The Michael Knowles Show - March 30, 2025


Secretary of the Treasury & Michael Knowles： Scott Bessent White House Interview


Episode Stats

Length

8 minutes

Words per Minute

158.46115

Word Count

1,281

Sentence Count

99


Summary

In this episode, I sit down with Treasury Secretary Scott Besson to discuss the economy and the economy's impact on the deficit and debt. We also discuss how to deal with the fiscal hawks in Congress, and how to balance the budget.


Transcript

00:00:01.000 It's wonderful to come to the White House.
00:00:11.600 It's always wonderful to interview top administration officials.
00:00:15.020 And it's especially wonderful to interview one of the most important men in the administration
00:00:19.040 and in the world, the Treasury Secretary, Scott Besson.
00:00:22.880 Mr. Secretary, thank you so much for taking the time.
00:00:24.880 Thanks for having me.
00:00:25.880 So I'll just jump right in.
00:00:27.440 You have made a priority, the reduction of long term interest rates and of mortgage rates.
00:00:33.800 And since the inauguration, both of those have come down materially.
00:00:37.180 So this has obviously been very effective.
00:00:39.720 Why is it so important for those two objectives to be achieved?
00:00:44.680 Good.
00:00:45.680 It's a great question.
00:00:46.680 And thanks for asking that the Biden administration created an affordability crisis.
00:00:52.720 One of the key problems in the affordability crisis has been a home affordability.
00:00:59.080 A big component of home affordability is mortgage rates.
00:01:02.460 So the Fed had to go on a very aggressive hiking cycle to bring down inflation.
00:01:08.820 We hope that the Biden inflation is dead.
00:01:12.200 We believe that everything President Trump's agenda is doing on the economy, making the tax cuts permanent, bringing down regulation, cutting regulations, bringing down energy prices will contribute to lower rates.
00:01:31.360 And so what we've seen, we've seen lower tenure rates.
00:01:34.720 And we've also seen the spread between interest rates and mortgages come in as we at Treasury have talked about bank deregulation.
00:01:43.680 So you mentioned the tax cuts.
00:01:47.000 I know that you've just met with the big six to try to make Trump's tax cuts both extended and expanded.
00:01:54.360 And on the campaign trail, President Trump was proposing no tax on tips, no tax on Social Security.
00:02:00.540 But you also have to deal with the fiscal hawks on Capitol Hill who are worried that that could exacerbate the budget deficit.
00:02:08.300 So how are those talks progressing?
00:02:10.080 Where do you think you're going to land, not just on the Trump tax cuts, but on the expansion?
00:02:16.200 Great.
00:02:16.660 So, again, very important question.
00:02:19.860 And for us, it's pass-fail.
00:02:21.540 If we don't get this done, it's going to be the biggest tax cut in the history of the United States, excuse me, biggest tax hike in the history of the United States, $4.5 trillion.
00:02:31.280 And you want to talk about blowing out the budget, the deficit, the long-term projections, there'll be no coming back from that and the economic calamity.
00:02:39.560 And so when you talk about the big six, the big six that I lead, it's myself, Kevin Hassett, who's NEC chair, Leader Thune, Speaker Johnson, Senator Crapo, and Chairman Jason Smith.
00:02:55.220 And we've got a great relationship.
00:02:56.560 We had an incredibly productive meeting the other day, and I think the story that the mainstream media doesn't want to tell, we can see that the Democrats are broken and in disarray, but the Republicans are the opposite.
00:03:11.580 And because of President Trump's leadership, Speaker Johnson did a great job.
00:03:17.600 He got the reconciliation motion through the House the first time.
00:03:22.940 We got a clean, continuing resolution bill, first vote.
00:03:27.340 Everyone said it couldn't be done.
00:03:29.300 Now the Senate has the House instructions.
00:03:33.040 They are going to put their stamp on it.
00:03:35.780 And it was a very productive meeting.
00:03:38.880 I was very impressed with Leader Thune's proposed timeline.
00:03:43.080 And it looks like this could get done sometime in the early summer.
00:03:48.600 So in other words, with regard to the fiscal hawks, because it's pass-fail, because the Republicans on Capitol Hill don't want to be responsible for the largest tax hike ever,
00:03:59.760 you're confident that the bill will get through?
00:04:01.960 Look, at the end of the day, there's going to be something for everybody.
00:04:06.220 There's going to be a very growthy component.
00:04:08.640 We're going to bring back the full expensing.
00:04:10.600 We may put in expensing of factories to reshore manufacturing for the bottom 50% of wage earners who have been killed by the previous administration.
00:04:21.480 As you mentioned, no tax on tips, no tax on Social Security, no tax on overtime.
00:04:25.900 We're going to make auto loans deductible again if your car is made in the United States.
00:04:31.340 And that will also address the affordability crisis.
00:04:34.720 And then we will have spending cuts.
00:04:37.080 This Green New Deal is out of control.
00:04:40.140 The CBO scored it at about $250 billion over 10 years.
00:04:45.600 It's up 2.5x.
00:04:47.120 And there are people who think it's going to be over a trillion dollars.
00:04:49.720 So it's very easy to rein that in.
00:04:53.900 And if you want to talk about deficit hawks, I'm a deficit hawk, but I'm also a realist.
00:04:59.440 Every $300 billion that we cut is 1% of GDP.
00:05:03.500 We didn't get here in a year.
00:05:05.820 And we're going to bring it down smartly over the next four years, get back to the long-term trend, and try to balance the budget in 10.
00:05:14.920 Before I let you go, one question that comes up to my mind, because you mentioned reshoring American manufacturing,
00:05:21.720 probably the single word that people are associating with President Trump's economic plan, tariffs.
00:05:27.980 I think he said that's his favorite word, and his second favorite word is reciprocal.
00:05:32.160 So Trump has run on tariffs, and there have been varying justifications for the tariffs.
00:05:38.260 One, in order to reduce trade barriers from other countries so that we would then reduce our tariffs so we have more trade.
00:05:44.240 Two, reshoring American manufacturing.
00:05:47.700 Three, raising revenue.
00:05:49.680 All of which sound great to me.
00:05:51.900 However, they do seem to be a little bit in conflict with each other.
00:05:55.140 So if, for instance, if we reduce all the trade barriers, then you're probably not going to get the jobs, you're not going to get the revenue.
00:06:02.280 If you do get the jobs, if we do reshore American manufacturing, that's great, but you're not going to get the revenue.
00:06:07.040 So there are these competing desires that the tariffs could serve.
00:06:12.400 As Treasury Secretary, how are you ranking those priorities?
00:06:18.040 Well, I don't do the ranking.
00:06:19.960 President Trump does the ranking.
00:06:21.880 And look, President Trump, if we go back, Alexander Hamilton was the original tariff man.
00:06:26.420 Why did he do it?
00:06:27.520 He did it to raise revenues for the new country, and he did it to protect U.S. industry.
00:06:33.460 President Trump has added a third leg for negotiations, whether it's closing the border, the immigration, the fentanyl crisis, or as a way to prevent people from trading with Venezuela.
00:06:47.660 So I think it'll become clearer after April 2nd.
00:06:52.660 And to your part on reciprocal tariffs, the tariff component is just one component.
00:06:59.300 I think if we were to look, a lot of the stated tariffs are lower than one would think.
00:07:05.620 But it's the non-tariff barriers that happen both at the port of entry.
00:07:10.260 It can be the usage standards.
00:07:13.480 It can be food standards.
00:07:15.160 It could be kind of made-up safety standards that they hold our cars or products to that they don't get held to.
00:07:23.360 So the non-tariff barriers are going to be addressed also.
00:07:27.220 It could be the cheap labor.
00:07:29.500 It could be government subsidies.
00:07:31.460 It could be currency manipulation.
00:07:33.700 So all of that is going to be included in the April 2nd.
00:07:37.720 But I think what's really going to get the economy going, we're going to have the tariffs.
00:07:43.580 We'll get more certainty on those from April 2nd onward.
00:07:46.960 And then early summer, we're going to get this tax bill done.
00:07:51.100 You know, that's a very fitting answer for the Trump administration, which counts as one of its great strengths.
00:07:58.520 Unpredictability is wait and see when we get the announcement on April 2nd.
00:08:02.700 Wonderful.
00:08:03.140 Mr. Secretary, thank you so much for taking this time.
00:08:04.580 Good to see you.