The priority
for a Fannie and Freddie release. The most important metric
that I'm looking at is any study or hint that
mortgage rates would go up. So anything that is done
(20:25):
around a safe and sound release is going to hinge
on the effect of long term mortgage rates and just.
Speaker 3 (20:33):
On the debt ceiling.
Speaker 1 (20:34):
The political theatrics of it is something that you're going
to be dealing.
Speaker 3 (20:37):
With this year at least.
Speaker 1 (20:40):
Do you think that it's time to talk to bond
owners about how they view this ongoing saga in Washington.
Speaker 2 (20:47):
So that's a prescient question because one of the things
that our market's desk, who interacts with our large debt
holders is speaking to them about is the the debt ceiling.
And I want to get the data. I have an
opinion on it, but I'm not sure how our large
(21:10):
debt holders feel. On one hand, it's kind of a
mia culpa, or it's a confessional that we have to
do forgive me, we've overspent, We'll never do it again.
And then on the other side, there's an unthinkable tail
risk that there could be an accident, and so people
(21:32):
get very worked up about it. But I can tell
you the United States of America is never going to
default on its debt.
Speaker 3 (21:37):
All right, Thank you so much, sir.
Speaker 1 (21:40):
Thanks This is the big take DC from Bloomberg News.
I'm Salai Emosen. This episode was produced by David Fox.
It was edited by Chris Anstey and our senior producer
Naomi Shapin. It was fact checked by Audrey and Atapia
and mixed and sound designed by Alex Suguira. A Special
Thing so Tyler Ken, Shaquilla Mari, and Peter Kher. Our
(22:03):
senior editor is Elizabeth Ponso, and our executive producer is
Nicole Beaster Bower. Sage Bauman is Bloomberg's head of podcasts.
If you like this episode, make sure to subscribe and
review The Big Take DC wherever you listen to podcasts.
It helps people find the show.
Speaker 3 (22:18):
Thanks for listening.
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