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