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Speaker 2: Listening to live testimony of Scott Bessen's President Elect Trumps
Speaker 2: selection to run the Treasury Department. A familiar voice here
Speaker 2: on Bloomberg TV and radio. As we've spent time with
Speaker 2: mister Bess and you're at this table on Balance of Power,
Speaker 2: and of course you've seen him on other programs. It
Speaker 2: is expected he will be confirmed. I'm Joe Matthew alongside
Speaker 2: Kaylee Lions in Washington. Thanks for being with us here
Speaker 2: as we continue our coverage of the confirmation hearing throughout
Speaker 2: this week, all leading up of course to the inauguration
Speaker 2: of Donald Trump on Monday, and we'll have special coverage
Speaker 2: for you then. Kaylee Lyons interesting Scott Besson going at
Speaker 2: it with Democrats and Republicans. Not terribly controver Ruschel today.
Speaker 2: There were some questions about taxes. There were some questions
Speaker 2: of course about tariffs. The implications when it comes to
Speaker 2: inflation and the FED. But this would be one of
Speaker 2: the easier walks for I think we can say Donald
Speaker 2: Trump's nominees absolutely.
Speaker 3: Scott Besstt widely seen by frankly people on both sides
Speaker 3: of the aisle as a qualified candidate to be Treasury Secretary.
Speaker 3: This hearing was not likely to make or break his
Speaker 3: confirmation prospects, as it was expected that he would be
Speaker 3: confirmed pretty easily prior to him giving answers to the
Speaker 3: many questions that these twenty seven senators asked of him today.
Speaker 3: But yes, it did focus primarily on the two tees,
Speaker 3: taxes and tariffs. He talked about how he would be
Speaker 3: it as an economic crisis if the tax cuts of
Speaker 3: twenty seventeen were allowed to expire. He kind of pushed
Speaker 3: back on the idea that tariffs were going to translate
Speaker 3: into higher prices for Americans and interesting, when pressed by
Speaker 3: Democratic Senator Elizabeth Warren on the debt ceiling, suggested that, well,
Speaker 3: he wants to do a market survey. He's not really
Speaker 3: sure what the best path forward on the debt ceiling
Speaker 3: would be. If Donald Trump were to tell him he
Speaker 3: wants the debt ceiling repealed, so he said he'd work
Speaker 3: with him to do it.
Speaker 2: It's clearly there to enact the Trump agenda. It's interesting,
Speaker 2: I'll tell you a lot of these conversations sound a
Speaker 2: lot like the ones that we had with Scott Besson
Speaker 2: before he was attapped to be secretary, because we had
Speaker 2: many of the same questions when it came to taxes
Speaker 2: and tariffs. The line that endures extending the Trump tax
Speaker 2: cuts is quote, the single most important economic issue in
Speaker 2: the US today.
Speaker 3: And on that note, we want to turn to someone
Speaker 3: who we also have had many conversations with about taxes
Speaker 3: and tariffs. Joe Lavornia is joining us now here on
Speaker 3: balance of Power. He's former chief economist at the National
Speaker 3: Economic Council during the first Donald Trump administration and is
Speaker 3: now managing director and chief Economists for SMBC Neco Securities America.
Speaker 3: Welcome back to Bloomberg, Joe. That was obviously a lengthy
Speaker 3: testimony from Scott Besson. Overall, do you think he did
Speaker 3: a good job pleading his case or did he leave
Speaker 3: you with some questions?
Speaker 4: No, no questions. He did a phenomenal job. I knew
Speaker 4: he was going to do a great job and it
Speaker 4: speaks to just his qualifications in the fact he's extraordinarily
Speaker 4: thoughtful in all of his answers. I thought it was fantastic.
Speaker 2: So what extent, Joe, I'm curious your thoughts on this,
Speaker 2: because we've talked about this, and we talked about the
Speaker 2: job before Scott Besstt was selected. To what extent is
Speaker 2: it his job? And you could really apply this to
Speaker 2: any of the nominees to enact the Trump agenda, to
Speaker 2: do what Donald Trump says, or is he there to
Speaker 2: advise the president and say no when he needs to?
Speaker 4: Well no, I mean the job you're serving at the
Speaker 4: pleasure of the president, and all the cabinet nominees are
Speaker 4: going to be responsible for implementing President Trump's visions for
Speaker 4: which he got elected for. Certainly, there are options, and
Speaker 4: my experience has been that when you talk to the president,
Speaker 4: you will give you your maybe your top option, maybe
Speaker 4: your second option, and maybe the third option, which let's
Speaker 4: say even will be suboptimal, but that it is an option,
Speaker 4: and then the president decides and then you implement that agenda.
Speaker 4: So you are there an advisory counseling way, and again
Speaker 4: you're working for the president. You want to put his agenda,
Speaker 4: and it seems to me that this time around, having
Speaker 4: had a lot of experience having done this once before,
Speaker 4: President Trump clearly has the people that have his vision
Speaker 4: and can best implement such policies.
Speaker 1: And if that.
Speaker 3: Vision were to include a renewed push to repeal the
Speaker 3: debt ceiling entirely, Joe, if you were in Scott Scott
Speaker 3: Best and Shoes are still advising Donald Trump in the
Speaker 3: second administration, what would you think about pursuing that kind
Speaker 3: of policy of removing what is supposed to be a
Speaker 3: check on fiscal impulses.
Speaker 4: Yeah, the thing is that it hasn't been a check
Speaker 4: on these Cisco impulses. We've gone through countless dozens of
Speaker 4: different debt ceiling scenarios. And maybe it depends whoever is
Speaker 4: in power, but there are plenty of prominent Democrats that
Speaker 4: in the past have said this debt ceiling is silly,
Speaker 4: we should get rid of it. And maybe that's what
Speaker 4: we should do. I don't know. I mean, ultimately the
Speaker 4: debt ceiling gets increased, then we just have a bunch
Speaker 4: of market this location that doesn't serve anybody's interest, but
Speaker 4: it gets past again increased. So President Trump wants to
Speaker 4: get rid of the death ceiling limit then so bit
Speaker 4: it has to go through Congress. But I don't think
Speaker 4: the debt ceiling at this point has done much of anything,
Speaker 4: just has been a distraction for bigger fiscal issues, which
Speaker 4: clearly we have to deal with given how big the
Speaker 4: deficits are.
Speaker 2: It's interesting We talked to Miami Guinness about this recently. She,
Speaker 2: like some lawmakers, would say Joe that at least it's
Speaker 2: a it's a chance to stop and think it's a
Speaker 2: speed limit. It gives you, it's a rest stop and
Speaker 2: say are we sure we want to do this? And
Speaker 2: we kind of recalibrate. Maybe there'll be some coverage of
Speaker 2: what our debt levels around and it gets people thinking
Speaker 2: about it. Is that reminder the most.
Speaker 4: Important No, because we're one twenty No, because we're one
Speaker 4: twenty debt to GDP and we ran and the current
Speaker 4: administration we ran nearly a seven percent budget deficit to
Speaker 4: GDP with full employment. So what is that debt ceiling
Speaker 4: given us? Or give a stop to think just well,
Speaker 4: we're yeah, oh you said that, but I mean to me,
Speaker 4: it's not effective in dealing with bigger issues. But again,
Speaker 4: they'll be the President of elects decision whether he want
Speaker 4: wants to pursue that. More importantly is where we could
Speaker 4: figure out ways to raise revenue, and even more importantly,
Speaker 4: because revenues have been right in line with their long
Speaker 4: term average, but figure out ways that we could get
Speaker 4: rid of some of this waste, abuse and fraud in
Speaker 4: the system, which, by the way, the GAO, the Government
Speaker 4: Accountability Office, the Congressional watchdog. You can look at recent studies,
Speaker 4: there's hundreds of billions of dollars we could save. So
Speaker 4: I'm optimistic that there are going to be some meaningful
Speaker 4: proposals on the spending side that actually could help at
Speaker 4: least stabilize this and get us down to where Scott
Speaker 4: wants to see budget devisits the GDP around three percent.
Speaker 4: That to me is very doable well.
Speaker 3: And he reiterated repeatedly throughout this hearing that he views
Speaker 3: the United States as not having a revenue problem but
Speaker 3: having a spending problem. But Joe, to what extent should
Speaker 3: we be worried about what would happen economically if there
Speaker 3: were to be a materially large pullback in government spending.
Speaker 3: When you have the likes of Elon Musk and vivik
Speaker 3: Ramaswami quoting figures in the trillions of dollars. Whether or
Speaker 3: not that's realistic, well.
Speaker 4: Remember trillions of dollars, it's just huge money scaling over
Speaker 4: a ten year period. The fact look, the last private
Speaker 4: GDP has been growing pretty strongly near three percent, but
Speaker 4: government spending is growing even faster. If we lower government spending,
Speaker 4: forwardlooking financial markets will react very positively. Equity markets will
Speaker 4: go up, more capital be available, they'll be less crowding out,
Speaker 4: which means interest rates can fall. So if there's a
Speaker 4: period of time under which there is some friction as
Speaker 4: we cut spending and maybe lay some of these workers
Speaker 4: off government workers, which Elon Musk had mentioned, that they
Speaker 4: would get large, pretty general severance. Whether that's sure and
Speaker 4: I don't know, but the point is the markets would
Speaker 4: like anything that gets us closer to some sort of
Speaker 4: fiscal stability after these massive depths that we've been running
Speaker 4: the last couple of years will be a huge positive.
Speaker 4: And if that comes as measure GDP being slightly softer
Speaker 4: for a period of time, even if that is the case,
Speaker 4: that to me is a very good trade off.
Speaker 2: Joe, I hate to say we're out of time. I've
Speaker 2: got less than a minute. When you were at the NEEC, though,
Speaker 2: what would it have been like that have Elon Musk
Speaker 2: down the hall breathing down your neck on spending? Would
Speaker 2: that have been productive?
Speaker 4: That had been pretty cool? Because he's very innovative. I mean,
Speaker 4: I mean, the guy is just got is it incredible,
Speaker 4: credible entrepreneur among many things. I mean he's bringing, I think,
Speaker 4: with Savekram Maslamia, clearly a fresher, thoughtful approach to try
Speaker 4: to get some of these spending cuts through. And as
Speaker 4: I've argued before, a lot of this to me is bipartisan.
Speaker 4: We look at the Defense bill and you look at
Speaker 4: how we do propurement. We waste a lot of money.
Speaker 4: If we fix that, more money we could use for
Speaker 4: other things.
Speaker 2: Come talk to us when we have more time, Joe,
Speaker 2: It's always great to spend time with Joelavarney. We appreciate
Speaker 2: it very much. In the Clutch off the testimony from
Speaker 2: Scott Besst SMBC Nico Securities America, I'm Joe Matthew alongside
Speaker 2: Kaylee Lines. We'll see you back here at five pm
Speaker 2: on Balance of Power on Bloomberg. Thanks for listening to
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