Bloomberg Audio Studios, podcasts, radio news. Seventeen days into the Trump presidency and just nine days after his swearing in, Treasury Secretary Scott Bessant sat down with me inside the historic cash room at the US Treasure Department.
I'll turn it over to my colleague Saliah Mosen, who is live at the Treasury Department with the new Secretary, Scott Beston.
Selia. Thank you, Kayley.
I'm here with US Treasure Secretary Scott Besson in Washington in his first days on the job. I wanted to ask him about the topics in his purview dominating the headlines like Elon Musk's doge efforts and tariffs, and about his plans for taxes and debt management. Across the conversation, Bessant presented himself and his department as a source of stability for global markets, for businesses, and for American taxpayers.
People shouldn't be concerned that at Treasury we moved deliberately and we fixed things. That's the way we work. So everyone should know that all the payments are going to be made, they're going to be in good order, and at the end of this review, they're going to be substantial savings for the American taxpayer.
This is the big take DC from Bloomberg News. I'm Saleamosen and today on the show, my full interview with the seventy ninth Secretary of the Treasury, Scott Pressant, on taxes, tariffs, government spending, and more, plus a couple of extra questions I asked him after the camera's cut away.
Mister secretary, thank you for joining me.
So good to see you.
Mister Secretary.
We are inside the cashroom at the Treasure Department. It is almost impossible to overstate how important the work that is done in this building is to the US financial system. Yet right now there is widespread concern about the DOGE team's access to sensitive payments systems. Are you worried at all that that access and that tinkering of the payment systems could affect the Treasury's market or cause any disruption?
Good well, Seliah, thank you for asking me about that, because there's a lot of misinformation out there. First of all, when you say the DOGE team, these are Treasury employees, it are two Treasury employees, one of whom I personally interviewed in his final round. There is no tinkering with the system. They are on read only, they are looking. They can make no changes. It is an operational program to suggest improvement. So we make one point three billion
payments a year. And this is two employees who are working with a group of long standing employees.
The letter that the Treasure Department sent earlier this week talked about how the team currently does not have access to change the system. Have they, at any point this year had the ability to make changes.
Absolutely not. This is no different than you would have the at a private company. And by the way, the ability to change the system sits over at the Federal Reserve, so it doesn't even lie in this building. So they could make suggestions on how to change the system, but we don't even run the system.
And if they ask for if they request the ability to change the system.
Would you grant that.
No. Again, they have no ability to change the system. I have no ability to grant that change. That they could make suggestions, then it would go to the Federal Reserve and just like any large erp system, there would be tests. There would be this, there would be that, and then the Fed will determine whether these changes are robust or not.
As the Secretary of Treasure you also oversee the IRS. Do you know what kind of access the team has to IRS data or individual taxpayer data?
Well, glad you I asked that too, because look that THERIRS, the privacy issue is one of the biggest issues and under over the past four years we've seen a lot of leaks out of there. The IRS systems are quite poor. When I started in college in nineteen eighty, I learned the program in Cobal. I think there are twelve different systems at the IRS that still run on cobyl. But as of now, there is no engagement at the RS.
And if they request that access, would you sign off on that request?
They haven't, so we'll take that when it comes to it. I think there is a lot to do there, but the president was elected with a big agenda and to the extent that getting the IRS in better shape is part of that. Sure, because look, with the IRS, what am I concerned about? I am concerned about collections, I'm concerned learn about privacy, and I am concerned that the system is robust and customer service.
But do you think that if they ask for access that is something you would consider signing off on.
There are a lot of things I'd consider but look, we're in the middle of the tax filing season right now. We even with the government buyouts that are being that expire at midnight tonight, we have the mandated that the IRS customer facing employees that they're not eligible for that until May fifteenth. So I don't imagine anything's going to go on at the IRS until then or beyond.
Elon Musk just a few half an hour ago tweeted out that Treasury needs to stop approving certain payments. Has your staff tried to block any payments here at Treasury?
We have not, and I'm glad you asked that too. And just to put in perspective, Elon and I are completely aligned in terms of cutting waste and increasing accountability and transparent guarrancy for the American people. I believe that this DOSE program, in my adult life, is one of the most important audits of government or changes to government structure.
We have seen that. When I was in my twenties, we had the Grace Report, and there's some great suggestions that came out of that never implemented under Clinton and Gore. I think it was to government efficiency or reduce government. Nothing happened. So President Trump came in. There's a big agenda, and I think that there are gigantic cost savings for the American people here, and I think it's unfortunate the way the media wants to lampoon what is going on.
These are highly trained professionals. This is not some roving band going around doing things. This is methodical and it is going to yield big savings.
At any point, would you heed what Musk just tweeted and stop payments from coming through.
Treasury, Well, most of that happens above us, that it comes from the Department and the agencies. We are doing a complete review and I want to emphasize to you and everyone watching that it is an operational review. It is not an ideological review. We want to make sure that the American people are getting the best practices, and I don't think that's happening right now.
The systems here at Treasury they're known to be a little antiquated, but very very sensitive, but also they're working. I'm hearing you at Bloomberg, we hear a lot about investors being concerned that this could hit markets in some way or start to cause a loss of confidence. What as a long time hedge fund and investor, like, do you have a response to those concerns.
People shouldn't be concerned that at Treasury we move deliberately and we fix things. That's the way we work. So everyone should know that all the payments are going to be made, they're going to be in good order, and at the end of this review, they're going to be substantial savings for the American taxpayer.
Mister Secretary, you have experience in currency markets, and now, as in your new role, you oversee US currency policy.
I'd like to ask you what does a strong dollar mean to you.
Well, first of all, the strong dollar policy is completely intact with President Trump, and I am very happy at his Economic Club of New York's speech in August when he re emphasized the importance of maintaining the dollar reserve currency status. But let's think about what does a strong dollar mean. It really means four things. One that when we think about a fiat currency, a piece of paper is credibility. So a strong dollar is credibility and a
rule of law that is backing it up. Two, it means a composite price in the screen the Bloomberg Currency Index, that is the dollar moving up against that. Three, it is a bilateral price. So what's important to remember is the dollar is either weak or strong versus something else. So we want the dollar to be strong. What we don't want is other countries to weaken their currencies to
manipulate their trade. And then fourth that we want to have the best policies that create the environment for a strong dollar.
Let's talk about other nations and how they manage their currencies. The President has asked for a tariff study from several of his cabinet officers or incoming cabinet officers do April first and the Treasury pe So that is to assess how to handle when foreign nations manipulate their currencies. Do you see any evidence of manipulation in foreign exchange rate markets right now?
Well, we'll wait till the study comes out, but I think just intuitive, Well, you and I could agree that when you see the accumulation of these large surpluses, that there is not a free form trading system that's going. It could be due to the level of the currency. It could be due to trade restrictions, it could be due to some interest rate repression policy. So it could be any of those.
Are there any countries that you're monitoring or watching specifically right now. I know the President in the past has labeled China as a currency manipulator. Do you see any other nations that need to be closely watched.
Well, I think we'll see on April first. And as you know that China's the most imbalanced unbalanced economy in the history of the world, and they are and a deep recession right now. Their experience in deflation and they're trying to export their way out of that, and we can't allow that. We want fair trade and part of that is taking a strong position on the currency and the terms of trade.
More from my interview with Treasury Secretary Scott Besson. After the break, I sat down with Treasury Secretary Scott Besson and one of his first interviews is being sworn in. That conversation continues now. Yesterday the Treasure Department had its first quarterly refunding since you were confirmed.
Do you have any.
Plans of looking at how the Treasury's debt issuing strategy comes together?
Well, I think the good news is that the trajectory of the borrowing is dropping, so I was very happy to see that that. It's one of the few good surprises I was left by the previous administration. So the trajectory is good and the government's well financed into the third quarter. And I believe that as it becomes apparent that the President's agenda is working, that we'll see a great deal of non inflationary growth and I think that that will help us calibrate what the debt policy should be.
But I don't see any changes in the issuance for the foreseeable future.
And what about the process.
Do you think that tea BAC is the most effective way of getting feedback from markets?
Well, I want to think all the members of tea BAC who are here this week. They are a very elite group. I think that maybe over time we need to think about the style of engagement. It is turned into more of a research think tank than direct market engagement, and that's going to require some changes from both sides. I believe when TEBAC was originally started, it was supposed to be a market feedback mechanism, a little less of a think tank, and we've been assigning research projects, So
I think there's some recalibration on both sides. But I think that whatever we do, tea BAC will still exist.
Mistress Secretary you said yesterday in an interview that the Trump administration is more focused on long term gields than what the Federal Reserve is doing, which is a bold statement. I want to ask, how do you plan to keep a lid on yields considering the deluge of debt issuance that is coming down the pike and also some of the inflationary risks that are ahead.
Well, one of the things I wanted to emphasize is that we are not focused on the whether the Fed is going to cut not cut. What we are focused on is lowering rates, So we are less focused on the specific of rate cuts and how do we get the whole curve down. I mentioned that the tenure I believe is the important price to focus on its mortgages,
it's long term capital formation. So and look, I think with the President's policies of energy, dominance, deregulation, and non inflationary growth, I think that the tenure is going to naturally come down. And then look on top of it, what if we do get some big savings on the spending side from the dose programs, Like let's think of a naive formula government equals spending minus taxes for my entire career and beyond, maybe even back to pre FDR.
Are the government equal spending, moneys, taxes, the s The Republicans we like spending. We just wanted to raise it less. The Democrats want to raise it more taxes. Democrats want tax increases. We want tax cuts. What nobody's singing about is what if the S actually went down? What if it actually goes down because of everything we're doing right now?
But what about the inflation concerns that are stumming from the tariffs and tariff threats.
Look that I'm not sure that where this narrative the tariffs for the country putting on the tariffs is inflationary, that we could have a small one time price adjustment that as we saw in Trump one point zero, that the deregulation and the other policies, we stayed right around the Fed's target level. So I'm unconcerned about that. You know, I think especially the China now given all their excess capacity, will no matter the level of the tariffs, will end up eating quite a bit.
There's a lot of uncertainty around tariffs.
We see them threatened or signaled and then they're taken back. It appears as if this administration might be unfriendly to businesses.
Is that right?
I really, I think it's just the opposite. I think this is the most pro business administration in history, and everything we are doing is going to increase the after tax return capital and as a result, working Americans will have very high real weight growth. That what we've seen over the past four years is the government and government adjacent sectors providing the employment growth. And why have we
experienced the supportability crisis? First there was a massive spending met by increase regulation which caused inflation, and then government and government adjacent jobs do not call real wage growth because they move up at CPI. So I think that we are going to not only be business friendly, but very very friendly for working Americans.
We're seeing companies already under some stress from the tariff threats, China is investigating Google, and also, as you know, are well aware that business is like to be able.
To plan ahead.
But with so much policy uncertainty, that predictability factor is gone. That all points to a little bit of a tougher environment.
Well, look, I think the best thing we can do for predictability is make the tax cuts and job back permanent. That would be the single best thing we could do for predictability. We can go back to the one hundred percent expensing and add some new features that I think business is going to be very happy with. But again, the most important thing is that it filters down to work wages, which is what we saw the President Trump's first administration. Hourly workers did better than supervisory workers.
Well, let me ask you about the tax plan.
Then, on the campaign trail, Trump floated no taxes on tips and cutting the corporate rate and a lot of other proposals. How are you going to juggle which campaign promises are high on that the priority list for the bill, considering how costly everything would be.
Well, that we're just starting the process now and that we'll do what President Trump will give us his priorities. But I can tell you the real priority is fixing this affordability crisis for the American people. And when you think about no tax on tips, no tax on Social Security, no tax on overtime, potentially putting back in auto loan deductibility, all of those benefits accrue to the bottom fifty percent
of income earners in America. They have really taken it between the eyes for the past four years and that's unsustainable.
Before I let you go, mister secretary, I want to ask you if you have had your traditional weekly meeting with FED Chair Powell.
Yet we did. I did an away game over the FED. We had a very nice breakfast. Chair Powell and I don't know each other well, so it was very constructive.
How do you view that relationship involving the two agencies and buildings are supposed to work very closely together, and you've had some criticism in the past of.
His work, and as I said at my hearing, everything I'm going to talk about is things FED the Fed's done in the past, prospectively. Monetary policy I will not comment on, and I'm sure he's going to do the right thing so there'll be no criticism.
All right, Well, mister Secretary, thank you so much for joining Kaylee back to you.
Is there anything that you can share on.
Plans to when and how you would release Fanny and Freddie from Conservative.
Right now, the priority is tax policy. Once we get through that, then we will think about that. The priority for a Fannie and Freddie release. The most important metric that I'm looking at is any study or hint that mortgage rates would go up. So anything that is done around a safe and sound release is going to hinge on the effect of long term mortgage rates and just.
On the debt ceiling.
The political theatrics of it is something that you're going to be dealing.
With this year at least.
Do you think that it's time to talk to bond owners about how they view this ongoing saga in Washington.
So that's a prescient question because one of the things that our market's desk, who interacts with our large debt holders is speaking to them about is the the debt ceiling. And I want to get the data. I have an opinion on it, but I'm not sure how our large debt holders feel. On one hand, it's kind of a mia culpa, or it's a confessional that we have to do forgive me, we've overspent, We'll never do it again.
And then on the other side, there's an unthinkable tail risk that there could be an accident, and so people get very worked up about it. But I can tell you the United States of America is never going to default on its debt.
All right, Thank you so much, sir.
Thanks This is the big take DC from Bloomberg News. I'm Salai Emosen. This episode was produced by David Fox. It was edited by Chris Anstey and our senior producer Naomi Shapin. It was fact checked by Audrey and Atapia and mixed and sound designed by Alex Suguira. A Special Thing so Tyler Ken, Shaquilla Mari, and Peter Kher. Our senior editor is Elizabeth Ponso, and our executive producer is Nicole Beaster Bower. Sage Bauman is Bloomberg's head of podcasts.
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