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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I'm Shinauli Bassk and

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Speaker 1: we are now joined by US Treasury Secretary Scott Bessant.

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Speaker 1: Just as the Senate has begun voting on what's known

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Speaker 1: as the Big Beautiful Bill. You look at the latest

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Speaker 1: version of the tax bill, the big question that remains

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Speaker 1: is the GOP holdouts. What kind of deal can be

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Speaker 1: cut with those holdouts and what are you and the

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Speaker 1: President prepared to offer for support.

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Speaker 2: Well, I'm confident that the bill is going to progress

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Speaker 2: as is over the next few hours and it'll be

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Speaker 2: on the President's desk to sign on July fourth, so

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Speaker 2: Senate will vote pass it over to the House. We've

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Speaker 2: seen incredible leadership, and this is what leadership looks like.

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Speaker 3: So President Trump.

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Speaker 2: That the Speaker Johnson, Leader thoone, and at the committee level,

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Speaker 2: Senator Crapo and Chairman Jason Myth have been fantastic to

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Speaker 2: work with. And again it all goes back to leadership.

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Speaker 1: Now, when it comes to the fiscal hawks, has the

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Speaker 1: administration made any assurances about executive orders or legislation down

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Speaker 1: the road to address the national debt load?

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Speaker 2: Well, I think everyone believes that this is a start,

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Speaker 2: So it's an eleven percent cut in non discretionary spending

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Speaker 2: and we're going to go from there. So we didn't

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Speaker 2: get here all at once. We've gotten here twenty or

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Speaker 2: forty years, and we are going to bend the curve

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Speaker 2: bring the debt levels down. I'm a fiscal hawk. I've

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Speaker 2: had a lot of very good meetings with that group,

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Speaker 2: and I think we're all on the same page on

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Speaker 2: how to grow the economy while controlling and bringing down expenses.

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Speaker 1: Now let's talk about some of the math there as well,

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Speaker 1: because if the GOP is right and the bill does

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Speaker 1: look to shrink the deficit, how will that affect treasure

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Speaker 1: issues over the next ten years? How does your map

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Speaker 1: square with the CBO, with Warren, with Yale, and even

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Speaker 1: the Bloomberg consensus of GDP projectors. You're economists that still

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Speaker 1: see growth under two.

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Speaker 3: Percent, Well, I think that's just wrong.

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Speaker 2: And you know, we can start with the CBO is

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Speaker 2: their model presumes one point eight percent forever and maybe

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Speaker 2: under democratic governments that's right. I think what we saw

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Speaker 2: under President Trump's first term is that we will get

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Speaker 2: a big the boost in the economy from the tax bill,

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Speaker 2: and we're going to have certainty.

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Speaker 3: We're going to go.

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Speaker 2: Back to one hundred percent expensing, so we are also

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Speaker 2: deregulating at the same time. So we saw it in

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Speaker 2: Trump one point zero. I think that we can see

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Speaker 2: it here. So I think we can really accelerate the

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Speaker 2: economy because the CBO model shows one point eight percent growth,

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Speaker 2: whether we have the biggest tax cut in history, or

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Speaker 2: we get this across the line and give companies and

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Speaker 2: consumers great certainty.

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Speaker 1: You mentioned that the spending cuts were just a start.

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Speaker 1: Now which will prevail When you think about the cuts

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Speaker 1: specifically as it pertains to Medicaid, Will the House level

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Speaker 1: of cuts to Medicaid prevail or the Senate level? And

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Speaker 1: which one will the President support?

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Speaker 3: We'll see.

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Speaker 2: My sense is, and again I take exception to cuts.

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Speaker 2: We are actually bending the curve further out. We are

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Speaker 2: getting able body people back to work, and the most

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Speaker 2: needy will have greater benefits.

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Speaker 1: Well, the main question too, is the benefits that are

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Speaker 1: being cut. What do you tell the nearly twelve million

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Speaker 1: people that are on the brink of losing access to Medicaid?

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Speaker 2: Well, again that's not right. One four million are illegal aliens.

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Speaker 2: Then a huge percent of that are the able body

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Speaker 2: working people who will need to go back to work.

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Speaker 2: So we're going to have a work requirement and we'll

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Speaker 2: go from there. We are just going back to the

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Speaker 2: levels pre COVID.

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Speaker 1: So given where the bill is, how does the latest

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Speaker 1: bill impact the trajectory of the debt and deficit in

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Speaker 1: your view?

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Speaker 2: Well, again that I think as we accelerate growth and

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Speaker 2: increase growth, trajectory completely changes the debt dynamics. So what

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Speaker 2: we're focusing on is the debt to GDP. We're going

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Speaker 2: to start bringing that back down. We are going to

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Speaker 2: pull down the deficit to GDP, and I think we

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Speaker 2: will be turning both of those down.

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Speaker 3: Over the next year.

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Speaker 1: Does it give you, though, enough confidence to start turning

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Speaker 1: out the debt? At what point do you start issuing

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Speaker 1: at longer data maturities?

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Speaker 3: Well, why would we do at these rates?

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Speaker 2: We are more than one standard deviation above the long

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Speaker 2: term more than one standard deviation above the long term rates,

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Speaker 2: So why would we do that. The time to have

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Speaker 2: done that would have been in twenty twenty one, twenty two.

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Speaker 1: So a lot of people in the market point out

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Speaker 1: to the success that has been in the bond market.

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Speaker 1: You have seen the ten year come down almost a

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Speaker 1: half a percentage point since the January highs. Where would

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Speaker 1: you like to see the ten year and where do

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Speaker 1: you think it could end by the.

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Speaker 3: End of the year. Well, I think it's going to

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Speaker 3: depend on a lot of things.

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Speaker 2: But I think that we could see a further lowering

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Speaker 2: up rates. I think inflation is very tame. I'm not

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Speaker 2: going to comment on FED policy, but I've said that

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Speaker 2: I am focusing on the tenure So as we inflation

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Speaker 2: come down, I think the whole curve could parallel shift down.

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Speaker 2: And I'll point out when everyone says the market, the

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Speaker 2: bond market's worried about this or that. In the US,

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Speaker 2: US is the only major bond market that has lower

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Speaker 2: tenure rates than any other country. Every other country the

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Speaker 2: rates are up.

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Speaker 1: While we're talking about interest rates and the Federal Reserve,

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Speaker 1: it has been recently reported that you might be in

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Speaker 1: consideration for the job as the next FED chair. When

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Speaker 1: you've been asked about the likelihood recently, you said that

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Speaker 1: it's up to the president. Is it a job that

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Speaker 1: you would want.

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Speaker 2: I will do what the president wants, but I think

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Speaker 2: I have the best job INBC. We're making a lot

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Speaker 2: of progress with the president's leadership. Think about it. We

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Speaker 2: are going to have the tax bill on his desk

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Speaker 2: by July fourth, We're going to be wrapping up the

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Speaker 2: trade talks. So I think we've had great moment minim

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Speaker 2: and we will be working on a chair Powell's successor

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Speaker 2: over the coming weeks and months.

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Speaker 1: You had mentioned that an announcement could be as early

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Speaker 1: as October or November, and Powell's term ends in May

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Speaker 1: of twenty twenty six. How is the street supposed to

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Speaker 1: navigate between that announcement time and the time between the

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Speaker 1: term being over four Chair Powell, you are the one

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Speaker 1: I want to remind people that had brought up the

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Speaker 1: idea of a shadow fed chair prior to the election.

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Speaker 1: Is a new appointee supposed to be considered that shadow

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Speaker 1: fed chair?

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Speaker 3: Well, not necessarily.

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Speaker 2: We'll see there's a seat opening up, a fourteen year

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Speaker 2: seat opening up in January, so we've given thought to

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Speaker 2: the idea that perhaps that person would go on to

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Speaker 2: become the chair when Jay Powell leaves in May, or

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Speaker 2: we could appoint the new chair in May. Unfortunately, that's

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Speaker 2: just a two year seat.

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Speaker 1: So ultimately, do you think that there could be some confusion.

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Speaker 2: Well, I don't see why there would be confusion because

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Speaker 2: obviously there are people who are currently at the FED

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Speaker 2: who are under consideration. So why would there be confusion

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Speaker 2: if that you add another candidate in January?

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Speaker 1: So? What about FED policy as it stands today? The

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Speaker 1: President has voiced his preference for lower interest rates. There

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Speaker 1: have been investors, but also most recently the Bank of

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Speaker 1: International Settlements warning about any inflation risks tied to the

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Speaker 1: tariff policy. Realistically, how much can the FED lower rates

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Speaker 1: this year? And what is the level and rate of

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Speaker 1: unemployment that would suggest a faster pace of rate cuts Economically?

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Speaker 1: What has to slow?

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Speaker 2: Well, look, I said during my confirmation, I won't talk

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Speaker 2: about the mistakes the Fed's going to make.

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Speaker 3: I'll only talk about the ones they have made.

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Speaker 2: They made a gigantic mistake in twenty twenty two, And

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Speaker 2: as I like to point out, medical studies have shown

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Speaker 2: that people who fall tend to look at their feet,

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Speaker 2: which makes them fall more. And my worry here is

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Speaker 2: that having fallen down on the American people in twenty

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Speaker 2: twenty two, Feds now looking at their feet. We have

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Speaker 2: seen no inflation from tariff if we do which we

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Speaker 2: don't have to. Then they'd be a one time price adjustment.

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Speaker 2: Nothing is more transitory than that. So Team Transitory having

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Speaker 2: failed the American people in twenty two, they seem a

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Speaker 2: little frozen.

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Speaker 3: At the wheel here.

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Speaker 1: Part of this uncertainty does relate back to the trade deals.

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Speaker 1: You've set a deadline for July ninth with key trading partners,

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Speaker 1: or at least the administration in total has how many

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Speaker 1: of the key eighteen, the eighteen most important partners that

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Speaker 1: you have been speaking about have deals that will be

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Speaker 1: agreed to by that time.

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Speaker 3: We'll see.

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Speaker 2: I'm not going to negotiate on TV and let people

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Speaker 2: off the hook, but as always, there's going to be

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Speaker 2: a flurry going into the final week as the pressure increases.

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Speaker 1: Well, can you tell us about what's coming out of

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Speaker 1: those deals? Are they inked deals or are they negotiations

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Speaker 1: for future deals?

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Speaker 2: Well, what I can tell you is that the staff level,

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Speaker 2: whether it's a Treasury at USTR, at commerce, people who've

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Speaker 2: been around for twenty years are in amazement and they're

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Speaker 2: saying these countries are coming with offers that they can't believe.

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Speaker 2: So in terms of bringing down teriffs, non tariff trade barriers,

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Speaker 2: we're leaving a side currency the financing of the labor

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Speaker 2: and capital in an advantageous way. All these countries are

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Speaker 2: pulling back.

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Speaker 1: So you've said that trade negotiations could be wrapped up

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Speaker 1: by Labor Day. How shoulds and nations impact It'd be

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Speaker 1: thinking about that July ninth deadline and could that be

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Speaker 1: pushed back to avoid going back to those April second

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Speaker 1: tariff rates.

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Speaker 2: Well, that's going to be able to present a trump

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Speaker 2: and I'm not going to tell any country. We have

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Speaker 2: countries that are negotiating in good faiths, but they should

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Speaker 2: be aware that if we can't get across the line

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Speaker 2: because they are being with calcitrant, then we could spring

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Speaker 2: back to the April second levels.

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Speaker 3: I hope that won't have to happen.

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Speaker 1: So one other part of the tariff strategy that a

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Speaker 1: lot of investors have been asking about is related to

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Speaker 1: the housing affordability crisis. There's still Section two thirty two

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Speaker 1: tariffs being seen as it retains to lumber and timber.

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Speaker 1: Those are key materials for housing construction. Are you in

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Speaker 1: support of them ultimately? Given where we are in the

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Speaker 1: housing affordability.

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Speaker 2: Crisis today, Well, I think it's important to break down.

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Speaker 2: So what we're negotiating now are the recip tariffs two

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Speaker 2: thirty two's take longer to implement, so you know, we'll

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Speaker 2: see what happens with those.

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Speaker 1: Also on the housing market, what kind of timeline, Well,

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Speaker 1: first of all, is Fanny and Freddy going to be

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Speaker 1: privatized and what type of timeline would you look to

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Speaker 1: do that on while also ensuring that mortgage rates won't

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Speaker 1: skyrocket on the heels of such a plan.

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Speaker 2: Well, let's work backwards on your question. Is any anything

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Speaker 2: we do, we will be focused on the mortgage rate,

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Speaker 2: the spread of mortgages over treasuries and ensuring that that.

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Speaker 3: Does not move. But you know, I can tell you

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Speaker 3: that we have been.

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Speaker 2: Busy with peace steels, trade deals, and tax deals and

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Speaker 2: once peace steals going well, tax deal done on July fourth,

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Speaker 2: a trade deal wrapping up midsummer.

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Speaker 3: And then we will focus on Fanny and Fredy.

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Speaker 1: One more question for you. Another thing that is making

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Speaker 1: its way through Congress is legislation as it pertains to cryptocurrency.

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Speaker 1: But right now stable coin. Will this bill help in

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Speaker 1: terms of making stable coins a bigger force in the

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Speaker 1: payments market and the treasury market. Will they be a

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Speaker 1: larger force of what absorbs new treasury supply.

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Speaker 2: Well, what you're referring to as the Genius Act, the

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Speaker 2: Senate's passed.

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Speaker 3: It is now with the House.

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Speaker 2: President Trump, myself, much of the Senate leadership, and many

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Speaker 2: in the House are encouraging them to pass the Senate.

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Speaker 3: Bill as is. I think we could have that also

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Speaker 3: done by mid July.

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Speaker 2: And I think stable coins create an exciting new payment

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Speaker 2: rail and importantly it will be a source of demand

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Speaker 2: for the US treasury market because if you think about

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Speaker 2: it in terms of preference globally, would you rather have

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Speaker 2: a a private stable coin that's backed by US treasuries

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Speaker 2: with US best practices regulation, or would you rather have

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Speaker 2: an ECB or a PBOC central bank digital currency that

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Speaker 2: if you write a mean the ex post.

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Speaker 3: The government can turn off.

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Speaker 2: I think everyone is going to choose the US private

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Speaker 2: sector with US regulation all day, every.

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Speaker 1: Day, Secretary BSST, we appreciate you joining us here in

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Speaker 1: our New York studio, that is the US Treasury Secretary

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Speaker 1: Scott Vessant