1 00:00:02,759 --> 00:00:10,560 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:10,440 --> 00:00:13,080 Speaker 2: For a Bloomberg audiences worldwide. I'm David Weston and we're 3 00:00:13,080 --> 00:00:16,319 Speaker 2: delighted to welcome the Secretary Treasurer, mister Scott Bessant to 4 00:00:16,480 --> 00:00:17,400 Speaker 2: our students in New York. 5 00:00:17,400 --> 00:00:19,040 Speaker 3: Thank you so much, mister Secretary. 6 00:00:18,720 --> 00:00:20,560 Speaker 1: For being here. David, thanks for having. 7 00:00:20,320 --> 00:00:23,080 Speaker 2: Me, particularly just fresh off a flight from Banff. All right, 8 00:00:23,120 --> 00:00:25,159 Speaker 2: from the G seven, and we want to talk about that. 9 00:00:25,200 --> 00:00:27,120 Speaker 2: But first of all, while you're up there, you might 10 00:00:27,160 --> 00:00:29,639 Speaker 2: not have heard the House of Representats actually passed a bill, 11 00:00:29,760 --> 00:00:31,680 Speaker 2: the tax bill you've been talking about for so long. 12 00:00:32,320 --> 00:00:35,280 Speaker 2: Give us your sense of the scoring as it were 13 00:00:35,320 --> 00:00:37,879 Speaker 2: on that bill, because I know you're concerned about the deficit. 14 00:00:38,080 --> 00:00:39,879 Speaker 2: A lot of people concerned it it's not helping us 15 00:00:39,880 --> 00:00:40,680 Speaker 2: that much of the deficit. 16 00:00:40,800 --> 00:00:46,920 Speaker 1: Well, David, I think this bill is very important because, 17 00:00:47,960 --> 00:00:51,920 Speaker 1: as I've said, our economic policy was trumpet. An economic 18 00:00:51,960 --> 00:00:56,360 Speaker 1: policy's a really three legged stool, so it's trade, taxes, 19 00:00:56,480 --> 00:01:01,279 Speaker 1: and deregulations. So this tax bill first step making it 20 00:01:01,360 --> 00:01:06,080 Speaker 1: through the House. I think the permanence in the bill 21 00:01:06,400 --> 00:01:10,840 Speaker 1: from twenty seventeen is going to give everyone's talking about, oh, 22 00:01:10,880 --> 00:01:13,440 Speaker 1: there's not enough certainty. Now, well, what I can tell 23 00:01:13,440 --> 00:01:17,320 Speaker 1: you is this permanence is going to give great certainty. 24 00:01:17,720 --> 00:01:20,960 Speaker 1: And I think the scoring you and I have talked 25 00:01:20,959 --> 00:01:24,640 Speaker 1: about it quite a bit. It's Washington style scoring and 26 00:01:25,240 --> 00:01:29,279 Speaker 1: it's not real world scoring. What I am concerned about, 27 00:01:29,600 --> 00:01:33,800 Speaker 1: or have been concerned about. Are we controlling expenses? Yes? 28 00:01:34,040 --> 00:01:36,880 Speaker 1: Are we going to grow the economy and accelerate the 29 00:01:36,920 --> 00:01:41,559 Speaker 1: economy and stabilize and then bring down the total debt 30 00:01:41,640 --> 00:01:44,280 Speaker 1: to GDP? And I think this bill does a great 31 00:01:44,360 --> 00:01:44,840 Speaker 1: job of that. 32 00:01:45,319 --> 00:01:47,720 Speaker 2: As you told us more than once, one of your 33 00:01:47,760 --> 00:01:50,800 Speaker 2: goals is a deficit that's no greater than three percent 34 00:01:50,840 --> 00:01:54,960 Speaker 2: of GDP. The scoring the predictions on this bill as 35 00:01:54,960 --> 00:01:57,720 Speaker 2: it's written right now is seven percent, maybe six and 36 00:01:57,760 --> 00:02:01,320 Speaker 2: a half percent next year, not anything close to three percent. Now, 37 00:02:01,360 --> 00:02:03,760 Speaker 2: you said we won't get there right away, but when 38 00:02:03,800 --> 00:02:04,640 Speaker 2: will we get there? 39 00:02:04,800 --> 00:02:07,880 Speaker 1: Well, David, what I've talked about is something with a 40 00:02:07,960 --> 00:02:10,600 Speaker 1: three in front of it by twenty twenty eight. We 41 00:02:10,639 --> 00:02:14,960 Speaker 1: didn't get here overnight. We're not going to get there tomorrow. 42 00:02:15,280 --> 00:02:18,400 Speaker 1: But what we've got to do is change a trajectory 43 00:02:18,560 --> 00:02:22,639 Speaker 1: and start moving it down. So could we get down 44 00:02:22,760 --> 00:02:28,400 Speaker 1: to six percent something below there with a five handle 45 00:02:28,720 --> 00:02:35,080 Speaker 1: because what the scoring doesn't include. We have substantial tariff 46 00:02:35,160 --> 00:02:39,360 Speaker 1: income coming in, so that's not included. We have dose 47 00:02:39,480 --> 00:02:43,680 Speaker 1: savings in the hundreds of billions, that's not included. And 48 00:02:43,720 --> 00:02:48,359 Speaker 1: then President Trump has made this very Bowld proposal on 49 00:02:48,760 --> 00:02:56,520 Speaker 1: prescription drug pricing, which could save HHS substantial amounts of money. 50 00:02:56,560 --> 00:02:59,919 Speaker 1: So none of those are included. So I'm very optimistic. 51 00:03:00,280 --> 00:03:02,960 Speaker 2: So let's include those for a moment here and start 52 00:03:02,960 --> 00:03:04,920 Speaker 2: with the first one that you identify, which is tariffs. 53 00:03:04,960 --> 00:03:09,240 Speaker 2: We've had some announcements even very recently about tariffs maybe 54 00:03:09,280 --> 00:03:13,480 Speaker 2: fifty percent from EU and twenty five percent on apple products. 55 00:03:14,000 --> 00:03:17,280 Speaker 2: Is that motivation for that revenue? I mean, do you 56 00:03:17,440 --> 00:03:20,200 Speaker 2: need those tariffs actually to go into effect to meet 57 00:03:20,200 --> 00:03:21,400 Speaker 2: the numbers Union in deficit? 58 00:03:22,120 --> 00:03:26,480 Speaker 1: Not at all, because we have substantial revenue coming in now, 59 00:03:27,080 --> 00:03:31,880 Speaker 1: and there is at some point there's an equilibrium rate. 60 00:03:32,080 --> 00:03:37,080 Speaker 1: It's called a lafter curve for tariffs, so and I 61 00:03:37,120 --> 00:03:41,160 Speaker 1: think we will reach that rate. The other thing that's 62 00:03:41,160 --> 00:03:44,920 Speaker 1: happening is a lot of their tariff barriers or non 63 00:03:44,960 --> 00:03:47,280 Speaker 1: tariff trade barriers. A lot of these non tariff trade 64 00:03:47,320 --> 00:03:52,240 Speaker 1: barriers are coming down, so friction is decreasing there and 65 00:03:52,320 --> 00:03:56,360 Speaker 1: again because we don't know where these tariff negotiations are 66 00:03:56,360 --> 00:03:59,320 Speaker 1: going to end up. They won't end up being scored, 67 00:03:59,600 --> 00:04:03,440 Speaker 1: but several hundred million dollars a year, several hundred billion 68 00:04:03,480 --> 00:04:08,440 Speaker 1: dollars a year of revenue that will be used for 69 00:04:08,520 --> 00:04:11,240 Speaker 1: every one hundred billion, that's one hundred billion less of 70 00:04:11,280 --> 00:04:12,960 Speaker 1: bonds a treasury has to issue. 71 00:04:13,120 --> 00:04:15,520 Speaker 2: When you talk about uncertainty and getting more certainly because 72 00:04:15,560 --> 00:04:17,640 Speaker 2: the tax bill, some of the uncertainty, A lot of 73 00:04:17,640 --> 00:04:19,440 Speaker 2: it is because of tariffs right now, because we're not 74 00:04:19,480 --> 00:04:21,680 Speaker 2: exactly sure we're going to end up. Do you have 75 00:04:21,720 --> 00:04:25,560 Speaker 2: a sense when the economic community, the business community will 76 00:04:25,600 --> 00:04:27,400 Speaker 2: get better certainty on tariffs. 77 00:04:27,600 --> 00:04:30,800 Speaker 1: Well, we've done the ninety day pause. As I've mentioned 78 00:04:30,800 --> 00:04:35,120 Speaker 1: several times, we have eighteen important trading partners. So what 79 00:04:35,200 --> 00:04:38,120 Speaker 1: everyone should really focus on are those. We've done a 80 00:04:38,120 --> 00:04:41,920 Speaker 1: deal with the UK. My sense is over the next 81 00:04:41,960 --> 00:04:46,840 Speaker 1: couple of weeks we're going to have several large deals announced. 82 00:04:47,560 --> 00:04:50,960 Speaker 1: We have put a pause and a ninety day pause 83 00:04:51,600 --> 00:04:55,120 Speaker 1: with China. I expect that we will be negotiating in 84 00:04:55,160 --> 00:05:02,040 Speaker 1: person with them again. And then the President today when 85 00:05:02,080 --> 00:05:06,640 Speaker 1: we initiated the pause, the pause and the ten percent 86 00:05:07,640 --> 00:05:11,919 Speaker 1: are moving down from the April second rate to the 87 00:05:12,000 --> 00:05:17,280 Speaker 1: ten percent level was contingent on countries or trading blocks 88 00:05:17,360 --> 00:05:20,560 Speaker 1: coming and negotiating in good faith, and I think the 89 00:05:20,600 --> 00:05:23,960 Speaker 1: President was getting frustrated with the EU. You know the 90 00:05:24,000 --> 00:05:27,120 Speaker 1: problem with EU, I've said several times they have a 91 00:05:27,120 --> 00:05:30,560 Speaker 1: collective action problem. They're twenty seven countries, they all have 92 00:05:30,720 --> 00:05:34,200 Speaker 1: different needs. The Germans they are interested in cars of 93 00:05:34,240 --> 00:05:39,039 Speaker 1: French and agriculture, so and then you have Brussels negotiating 94 00:05:39,120 --> 00:05:42,680 Speaker 1: with them. Now I am very impressed. I met my 95 00:05:43,600 --> 00:05:46,920 Speaker 1: German counterpart who's part of the new German government, the 96 00:05:47,080 --> 00:05:53,760 Speaker 1: German Finance minister in bamp that he was very responsive. 97 00:05:54,279 --> 00:05:58,880 Speaker 1: I think that the new Chancellor Mertz is going to 98 00:05:58,920 --> 00:06:04,279 Speaker 1: give a opportunity for a US Germany reset. So I'm 99 00:06:04,400 --> 00:06:10,320 Speaker 1: very optimistic that perhaps Germany can help push the EU forward. 100 00:06:10,360 --> 00:06:13,520 Speaker 2: Here, let's talk from something you know terribly well, have 101 00:06:13,640 --> 00:06:17,440 Speaker 2: lived it your professional life, which is the markets. The 102 00:06:17,480 --> 00:06:21,080 Speaker 2: bond market hasn't necessarily stood up and applauded with what 103 00:06:21,080 --> 00:06:22,520 Speaker 2: they've seen out of Congress. 104 00:06:22,720 --> 00:06:23,719 Speaker 3: Is the bond market wrong? 105 00:06:24,640 --> 00:06:29,840 Speaker 1: Well, I think the notion that in any movements in 106 00:06:29,880 --> 00:06:33,760 Speaker 1: the bond market being driven by the action of Congress. 107 00:06:33,839 --> 00:06:36,520 Speaker 1: Is what's wrong? First of all, this has been a 108 00:06:36,560 --> 00:06:42,920 Speaker 1: global phenomenon that the Japanese yields and most substantially German, 109 00:06:44,160 --> 00:06:47,880 Speaker 1: UK and David. If we go back and look since 110 00:06:48,200 --> 00:06:51,240 Speaker 1: either the beginning of the year or January twentieth, when 111 00:06:51,240 --> 00:06:56,040 Speaker 1: the Trump administration came in the US tenure, is the 112 00:06:56,080 --> 00:07:02,200 Speaker 1: only yield that is lower. Today, all yields are up. 113 00:07:02,600 --> 00:07:05,560 Speaker 1: And again, you know, I think that that was a 114 00:07:05,640 --> 00:07:11,320 Speaker 1: coincident indicator in market's very good at latching onto a story. 115 00:07:11,520 --> 00:07:15,080 Speaker 1: So I'm not particularly worried about what the market's thinking. 116 00:07:15,120 --> 00:07:16,720 Speaker 1: And because you know, on the other hand, what the 117 00:07:16,760 --> 00:07:21,160 Speaker 1: market also could be thinking is that this bill is 118 00:07:21,200 --> 00:07:22,280 Speaker 1: going to create growth. 119 00:07:23,760 --> 00:07:26,000 Speaker 2: At the same time, you have things like the term 120 00:07:26,040 --> 00:07:29,720 Speaker 2: premium up almost a one percent now, and you also 121 00:07:29,760 --> 00:07:32,200 Speaker 2: have real yield up well over two percent. 122 00:07:32,800 --> 00:07:34,480 Speaker 3: Should we be concerned with that? 123 00:07:34,920 --> 00:07:37,360 Speaker 2: Is there a question here about the long term ability 124 00:07:37,400 --> 00:07:38,200 Speaker 2: to repay the debt? 125 00:07:39,080 --> 00:07:45,800 Speaker 1: Look, I think that again, as growth accelerates, I'm not 126 00:07:45,920 --> 00:07:51,560 Speaker 1: worried about the US debt dynamics because a change in 127 00:07:51,880 --> 00:07:55,760 Speaker 1: the growth trajectory takes care of a lot of that. 128 00:07:56,720 --> 00:07:59,679 Speaker 2: I should we be concerned when we see yields going 129 00:07:59,760 --> 00:08:03,080 Speaker 2: up on US treasuries and the dollar weakening normally, that's 130 00:08:03,120 --> 00:08:05,400 Speaker 2: not the way it works as I understand it, is 131 00:08:05,440 --> 00:08:07,000 Speaker 2: that something we should be concerned about. 132 00:08:07,960 --> 00:08:10,880 Speaker 1: Well, I'm not concerned about it because I think part 133 00:08:10,880 --> 00:08:14,800 Speaker 1: of it is we are seeing other countries step up, 134 00:08:15,000 --> 00:08:18,960 Speaker 1: so I wouldn't on many of them, I wouldn't necessarily 135 00:08:19,000 --> 00:08:23,160 Speaker 1: categorize it as a week dollar. It's for the first 136 00:08:23,200 --> 00:08:27,800 Speaker 1: time in much of my career, Europe is actually going 137 00:08:27,840 --> 00:08:32,000 Speaker 1: through a fiscal expansion. Back to this new German government 138 00:08:32,600 --> 00:08:37,440 Speaker 1: that they are opening the German purse for the first 139 00:08:37,440 --> 00:08:39,800 Speaker 1: time maybe even since he had been to the Euro. 140 00:08:39,880 --> 00:08:43,880 Speaker 1: They're taking off the debt break, so the fundamentals are 141 00:08:43,960 --> 00:08:50,040 Speaker 1: driving the euro. Japan is seeing a large increase in 142 00:08:50,040 --> 00:08:54,480 Speaker 1: interest rates, driven by the Bank of Japan. So I 143 00:08:54,520 --> 00:08:58,680 Speaker 1: think a lot of this is other countries strengthening or 144 00:08:58,720 --> 00:09:03,120 Speaker 1: other country and see strengthening as opposed to the dollar weakening. 145 00:09:03,679 --> 00:09:06,560 Speaker 2: You have said your concerns certainly about the deficit getting 146 00:09:06,600 --> 00:09:09,760 Speaker 2: outder control and the President Trump and what you says, 147 00:09:09,800 --> 00:09:12,000 Speaker 2: that's really a priority for him to get down to 148 00:09:12,040 --> 00:09:14,440 Speaker 2: something with a three beginning it at least, if not 149 00:09:14,559 --> 00:09:18,319 Speaker 2: three point zero percent how high a priority is that, 150 00:09:18,400 --> 00:09:20,280 Speaker 2: And let me push you on a little bit like 151 00:09:20,320 --> 00:09:23,280 Speaker 2: Mario Dragi. Will you do whatever it takes to get 152 00:09:23,280 --> 00:09:25,080 Speaker 2: it to that level so that if the present plan 153 00:09:25,400 --> 00:09:27,439 Speaker 2: does not work the way you hope it will, you'll 154 00:09:27,480 --> 00:09:28,240 Speaker 2: take other steps. 155 00:09:28,480 --> 00:09:31,960 Speaker 1: Well. I think what we've been trying to do, especially 156 00:09:32,080 --> 00:09:37,480 Speaker 1: on the cost cutting side, whether it's Doge, whether it's 157 00:09:37,640 --> 00:09:40,640 Speaker 1: it's omb is go line by line, and on a 158 00:09:40,640 --> 00:09:44,000 Speaker 1: lot of this, the Democrats are fighting us, the courts 159 00:09:44,040 --> 00:09:47,480 Speaker 1: are fighting us. So let's see where that ends up. 160 00:09:47,559 --> 00:09:50,440 Speaker 1: And of course we will. We can keep coming back 161 00:09:51,040 --> 00:09:55,880 Speaker 1: in terms of making government more efficient. I think I've 162 00:09:55,920 --> 00:09:59,000 Speaker 1: been there three and a half months now, and I 163 00:09:59,000 --> 00:10:01,560 Speaker 1: can tell you the amount of waste, fraud, and abuse 164 00:10:01,600 --> 00:10:02,240 Speaker 1: is startling. 165 00:10:02,559 --> 00:10:02,719 Speaker 3: Yeah. 166 00:10:02,760 --> 00:10:04,480 Speaker 2: I think most of us who dealt with Washington would 167 00:10:04,480 --> 00:10:06,520 Speaker 2: not disagree with that at all. The question is where 168 00:10:06,520 --> 00:10:07,840 Speaker 2: do you trim and how do you go about it? 169 00:10:08,240 --> 00:10:11,080 Speaker 2: There was a two trillion dollar number thrown out at 170 00:10:11,120 --> 00:10:13,040 Speaker 2: a rally here in New York City, as I recall, 171 00:10:13,240 --> 00:10:14,800 Speaker 2: by Elon Musk and Howard Lutnik. 172 00:10:15,440 --> 00:10:16,640 Speaker 3: Was that a wrong number? 173 00:10:16,679 --> 00:10:18,880 Speaker 2: Are you going to come close to two trillion dollars 174 00:10:18,920 --> 00:10:19,640 Speaker 2: out of costs? 175 00:10:19,840 --> 00:10:24,800 Speaker 1: Well, we'll see over what the scoring window is. Could 176 00:10:24,840 --> 00:10:29,000 Speaker 1: we end up with one hundred and fifty billion a 177 00:10:29,080 --> 00:10:32,439 Speaker 1: year in savings over the CBO window, that'd be a 178 00:10:32,520 --> 00:10:33,520 Speaker 1: trillion and a half. 179 00:10:33,920 --> 00:10:37,319 Speaker 2: So so, but you're on track, you think on the 180 00:10:37,760 --> 00:10:39,160 Speaker 2: cost cutting side. 181 00:10:38,880 --> 00:10:44,120 Speaker 1: Well, again, there's a lot of resistance that the DOGE 182 00:10:44,240 --> 00:10:48,520 Speaker 1: and Elon were criticized for the pace they did. But 183 00:10:49,040 --> 00:10:51,840 Speaker 1: I tell you just my three and a half months 184 00:10:51,880 --> 00:10:55,439 Speaker 1: in Washington. If you don't move fast, then the swamp 185 00:10:55,559 --> 00:10:58,760 Speaker 1: kind of grabs you and you start sinking, and the 186 00:10:58,840 --> 00:11:00,679 Speaker 1: vest at interest cant. 187 00:11:00,800 --> 00:11:03,480 Speaker 2: What other tools do you have in your toolbox to 188 00:11:03,559 --> 00:11:06,199 Speaker 2: apply to the deficit if the present plan doesn't deliver 189 00:11:06,360 --> 00:11:07,760 Speaker 2: all that you hope? 190 00:11:08,240 --> 00:11:13,559 Speaker 1: Oh look, I think it's why don't we wait and 191 00:11:13,720 --> 00:11:18,240 Speaker 1: see how this works out? Because I think we can see. 192 00:11:18,800 --> 00:11:22,320 Speaker 1: As I mentioned, it's a three legged stool, so I 193 00:11:22,400 --> 00:11:27,959 Speaker 1: think it would be the third part trade, tax and deregulation. 194 00:11:28,200 --> 00:11:32,559 Speaker 1: So deregulation is the slowest moving part. I would expect 195 00:11:32,559 --> 00:11:36,640 Speaker 1: that to substantially kick in to the economic growth in 196 00:11:36,679 --> 00:11:41,000 Speaker 1: the third fourth quarters and really accelerate next year. Also, 197 00:11:42,400 --> 00:11:46,080 Speaker 1: one of the most powerful economic parts of the tax 198 00:11:46,120 --> 00:11:49,640 Speaker 1: bill is the immediate expensing of capital goods, one hundred 199 00:11:49,679 --> 00:11:54,240 Speaker 1: percent for capital goods, and what we have added to 200 00:11:54,280 --> 00:11:58,920 Speaker 1: that is one hundred percent expensing of factory structures. So 201 00:11:59,040 --> 00:12:01,400 Speaker 1: I think that that could really accelerate the growth. 202 00:12:02,080 --> 00:12:05,720 Speaker 2: And as you look at this problem right now, what 203 00:12:05,920 --> 00:12:10,640 Speaker 2: is your approach to making sure that we bring the 204 00:12:10,760 --> 00:12:14,400 Speaker 2: US economic machine into line and particularly the business community 205 00:12:14,520 --> 00:12:16,679 Speaker 2: and investment most importantly. 206 00:12:16,840 --> 00:12:22,120 Speaker 1: Well, let's talk about two pieces. But so before us 207 00:12:22,240 --> 00:12:24,840 Speaker 1: with you just now, I was with a group of 208 00:12:24,960 --> 00:12:28,680 Speaker 1: community bankers. So we are doing a substantial amount of 209 00:12:28,760 --> 00:12:32,800 Speaker 1: financial deregulation to make sure that the benefits are more 210 00:12:32,920 --> 00:12:37,520 Speaker 1: evenly distributed across the US economy. That as I said before, 211 00:12:37,880 --> 00:12:40,800 Speaker 1: Wall Street's done great. Now it's time for Maintain Street 212 00:12:40,840 --> 00:12:43,760 Speaker 1: to do well also, and they can both do great together. 213 00:12:44,320 --> 00:12:47,360 Speaker 1: It's not an either or. So when I was with 214 00:12:47,440 --> 00:12:50,880 Speaker 1: these community bankers, they were talking about the substantial amount 215 00:12:51,280 --> 00:12:56,440 Speaker 1: of regulation that's been crushing them over the past ten 216 00:12:56,600 --> 00:13:00,000 Speaker 1: fifteen years, and a huge amount of small business loans, 217 00:13:00,160 --> 00:13:03,199 Speaker 1: huge amount of real estate loans and loans are made 218 00:13:03,240 --> 00:13:07,280 Speaker 1: by these community banks. So we are really focusing on 219 00:13:07,480 --> 00:13:11,600 Speaker 1: that on US business. We want to make the US 220 00:13:13,640 --> 00:13:17,520 Speaker 1: the most attractive location for capital. I was just you 221 00:13:17,600 --> 00:13:19,440 Speaker 1: and I were talking. I was just with the President 222 00:13:19,480 --> 00:13:22,360 Speaker 1: in the Middle East. We were in Saudi, We're in Qatar, 223 00:13:22,720 --> 00:13:27,800 Speaker 1: and we're in the UAE, and the trillions of dollars 224 00:13:27,800 --> 00:13:30,720 Speaker 1: that are going to be pushed into the US. 225 00:13:31,440 --> 00:13:33,240 Speaker 2: One form of regulation that gets a lot of attension 226 00:13:33,320 --> 00:13:36,040 Speaker 2: in New York and on Wall Street is banking regulation. 227 00:13:37,120 --> 00:13:40,160 Speaker 2: Let's talk about the supplemental leverage ratio, which seems like 228 00:13:40,200 --> 00:13:42,400 Speaker 2: an obscure thing off to the side, but it has 229 00:13:42,440 --> 00:13:44,880 Speaker 2: been the subject of much discussion, and it does, as 230 00:13:44,920 --> 00:13:48,800 Speaker 2: I understand, relate to US treasuries and yields on US treasuries, 231 00:13:48,800 --> 00:13:51,600 Speaker 2: so that if major banks held more US treasuries, it 232 00:13:51,640 --> 00:13:55,400 Speaker 2: would bring it bring yields down. You've said you're going 233 00:13:55,480 --> 00:13:57,439 Speaker 2: to take more of an active role, as I understand it, 234 00:13:57,520 --> 00:13:59,160 Speaker 2: with respect to some of that banking regulation. 235 00:13:59,360 --> 00:14:02,840 Speaker 1: Where are we. I think we are very close to 236 00:14:02,880 --> 00:14:09,720 Speaker 1: moving the supplementary leverage ratio SLR. That is moving along 237 00:14:09,880 --> 00:14:14,480 Speaker 1: very quickly between the three banking regulators, the FED, the 238 00:14:14,520 --> 00:14:18,240 Speaker 1: OCC and the FDIC. So I would think we could 239 00:14:18,320 --> 00:14:22,120 Speaker 1: see something on that over the summer or so. 240 00:14:22,320 --> 00:14:25,440 Speaker 2: And knowing the markets as you do, would you anticipate 241 00:14:25,480 --> 00:14:29,600 Speaker 2: that might have a significant material effect on treasury yields. 242 00:14:30,480 --> 00:14:35,320 Speaker 1: Well, I think it could because banks are being penalized 243 00:14:35,360 --> 00:14:40,920 Speaker 1: for holding treasury. You know, there's a large supplementary leverage charge, 244 00:14:41,040 --> 00:14:44,080 Speaker 1: so I think for holding the risk free asset, we 245 00:14:44,120 --> 00:14:48,400 Speaker 1: can reduce that. And you know, I've seen estimates that 246 00:14:48,560 --> 00:14:53,240 Speaker 1: it could bring yields down by tens of basis points. Certainly, 247 00:14:53,920 --> 00:15:00,400 Speaker 1: during the COVID crisis, it was the temporarily taken and 248 00:15:00,440 --> 00:15:01,480 Speaker 1: it had a big effect. 249 00:15:02,080 --> 00:15:04,960 Speaker 2: Let me ask something different, but I think might be related, 250 00:15:04,960 --> 00:15:08,520 Speaker 2: which is stable coin. If really we went big into 251 00:15:08,520 --> 00:15:10,880 Speaker 2: stable coin in this country, what effect could that have 252 00:15:11,160 --> 00:15:13,400 Speaker 2: on the strength of the dollar because people might have 253 00:15:13,400 --> 00:15:16,080 Speaker 2: to hold dollars in order to match against or even 254 00:15:16,120 --> 00:15:16,760 Speaker 2: for treasuries. 255 00:15:17,160 --> 00:15:22,040 Speaker 1: Well, we are going big on digital assets. So Trump 256 00:15:22,040 --> 00:15:29,760 Speaker 1: administration has made digital assets for priority. Past administration starved 257 00:15:29,800 --> 00:15:32,440 Speaker 1: and all thus made extinct a lot of these companies 258 00:15:32,720 --> 00:15:35,360 Speaker 1: and pushed it offshore. So what we want to do 259 00:15:35,800 --> 00:15:43,440 Speaker 1: is apply the highest US regulatory and AML standards two 260 00:15:43,560 --> 00:15:48,760 Speaker 1: digital assets, especially stable coins. And I've seen estimates that 261 00:15:49,040 --> 00:15:53,640 Speaker 1: just over the short term, stable coins could create two 262 00:15:53,800 --> 00:15:58,280 Speaker 1: trillion of demand for US treasuries and treasury bills to 263 00:15:58,280 --> 00:16:01,560 Speaker 1: put that in context, the number is probably about three 264 00:16:01,680 --> 00:16:02,880 Speaker 1: hundred billion right now. 265 00:16:03,520 --> 00:16:07,280 Speaker 2: There are reports, including Blueberg that there may be if 266 00:16:07,320 --> 00:16:10,200 Speaker 2: I can call a privatization of Famimine freddie Mac something 267 00:16:10,240 --> 00:16:13,040 Speaker 2: that's been talked about since I think they were nationalized 268 00:16:13,160 --> 00:16:16,240 Speaker 2: essentially during the Great Financial Crisis. I heard the President 269 00:16:16,280 --> 00:16:19,200 Speaker 2: say I'm going to ask Scott Besson about this. 270 00:16:19,640 --> 00:16:21,520 Speaker 1: So has he asked you? And where does that stand? 271 00:16:24,120 --> 00:16:29,680 Speaker 1: It is a goal for this administration. Again, we're doing 272 00:16:29,960 --> 00:16:35,240 Speaker 1: piece deals, tax deals, trade deals. So as we land 273 00:16:35,480 --> 00:16:39,120 Speaker 1: some of those deals, then we will focus on that. 274 00:16:39,400 --> 00:16:42,480 Speaker 1: But David, what I can tell you we are doing 275 00:16:42,520 --> 00:16:47,880 Speaker 1: a great deal, a great deal of studying at Treasury 276 00:16:48,240 --> 00:16:52,120 Speaker 1: because the one requirement, the one requirement for this privatization 277 00:16:52,680 --> 00:16:55,280 Speaker 1: is that they are privatized in such a way that 278 00:16:55,600 --> 00:16:59,680 Speaker 1: mortgage spreads they do not widen. And in fact, is 279 00:16:59,720 --> 00:17:02,320 Speaker 1: there a way that we can make the spread between 280 00:17:02,360 --> 00:17:06,639 Speaker 1: the risk free rate and mortgages titan as the Fanning 281 00:17:06,680 --> 00:17:07,840 Speaker 1: and freddie Er privatized. 282 00:17:07,960 --> 00:17:09,800 Speaker 2: That was exactly my question. So do you know the 283 00:17:09,840 --> 00:17:11,720 Speaker 2: answer to the question, is there a way to do that? 284 00:17:11,800 --> 00:17:14,879 Speaker 2: Because most people are concerned that will drive up mortgage rates. 285 00:17:15,720 --> 00:17:18,480 Speaker 1: Sure, there are several ways to do it, and we're 286 00:17:18,560 --> 00:17:24,000 Speaker 1: exploring it. So we will move forward again after we 287 00:17:24,119 --> 00:17:27,000 Speaker 1: land some of the piece deals, trade deals and tax deals, 288 00:17:27,320 --> 00:17:29,840 Speaker 1: then we will work on this privatization deal. 289 00:17:30,359 --> 00:17:32,399 Speaker 2: One of your many responsibilities that has to do is 290 00:17:32,640 --> 00:17:36,040 Speaker 2: taxation and the IRS. I know that you were really 291 00:17:36,040 --> 00:17:38,640 Speaker 2: pushing hard for montization of the IRS. At the same time, 292 00:17:38,720 --> 00:17:41,080 Speaker 2: we've lost a lot of people of the IRS. Isn't 293 00:17:41,119 --> 00:17:42,760 Speaker 2: that hurting their ability to do their job? 294 00:17:43,800 --> 00:17:50,040 Speaker 1: So, David, my three priorities collections, privacy, and customer service, 295 00:17:50,480 --> 00:17:55,520 Speaker 1: and if we look over a long view, we haven't 296 00:17:55,520 --> 00:17:57,000 Speaker 1: lost a lot of people of the I r S. 297 00:17:57,400 --> 00:18:01,680 Speaker 1: There was a massive headcount increase from the Inflation Reduction 298 00:18:01,760 --> 00:18:07,120 Speaker 1: Act and back to this crazy CBO scoring by increasing expenses. 299 00:18:07,520 --> 00:18:11,560 Speaker 1: There was this scoring that you would actually somehow up collections, 300 00:18:11,640 --> 00:18:14,960 Speaker 1: which didn't happen. So we had a great collections year. 301 00:18:16,000 --> 00:18:21,760 Speaker 1: This year came in above target. And this monitorization program, 302 00:18:22,000 --> 00:18:25,600 Speaker 1: the tech monitorization program at the IRS was begun in 303 00:18:25,680 --> 00:18:29,240 Speaker 1: nineteen ninety that the young man who was in charge 304 00:18:29,280 --> 00:18:31,560 Speaker 1: of it was not who I put in charge of it, 305 00:18:31,640 --> 00:18:36,040 Speaker 1: was not even born then, So that it's fifteen billion 306 00:18:36,119 --> 00:18:39,280 Speaker 1: over budget. It's a three and a half billion a 307 00:18:39,359 --> 00:18:42,960 Speaker 1: year budget. I think it's running on cobal, which is 308 00:18:43,000 --> 00:18:47,080 Speaker 1: what I may have learned in college, on twelve different systems. 309 00:18:47,480 --> 00:18:51,840 Speaker 1: So we are going to fix that, and I think 310 00:18:52,240 --> 00:18:54,840 Speaker 1: all three of my priorities are going to be served. 311 00:18:54,960 --> 00:18:57,320 Speaker 1: And I think it could be substantial savings to the 312 00:18:57,359 --> 00:19:02,960 Speaker 1: American people because the IRS roughly processes as many transactions 313 00:19:03,359 --> 00:19:07,080 Speaker 1: as a mid size US bank, which does it at 314 00:19:07,160 --> 00:19:09,359 Speaker 1: ten percent of the number of people ten percent of 315 00:19:09,400 --> 00:19:09,800 Speaker 1: the cost. 316 00:19:10,640 --> 00:19:13,639 Speaker 2: President Trump said a while ago, posted actually on social 317 00:19:13,680 --> 00:19:17,879 Speaker 2: media that they were in the process of removing the 318 00:19:17,960 --> 00:19:21,320 Speaker 2: tax exempt status from Harvard. There's a lot of issues 319 00:19:21,320 --> 00:19:23,720 Speaker 2: at Harvard, but that's one that comes within your bailiwick. 320 00:19:24,040 --> 00:19:25,400 Speaker 3: Where is that process right now? 321 00:19:27,200 --> 00:19:32,520 Speaker 1: That the President is moving forward with that, and we're 322 00:19:32,520 --> 00:19:36,560 Speaker 1: also looking at taxes on endowments, and I think the 323 00:19:36,960 --> 00:19:39,760 Speaker 1: important thing here, and it goes a little bit back 324 00:19:39,800 --> 00:19:47,080 Speaker 1: to this main street versus the elites that Harvard to 325 00:19:47,240 --> 00:19:50,439 Speaker 1: have a tax exempt status, there are rules you have 326 00:19:50,520 --> 00:19:52,800 Speaker 1: to follow, and if you're not following the rules, no 327 00:19:52,880 --> 00:19:56,240 Speaker 1: one's above the wall. So we will see if they're 328 00:19:56,520 --> 00:19:59,920 Speaker 1: following the rules. It looks like there's substantial number where 329 00:20:00,160 --> 00:20:05,080 Speaker 1: perhaps they weren't, and you know again too, Harvard is 330 00:20:05,119 --> 00:20:10,080 Speaker 1: a giantic hedge fund. They run a leveraged investment model. 331 00:20:10,400 --> 00:20:13,000 Speaker 1: So we'll see where all that goes. 332 00:20:13,280 --> 00:20:16,200 Speaker 2: Is it Harvard alone or other other universities or colleges 333 00:20:16,280 --> 00:20:19,360 Speaker 2: that also might be subject to review on taxis and status. 334 00:20:20,560 --> 00:20:27,840 Speaker 1: I haven't seen that. But again back to cutting government expenses. 335 00:20:28,680 --> 00:20:33,000 Speaker 1: These things are more out of control the universities. They 336 00:20:33,160 --> 00:20:35,919 Speaker 1: are more out of control than the government. That there 337 00:20:36,119 --> 00:20:40,960 Speaker 1: is a separate inflation index, it's called like the Index 338 00:20:41,000 --> 00:20:47,879 Speaker 1: of Higher Education inflation index, and most of the expenses 339 00:20:47,920 --> 00:20:53,000 Speaker 1: have grown at CPI plus three percent, So you know, 340 00:20:53,080 --> 00:20:55,200 Speaker 1: they need to get their houses in order. 341 00:20:55,480 --> 00:20:57,680 Speaker 2: Let's come back to BAMF because you just got back 342 00:20:57,720 --> 00:21:00,440 Speaker 2: from the G seven meetings and the communicats I read 343 00:21:00,440 --> 00:21:04,320 Speaker 2: it really focused on imbalances. What were the imbalances you're 344 00:21:04,359 --> 00:21:05,240 Speaker 2: most concerned about? 345 00:21:05,560 --> 00:21:10,280 Speaker 1: Well, I think the group as a whole was very 346 00:21:10,320 --> 00:21:16,239 Speaker 1: concerned about the global imbalances around China, that China just 347 00:21:16,359 --> 00:21:23,159 Speaker 1: keeps increasing their share of global manufacturing and has not 348 00:21:23,400 --> 00:21:27,720 Speaker 1: done a much needed adjustment in terms of consumption. And 349 00:21:28,400 --> 00:21:32,680 Speaker 1: as I predicted. Normally don't like to take victory laps, 350 00:21:32,720 --> 00:21:35,359 Speaker 1: but I did predict it and I was right. I 351 00:21:35,359 --> 00:21:37,760 Speaker 1: said when the US put up the tariff wall, that 352 00:21:37,880 --> 00:21:41,800 Speaker 1: all those Chinese goods would go somewhere. And I think 353 00:21:42,280 --> 00:21:46,840 Speaker 1: the other the G six has seen that these Chinese 354 00:21:46,840 --> 00:21:50,480 Speaker 1: goods are starting to permeate into their economies. They're quite 355 00:21:50,480 --> 00:21:53,760 Speaker 1: worried about it. But you know, there's a whole series 356 00:21:53,800 --> 00:22:00,359 Speaker 1: of global imbalances. We have a oors trade deficity with 357 00:22:00,880 --> 00:22:04,960 Speaker 1: the EU, so we'd like to see more pro growth 358 00:22:05,240 --> 00:22:10,080 Speaker 1: consumer spending there. But the real thing when I think 359 00:22:10,119 --> 00:22:13,760 Speaker 1: about China and the rest of the world, especially the US. 360 00:22:13,920 --> 00:22:18,359 Speaker 1: In the US, we are trying to rebalance towards more manufacturing, 361 00:22:18,440 --> 00:22:22,440 Speaker 1: mostly high end manufacturing, not the kind China has. Everyone 362 00:22:22,520 --> 00:22:28,480 Speaker 1: agrees that China needs to rebalance toward less manufacturing more consumption. 363 00:22:29,040 --> 00:22:31,000 Speaker 1: And is there a chance that we could do it 364 00:22:31,040 --> 00:22:35,000 Speaker 1: together what Ray Dalio might call a big, beautiful rebalancing. 365 00:22:35,680 --> 00:22:38,119 Speaker 2: So as I understand, I'm not a macroeconomists, you know, 366 00:22:38,520 --> 00:22:40,400 Speaker 2: So as I understand it, when you have these trade 367 00:22:40,440 --> 00:22:43,320 Speaker 2: and balances, it means we're importing buying more things, and 368 00:22:43,359 --> 00:22:46,639 Speaker 2: we're exporting dollars essentially overseas. A lot of those dollars 369 00:22:46,680 --> 00:22:49,280 Speaker 2: have been coming back to US in various forms, particalarly 370 00:22:49,280 --> 00:22:52,600 Speaker 2: in US treasuries. Can you have a rebalancing, for example 371 00:22:52,600 --> 00:22:54,960 Speaker 2: of China or with Europe for that matter, that doesn't 372 00:22:55,000 --> 00:22:58,840 Speaker 2: necessarily raise the yield on treasuries because there are less 373 00:22:58,840 --> 00:23:01,840 Speaker 2: dollars overseas to be invested in US treasuries. 374 00:23:01,920 --> 00:23:06,520 Speaker 1: Oh sure, sure, I mean these balances weren't always like 375 00:23:06,600 --> 00:23:14,520 Speaker 1: this in two thousand, before the China shock. We've historically 376 00:23:16,000 --> 00:23:20,240 Speaker 1: had big inflows into treasuries. But what used to happen 377 00:23:20,920 --> 00:23:25,399 Speaker 1: was in the old days, trade would come in and 378 00:23:25,440 --> 00:23:29,000 Speaker 1: then we would sell the other country a GM. Now 379 00:23:29,080 --> 00:23:32,560 Speaker 1: we are selling them either treasury bond, private equity, or 380 00:23:32,680 --> 00:23:37,879 Speaker 1: Google stock, and that has a lot of distributional problems 381 00:23:37,880 --> 00:23:40,760 Speaker 1: within the US. So that's how we've ended up with 382 00:23:40,960 --> 00:23:43,960 Speaker 1: the coast or Wall Street doing very well, middle of 383 00:23:43,960 --> 00:23:49,639 Speaker 1: the country manufacturing being gutted. So I think it's the 384 00:23:49,720 --> 00:23:54,000 Speaker 1: composition of the flows coming back in, and then as 385 00:23:54,040 --> 00:23:58,040 Speaker 1: you mentioned, I think we can see more bond buying 386 00:23:58,240 --> 00:24:02,160 Speaker 1: by US citizens US US institutions. But the other thing 387 00:24:02,359 --> 00:24:04,720 Speaker 1: that I will say is, you know, I have access 388 00:24:04,760 --> 00:24:11,080 Speaker 1: to the data and we've actually been seeing foreign national entities, 389 00:24:11,119 --> 00:24:14,280 Speaker 1: whether it's reserve managers, sovereign wealth funds or pension funds 390 00:24:14,560 --> 00:24:17,760 Speaker 1: have been buying more treasuries in the latest auctions. 391 00:24:18,320 --> 00:24:20,800 Speaker 2: So when we talk about trade, we talk about goods, 392 00:24:21,080 --> 00:24:25,160 Speaker 2: sometimes services. What about capital flows and how capital flows work? 393 00:24:25,280 --> 00:24:27,119 Speaker 2: There seems to be a movement in parts of the 394 00:24:27,160 --> 00:24:31,240 Speaker 2: world toward stopping capital flows. I mean, we've had Macron 395 00:24:31,320 --> 00:24:33,640 Speaker 2: and France said Europe can make it on its own. 396 00:24:33,720 --> 00:24:37,639 Speaker 2: We've had Australia take certain actions requiring pension plans to 397 00:24:37,720 --> 00:24:38,840 Speaker 2: invest domestically. 398 00:24:38,880 --> 00:24:40,960 Speaker 3: Are we moving toward toward autocre? 399 00:24:42,560 --> 00:24:46,200 Speaker 1: I don't think we have to. There's certainly nothing the 400 00:24:46,320 --> 00:24:54,240 Speaker 1: US is doing to prevent capital flows. We except for 401 00:24:54,720 --> 00:25:03,359 Speaker 1: strategic except for strategic products, high val value tech products, 402 00:25:04,400 --> 00:25:10,239 Speaker 1: the rest. We want smooth capital flows globally. Could we 403 00:25:10,320 --> 00:25:16,360 Speaker 1: see more people being more nationalistic, maybe, But again, as 404 00:25:16,400 --> 00:25:19,399 Speaker 1: we saw with these trillions of dollars from these Middle 405 00:25:19,440 --> 00:25:24,000 Speaker 1: East countries coming into the US, that the US is 406 00:25:24,040 --> 00:25:29,040 Speaker 1: the premier destination for capital. We are working to do 407 00:25:29,160 --> 00:25:32,240 Speaker 1: everything we can on that. And you know, David, back 408 00:25:32,280 --> 00:25:35,800 Speaker 1: to your question on the money coming back in into 409 00:25:35,840 --> 00:25:39,320 Speaker 1: the bond market, that a lot of it's going to 410 00:25:39,359 --> 00:25:42,080 Speaker 1: come back in in the form of foreign direct investment. 411 00:25:42,160 --> 00:25:45,320 Speaker 1: Which is actually a much more stable kind of investing. 412 00:25:45,680 --> 00:25:48,560 Speaker 2: Let's talk about the dollar for a second and where 413 00:25:48,560 --> 00:25:51,879 Speaker 2: the dollar is. I've seen some charts actually about the 414 00:25:51,960 --> 00:25:55,719 Speaker 2: nominal value of the dollar versus purchasing power parity, and 415 00:25:55,760 --> 00:25:59,080 Speaker 2: in fact that there's been a growing difference between those 416 00:25:59,320 --> 00:26:02,920 Speaker 2: where the nominal value is well above PPP, I mean. 417 00:26:03,000 --> 00:26:04,320 Speaker 3: Almost at historical levels. 418 00:26:05,560 --> 00:26:08,600 Speaker 2: From your experience with markets, does that have to correct itself? 419 00:26:08,600 --> 00:26:10,080 Speaker 2: Does that mean the dollar's overvalued? 420 00:26:11,359 --> 00:26:15,480 Speaker 1: It doesn't, doesn't have to mean it's overvalued. And lots 421 00:26:15,520 --> 00:26:22,120 Speaker 1: of lots of times that levels can stay versus PPP, 422 00:26:22,320 --> 00:26:26,719 Speaker 1: which is just an academic measure. Many currencies stay above 423 00:26:26,760 --> 00:26:31,520 Speaker 1: their PPP equilibrium for a long period. And David I 424 00:26:31,840 --> 00:26:33,879 Speaker 1: can tell you that when I look at the amount 425 00:26:33,920 --> 00:26:37,120 Speaker 1: of innovation going on in the US, vice of either 426 00:26:37,080 --> 00:26:41,640 Speaker 1: the rest of the world, everybody wants to come here. 427 00:26:43,600 --> 00:26:46,359 Speaker 2: So as you look forward, what is the thing that 428 00:26:46,440 --> 00:26:47,880 Speaker 2: worries you the most. 429 00:26:49,960 --> 00:26:57,760 Speaker 1: That we are not able to that somehow our agenda 430 00:26:57,800 --> 00:27:02,320 Speaker 1: gets slowed down that whether it's whether it's the courts, 431 00:27:02,920 --> 00:27:12,600 Speaker 1: whether it's the the democrats, that's really what worries me 432 00:27:12,640 --> 00:27:13,440 Speaker 1: the most. 433 00:27:13,760 --> 00:27:16,399 Speaker 2: And on deregulation, how long will it take. So we 434 00:27:16,440 --> 00:27:17,639 Speaker 2: actually see it in productivity. 435 00:27:18,200 --> 00:27:20,840 Speaker 1: Well, I think we. I think we're going to see 436 00:27:20,840 --> 00:27:24,160 Speaker 1: it in the economic numbers in the third and fourth quarter, in. 437 00:27:24,119 --> 00:27:25,320 Speaker 3: The third and fourth quarter this year. 438 00:27:25,400 --> 00:27:25,560 Speaker 1: Yep. 439 00:27:26,440 --> 00:27:27,560 Speaker 3: That's fascinating. 440 00:27:28,200 --> 00:27:31,639 Speaker 1: Yeah, because you know again that when when you ask me, 441 00:27:31,720 --> 00:27:36,400 Speaker 1: what worries me, is this, like we need this substantial 442 00:27:36,480 --> 00:27:41,080 Speaker 1: permitting reform, that we aren't able to build things that 443 00:27:41,359 --> 00:27:44,400 Speaker 1: we have because of this AI boom. You know we're 444 00:27:44,400 --> 00:27:48,080 Speaker 1: going to we're becoming the AI superpower. Well, that's going 445 00:27:48,119 --> 00:27:50,879 Speaker 1: to take a lot of electricity, so you're going to 446 00:27:50,960 --> 00:27:55,800 Speaker 1: need energy pipelines, You're going to need transmission. And the 447 00:27:55,960 --> 00:27:59,480 Speaker 1: fact that we have that it takes three, six, seven 448 00:27:59,560 --> 00:28:02,840 Speaker 1: years or the permitting. So what worries me is that 449 00:28:03,000 --> 00:28:07,000 Speaker 1: somehow we get bogged down in a legal morass. Because 450 00:28:07,600 --> 00:28:11,240 Speaker 1: this administration is really trying to get America back to 451 00:28:11,440 --> 00:28:12,200 Speaker 1: building again. 452 00:28:13,640 --> 00:28:17,080 Speaker 2: One of the things that people are interested in is 453 00:28:17,080 --> 00:28:20,560 Speaker 2: a sovereign wealth fund. I remember, actually, as I recall 454 00:28:20,680 --> 00:28:22,960 Speaker 2: seeing President Trump's sign an executive order with you in 455 00:28:23,000 --> 00:28:25,440 Speaker 2: the old office and talking about it at the time, 456 00:28:25,800 --> 00:28:28,040 Speaker 2: where does that stand right now? Because some people say, 457 00:28:28,440 --> 00:28:30,399 Speaker 2: you know, if you're really going to try to build 458 00:28:30,440 --> 00:28:32,159 Speaker 2: the wealth the United States. You're better off cutting the 459 00:28:32,160 --> 00:28:34,760 Speaker 2: deficit than borrowing money to put it in a sovereign 460 00:28:34,800 --> 00:28:35,240 Speaker 2: wealth fund. 461 00:28:35,400 --> 00:28:38,600 Speaker 1: Yeah, I think the President decided that it's on Paul's 462 00:28:38,640 --> 00:28:42,320 Speaker 1: while we work on everything else that we're doing now. 463 00:28:43,080 --> 00:28:47,440 Speaker 1: So and he said the other day that it would 464 00:28:47,680 --> 00:28:51,200 Speaker 1: probably spend more time paying paying down debt. You know, 465 00:28:51,520 --> 00:28:56,400 Speaker 1: he is a laser focused on paying down debt. 466 00:28:56,200 --> 00:28:58,040 Speaker 2: And you're prepared if it doesn't go the way you 467 00:28:58,080 --> 00:29:00,239 Speaker 2: want to do other adjustments to make sure we are 468 00:29:00,240 --> 00:29:03,320 Speaker 2: paying to the debt. Because some people are a little skeptical. 469 00:29:02,960 --> 00:29:07,760 Speaker 1: Well again, let's talk about the can you grow the 470 00:29:09,160 --> 00:29:12,720 Speaker 1: nominator fast and faster than the numerator? Like the reason 471 00:29:12,800 --> 00:29:17,320 Speaker 1: we got here was, you know, think about taking out 472 00:29:17,320 --> 00:29:21,600 Speaker 1: a home mortgage. It's fine if the value of your 473 00:29:21,640 --> 00:29:25,720 Speaker 1: house is stable or growing faster than the debt's what's 474 00:29:25,760 --> 00:29:30,160 Speaker 1: happened is that previous administrations took out a big mortgage. 475 00:29:30,440 --> 00:29:33,320 Speaker 1: We didn't grow away out of it. Now, I actually 476 00:29:33,400 --> 00:29:36,360 Speaker 1: think that there is a chance that we can constrain 477 00:29:36,440 --> 00:29:40,520 Speaker 1: the spending up the growth, and that changes a trajectory 478 00:29:40,840 --> 00:29:45,200 Speaker 1: because going back to this CBO scoring, which is alien 479 00:29:45,280 --> 00:29:49,880 Speaker 1: to anything that makes sense, that if you cut taxes, 480 00:29:50,960 --> 00:29:54,880 Speaker 1: they still score growth at one point seventy one. If 481 00:29:54,880 --> 00:29:58,160 Speaker 1: we raise taxes, and if this tax bill didn't go through, 482 00:29:58,520 --> 00:30:01,680 Speaker 1: it would be the biggest tax psyche and history, then 483 00:30:01,760 --> 00:30:04,440 Speaker 1: growth stays at one point eight percent. So you know, 484 00:30:04,560 --> 00:30:08,400 Speaker 1: I think that we can accelerate growth here. So you know, 485 00:30:08,560 --> 00:30:17,320 Speaker 1: my worry would be that somehow there is a glitch 486 00:30:18,160 --> 00:30:21,760 Speaker 1: and the tax bill did not get passed soon enough. 487 00:30:21,880 --> 00:30:24,440 Speaker 1: So you know, I would encourage our colleagues in the 488 00:30:24,520 --> 00:30:27,240 Speaker 1: Senate to push for the July date. 489 00:30:27,240 --> 00:30:30,280 Speaker 3: The leader Thune has last question. 490 00:30:31,160 --> 00:30:33,680 Speaker 2: Growth is critical to your approach and the President's approach. 491 00:30:34,200 --> 00:30:36,320 Speaker 2: What growth are we talking about? What are you projecting 492 00:30:36,360 --> 00:30:38,240 Speaker 2: and when? Because right now we're not close to three 493 00:30:38,240 --> 00:30:38,880 Speaker 2: percent growth. 494 00:30:40,000 --> 00:30:43,640 Speaker 1: Look, I think we can get to three percent the 495 00:30:44,040 --> 00:30:44,760 Speaker 1: pretty quickly. 496 00:30:45,520 --> 00:30:49,440 Speaker 2: Well okay, how big is how quickly is pretty quickly? 497 00:30:50,320 --> 00:30:54,520 Speaker 2: I'm quarters years, quarters in quarters will be at three percent? 498 00:30:54,560 --> 00:30:55,200 Speaker 1: You believe? Yes? 499 00:30:55,240 --> 00:30:55,880 Speaker 3: Sustainable? 500 00:30:56,840 --> 00:31:00,240 Speaker 1: Yeah, Look, I think we were in the middle of 501 00:31:00,840 --> 00:31:05,440 Speaker 1: as I talk to industry, this US innovation edge. We 502 00:31:05,520 --> 00:31:08,880 Speaker 1: are starting to see real productivity increases like no other 503 00:31:09,000 --> 00:31:13,720 Speaker 1: country is. I think with the deregulation, with the certainty 504 00:31:13,760 --> 00:31:19,840 Speaker 1: from taxes, and with this full expensing which from twenty 505 00:31:19,960 --> 00:31:25,520 Speaker 1: eighteen twenty nineteen going into COVID for the industrial economy 506 00:31:26,080 --> 00:31:30,600 Speaker 1: really gave it big impetus. So you know, I'm expecting 507 00:31:30,960 --> 00:31:34,520 Speaker 1: that by certainly by this time next year, we will 508 00:31:34,560 --> 00:31:37,280 Speaker 1: be north of three, and that we will be turning 509 00:31:37,320 --> 00:31:39,520 Speaker 1: the corner towards the end of the year. 510 00:31:40,000 --> 00:31:42,640 Speaker 2: Mister Jarah, I can't thank you enough for being really appreciated. 511 00:31:43,040 --> 00:31:45,720 Speaker 2: That is the United States Secretary of Treasury. He is 512 00:31:45,760 --> 00:31:46,360 Speaker 2: Scott Bessen