Scott Bessent on the Trump tariffs

The Trump tariffs have become a huge political issue and have tanked the stock market. But the goals are great even if a bit iffy. A major goal is helping the working class whose standard of living has deteriorated in recent decades—Bessent notes working people going to food banks. He is concerned about the often-noted financialization of the economy and wants to promote manufacturing in the U.S. Wall St. loves free trade, and the financial elites — the hostile elites who have opposed the interests of White Americans so effectively for decades — have benefited greatly from shipping factories overseas, especially to China (there is a $292 billion annual trade deficit with China). The result has been that China has gotten rich and has become a serious military threat.

A basic idea is that the deficit is unsustainable and that we have to lower the deficits, so they are willing to accept some political pain and economic instability to get on a sustainable path. Bessent points to Reagan who had a “choppy” two years, but Reagan “stayed the course” and won in a landslide in 1984. He notes that it could result in the Dems regaining the House and, if so, there would be yet more attempts to impeach Trump. Unlike the 80s, the political culture is much more polarized. Nothing but hate from the Dems and their supporters.

Treasury Secretary Scott Bessent Breaks Down Trump’s Tariff Plan and Its Impact on the Middle Class

Tucker [00:00:00] Mr. Secretary, thank you very much for joining us. So we’re at the Treasury Department. The President had a press conference yesterday next door in which he announced a whole new tariff regime global. He’d been promising to do this, well, for 40 years, really. It came not out of nowhere, but it was clearly his intent all along as stated, but it did rattle people, including some of his supporters. So I just wanted to ask you, big picture, where do you think this leads?

Scott Bessent [00:00:28] Tucker, and thank you for having me. And as you said, the President’s been talking about this for four decades, and this is transformational for the American economy, for the America worker, and for the new Republican alignment. And it’s a combination of the old and new ideas. Some of the ideas were put away. I always tell everyone, and they don’t want to hear it, the original tariff man That was Alexander Hamilton, and he used tariffs to fund the new nation and to protect American industry. President Trump has added a third leg to the stool and he uses tariffs to negotiate. But I think this is not unlike, I was a freshman in college when Ronald Reagan came in in 1980, and a new day in America, and when I talk to people now and they look back and they looked at the Reagan years so fondly. Yes. I remember what it was like and it was choppy and the president very choppy very choppy president Reagan stood the course and look this is not an invitation but they at one point in the early 80s a farmer showed up with a shotgun at the Federal Reserve to the kill Paul Volcker for raising rates. So like I said that’s not an imitation for anybody for action but it was a tough time. And then in 1984, President Reagan won re-election with 49 states, and I think they may have even let Mondale win Minnesota, just so it wasn’t a skunk. Just to be nice, yeah. And that’s what President Trump is doing now. For years, the American worker Middle class has been eviscerated, American workers have taken it on the chin, and we’re just starting to see some of the research now. We’re seeing research on what’s called the China shock from 2004. It’s just coming out now, and it’s what you know, it’s when I know, but finally academics are saying, oh, gosh, the American workers never recovered from the China shock. What a surprise and President Trump sensed it 40 years ago, but out in the campaign trail starting in 2015, up until last year, he has promised the American workers that the old standard of living can come back. And because what we’ve seen over the past at least 20 years since the China shock, but more like the past 30 are these massive distributional problems where the coast have done great. And the middle of the country, as they have just seen quality of life, life expectancy decline, they don’t think their children are going to do better than they are, and a lot of people don’t care. And President Trump cares, this administration cares, and this is the first step towards realigning that a lot of our trading partners, including some of our allies, have not been good partners. If tariffs are so bad, why do they have them? Why do they have them, right? Or if the American consumer is gonna pay all the tariff, then why do they care about tariff? Right, because they’re gonna eat them. So I think that this is the beginning of a process. We’re going to re-industrialize that we have gone to a highly financialized economy. We have stopped making things, especially A lot of things are relevant for national security. I think one of the few good outcomes from COVID was we had a beta test for what maybe a kinetic war with a large adversary could look like. And it turned out that these highly efficient supply chains were not strategically secure. So that we don’t make our own medicines, that we make our on semiconductors, so we don’t. make our own ships anymore. So I think if I were to say, was there any good outcome from COVID? It woke the world up to these supply chain problems. So economic security is national security. President Trump and I have talked about that a lot. So this is a national security issue that we’re seeing here, but it’s also an economic security issue. And it’s to I don’t want to say redistribute, but it is to give working Americans real wage gains and enhance their lives. And I’ve said out on the campaign trail, one of my most frequent mottos was Wall Street’s done great. It can continue doing well, but its Main Street’s turn. Its Main Street turn. And that’s what we saw yesterday. It’s Main Street’s turn.

Tucker [00:05:44] So over the course of my life, 55 years, Wall Street really has been the commonly recognized measure of economic health, like how’s the Dow doing? We’ve got entire TV channels devoted to tracking its progress, which has mostly been up during the course my life. So. you know, the average of, you know the equity averages fall, if the stock market falls, that’s seen by a lot of people as like a measure that the economy itself is in decline. Do you think that’s a fair measure?

Scott Bessent [00:06:12] The market goes up and down. Warren Buffett has a saying, in the short run, the market’s a voting machine. In the long run, it’s a weighing machine. And in the long-run, it is going to weigh, do we have good policies? And in my former business, I commented on market structure, market ups and downs a lot. I’m trying not to do that. Yes. But for everyone who thinks that these market declines. are all based on the president’s economic policies, I can tell you that this market decline started with the Chinese AI announcement of DeepSeek. So the so-called Mag-7, the tech stocks, had been doing very well for about 18 months, led the market. And I think that there was kind of a real dose of reality in what was going on in AI. I think U.S. is gonna remain the leader in AI, but the AI related stocks started coming down. So like if I were to analyze in my old hat, and this is the only time I’m going to talk about it. My old hat what’s happening with the market, I’d say it’s more a MAG 7 problem and not a MAGA problem.

Tucker [00:07:29] So it’s a deeper, so actually the markets are, you’re saying in this specific case with tech stocks, are taking like a real measure of the value of companies relative to foreign companies.

Scott Bessent [00:07:41] It’s sad, but if we look at the equal-weighted S&P, even after today’s move, down 4% in the year. In a long-term chart, you wouldn’t even notice that. And I think the most important thing that we can do, that I can do as the Treasury Secretary, that President Trump wants to do, is put in sound fundamentals for the underlying economy. And if the underlying economies good, if taxes are stable, if businesses have predictability, If we have cheap and plentiful energy, if we deregulate, if they treat our workforce well, then we’re going to have a great stock market.

Tucker [00:08:22] The president suggested in describing his plan for tariffs, he said, look, you could conceivably fund a lot of government with tariffs. And that would suggest that taxpayers fund less of the burden. And so do you expect that these will be accompanied by a congressionally approved tax cut for the middle class?

Scott Bessent [00:08:44] I just want to go back for a moment too, that one of the things that the terrorists are doing is we are pushing back against other economic systems. So the Chinese have a very different economic system. They have low cost, some would call it literally slave labor. They subsidize industry with subsidized loans. They have a lot of non-tariff barriers. Your show can’t be shown there. So, we’re pushing back against that, and with the tariff income, it can be substantial. And if we think, like a classical model of tariff-income would say, if there’s a 10% tariff, then the currency would appreciate about 40% of that, so 4% of it. Then the producer in the other country would eat about 4%. And then the US consumer might have a one-time price adjustment of 2%. So in a 10% tariff, maybe the consumer pays 2% of it. We saw there’s a study out recently from a group at MIT that shows that with President Trump’s first China tariffs, which were approximately 20%, the price level went up 0.7. So to answer your question If we could put on a 20% tariff and have the foreigners pay that and use that money to bring down our government deficit and keep taxes low here, that’s a very unique formula that hasn’t been tried in this country for a long time.

Tucker [00:10:29] And do you think, but it would require congressional participation to get there, to move tax rates, of course, they’re set by the Congress, so.

Scott Bessent [00:10:37] What we’re gonna have now, we are in this very odd, what I would call betwixt and between, between the tariff income and what Doge is doing in terms of the cutting government expenses. So CBO scoring and for 35 years, I was on the other side of the wall and I would always say, oh, well, CBO says this. And I didn’t really realize that kind of CBO scoring is a lot like Enron accounting, that it’s not real. and when you actually look at the real story. But you assumed it was on the outside? Sure, well, they’re experts. It’s a congressional budget office. It’s the congressional budget, budget office, and they’re well-intentioned people, they just have the nonsensical rules. Think about this, when all the scoring’s done over a 10-year window. Yes. So they just assume 1.7 or 1.8% economic growth Over the 10 years and that never moves whether you raise taxes or cut taxes, doesn’t move. So that’s what, like during the campaign, when Vice President Harris was announcing all these big tax increases she wanted to do and things like that, that the CBO was scoring her very well and President Trump wants to make the 2017 tax cuts permanent. That was kind of a blowout number. because obviously, growth’s gonna go up a lot when you cut taxes. So that was a long way of saying, we will not get credit for the tariffs in any bill because Congress is not going to legislate it. President’s doing it with executive authority, but the money will be coming in. We’ve already taken in several hundred million dollars on the China tariffs from his first term. We’ve taken about 35 billion a year just on the old tariffs, not on the new ones. So in the CBO window, that’s about $350 billion, which pays for a lot of the president’s promises on no tax on tips, no tax on social security, no taxes on overtime, making interest deductibility on autos made in the US. And think what the president is doing here. He is backing into an affordability solution for the bottom 50% of wagers because they’re the ones who will benefit from all four of those programs.

Tucker [00:13:17] So looking at, say, a year from now, so beginning of next April, do you have any sense of how much the U.S. government anticipates bringing in from the tariffs announced yesterday?

Scott Bessent [00:13:27] It’s going to be a moving target, but could it be anywhere from $300 billion to $600 billion a year? Sure. Okay. So that’s meaningful revenue. Very meaningful. But what will happen with tariffs over time, the ultimate goal of the tariffs and the president says all the time, bring your factory here. That’s the best solution toward getting away from a tariff wall. move your factory from China, from Mexico, from Vietnam, bring it here. So what will happen over time, we’ll have substantial tariff income in the beginning. Manufacturers will build their factory here, the tariffs will drop, but the revenue from the factories, they have from income taxes, from all the new jobs will go up. So we’ll be taking it in domestically as the tariffs drop and why are the tariffs dropping because we’re making it here and our trade deficits dropping.

Tucker [00:14:34] So you’ve obviously thought this through, you think that the United States has the necessary labor force for this transition?

Scott Bessent [00:14:43] I think we do. I think with AI, with automation, with so many of these factories are going to be new. They’re going to be smart factories that I think, we’ve got all the labor force we need. And what we are doing on the other side, one of the reasons other than my support for President Trump, that I came out from behind my desk, and I had a pretty good life, and I wanted to come out. and really tell people that I was worried about an impending financial calamity given the high levels of government spending that were leading to high levels and government debt. So what we are doing on one side, the president is reordering trade. On the other side, we are shedding excess labor in the federal government and bringing down federal borrowings? And then on the other side, that will give us the labor that we need for the new manufacturing. And we’re going to relever the private sector. So the private section, in essence, has been in recession during the Biden years. And this is an opportunity to right-size the federal government and unleash the private sector again, because it’s been hemmed down by excessive regulation, and it’s been crowded out by the government.

Tucker [00:16:12] Do you ever think, since your job is to, part of your job is to forecast like the effects of these policies, that you have, we’ve got probably one out of six people in this country’s here illegally, maybe 50 million illegal aliens, and the president said he wants to deport them. Then you have AI, and the projections there are massive labor market disruption, fewer people needed, you alluded to that a minute ago. Then you the tariffs, and like we can guess is their effect, but we don’t really know because we’ve never done it. and then you have the reaction from the rest of the world to those terms, like there’s so many huge factors that are effectively unknown, that are black boxes. Really, do you ever think like, wow, you know, it’s kind of hard to know what’s gonna happen. Look, I.

Scott Bessent [00:16:55] It is, and I always think that you can never be 100% sure, but you can stay within sight of guardrails and keep moving forward. I can’t remember. One of the Sunday morning shows I was on a couple weeks ago, the commentator asked me, she said, can you guarantee me there won’t be a recession? And I said, I can guarantee you anything. Well, yeah, there’s nothing that tells me there should be one I believe that this is going to work, just like President Reagan believed that supply side economics was going to, but what I do know the old system wasn’t working. I think that’s right. And if you look at a system that’s not working, you gotta be brave to change it. So what wasn’t workin’? Would it have been really fun for me to come in and just keep issuing a lot of debt and it’s almost like a bodybuilder’s taking steroids. Outside looks great, you’re muscular, inside you’re killing your vital organs. That’s what was going on here. But it would have been easy to keep pumping up the economy, borrowing a lot of money, creating a lot of government jobs. There was no controversy when we’re doing all that. But you were going to end up in a calamity. If you go back and look, you look at the financial crisis in 07, 08, economy looked great right up until then. You go back and you look at the end of the dot-com bubble, and then the whole credit problem, the fraud at WorldCom, Enron, some other companies. Economy looked great until it didn’t. And I think one of the things that we won’t get credit for, but that this administration will have done is avoiding a financial calamity. Think about it, that they’ve done an analysis. One of the reasons 9-11 happened, because the airlines didn’t wanna pay for reinforced doors. They kept pushing back, FAA didn’t push hard enough. And now we’ve got the reinforced doors, so I look at it, we’re putting on the reinforced doors before the crash.

Tucker [00:19:21] What’s the scramble, the lobbying scramble by foreign governments gonna be like over the next three months? Because the president said yesterday, you know, we’re putting a universal tariff, you know one standard, but then of course each country’s adjusted according to a lot of different factors, trade deficit, currency manipulation, regulation, and then tariffs. But you know this is all, as you said, a moving picture. It’s a developing situation. So like, if I’m, pick a country, you know Vietnam. I mean, I’m gonna really try to bring pressure to bear on this administration to adjust those numbers. Like, what’s that gonna be like?

Scott Bessent [00:19:55] It’s going to be the president’s decision, and I think his view is this has been going on for a long time for friends and foes, and we’re going to see where this plays out. I think what’s going be more important than the discussion with countries is the discussion with companies. So what do companies want to do? As President Trump said yesterday, best way to get around the tariffs, build your factory here. Yeah. And what can… We do here at Treasury to help that. We’re pushing to get the tax bill done so we can guarantee the low taxes, full depreciation within the first year. We’re working with Secretaries Burgum and Wright on energy security, and we’re working on getting the regulations down. President, I don’t know whether he talked about it yesterday or the day before, Taiwan Semi, or just semiconductor manufacturing in the world. Lee Zeldin, the EPA commissioner, is working to push through all the permits that they need because we’ve just gone into this regulatory morass where it takes so long to get things done in this country. So I think what will be more interesting are the individual company announcements more than the country announced.

Tucker [00:21:18] You want to sell to Americans, you’ve got to make it in America. Sure. Or pay the tariff. So how is China as a nation going to, I mean, this is such a big challenge, it’s directly in their face. It’s about every country on the globe, but it’s really most, more than any other country about China, I think it’s fair to say. How are they going to respond? What’s their retaliation look like?

Scott Bessent [00:21:37] Well, I don’t know if they can retaliate for a couple of reasons. If you look at the history, and I used to teach economic history, when you look at the history, we are the debtor nation. We have the trade deficits. The surplus nation is in the weaker position, because the Chinese business model, and Tucker, by the way, the Chinese business model and the economy are the most unbalanced, imbalanced in the history the modern world. We’ve never seen anything like this in terms of their export level relative to their GDP, relative to the population. So I think it is going to be very difficult for them to try to change the model. They’re in a deflationary recession slash depression right now. They’re trying to export their way out of it, and we can’t let them do that. But I think that when you think the Chinese manufacturing systems like that old Disney movie. with the brooms carrying the buckets. There’s nothing you can do, like that’s their business model. It’s not going to stop. Now what could happen if you were to say, Scott, what’s the dream scenario? That somehow there could be a deal where the US and China, we want more manufacturing, which would mean a smaller part of the economy’s consumption. And the Chinese have this imbalanced economy. with too much manufacturing and actually the Chinese consumers really get the short end of the stick. So Chinese households, they’re caught in what’s called the middle income trap that could we do something together to say, okay, you rebalance, you consume more, manufacture less, we are going to consume less and manufacture more. We’ll be military rivals. There’ll still be an economic rivalry, but we’re gonna level the playing field by a lot. Now, that’s not gonna happen tomorrow. That’s not going to happen in a month, but over the next few years, they may have to come around because I think their business model is broken. I think President Trump’s broken their business model with these tariffs.

Tucker [00:24:01] So you’re describing, you know, the famous scenario where if you take a bank loan and the bank is in charge, they can repossess whatever you barred against, but if you take a big enough loan, you’re kind of in charge of the bank. Exactly. And they’ve just got such a big deficit with us that they need our markets.

Scott Bessent [00:24:20] They can’t survive without them.

Tucker [00:24:23] Are you confident that there’s a clear enough channel of communication between the two governments that the details can be worked out and that nothing will go crazy in the meantime?

Scott Bessent [00:24:31] Well, I think what gives me a lot of confidence is the relationship between President Trump and Chairman Xi, that when you have a direct line of communication at the very top, then I think it’s very difficult for things to go haywire. What about the rest of the world? Look, the Europeans, we look back and there was a famous meeting where President Trump told the Europeans that you’re insane for building Nord Stream 2. What are you doing? You already get most of your energy from Russia and you’re going to double down on it? And they did. And look what happened. So we blew it up. Somebody did. Some Norwegian fishermen bumped into it is what I read, but look, the Europeans go kicking and screaming, but I think they’re going to have to rebalance, too. Germany has a very imbalanced export economy, and they were on the verge of deindustrialization. They were the opposite of us. They had expensive energy. Yes, they were depending on. Italy and the countries in the south to keep the euro suppressed, and they were selling into China, and now China is becoming their competitor.

Tucker [00:26:01] So you said at the outset, the first example of the analogy that you used was President Reagan’s first term, obviously big win in 80, recession of 82, wipeout, and then the biggest landslide in history in 84. So you’re suggesting by saying that that the fruits were obvious within the first term within four years. They were.

Scott Bessent [00:26:24] The only difference now is there was a lot of competition back then, but there’s a level of civility and the real danger here, if there were a midterm law, and I don’t think there has to be, you know what’s going to happen. I know what is going to happened. Democratic House is going immediately to impeachment for something. Of course. Like the law fair is going start again. Yes. And I think the American people are going to hate it again. So. Einstein’s definition of insanity, doing the same thing again and again and expecting a different outcome.

Tucker [00:26:56] Do you think that and this is really aimed at the people who support President Trump and who agree with you Wholeheartedly that the current system was really bad and like drive across the country. You’ll see how bad it has been horrible It lowered life expectancy, but the people are hoping that yesterday’s move will lead to a Demonstrably brighter future within four years. Is it your sincere prediction that with you know within four years will say actually that kind of worked I I believe

Scott Bessent [00:27:27] it’s going to work. And I know that what we were doing wasn’t working. Yes. So I think we have to try this and I have a high confidence ratio, it’s gonna work. And I have very high confidence ration. The good news is, we have President Trump’s previous term when everyone said none of this was gonna work, oh, the China terrorists are gonna do this, they’re gonna cause inflation, they didn’t. this is going to happen to working, it’s going to be bad for working class Americans. Well, guess what? Working class Americans, that hourly workers did better than supervisory workers. The bottom 50% of households, their net worth increased faster than the top 10% of households. And look, I’m not happy with what’s going on in the market today, but the distribution of equities across households The top 10% of Americans own 88% of equities, 88% of the stock market. The next 40% owns 12% of the stop market. The bottom 50% has debt. They have credit card bills. They rent their homes. They have auto loans. And we’ve got to give them some relief. I was struck by the statistic from last year.

Tucker [00:28:49] That’s the message, right?

Scott Bessent [00:28:50] Just as a bystander, I’m like, wow, okay. All right, or that I like the examples, and I was really struck by two different statistics last year. Summer of 2024, Americans took more European vacations than they had in history. Summer of 2024, more Americans were using food banks than they ever have in history, I went into two food banks that near my hometown, to ask, what’s the story? And they said, you know, it really takes, for a lot of people, it’s a loss of dignity to walk in a food bank, of course. But they were seeing something, a new phenomenon, that it wasn’t their traditional clientele, wasn’t people who’d lost their homes, wasn’ t people out on the street. These were working families who could no longer, $100 at the grocery store, that basket of groceries every week. They were missing five, six, seven things, and they were coming to the food bank to top up. So that’s not a great America. Record European vacation, record food banks. And no reason we can’t keep the record European vacations going, but we got to take care of these other people. But, and you know what? That they don’t want handouts. The Democrats had this strategy called compensate the loser. So first of all, the name of that strategy, I don’t think the bottom 50% of Americans are losers. I think the system hasn’t worked for them. I think that they are winners. It’s just a bad system. So we are going to fix the system. And look, they want good jobs. They want their kids to do better than they did. They wanna own a home. They wanna pay down their debt. That this isn’t hard. and… I think that we can do this in the next four years.

Tucker [00:30:54] You grew up in a middle-class, working-class background. You were very successful, lived in rich-person world for a long time. While this was all going on, and I just have to ask you candidly, were you ever at dinner with people who were like, wow, you know, we’re doing great? I lived in a rich- person world too. I’m not criticizing you at all. But like, did anyone at dinner ever say, wow, I just tried to drive somewhere for a hundred miles and this country doesn’t look good. Like, people are not thriving. Was there any sense of that?

Scott Bessent [00:31:20] No, they were more, my NetJet was an hour late, I had the worst day, my Jet was an hour late. You can’t believe, oh my God, I’m going to switch charter companies. So that’s, and look Tucker, I am especially attuned to what I think is going on with the United States, because I will tell you, my family was very affluent, early settlers, we were very affluent for about 250 years. My dad made a lot of bad financial choices, so when I was born, first 6, 7, 8 years, we were affluent. He lost everything, and so I’ve seen what that’s like. I’ve see both sides that I was fortunate enough to be able to make it back, and I know what economic insecurity is like, and I don’t think people should have to have that, or if you want to work hard, and people want to hard. You were out on the campaign trail of President Trump, I was out on a campaign trail, and I got to say, one of the most… So I went for the final. two stops in Pittsburgh, Grand Rapids, Michigan. Pittsburgh in the Duquesne Arena walk in and there are the union workers, the steel workers, they got on their hats, they got in their vests, they’re with their children. And it’s very moving. Like they just want a better life. They want their communities to be sound. They want the kids to do better. They want a little league baseball. like They don’t care what’s going on in Madison Avenue. They don’ know what the hot new restaurant is in Paris. And that President Trump somehow has assembled this incredible coalition of Elon Musk, the richest man in the world, and those folks who were in the Rose Garden yesterday, and those people I saw at the Duquesne Arena. And I think it’s unbelievable.

Tucker [00:33:27] interesting. What do you worry about as Treasury Secretary? Obviously, probably like lying bed at night, thinking about all the things that go wrong with the US economy. What are your, if you could be honest, what are your biggest worries?

Scott Bessent [00:33:40] So, to the extent that in my business career, I had a strong point, I think it was risk management. So I do myself two things, the United States leading bond salesman, and I think that with what’s going on, I’m going to have a better and better story to tell as we’re getting our economic health and our fiscal health in order, and then I try to imagine What could go very wrong? What what would we do if there were another outbreak similar to COVID? You can’t worry about things like that, but I worry about a kinetic war somewhere. What would we in the event of something that happened? And what I try to do is create the situation where I can worry a little less every day. So I’ll tell you I came in I was confirmed on January 28th, and during the month of January, 10-year interest rates, which is probably the most important rate in the country, mortgages are based on that, business and capital formation is based on, that I came in and that it almost spiked to 5%. And I think 5% can be an uncomfortable area for the economy, for Treasury who has to issue a lot of bonds. You know, now that I’ve gotten in, I worry a little less, but I still worry we’ve got a tremendous amount of debt to roll, and I worry that we aren’t going to do the smart cuts and the focus on waste, fraud, and abuse. I worry if that gets sidelined. And then on the other side, I worry that… the tax bill somehow gets bogged down, we could have the largest tax increase in history. Or I worry that the normal geopolitical things, whether it’s Iran, Taiwan. that something goes haywire between them.

Tucker [00:35:55] in Ukraine. So you began your job description by saying you’re a bond salesman, you’re selling America’s debt to the world. Yep. And I know that was like a big part of the portfolio as the transition was envisioning it, like who can make the case for American bonds to the world? How would your case, are you confident you can do that? and how is your pitch changing after yesterday?

Scott Bessent [00:36:22] As I said right now, we’re in this strange betwixt in between because we are going to take in substantial tariff revenue and what Doge is doing is substantially cutting expenses, but we’re not getting credit for it right now. But I think market’s starting to get a hand of it. So, the 10-year bond having almost peaked at five is now through four. way to think about it is every hundred, every basis points, about a billion dollars in savings. So we’ve saved a hundred billion dollars. And that’s probably not going to happen that quickly again. But I think that we are setting the sales for a much better fiscal time. And people don’t have to say the US is out of control. The US is going to default. We’re not. And I think every day, my case gets better. And if we were to just imagine a very reductionist formula for government. So G equals S minus T, spending minus taxes. For spending, our side, the Republicans, we like to spend, but less than the Democrats. But both sides like to spin. And then minus t, Democrats like higher taxes. We like lower taxes. What if the S actually went down? And I think, to me, that’s the exciting part, that that’s been unthinkable in everybody’s calculation. No one’s even really seriously raised it, including Ronald Reagan, by the way. Yeah. And look, I think President Reagan had a different agenda that he ramped up defense spending and remember, oh, he’s crazy, it’s this, it is going to break the budget, Star Wars is crazy, he is a mad man, and then the Iron Curtain went down, and we were able to. So, it was actually a Soviet term, and he used the Soviet strategy on the Russians Thanks for watching! Escalate to de-escalate. Yeah, so we escalated military spending they tried to keep up and then they collapse You know, again, everything’s easy in hindsight, but I think here, what we’re doing in terms of bringing down these credible levels of spending, but more importantly, I tell anyone who’ll listen, I said, remember, DOGE is the Office of Government Efficiency, not elimination, not extinction. So what if we can actually do a better job with less? seems inconceivable, but when I see what’s going on in a lot of these government agencies, it’s unbelievable. And if you think, I’ve lived in Manhattan, I lived in Florida. Roughly, state of New York, state of Florida have the same number of people. Actually, Florida has a few more now. New York budget is about $235 billion. Florida budget is $125 billion. How do they do that? Oh yeah, and there’s no income tax in Florida. Oh yeah and the roads are better and you go and get your driver’s license and it takes 15 minutes, not five hours. So I think can we make the rest of America look more like Florida and less like New York or one day Is New York gonna look more like Florida?

Tucker [00:40:17] So do you think after four years we will see an actual net reduction in government spending thanks to doge inflation adjusted. Yes.

Scott Bessent [00:40:27] How long do you think Elon’s in for? I think that Elon, that day to day, I don’t know, but I think his imprint is gonna be with us a long time. And I think. mainstream media has tried to demonize Doge and all the folks who work with him. And I tell you, we have a couple of Treasury, a couple at IRS, they’re Treasury employees who I hired, I interviewed, and I’ll tell you there’s this one fellow, Tom Krause, he was on TV with Bret Baier the other night, and Tom’s incredible. He’s done a hundred billion dollars of tech mergers with my investment business I would have hired him, I don’t think I could have afforded him. And he is doing this for the good of his country. He came in without touching any of the payment systems. mistruths that were spread by the Washington Post. He has analyzed the system, and within six weeks, pointed at all the vulnerabilities. There’s a young man named Sam Kyrgos, who was on Laura Ingraham with me the other night, and that was my idea. Let’s bring him out of the shadows, and let’s make this demonization stop. And like this young man, other than the fact he only owns one pair of pants, which he likes telling everyone, you or I would be happy if our daughter brought him home. He’s a patriot, he’s working hard for the country, and he’s analytical. And the things that he’s seen at the IRS, just in their tech systems, and that’s all he does. You know, Elon has a shirt that he wears under his jacket and he’ll flash it every once in a while and it says tech support. And that’s what we’re getting. It is we’ve got a blockbuster style government and we should be on Netflix where we’re hailing cabs and we’re in an uber economy. Why can’t the government be in the gig economy? Not hard. Well, I guess you were-

Tucker [00:42:39] question what who runs the Federal Reserve exactly? I don’t really how can you have this like pivotal entity institution that obviously has like the most direct effect on markets of any and it does seem outside of political control. What is that? Well, look, I, I

Scott Bessent [00:42:59] I think that I, during my confirmation hearing and I was actually at a dinner that Jerome Powell was at last night, at my confirmation hearing, I said, you know, I’m only going to talk about the mistakes the Federal Reserve has made in the past. I won’t talk about the ones they’re gonna make in the future, right? But I think it is important for monetary policy that they are walled off, that some of the other things they do, regulation, they got into DEI, they get into climate. I actually think that that impinges on their monetary policy and makes them vulnerable. So I think that they should focus on monetary policy, doing the best that they can for the American economy, the American people, keeping inflation low. And then the rest, there are a lot of other banking agencies too. So the Fed controls the weather now too? What were they doing? Well, I will tell you there’s something that the Treasury Secretary chairs something called the Financial Stability Oversight Council and it’s all the financial regulators. And I think it was two weeks before Silicon Valley Bank went under, FSOC issued a report And guess what they said? The biggest risk to the financial system was Not that there was a large bank in California that was having a slow motion run on its assets and that it would cause another bank failure than another bank’s failure. It was climate. As far as I can see, climate’s been pretty good. They failed. The regulators failed. And I think that’s what people are getting sick of. And it’s back to one of my favorite phrases that President Trump uses, common sense. It’s just common sense that if you have a whole bunch of deposits that could leave your bank with a click, you shouldn’t have all these long-term assets. They were too busy worrying about the weather, and there was also some degree of regulatory capture. Seems hard to believe to the average citizen, the CEO of Silicon Valley Bank was on the board of the San Francisco Federal Reserve, who was his chief regulator. They gonna tell that guy what to do? Why is gold moving around the world in such huge quantities right now? Well, a couple of things. It’s moving. Physically, it’s moving because of potential tariffs here. It was unclear whether we were going to exempt gold from tariffs, which I believe we have. So there was a big move out of vaults in Switzerland, out of a vaults and London to get it into. And look at that. There are a lot of different stores of value over time. Bitcoin’s becoming a store of value. Gold has historically been a store a value. I think what’s interesting is where do we see the gold demand coming from? A huge amount is from China. Yes. Where, as I said, they’re in the middle of an economic recession slash depression. And people don’t trust the Chinese currency. because they have capital controls. There are 1.4 billion Chinese who want to get their money out and they won’t let them. They will let them buy gold.

Tucker [00:46:56] So that’s the response you think, but it’s just, do you find it interesting that even now, 2025, when everything is abstract and digital, that gold is still widely believed globally to be a reliable store of value?

Scott Bessent [00:47:10] I think that gold has a lot of history going with it. friend of mine’s grandmother during Russia had a financial crisis in 98, then they had a big inflation and a friend of mines, grandmother went out and bought 18 bicycles and put them in her apartment. And that was her store of value. Yes. So how’d she do on the bike investment? Great. Great. I wish I did that well. So, but Gold also has other applications, a lot of applications, jewelry in India, but it’s something that historically people have all agreed on, and gold does not have, gold can’t have a fiscal problem. Gold cannot have a gigantic budget deficit. Gold cannot have the, a. a war. So just the fact that it is this isolated thing makes it very interesting and the fact the entire global trading system, until Richard Nixon took us off, was tied to gold. So you’re not anti-gold? Oh no, no, when I had my fun, I think people might’ve called me a gold bug. How’d you wind up interacting with Zelensky? President asked me to go to Kiev. Well, he actually asked me to lead the economic agreement. That was part of his peace plan I think it’s important to look at the arc of President Trump’s peace plan. And he had sequenced it really well. We’re going to sign a deal with Ukrainians and it’ll do several things. One, it will make the U.S. and Ukraine partners, link us closer together. 2. It will be a symbol to Russian leadership that the U.S. isn’t abandoning Ukraine. But importantly, three, it will show the American people that we have an economic stake and that we haven’t just been doing these massive grants, which have been the history of USAID. Of course. So Ukraine succeeds, we succeed, and it could be a long-term partnership. Now, President, I thought it was important… to take the agreement to Kiev and present it to President Zelensky. Everyone’s telling me, I don’t know, having me to in Vienna, he’s gonna be at the Munich Security Conference a few days later. I want to go there and discuss it with him. And that’s how I ended up going to Kiev. Very interesting going to Kyiv. Fly to Poland, then you get on, I don’t know if you’ve been on it, get on this night train for 10 hours and you arrive at Kyiv at 8.30 in the morning. And for anyone who, they said, oh, the President Trump’s selling out to the Russians, not selling out the Russians. The Russians bombed Kyiv, four hours before I got there, they hadn’t bombed since November. So the Russians didn’t like the look of this deal because it thought that it was actually something durable for the US people and the Ukrainian people. So what happened? President Zelensky was in the mood to sign the deal that day. We had a spirited discussion and I said to him, you’ve got 50 reporters out there. I am here. to show that there is no daylight between the American people, the Russian people, between, excuse me, the Ukrainian people, between the American leadership and Ukrainian leadership. And I said, you’ve opened up daylight sides of the Grand Canyon. What are we gonna go out and tell those people? They said, tell them I’m gonna sign the deal in Munich. I said so you’re gonna sign the deal when you see Vice President Vance and Secretary of State Rubio in Munich. Yes. He didn’t sign it there. There was a lot of back and forth the following week. They’re begging to come to the White House and should make him sign the deal before he comes. And then he got to the Oval Office and blew up what should have been the easiest thing to do in the world. He was supposed to show up, have a press conference. We’re gonna have a private lunch. If he had anything on his mind, They’re gonna be nine of us, nine of them, in the White House dining room. He could have aired his grievances then. And there’s a famous photo in the East Wing ballroom of everything laid out on the table to be signed. And it never got signed.

Tucker [00:52:18] So this is a non-elected president of a client state whose bureaucrats are being paid directly by American taxpayers, including their retirement accounts are funded by us.

Scott Bessent [00:52:27] they have the lowest retirement age in Europe. It’s 60. Put it in contrast, France is 62.

Tucker [00:52:36] And we’re paying for that. And so at a certain point, you know, you wouldn’t expect a man like that in a highly precarious position, I think it’s fair to say, to like assume a high handed tone with American officials and berate them and sniff a lot and say, you knows, basically act like a crazy person. Like how do you account for that? The arrogance? What is that? Look a couple

Scott Bessent [00:52:59] couple of things, is he was a performer, kind of a vaudevillian, and he was an ordinary person thrown into a fraught time, rose to the occasion, was heroic, and I think is stuck. And I think under a tremendous amount of pressure, I think that some of the government officials surrounding and the cabinet are very good. I think some of the people around him, he’s not getting the best advice that his advisors are not. And I think if we go back to the agreement, I think one of the great things about the agreement is it makes sure that the money comes to the American people and the Ukrainian people. Because Tucker, let me tell you what the agreement wasn’t. It wasn’t one of these rapacious Chinese deals where it’s sign over your mind, sign over report, or it wasn’t a loan to own. Here’s the loan, you’re never gonna be able to pay it back, we’re gonna get this. It’s a genuine economic partnership. They put in assets, we can put in loans from our overseas banks, we put in American know-how, and we don’t make any money unless they make money. And you know who doesn’t like that? People with their hand in the till. Right. Right, because we were regulating the flow of the money. Ah. So I think that’s part of the glitch. I am hopeful. that it was a bug, not a feature of the system, and that that’s been fixed. We’re expecting a Ukrainian technical team beginning of next week, and I’m hopeful we can get this thing signed and go back to a win-win situation because President Trump, I didn’t give you the full arc of the deal, President Trump wanted to create this deal with the Ukrainians. then be able to go to Russian leadership with and show them. we do stand with the Ukrainians, but on an economic basis. And then the Russians would be incentivized to come to the table also. And so the sequencing has been thrown off, but I think we can.

Tucker [00:55:31] fix it. Are we ever going to get an audit of where all of our billions went, where all the weapons we sent, what happened to all the cash, all the pallets of hundred dollar bills, like where are they now? Why? Why is it hard to get in audit of what happened in the money? I don’t know.

Scott Bessent [00:55:48] In my life, I always try to look forward, and I think if this deal works, then that money could end up being small change. A good way to think about it, when the Iron Curtain came down, Ukraine and Poland’s economies were roughly the same size. Poland is three and a half or four times larger now. Yes. Poland is going to have one of the highest per capita GDPs. in the world, higher than some Western European countries. For sure. Ukraine, to your point, because of various kleptocracy aspects, has been held back. So hopefully, with U.S. assistance and President Trump engineering this peace deal, Ukrainian people can have a better future.

Tucker [00:56:41] For a treasurer’s secretary, you’re a very capable diplomat, I must say, very diplomatic language. Last question, how do you, so because this is all soon, you just going back to the tariff announcement yesterday, and because it’s like, it really is a total departure from what all of us have grown up with and our expectations and however much you support it, it’s new. And people are freaked out about it. How do you keep message discipline in an administration, in any administration, and this one specifically? How do you decide? how you’re going to explain this, who’s going to to explain it, how do you keep messages from contradicting one another, what is that process like?

Scott Bessent [00:57:18] We all take President Trump’s lead. We know we had a meeting yesterday morning, we had meeting after the announcement in the Rose Garden before we went out doing media and as you know, he’s his own best spokesman. Nobody can do it better and then we fan out and we are all unified behind this and his vision, that’s why we’re here. If you didn’t want to be part of it, you shouldn’t be here.

Tucker [00:57:49] But do you ever say like, you know, maybe this is someone who can reassure potential bond buyers, investors in markets. This person scares the crap out of markets. Like, let’s get the guy who reassures markets.

Scott Bessent [00:58:02] The one thing I will say that no one should listen to anyone in the markets talk about the US dollar other than President Trump or myself. We are the only ones who speak for this administration, the United States government on dollar policy. I can tell you, we have a strong dollar policy and we’re putting in all of the necessary ingredients to make sure the dollar is strong over the long run. Can it go up and down? on a Bloomberg terminal over the short run, sure, can individual bilateral moves happen between the dollar and the Mexican currency, the dollar in the yen. Sure, that’s what I made my living going. I’m glad it doesn’t. But over time, if we put in solid economic fundamentals and do this transformative program, then the dollar is gonna do great and the American people are gonna do right. Secretary, thank you very much. Thank you. Appreciate it.