Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: For a Bloomberg audiences worldwide. I'm David Weston and we're
Speaker 2: delighted to welcome the Secretary Treasurer, mister Scott Bessant to
Speaker 2: our students in New York.
Speaker 3: Thank you so much, mister Secretary.
Speaker 1: For being here. David, thanks for having.
Speaker 2: Me, particularly just fresh off a flight from Banff. All right,
Speaker 2: from the G seven, and we want to talk about that.
Speaker 2: But first of all, while you're up there, you might
Speaker 2: not have heard the House of Representats actually passed a bill,
Speaker 2: the tax bill you've been talking about for so long.
Speaker 2: Give us your sense of the scoring as it were
Speaker 2: on that bill, because I know you're concerned about the deficit.
Speaker 2: A lot of people concerned it it's not helping us
Speaker 2: that much of the deficit.
Speaker 1: Well, David, I think this bill is very important because,
Speaker 1: as I've said, our economic policy was trumpet. An economic
Speaker 1: policy's a really three legged stool, so it's trade, taxes,
Speaker 1: and deregulations. So this tax bill first step making it
Speaker 1: through the House. I think the permanence in the bill
Speaker 1: from twenty seventeen is going to give everyone's talking about, oh,
Speaker 1: there's not enough certainty. Now, well, what I can tell
Speaker 1: you is this permanence is going to give great certainty.
Speaker 1: And I think the scoring you and I have talked
Speaker 1: about it quite a bit. It's Washington style scoring and
Speaker 1: it's not real world scoring. What I am concerned about,
Speaker 1: or have been concerned about. Are we controlling expenses? Yes?
Speaker 1: Are we going to grow the economy and accelerate the
Speaker 1: economy and stabilize and then bring down the total debt
Speaker 1: to GDP? And I think this bill does a great
Speaker 1: job of that.
Speaker 2: As you told us more than once, one of your
Speaker 2: goals is a deficit that's no greater than three percent
Speaker 2: of GDP. The scoring the predictions on this bill as
Speaker 2: it's written right now is seven percent, maybe six and
Speaker 2: a half percent next year, not anything close to three percent. Now,
Speaker 2: you said we won't get there right away, but when
Speaker 2: will we get there?
Speaker 1: Well, David, what I've talked about is something with a
Speaker 1: three in front of it by twenty twenty eight. We
Speaker 1: didn't get here overnight. We're not going to get there tomorrow.
Speaker 1: But what we've got to do is change a trajectory
Speaker 1: and start moving it down. So could we get down
Speaker 1: to six percent something below there with a five handle
Speaker 1: because what the scoring doesn't include. We have substantial tariff
Speaker 1: income coming in, so that's not included. We have dose
Speaker 1: savings in the hundreds of billions, that's not included. And
Speaker 1: then President Trump has made this very Bowld proposal on
Speaker 1: prescription drug pricing, which could save HHS substantial amounts of money.
Speaker 1: So none of those are included. So I'm very optimistic.
Speaker 2: So let's include those for a moment here and start
Speaker 2: with the first one that you identify, which is tariffs.
Speaker 2: We've had some announcements even very recently about tariffs maybe
Speaker 2: fifty percent from EU and twenty five percent on apple products.
Speaker 2: Is that motivation for that revenue? I mean, do you
Speaker 2: need those tariffs actually to go into effect to meet
Speaker 2: the numbers Union in deficit?
Speaker 1: Not at all, because we have substantial revenue coming in now,
Speaker 1: and there is at some point there's an equilibrium rate.
Speaker 1: It's called a lafter curve for tariffs, so and I
Speaker 1: think we will reach that rate. The other thing that's
Speaker 1: happening is a lot of their tariff barriers or non
Speaker 1: tariff trade barriers. A lot of these non tariff trade
Speaker 1: barriers are coming down, so friction is decreasing there and
Speaker 1: again because we don't know where these tariff negotiations are
Speaker 1: going to end up. They won't end up being scored,
Speaker 1: but several hundred million dollars a year, several hundred billion
Speaker 1: dollars a year of revenue that will be used for
Speaker 1: every one hundred billion, that's one hundred billion less of
Speaker 1: bonds a treasury has to issue.
Speaker 2: When you talk about uncertainty and getting more certainly because
Speaker 2: the tax bill, some of the uncertainty, A lot of
Speaker 2: it is because of tariffs right now, because we're not
Speaker 2: exactly sure we're going to end up. Do you have
Speaker 2: a sense when the economic community, the business community will
Speaker 2: get better certainty on tariffs.
Speaker 1: Well, we've done the ninety day pause. As I've mentioned
Speaker 1: several times, we have eighteen important trading partners. So what
Speaker 1: everyone should really focus on are those. We've done a
Speaker 1: deal with the UK. My sense is over the next
Speaker 1: couple of weeks we're going to have several large deals announced.
Speaker 1: We have put a pause and a ninety day pause
Speaker 1: with China. I expect that we will be negotiating in
Speaker 1: person with them again. And then the President today when
Speaker 1: we initiated the pause, the pause and the ten percent
Speaker 1: are moving down from the April second rate to the
Speaker 1: ten percent level was contingent on countries or trading blocks
Speaker 1: coming and negotiating in good faith, and I think the
Speaker 1: President was getting frustrated with the EU. You know the
Speaker 1: problem with EU, I've said several times they have a
Speaker 1: collective action problem. They're twenty seven countries, they all have
Speaker 1: different needs. The Germans they are interested in cars of
Speaker 1: French and agriculture, so and then you have Brussels negotiating
Speaker 1: with them. Now I am very impressed. I met my
Speaker 1: German counterpart who's part of the new German government, the
Speaker 1: German Finance minister in bamp that he was very responsive.
Speaker 1: I think that the new Chancellor Mertz is going to
Speaker 1: give a opportunity for a US Germany reset. So I'm
Speaker 1: very optimistic that perhaps Germany can help push the EU forward.
Speaker 2: Here, let's talk from something you know terribly well, have
Speaker 2: lived it your professional life, which is the markets. The
Speaker 2: bond market hasn't necessarily stood up and applauded with what
Speaker 2: they've seen out of Congress.
Speaker 3: Is the bond market wrong?
Speaker 1: Well, I think the notion that in any movements in
Speaker 1: the bond market being driven by the action of Congress.
Speaker 1: Is what's wrong? First of all, this has been a
Speaker 1: global phenomenon that the Japanese yields and most substantially German,
Speaker 1: UK and David. If we go back and look since
Speaker 1: either the beginning of the year or January twentieth, when
Speaker 1: the Trump administration came in the US tenure, is the
Speaker 1: only yield that is lower. Today, all yields are up.
Speaker 1: And again, you know, I think that that was a
Speaker 1: coincident indicator in market's very good at latching onto a story.
Speaker 1: So I'm not particularly worried about what the market's thinking.
Speaker 1: And because you know, on the other hand, what the
Speaker 1: market also could be thinking is that this bill is
Speaker 1: going to create growth.
Speaker 2: At the same time, you have things like the term
Speaker 2: premium up almost a one percent now, and you also
Speaker 2: have real yield up well over two percent.
Speaker 3: Should we be concerned with that?
Speaker 2: Is there a question here about the long term ability
Speaker 2: to repay the debt?
Speaker 1: Look, I think that again, as growth accelerates, I'm not
Speaker 1: worried about the US debt dynamics because a change in
Speaker 1: the growth trajectory takes care of a lot of that.
Speaker 2: I should we be concerned when we see yields going
Speaker 2: up on US treasuries and the dollar weakening normally, that's
Speaker 2: not the way it works as I understand it, is
Speaker 2: that something we should be concerned about.
Speaker 1: Well, I'm not concerned about it because I think part
Speaker 1: of it is we are seeing other countries step up,
Speaker 1: so I wouldn't on many of them, I wouldn't necessarily
Speaker 1: categorize it as a week dollar. It's for the first
Speaker 1: time in much of my career, Europe is actually going
Speaker 1: through a fiscal expansion. Back to this new German government
Speaker 1: that they are opening the German purse for the first
Speaker 1: time maybe even since he had been to the Euro.
Speaker 1: They're taking off the debt break, so the fundamentals are
Speaker 1: driving the euro. Japan is seeing a large increase in
Speaker 1: interest rates, driven by the Bank of Japan. So I
Speaker 1: think a lot of this is other countries strengthening or
Speaker 1: other country and see strengthening as opposed to the dollar weakening.
Speaker 2: You have said your concerns certainly about the deficit getting
Speaker 2: outder control and the President Trump and what you says,
Speaker 2: that's really a priority for him to get down to
Speaker 2: something with a three beginning it at least, if not
Speaker 2: three point zero percent how high a priority is that,
Speaker 2: And let me push you on a little bit like
Speaker 2: Mario Dragi. Will you do whatever it takes to get
Speaker 2: it to that level so that if the present plan
Speaker 2: does not work the way you hope it will, you'll
Speaker 2: take other steps.
Speaker 1: Well. I think what we've been trying to do, especially
Speaker 1: on the cost cutting side, whether it's Doge, whether it's
Speaker 1: it's omb is go line by line, and on a
Speaker 1: lot of this, the Democrats are fighting us, the courts
Speaker 1: are fighting us. So let's see where that ends up.
Speaker 1: And of course we will. We can keep coming back
Speaker 1: in terms of making government more efficient. I think I've
Speaker 1: been there three and a half months now, and I
Speaker 1: can tell you the amount of waste, fraud, and abuse
Speaker 1: is startling.
Speaker 3: Yeah.
Speaker 2: I think most of us who dealt with Washington would
Speaker 2: not disagree with that at all. The question is where
Speaker 2: do you trim and how do you go about it?
Speaker 2: There was a two trillion dollar number thrown out at
Speaker 2: a rally here in New York City, as I recall,
Speaker 2: by Elon Musk and Howard Lutnik.
Speaker 3: Was that a wrong number?
Speaker 2: Are you going to come close to two trillion dollars
Speaker 2: out of costs?
Speaker 1: Well, we'll see over what the scoring window is. Could
Speaker 1: we end up with one hundred and fifty billion a
Speaker 1: year in savings over the CBO window, that'd be a
Speaker 1: trillion and a half.
Speaker 2: So so, but you're on track, you think on the
Speaker 2: cost cutting side.
Speaker 1: Well, again, there's a lot of resistance that the DOGE
Speaker 1: and Elon were criticized for the pace they did. But
Speaker 1: I tell you just my three and a half months
Speaker 1: in Washington. If you don't move fast, then the swamp
Speaker 1: kind of grabs you and you start sinking, and the
Speaker 1: vest at interest cant.
Speaker 2: What other tools do you have in your toolbox to
Speaker 2: apply to the deficit if the present plan doesn't deliver
Speaker 2: all that you hope?
Speaker 1: Oh look, I think it's why don't we wait and
Speaker 1: see how this works out? Because I think we can see.
Speaker 1: As I mentioned, it's a three legged stool, so I
Speaker 1: think it would be the third part trade, tax and deregulation.
Speaker 1: So deregulation is the slowest moving part. I would expect
Speaker 1: that to substantially kick in to the economic growth in
Speaker 1: the third fourth quarters and really accelerate next year. Also,
Speaker 1: one of the most powerful economic parts of the tax
Speaker 1: bill is the immediate expensing of capital goods, one hundred
Speaker 1: percent for capital goods, and what we have added to
Speaker 1: that is one hundred percent expensing of factory structures. So
Speaker 1: I think that that could really accelerate the growth.
Speaker 2: And as you look at this problem right now, what
Speaker 2: is your approach to making sure that we bring the
Speaker 2: US economic machine into line and particularly the business community
Speaker 2: and investment most importantly.
Speaker 1: Well, let's talk about two pieces. But so before us
Speaker 1: with you just now, I was with a group of
Speaker 1: community bankers. So we are doing a substantial amount of
Speaker 1: financial deregulation to make sure that the benefits are more
Speaker 1: evenly distributed across the US economy. That as I said before,
Speaker 1: Wall Street's done great. Now it's time for Maintain Street
Speaker 1: to do well also, and they can both do great together.
Speaker 1: It's not an either or. So when I was with
Speaker 1: these community bankers, they were talking about the substantial amount
Speaker 1: of regulation that's been crushing them over the past ten
Speaker 1: fifteen years, and a huge amount of small business loans,
Speaker 1: huge amount of real estate loans and loans are made
Speaker 1: by these community banks. So we are really focusing on
Speaker 1: that on US business. We want to make the US
Speaker 1: the most attractive location for capital. I was just you
Speaker 1: and I were talking. I was just with the President
Speaker 1: in the Middle East. We were in Saudi, We're in Qatar,
Speaker 1: and we're in the UAE, and the trillions of dollars
Speaker 1: that are going to be pushed into the US.
Speaker 2: One form of regulation that gets a lot of attension
Speaker 2: in New York and on Wall Street is banking regulation.
Speaker 2: Let's talk about the supplemental leverage ratio, which seems like
Speaker 2: an obscure thing off to the side, but it has
Speaker 2: been the subject of much discussion, and it does, as
Speaker 2: I understand, relate to US treasuries and yields on US treasuries,
Speaker 2: so that if major banks held more US treasuries, it
Speaker 2: would bring it bring yields down. You've said you're going
Speaker 2: to take more of an active role, as I understand it,
Speaker 2: with respect to some of that banking regulation.
Speaker 1: Where are we. I think we are very close to
Speaker 1: moving the supplementary leverage ratio SLR. That is moving along
Speaker 1: very quickly between the three banking regulators, the FED, the
Speaker 1: OCC and the FDIC. So I would think we could
Speaker 1: see something on that over the summer or so.
Speaker 2: And knowing the markets as you do, would you anticipate
Speaker 2: that might have a significant material effect on treasury yields.
Speaker 1: Well, I think it could because banks are being penalized
Speaker 1: for holding treasury. You know, there's a large supplementary leverage charge,
Speaker 1: so I think for holding the risk free asset, we
Speaker 1: can reduce that. And you know, I've seen estimates that
Speaker 1: it could bring yields down by tens of basis points. Certainly,
Speaker 1: during the COVID crisis, it was the temporarily taken and
Speaker 1: it had a big effect.
Speaker 2: Let me ask something different, but I think might be related,
Speaker 2: which is stable coin. If really we went big into
Speaker 2: stable coin in this country, what effect could that have
Speaker 2: on the strength of the dollar because people might have
Speaker 2: to hold dollars in order to match against or even
Speaker 2: for treasuries.
Speaker 1: Well, we are going big on digital assets. So Trump
Speaker 1: administration has made digital assets for priority. Past administration starved
Speaker 1: and all thus made extinct a lot of these companies
Speaker 1: and pushed it offshore. So what we want to do
Speaker 1: is apply the highest US regulatory and AML standards two
Speaker 1: digital assets, especially stable coins. And I've seen estimates that
Speaker 1: just over the short term, stable coins could create two
Speaker 1: trillion of demand for US treasuries and treasury bills to
Speaker 1: put that in context, the number is probably about three
Speaker 1: hundred billion right now.
Speaker 2: There are reports, including Blueberg that there may be if
Speaker 2: I can call a privatization of Famimine freddie Mac something
Speaker 2: that's been talked about since I think they were nationalized
Speaker 2: essentially during the Great Financial Crisis. I heard the President
Speaker 2: say I'm going to ask Scott Besson about this.
Speaker 1: So has he asked you? And where does that stand?
Speaker 1: It is a goal for this administration. Again, we're doing
Speaker 1: piece deals, tax deals, trade deals. So as we land
Speaker 1: some of those deals, then we will focus on that.
Speaker 1: But David, what I can tell you we are doing
Speaker 1: a great deal, a great deal of studying at Treasury
Speaker 1: because the one requirement, the one requirement for this privatization
Speaker 1: is that they are privatized in such a way that
Speaker 1: mortgage spreads they do not widen. And in fact, is
Speaker 1: there a way that we can make the spread between
Speaker 1: the risk free rate and mortgages titan as the Fanning
Speaker 1: and freddie Er privatized.
Speaker 2: That was exactly my question. So do you know the
Speaker 2: answer to the question, is there a way to do that?
Speaker 2: Because most people are concerned that will drive up mortgage rates.
Speaker 1: Sure, there are several ways to do it, and we're
Speaker 1: exploring it. So we will move forward again after we
Speaker 1: land some of the piece deals, trade deals and tax deals,
Speaker 1: then we will work on this privatization deal.
Speaker 2: One of your many responsibilities that has to do is
Speaker 2: taxation and the IRS. I know that you were really
Speaker 2: pushing hard for montization of the IRS. At the same time,
Speaker 2: we've lost a lot of people of the IRS. Isn't
Speaker 2: that hurting their ability to do their job?
Speaker 1: So, David, my three priorities collections, privacy, and customer service,
Speaker 1: and if we look over a long view, we haven't
Speaker 1: lost a lot of people of the I r S.
Speaker 1: There was a massive headcount increase from the Inflation Reduction
Speaker 1: Act and back to this crazy CBO scoring by increasing expenses.
Speaker 1: There was this scoring that you would actually somehow up collections,
Speaker 1: which didn't happen. So we had a great collections year.
Speaker 1: This year came in above target. And this monitorization program,
Speaker 1: the tech monitorization program at the IRS was begun in
Speaker 1: nineteen ninety that the young man who was in charge
Speaker 1: of it was not who I put in charge of it,
Speaker 1: was not even born then, So that it's fifteen billion
Speaker 1: over budget. It's a three and a half billion a
Speaker 1: year budget. I think it's running on cobal, which is
Speaker 1: what I may have learned in college, on twelve different systems.
Speaker 1: So we are going to fix that, and I think
Speaker 1: all three of my priorities are going to be served.
Speaker 1: And I think it could be substantial savings to the
Speaker 1: American people because the IRS roughly processes as many transactions
Speaker 1: as a mid size US bank, which does it at
Speaker 1: ten percent of the number of people ten percent of
Speaker 1: the cost.
Speaker 2: President Trump said a while ago, posted actually on social
Speaker 2: media that they were in the process of removing the
Speaker 2: tax exempt status from Harvard. There's a lot of issues
Speaker 2: at Harvard, but that's one that comes within your bailiwick.
Speaker 3: Where is that process right now?
Speaker 1: That the President is moving forward with that, and we're
Speaker 1: also looking at taxes on endowments, and I think the
Speaker 1: important thing here, and it goes a little bit back
Speaker 1: to this main street versus the elites that Harvard to
Speaker 1: have a tax exempt status, there are rules you have
Speaker 1: to follow, and if you're not following the rules, no
Speaker 1: one's above the wall. So we will see if they're
Speaker 1: following the rules. It looks like there's substantial number where
Speaker 1: perhaps they weren't, and you know again too, Harvard is
Speaker 1: a giantic hedge fund. They run a leveraged investment model.
Speaker 1: So we'll see where all that goes.
Speaker 2: Is it Harvard alone or other other universities or colleges
Speaker 2: that also might be subject to review on taxis and status.
Speaker 1: I haven't seen that. But again back to cutting government expenses.
Speaker 1: These things are more out of control the universities. They
Speaker 1: are more out of control than the government. That there
Speaker 1: is a separate inflation index, it's called like the Index
Speaker 1: of Higher Education inflation index, and most of the expenses
Speaker 1: have grown at CPI plus three percent, So you know,
Speaker 1: they need to get their houses in order.
Speaker 2: Let's come back to BAMF because you just got back
Speaker 2: from the G seven meetings and the communicats I read
Speaker 2: it really focused on imbalances. What were the imbalances you're
Speaker 2: most concerned about?
Speaker 1: Well, I think the group as a whole was very
Speaker 1: concerned about the global imbalances around China, that China just
Speaker 1: keeps increasing their share of global manufacturing and has not
Speaker 1: done a much needed adjustment in terms of consumption. And
Speaker 1: as I predicted. Normally don't like to take victory laps,
Speaker 1: but I did predict it and I was right. I
Speaker 1: said when the US put up the tariff wall, that
Speaker 1: all those Chinese goods would go somewhere. And I think
Speaker 1: the other the G six has seen that these Chinese
Speaker 1: goods are starting to permeate into their economies. They're quite
Speaker 1: worried about it. But you know, there's a whole series
Speaker 1: of global imbalances. We have a oors trade deficity with
Speaker 1: the EU, so we'd like to see more pro growth
Speaker 1: consumer spending there. But the real thing when I think
Speaker 1: about China and the rest of the world, especially the US.
Speaker 1: In the US, we are trying to rebalance towards more manufacturing,
Speaker 1: mostly high end manufacturing, not the kind China has. Everyone
Speaker 1: agrees that China needs to rebalance toward less manufacturing more consumption.
Speaker 1: And is there a chance that we could do it
Speaker 1: together what Ray Dalio might call a big, beautiful rebalancing.
Speaker 2: So as I understand, I'm not a macroeconomists, you know,
Speaker 2: So as I understand it, when you have these trade
Speaker 2: and balances, it means we're importing buying more things, and
Speaker 2: we're exporting dollars essentially overseas. A lot of those dollars
Speaker 2: have been coming back to US in various forms, particalarly
Speaker 2: in US treasuries. Can you have a rebalancing, for example
Speaker 2: of China or with Europe for that matter, that doesn't
Speaker 2: necessarily raise the yield on treasuries because there are less
Speaker 2: dollars overseas to be invested in US treasuries.
Speaker 1: Oh sure, sure, I mean these balances weren't always like
Speaker 1: this in two thousand, before the China shock. We've historically
Speaker 1: had big inflows into treasuries. But what used to happen
Speaker 1: was in the old days, trade would come in and
Speaker 1: then we would sell the other country a GM. Now
Speaker 1: we are selling them either treasury bond, private equity, or
Speaker 1: Google stock, and that has a lot of distributional problems
Speaker 1: within the US. So that's how we've ended up with
Speaker 1: the coast or Wall Street doing very well, middle of
Speaker 1: the country manufacturing being gutted. So I think it's the
Speaker 1: composition of the flows coming back in, and then as
Speaker 1: you mentioned, I think we can see more bond buying
Speaker 1: by US citizens US US institutions. But the other thing
Speaker 1: that I will say is, you know, I have access
Speaker 1: to the data and we've actually been seeing foreign national entities,
Speaker 1: whether it's reserve managers, sovereign wealth funds or pension funds
Speaker 1: have been buying more treasuries in the latest auctions.
Speaker 2: So when we talk about trade, we talk about goods,
Speaker 2: sometimes services. What about capital flows and how capital flows work?
Speaker 2: There seems to be a movement in parts of the
Speaker 2: world toward stopping capital flows. I mean, we've had Macron
Speaker 2: and France said Europe can make it on its own.
Speaker 2: We've had Australia take certain actions requiring pension plans to
Speaker 2: invest domestically.
Speaker 3: Are we moving toward toward autocre?
Speaker 1: I don't think we have to. There's certainly nothing the
Speaker 1: US is doing to prevent capital flows. We except for
Speaker 1: strategic except for strategic products, high val value tech products,
Speaker 1: the rest. We want smooth capital flows globally. Could we
Speaker 1: see more people being more nationalistic, maybe, But again, as
Speaker 1: we saw with these trillions of dollars from these Middle
Speaker 1: East countries coming into the US, that the US is
Speaker 1: the premier destination for capital. We are working to do
Speaker 1: everything we can on that. And you know, David, back
Speaker 1: to your question on the money coming back in into
Speaker 1: the bond market, that a lot of it's going to
Speaker 1: come back in in the form of foreign direct investment.
Speaker 1: Which is actually a much more stable kind of investing.
Speaker 2: Let's talk about the dollar for a second and where
Speaker 2: the dollar is. I've seen some charts actually about the
Speaker 2: nominal value of the dollar versus purchasing power parity, and
Speaker 2: in fact that there's been a growing difference between those
Speaker 2: where the nominal value is well above PPP, I mean.
Speaker 3: Almost at historical levels.
Speaker 2: From your experience with markets, does that have to correct itself?
Speaker 2: Does that mean the dollar's overvalued?
Speaker 1: It doesn't, doesn't have to mean it's overvalued. And lots
Speaker 1: of lots of times that levels can stay versus PPP,
Speaker 1: which is just an academic measure. Many currencies stay above
Speaker 1: their PPP equilibrium for a long period. And David I
Speaker 1: can tell you that when I look at the amount
Speaker 1: of innovation going on in the US, vice of either
Speaker 1: the rest of the world, everybody wants to come here.
Speaker 2: So as you look forward, what is the thing that
Speaker 2: worries you the most.
Speaker 1: That we are not able to that somehow our agenda
Speaker 1: gets slowed down that whether it's whether it's the courts,
Speaker 1: whether it's the the democrats, that's really what worries me
Speaker 1: the most.
Speaker 2: And on deregulation, how long will it take. So we
Speaker 2: actually see it in productivity.
Speaker 1: Well, I think we. I think we're going to see
Speaker 1: it in the economic numbers in the third and fourth quarter, in.
Speaker 3: The third and fourth quarter this year.
Speaker 1: Yep.
Speaker 3: That's fascinating.
Speaker 1: Yeah, because you know again that when when you ask me,
Speaker 1: what worries me, is this, like we need this substantial
Speaker 1: permitting reform, that we aren't able to build things that
Speaker 1: we have because of this AI boom. You know we're
Speaker 1: going to we're becoming the AI superpower. Well, that's going
Speaker 1: to take a lot of electricity, so you're going to
Speaker 1: need energy pipelines, You're going to need transmission. And the
Speaker 1: fact that we have that it takes three, six, seven
Speaker 1: years or the permitting. So what worries me is that
Speaker 1: somehow we get bogged down in a legal morass. Because
Speaker 1: this administration is really trying to get America back to
Speaker 1: building again.
Speaker 2: One of the things that people are interested in is
Speaker 2: a sovereign wealth fund. I remember, actually, as I recall
Speaker 2: seeing President Trump's sign an executive order with you in
Speaker 2: the old office and talking about it at the time,
Speaker 2: where does that stand right now? Because some people say,
Speaker 2: you know, if you're really going to try to build
Speaker 2: the wealth the United States. You're better off cutting the
Speaker 2: deficit than borrowing money to put it in a sovereign
Speaker 2: wealth fund.
Speaker 1: Yeah, I think the President decided that it's on Paul's
Speaker 1: while we work on everything else that we're doing now.
Speaker 1: So and he said the other day that it would
Speaker 1: probably spend more time paying paying down debt. You know,
Speaker 1: he is a laser focused on paying down debt.
Speaker 2: And you're prepared if it doesn't go the way you
Speaker 2: want to do other adjustments to make sure we are
Speaker 2: paying to the debt. Because some people are a little skeptical.
Speaker 1: Well again, let's talk about the can you grow the
Speaker 1: nominator fast and faster than the numerator? Like the reason
Speaker 1: we got here was, you know, think about taking out
Speaker 1: a home mortgage. It's fine if the value of your
Speaker 1: house is stable or growing faster than the debt's what's
Speaker 1: happened is that previous administrations took out a big mortgage.
Speaker 1: We didn't grow away out of it. Now, I actually
Speaker 1: think that there is a chance that we can constrain
Speaker 1: the spending up the growth, and that changes a trajectory
Speaker 1: because going back to this CBO scoring, which is alien
Speaker 1: to anything that makes sense, that if you cut taxes,
Speaker 1: they still score growth at one point seventy one. If
Speaker 1: we raise taxes, and if this tax bill didn't go through,
Speaker 1: it would be the biggest tax psyche and history, then
Speaker 1: growth stays at one point eight percent. So you know,
Speaker 1: I think that we can accelerate growth here. So you know,
Speaker 1: my worry would be that somehow there is a glitch
Speaker 1: and the tax bill did not get passed soon enough.
Speaker 1: So you know, I would encourage our colleagues in the
Speaker 1: Senate to push for the July date.
Speaker 3: The leader Thune has last question.
Speaker 2: Growth is critical to your approach and the President's approach.
Speaker 2: What growth are we talking about? What are you projecting
Speaker 2: and when? Because right now we're not close to three
Speaker 2: percent growth.
Speaker 1: Look, I think we can get to three percent the
Speaker 1: pretty quickly.
Speaker 2: Well okay, how big is how quickly is pretty quickly?
Speaker 2: I'm quarters years, quarters in quarters will be at three percent?
Speaker 1: You believe? Yes?
Speaker 3: Sustainable?
Speaker 1: Yeah, Look, I think we were in the middle of
Speaker 1: as I talk to industry, this US innovation edge. We
Speaker 1: are starting to see real productivity increases like no other
Speaker 1: country is. I think with the deregulation, with the certainty
Speaker 1: from taxes, and with this full expensing which from twenty
Speaker 1: eighteen twenty nineteen going into COVID for the industrial economy
Speaker 1: really gave it big impetus. So you know, I'm expecting
Speaker 1: that by certainly by this time next year, we will
Speaker 1: be north of three, and that we will be turning
Speaker 1: the corner towards the end of the year.
Speaker 2: Mister Jarah, I can't thank you enough for being really appreciated.
Speaker 2: That is the United States Secretary of Treasury. He is
Speaker 2: Scott Bessen