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Listening to live testimony of Scott Bessen's President Elect Trumps selection to run the Treasury Department. A familiar voice here on Bloomberg TV and radio. As we've spent time with mister Bess and you're at this table on Balance of Power, and of course you've seen him on other programs. It is expected he will be confirmed. I'm Joe Matthew alongside
Kaylee Lions in Washington. Thanks for being with us here as we continue our coverage of the confirmation hearing throughout this week, all leading up of course to the inauguration of Donald Trump on Monday, and we'll have special coverage for you then. Kaylee Lyons interesting Scott Besson going at it with Democrats and Republicans. Not terribly controver Ruschel today. There were some questions about taxes. There were some questions of course about tariffs. The implications when it comes to
inflation and the FED. But this would be one of the easier walks for I think we can say Donald Trump's nominees absolutely.
Scott Besstt widely seen by frankly people on both sides of the aisle as a qualified candidate to be Treasury Secretary. This hearing was not likely to make or break his confirmation prospects, as it was expected that he would be confirmed pretty easily prior to him giving answers to the many questions that these twenty seven senators asked of him today. But yes, it did focus primarily on the two tees, taxes and tariffs. He talked about how he would be it as an economic crisis if the tax cuts of
twenty seventeen were allowed to expire. He kind of pushed back on the idea that tariffs were going to translate into higher prices for Americans and interesting, when pressed by Democratic Senator Elizabeth Warren on the debt ceiling, suggested that, well, he wants to do a market survey. He's not really sure what the best path forward on the debt ceiling would be. If Donald Trump were to tell him he wants the debt ceiling repealed, so he said he'd work with him to do it.
It's clearly there to enact the Trump agenda. It's interesting, I'll tell you a lot of these conversations sound a lot like the ones that we had with Scott Besson before he was attapped to be secretary, because we had many of the same questions when it came to taxes and tariffs. The line that endures extending the Trump tax cuts is quote, the single most important economic issue in the US today.
And on that note, we want to turn to someone who we also have had many conversations with about taxes and tariffs. Joe Lavornia is joining us now here on balance of Power. He's former chief economist at the National Economic Council during the first Donald Trump administration and is now managing director and chief Economists for SMBC Neco Securities America. Welcome back to Bloomberg, Joe. That was obviously a lengthy
testimony from Scott Besson. Overall, do you think he did a good job pleading his case or did he leave you with some questions?
No, no questions. He did a phenomenal job. I knew he was going to do a great job and it speaks to just his qualifications in the fact he's extraordinarily thoughtful in all of his answers. I thought it was fantastic.
So what extent, Joe, I'm curious your thoughts on this, because we've talked about this, and we talked about the job before Scott Besstt was selected. To what extent is it his job? And you could really apply this to any of the nominees to enact the Trump agenda, to do what Donald Trump says, or is he there to advise the president and say no when he needs to?
Well no, I mean the job you're serving at the pleasure of the president, and all the cabinet nominees are going to be responsible for implementing President Trump's visions for
which he got elected for. Certainly, there are options, and my experience has been that when you talk to the president, you will give you your maybe your top option, maybe your second option, and maybe the third option, which let's say even will be suboptimal, but that it is an option, and then the president decides and then you implement that agenda. So you are there an advisory counseling way, and again
you're working for the president. You want to put his agenda, and it seems to me that this time around, having had a lot of experience having done this once before, President Trump clearly has the people that have his vision and can best implement such policies.
And if that.
Vision were to include a renewed push to repeal the debt ceiling entirely, Joe, if you were in Scott Scott Best and Shoes are still advising Donald Trump in the second administration, what would you think about pursuing that kind of policy of removing what is supposed to be a check on fiscal impulses.
Yeah, the thing is that it hasn't been a check on these Cisco impulses. We've gone through countless dozens of different debt ceiling scenarios. And maybe it depends whoever is in power, but there are plenty of prominent Democrats that in the past have said this debt ceiling is silly, we should get rid of it. And maybe that's what
we should do. I don't know. I mean, ultimately the debt ceiling gets increased, then we just have a bunch of market this location that doesn't serve anybody's interest, but it gets past again increased. So President Trump wants to get rid of the death ceiling limit then so bit
it has to go through Congress. But I don't think the debt ceiling at this point has done much of anything, just has been a distraction for bigger fiscal issues, which clearly we have to deal with given how big the deficits are.
It's interesting We talked to Miami Guinness about this recently. She, like some lawmakers, would say Joe that at least it's a it's a chance to stop and think it's a speed limit. It gives you, it's a rest stop and say are we sure we want to do this? And we kind of recalibrate. Maybe there'll be some coverage of what our debt levels around and it gets people thinking about it. Is that reminder the most.
Important No, because we're one twenty No, because we're one twenty debt to GDP and we ran and the current administration we ran nearly a seven percent budget deficit to GDP with full employment. So what is that debt ceiling given us? Or give a stop to think just well, we're yeah, oh you said that, but I mean to me, it's not effective in dealing with bigger issues. But again, they'll be the President of elects decision whether he want
wants to pursue that. More importantly is where we could figure out ways to raise revenue, and even more importantly, because revenues have been right in line with their long term average, but figure out ways that we could get rid of some of this waste, abuse and fraud in the system, which, by the way, the GAO, the Government Accountability Office, the Congressional watchdog. You can look at recent studies,
there's hundreds of billions of dollars we could save. So I'm optimistic that there are going to be some meaningful proposals on the spending side that actually could help at least stabilize this and get us down to where Scott wants to see budget devisits the GDP around three percent. That to me is very doable well.
And he reiterated repeatedly throughout this hearing that he views the United States as not having a revenue problem but having a spending problem. But Joe, to what extent should we be worried about what would happen economically if there were to be a materially large pullback in government spending. When you have the likes of Elon Musk and vivik Ramaswami quoting figures in the trillions of dollars. Whether or not that's realistic, well.
Remember trillions of dollars, it's just huge money scaling over a ten year period. The fact look, the last private GDP has been growing pretty strongly near three percent, but government spending is growing even faster. If we lower government spending, forwardlooking financial markets will react very positively. Equity markets will go up, more capital be available, they'll be less crowding out,
which means interest rates can fall. So if there's a period of time under which there is some friction as we cut spending and maybe lay some of these workers off government workers, which Elon Musk had mentioned, that they
would get large, pretty general severance. Whether that's sure and I don't know, but the point is the markets would like anything that gets us closer to some sort of fiscal stability after these massive depths that we've been running the last couple of years will be a huge positive. And if that comes as measure GDP being slightly softer for a period of time, even if that is the case, that to me is a very good trade off.
Joe, I hate to say we're out of time. I've got less than a minute. When you were at the NEEC, though, what would it have been like that have Elon Musk down the hall breathing down your neck on spending? Would that have been productive?
That had been pretty cool? Because he's very innovative. I mean, I mean, the guy is just got is it incredible, credible entrepreneur among many things. I mean he's bringing, I think, with Savekram Maslamia, clearly a fresher, thoughtful approach to try to get some of these spending cuts through. And as I've argued before, a lot of this to me is bipartisan. We look at the Defense bill and you look at how we do propurement. We waste a lot of money.
If we fix that, more money we could use for other things.
Come talk to us when we have more time, Joe, It's always great to spend time with Joelavarney. We appreciate it very much. In the Clutch off the testimony from Scott Besst SMBC Nico Securities America, I'm Joe Matthew alongside Kaylee Lines. We'll see you back here at five pm on Balance of Power on Bloomberg. Thanks for listening to
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