WEBVTT - US Treasury Secretary Scott Bessent Talks Treasury Department Concerns

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. I'll turn it over

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<v Speaker 1>to my colleague Saliah Molson, who is live at the

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<v Speaker 1>Treasury Department with the new Secretary, Scott Beston Seleiah, thank you, Kayley.

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<v Speaker 2>I'm here with US Treasure Secretary Scott Besson and Washington.

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<v Speaker 2>Mister Secretary, thank you for joining me. So good to

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<v Speaker 2>see you, mister Secretary. We are inside the cashroom at

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<v Speaker 2>the Treasure Department. It is almost impossible to overstate how

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<v Speaker 2>important the work that is done in this building is

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<v Speaker 2>the US financial system. Yet right now there is widespread

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<v Speaker 2>concern about the DOGE team's access to sensitive payment systems.

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<v Speaker 2>Are you worried at all that that access and that

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<v Speaker 2>tinkering of the payment systems could affect the Treasury's market

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<v Speaker 2>or cause any disruption?

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<v Speaker 1>Good? Well, so, Leiah, thank you for asking me about that,

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<v Speaker 1>because there's a lot of misinformation out there. First of all,

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<v Speaker 1>when you say the DOGE team, these are Treasury employees

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<v Speaker 1>a two employees, one of whom I personally interviewed in

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<v Speaker 1>his final round. There is no tinkering with the system.

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<v Speaker 1>They are on read only, they are looking. They can

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<v Speaker 1>make no changes. It is an operational program to suggest improvement.

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<v Speaker 1>So we make one point three billion payments a year,

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<v Speaker 1>and this is two employees who are working with a

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<v Speaker 1>group of long standing employees.

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<v Speaker 2>The letter that the Treasure Department sent earlier this week

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<v Speaker 2>talked about how the team currently does not have access

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<v Speaker 2>to change the system. Have they, at any point this

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<v Speaker 2>year had the ability to make changes.

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<v Speaker 1>Absolutely not. This is no different than you would have

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<v Speaker 1>at a private company. And by the way, the ability

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<v Speaker 1>to change the system sits over at the Federal Reserve,

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<v Speaker 1>so it doesn't even lie in this building. So they

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<v Speaker 1>could make suggestions on how to change the system, but

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<v Speaker 1>we don't even run this system.

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<v Speaker 2>And if they ask for if they request the ability

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<v Speaker 2>to change the system, would you grant that.

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<v Speaker 1>No, Again, they have no ability to change the system.

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<v Speaker 1>I have no ability to grant that change. That they

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<v Speaker 1>can make suggestions, then it would go to the Federal

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<v Speaker 1>Reserve and just like any large erp system, there would

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<v Speaker 1>be tests, there would be this, there would be that,

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<v Speaker 1>and then the Fed will determine whether these changes are

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<v Speaker 1>robust or not.

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<v Speaker 2>As the Secretary of Treasure, you also oversee the IRS.

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<v Speaker 2>Do you know what kind of access the team has

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<v Speaker 2>to IRS data or individual taxpayer data.

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<v Speaker 1>Well, I'm glad you asked that too, because look, THERIRS,

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<v Speaker 1>the privacy issue is one of the biggest issues, and

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<v Speaker 1>over the past four years we've seen a lot of

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<v Speaker 1>leaks out of there. The IRS systems are quite poor.

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<v Speaker 1>When I started in college in nineteen eighty I learned

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<v Speaker 1>the program in COBAL. I think there are twelve different

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<v Speaker 1>systems at the IRS that still run on COBOL. But

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<v Speaker 1>as of now, there is no engagement at the IRS.

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<v Speaker 2>And if they request that access, would you sign off

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<v Speaker 2>on that request?

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<v Speaker 1>They haven't, so we'll take that when it comes to it.

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<v Speaker 1>I think there is a lot to do there, but

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<v Speaker 1>the president was elected with a big agenda and to

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<v Speaker 1>the extent that getting the IRS in better shape is

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<v Speaker 1>part of that. Sure, because look, with the IRS, what

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<v Speaker 1>am I concerned about? I am concerned about collections, I'm

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<v Speaker 1>concerned about privacy, and I am concerned that the system

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<v Speaker 1>is robust and customer service.

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<v Speaker 2>But do you think that if they ask for access,

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<v Speaker 2>that is something you would consider signing off on.

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<v Speaker 1>There are a lot of things I'd consider, But look,

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<v Speaker 1>we're in the middle of the tax filing season right now.

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<v Speaker 1>Even with the government outs that are being that expire

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<v Speaker 1>at midnight tonight. We have been mandated that the IRS

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<v Speaker 1>customer facing employees that they're not eligible for that until

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<v Speaker 1>May fifteenth, So I don't imagine anything's going to go

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<v Speaker 1>on at the IRS until then or beyond.

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<v Speaker 2>Elon must just a few half an hour ago tweeted

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<v Speaker 2>out that Treasury needs to stop approving certain payments. Has

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<v Speaker 2>your staff tried to block any payments here at Treasury?

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<v Speaker 1>We have not, and I'm glad you asked that too.

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<v Speaker 1>And just to put in perspective, Elon and I are

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<v Speaker 1>completely aligned in terms of cutting waste and increasing accountability

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<v Speaker 1>and transparency for the American people. I believe that this

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<v Speaker 1>Dove program in my adult life is one of the

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<v Speaker 1>most important audits of government or changes to government structure.

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<v Speaker 1>We have seen that. When I was in my twenties,

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<v Speaker 1>we had the Grace Report, and there's some great suggestions

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<v Speaker 1>that came out of that never implemented under Clinton and Gore.

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<v Speaker 1>I think it was to government efficiency or reduce government.

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<v Speaker 1>Nothing happened. So President Trump came in, there's a big agenda,

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<v Speaker 1>and I think that there are gigantic cost savings for

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<v Speaker 1>the American people here. And I think It's unfortunate the

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<v Speaker 1>way the media wants to lampoon what is going on.

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<v Speaker 1>These are highly trained professionals. This is not some roving

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<v Speaker 1>ban going around doing things. This is methodical and it

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<v Speaker 1>is going to yield big savings.

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<v Speaker 2>At any point, would you heed what Musk just tweeted

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<v Speaker 2>and stop payments from coming through Treasury?

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<v Speaker 1>Well, most of that happens above us, that it comes

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<v Speaker 1>from the departments and the agencies. We are doing a

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<v Speaker 1>complete review, and I want to emphasize to you and

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<v Speaker 1>everyone watching that it is an operational review. It is

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<v Speaker 1>not an ideological review. We want to make sure that

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<v Speaker 1>the American people are getting the best practices, and I

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<v Speaker 1>don't think that's happening right now.

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<v Speaker 2>The systems here at Treasury they're known to be a

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<v Speaker 2>little antiquated, but very very sensitive, but also they're working.

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<v Speaker 2>I'm hearing you. At Bloomberg, we hear a lot about

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<v Speaker 2>investors being concerned that this could hit markets in some

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<v Speaker 2>way or start to cause a loss of confidence. What

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<v Speaker 2>as a long time hedge fund and investor like, do

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<v Speaker 2>you have a response to those concerns.

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<v Speaker 1>People shouldn't be concerned that at Treasury we move deliberately

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<v Speaker 1>and we fix things. That's the way we work. So

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<v Speaker 1>everyone should know that all the payments are going to

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<v Speaker 1>be made, they're going to be in good order, and

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<v Speaker 1>at the end of this review, they're going to be

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<v Speaker 1>substantial savings for the American taxpayer.

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<v Speaker 2>Mister Secretary, you have experience in currency markets, and now,

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<v Speaker 2>as in your new role, you oversee US currency policy.

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<v Speaker 2>I'd like to ask you what does a strong dollar

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<v Speaker 2>mean to you.

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<v Speaker 1>Well, first of all, the strong dollar policy is completely

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<v Speaker 1>intact with President Trump, and I'm very happy at his

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<v Speaker 1>Economic clob of New York speech in August when he

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<v Speaker 1>re emphasized the importance of maintaining the dollar reserve currency status.

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<v Speaker 1>But let's think about what does a strong dollar mean.

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<v Speaker 1>It really means four things. One that when we think

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<v Speaker 1>about a fiat currency, a piece of paper is credibility.

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<v Speaker 1>So a strong dollar is credibility and a rule of

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<v Speaker 1>law that is backing it up. Two, it means a

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<v Speaker 1>composite price in the screen the Bloomberg Currency Index, that

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<v Speaker 1>is the dollar moving up against that. Three, it is

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<v Speaker 1>a bilateral price. So what's important to remember is the

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<v Speaker 1>dollar is either weak or strong versus something else. So

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<v Speaker 1>we want the dollar to be strong. What we don't

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<v Speaker 1>want is other countries to weaken their currencies to manipulate

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<v Speaker 1>their trade. And then fourth that we want to have

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<v Speaker 1>the best policies that create the environment for a strong dollar.

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<v Speaker 2>Let's talk about other nations and how they manage their currencies.

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<v Speaker 2>The President has asked for a tariff study from several

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<v Speaker 2>of his cabinet officers or incoming cabinet officers do April first,

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<v Speaker 2>and the Treasury piece of that is to assess how

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<v Speaker 2>to handle when foreign nations manipulate their currencies. Do you

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<v Speaker 2>see any evidence of manipulation in foreign exchange rate markets

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<v Speaker 2>right now?

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<v Speaker 1>Well, we'll wait till the study comes out, But I

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<v Speaker 1>think just intuitively, you and I could agree that when

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<v Speaker 1>you see the accumulation of these large surpluses, that there

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<v Speaker 1>is not a free form trading system that's going. It

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<v Speaker 1>could be due to the level of the currency. It

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<v Speaker 1>could be due to trade restrictions, it could be due

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<v Speaker 1>to some interest rate repression policy. So it could be

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<v Speaker 1>any of those.

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<v Speaker 2>Are there any countries that you're monitoring or watching specifically

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<v Speaker 2>right now? I know the President in the past has

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<v Speaker 2>labeled China as a currency manipulator. Do you see any

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<v Speaker 2>other nations that need to be closely watched.

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<v Speaker 1>Well, I think we'll see on April first. And as

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<v Speaker 1>you know that China's the most imbalanced unbalanced economy in

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<v Speaker 1>the history of the world, and they are in a

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<v Speaker 1>deep recession right now. They're experience in deflation and they're

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<v Speaker 1>trying to export their way out of that, and we

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<v Speaker 1>can't allow that. We want fair trade, and part of

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<v Speaker 1>that is taking a strong position on the currency and

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<v Speaker 1>the terms of trade.

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<v Speaker 2>Yesterday, the Treasure Department had its first quarterly refunding since

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<v Speaker 2>you were confirmed. Do you have any plans of looking

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<v Speaker 2>at how the Treasury's debt issuance strategy comes together.

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<v Speaker 1>Well, I think the good news is that the trajectory

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<v Speaker 1>of the borrowing is dropping, so I was very happy

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<v Speaker 1>to see that. It's one of the few good surprises

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<v Speaker 1>I was left by the previous administration. So the trajectory

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<v Speaker 1>is good, and the government's well financed into the third quarter.

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<v Speaker 1>And I believe that as it becomes apparent that the

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<v Speaker 1>present's agenda is working, that we'll see a great deal

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<v Speaker 1>of non inflationary growth, and I think that that will

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<v Speaker 1>help us calibrate what the debt policy should be but

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<v Speaker 1>I don't foresee any changes in the issuance for the

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<v Speaker 1>foreseeable future.

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<v Speaker 2>And what about the process. Do you think that tea

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<v Speaker 2>BAC is the most effective way of getting feedback from markets?

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<v Speaker 1>Well, I want to thank all the members of tea

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<v Speaker 1>BAC who are here this week. They are a very

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<v Speaker 1>elite group. I think that maybe over time we need

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<v Speaker 1>to think about the style of engagement. It is turned

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<v Speaker 1>into more of a research think tank than direct market engagement,

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<v Speaker 1>and that's going to require some changes from both sides.

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<v Speaker 1>I believe when tea BAC was originally started, it was

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<v Speaker 1>supposed to be a market feedback mechanism, a little less

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<v Speaker 1>of a think tank, and we've been assigning research projects.

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<v Speaker 1>So I think there's some recalibration on both sides. But

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<v Speaker 1>I think that whatever we do, tea BAC will still exist.

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<v Speaker 2>Mistress Secretary you said yesterday in an interview that the

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<v Speaker 2>Trump administration is more focused on long term deals than

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<v Speaker 2>what the Federal Reserve is doing, which is a bold statement.

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<v Speaker 2>I want to ask, how do you plan to keep

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<v Speaker 2>a lid on yields considering the deluge of debt issuance

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<v Speaker 2>that is coming down the pike, and also some of

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<v Speaker 2>the inflationary risks that are ahead.

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<v Speaker 1>Well, one of the things I wanted to emphasize is

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<v Speaker 1>that we are not focused on whether the FED is

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<v Speaker 1>going to cut not cut. What we are focused on

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<v Speaker 1>is lowering rates, So we are less focused on the

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<v Speaker 1>specific of rate cuts and how do we get the

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<v Speaker 1>whole curve down. I mentioned that the tenure I believe

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<v Speaker 1>is the important price to focus on its mortgages. It's

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<v Speaker 1>long term capital formation. So look, I think with the

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<v Speaker 1>President's policies of energy, dominance, deregulation, and non inflationary growth,

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<v Speaker 1>I think that the tenure is going to naturally come down.

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<v Speaker 1>And then look, on top of it, we do get

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<v Speaker 1>some big savings on the spending side from the dose programs.

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<v Speaker 1>Like let's think of a naive formula government equals spending

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<v Speaker 1>minus taxes for my entire career and beyond, maybe even

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<v Speaker 1>back to pre FDR the government equal spending minus taxes.

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<v Speaker 1>The S the Republicans that we liked spending, We just

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<v Speaker 1>wanted to raise it less. The Democrats want to raise

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<v Speaker 1>it more taxes. Democrats want tax increases. We want tax cuts.

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<v Speaker 1>What nobody's singing about is what if the S actually

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<v Speaker 1>went down. What if it actually goes down because of

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<v Speaker 1>everything we're doing right now?

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<v Speaker 2>But what about the inflation concerns that are stumming from

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<v Speaker 2>the tariffs and tariff threats.

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<v Speaker 1>Uh, Look that I'm not sure that where this narrative

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<v Speaker 1>the tariffs for the country putting on the tariffs is inflationary.

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<v Speaker 1>That we could have a small one time price adjustment

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<v Speaker 1>that as we saw in Trump one point zero, that

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<v Speaker 1>the deregulation and the other policies we stayed right around

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<v Speaker 1>the Fed's target level. So I'm unconcerned about that. I

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<v Speaker 1>think especially that China, now given all their excess capacity,

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<v Speaker 1>will no matter the level of the tariffs, will end

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<v Speaker 1>up eating quite a bit.

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<v Speaker 2>There's a lot of uncertainty around tariffs. We see them

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<v Speaker 2>threatened or signaled, and that they're taken back. It appears

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<v Speaker 2>as if this administration might be unfriendly to businesses.

0:14:41.920 --> 0:14:47.200
<v Speaker 1>Is that right? Really? I think it's just the opposite.

0:14:47.480 --> 0:14:52.280
<v Speaker 1>I think this is the most pro business administration in history,

0:14:52.680 --> 0:14:57.000
<v Speaker 1>and everything we are doing is going to increase the

0:14:57.040 --> 0:15:02.640
<v Speaker 1>after tax return capital and as result, working Americans will

0:15:02.720 --> 0:15:06.800
<v Speaker 1>have very high real wage growth. That what we've seen

0:15:06.840 --> 0:15:10.240
<v Speaker 1>over the past four years is the government and government

0:15:10.320 --> 0:15:14.600
<v Speaker 1>adjacent sectors providing the employment growth. And why have we

0:15:14.760 --> 0:15:18.880
<v Speaker 1>experienced a supportability crisis? First there was a massive spending

0:15:19.240 --> 0:15:23.720
<v Speaker 1>met by increased regulation which caused inflation, and then government

0:15:23.760 --> 0:15:27.440
<v Speaker 1>and government adjacent jobs do not call real wage growth

0:15:27.520 --> 0:15:31.880
<v Speaker 1>because they move up at CPI. So I think that

0:15:32.000 --> 0:15:34.760
<v Speaker 1>we are going to not only be business friendly, but

0:15:35.080 --> 0:15:37.560
<v Speaker 1>very very friendly for working Americans.

0:15:37.920 --> 0:15:41.920
<v Speaker 2>We're seeing companies already under some stress from the tariff threats,

0:15:42.080 --> 0:15:45.800
<v Speaker 2>China is investigating Google, and also, as you know, are

0:15:45.800 --> 0:15:47.800
<v Speaker 2>well aware that business is like to be able to

0:15:47.880 --> 0:15:51.360
<v Speaker 2>plan ahead, but with so much policy uncertainty, that predictability

0:15:51.400 --> 0:15:54.240
<v Speaker 2>factor is gone. That all points to a little bit

0:15:54.280 --> 0:15:55.280
<v Speaker 2>of a tougher environment.

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<v Speaker 1>Well, look, I think the best thing we can do

0:15:57.680 --> 0:16:01.760
<v Speaker 1>for predictability is make the tax cuts and jaw back permanent.

0:16:02.120 --> 0:16:04.160
<v Speaker 1>That would be the single best thing we could do

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<v Speaker 1>for predictability. We can go back to the one hundred

0:16:07.080 --> 0:16:12.080
<v Speaker 1>percent expensing and add some new features that I think

0:16:12.160 --> 0:16:14.600
<v Speaker 1>business is going to be very happy with. But again

0:16:14.640 --> 0:16:18.960
<v Speaker 1>the most important thing is that it filters down to

0:16:19.480 --> 0:16:23.640
<v Speaker 1>working wages, which is what we saw the President Trump's

0:16:23.640 --> 0:16:28.120
<v Speaker 1>first administration, hourly workers did better than supervisory workers.

0:16:28.880 --> 0:16:30.760
<v Speaker 2>Well, let me ask you about the tax plan. Then,

0:16:31.320 --> 0:16:36.040
<v Speaker 2>on the campaign trail, Trump floated no taxes on tips

0:16:36.320 --> 0:16:39.880
<v Speaker 2>and cutting the corporate rate and a lot of other proposals.

0:16:40.160 --> 0:16:42.760
<v Speaker 2>How are you going to juggle which campaign promises are

0:16:42.880 --> 0:16:46.600
<v Speaker 2>high on that the priority list for the bill, considering

0:16:46.640 --> 0:16:48.280
<v Speaker 2>how costly everything would be.

0:16:48.560 --> 0:16:53.040
<v Speaker 1>Well, that we're just starting the process now and that

0:16:53.160 --> 0:16:56.920
<v Speaker 1>we'll do what President Trump will give us his priorities.

0:16:57.160 --> 0:17:00.840
<v Speaker 1>But I can tell you the real priority is fixing

0:17:00.880 --> 0:17:03.920
<v Speaker 1>this affordability crisis for the American people. And when you

0:17:03.920 --> 0:17:07.080
<v Speaker 1>think about no tax on tips, no tax on Social Security,

0:17:07.400 --> 0:17:12.440
<v Speaker 1>no tax on overtime, potentially putting back in auto loan deductibility,

0:17:12.880 --> 0:17:16.119
<v Speaker 1>all of those benefits accrue to the bottom fifty percent

0:17:16.640 --> 0:17:20.840
<v Speaker 1>of income earners in America if they have really taken

0:17:20.880 --> 0:17:24.480
<v Speaker 1>it the between the eyes for the past four years,

0:17:24.800 --> 0:17:27.239
<v Speaker 1>and that that's unsustainable. Uh.

0:17:27.280 --> 0:17:28.960
<v Speaker 2>Before I let you go, mister secretary, I want to

0:17:29.000 --> 0:17:31.600
<v Speaker 2>ask you if you have had your m uh traditional

0:17:31.640 --> 0:17:33.560
<v Speaker 2>weekly meeting with FED Chair Powell.

0:17:33.640 --> 0:17:36.840
<v Speaker 1>Yet we did that. I did an away game over

0:17:37.000 --> 0:17:40.240
<v Speaker 1>the FED. We we had a very nice breakfast. Uh.

0:17:40.600 --> 0:17:43.080
<v Speaker 1>Chair Powell and I don't know each other well, so

0:17:43.200 --> 0:17:44.480
<v Speaker 1>it was very constructive.

0:17:44.680 --> 0:17:47.160
<v Speaker 2>How do you view that relationship involving the two agencies

0:17:47.200 --> 0:17:49.960
<v Speaker 2>are and buildings are supposed to work very closely together.

0:17:50.000 --> 0:17:52.760
<v Speaker 2>And you've had some criticism in the past of his work.

0:17:53.040 --> 0:17:56.160
<v Speaker 1>Uh. And as I said at my hearing, everything I'm

0:17:56.160 --> 0:17:58.680
<v Speaker 1>gonna talk about is things FED the Fed's done in

0:17:58.720 --> 0:18:03.720
<v Speaker 1>the past actively monetary policy. I will not comment on,

0:18:04.280 --> 0:18:06.080
<v Speaker 1>and I'm sure he's going to do the right thing,

0:18:06.320 --> 0:18:08.399
<v Speaker 1>so there'll be no criticism. All right.

0:18:08.440 --> 0:18:10.359
<v Speaker 2>Well, mister Secretary, thank you so much for joining