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Scotte Besson's of K Square Group joins us around the table for more. Why do you consider to be a potential Treasury Secretary? Pick Scock And morning, sir, good morning, thanks for coming in. Thank you very much for being with us. Let's stop with an easy one. Why do you think that one is a bad idea? We're capital gains tax? Well, the capital gains tax. Look, Kamala Harris is an economic illiterate. Donald Trump is going to give an extensive speech at the Economic Club of New York today.
He's going to take questions. She's reading from a teleprompter, and you know, let's just review here.
The capital gains tax will be after a proposed tax on unrealized capital gains, which, in the scheme of the new taxes, has to be one of the worst tax ideas in thirty years.
Let's talk about how the former president, perhaps future president might count to that. What are his policies.
Well, I think you're going to hear from President Trump today. You are going to hear you a warning that the Harris Biden administration caused a great inflation. Vice President Harris was the tiebreaking vote on both spending bills that led to the inflation, the inappropriately named Inflation Reduction Act and the American Rescue Plan. They would not have passed without her signatures. I'm still not sure that she knew what
she signed, but she did sign it. And you know, all these policies that she's talking about now, you know, are going to ignite inflation again because what happened last time was we got a demand shock from government spending that was met with high levels of regulation, and that's the recipe for inflation. And Trump one point zero. We got a demand shock from the private sector, fueled by the tax cuts, and that was met with deregulation, and
that's why we had non inflationary growth. President Trump's going to talk about that. He's going to talk about energy dominance. He's going to talk about not only stopping the inflation rate, but getting prices down, which I think is very important for the American household. You know, we're in an affordability crisis, and he's going to address getting the deficit down. I mean, we are at seven percent peacetime non recessionary deficits. And it is clear now, you know, I think I said
it last time. When I was here. I've been saying it for about two months that the economy is slowing dramatically.
Scott, how do you get the deficit down when if you look at Trump's policy proposals floating a corporate tax rate of fifteen percent, campaign is also excluding Social Security payments from taxes, exempting tax on tipped wages, also increasing the child tax credit. All of this is going to add to the deficit plus Travis with Some economists will say is inflationary.
Well, let's unpack that there there would be income from the tariffs, so that's a big number.
Well, that's debatable though, that's just going to be passed on to consumers.
Well, all taxes that are passed on the consumers. And I think what's interesting about taxes is they aren't necessarily inflationary. They're one time administrative price adjustment. Historically forty to fifty percent of any upward enmpulse is reflected in the currency. So that would all set it. Then we have the various preferences by consumers. It could end up in foreign manufacturers' margins. Their margins could go down, so and you know their elasticities.
Consumer behavior can change, but in terms of getting the death sit down. I have been talking about it before. I think we would freeze domestic programs except for defense. If you look at the Paris Biden proposals, and she hasn't walked this back yet, maybe she will. They're calling for a twenty one percent decrease in defense spending. I can't imagine a worse time to do it. The only thing that I believe, and again I don't speak for the campaign, but the only thing that I believe that
should have a real increases is defense. The Inflation Reduction Act is the doomsday machine for the deficits. It was originally scored at a positive score. It was supposed to be positive fifty billion, then it went to three hundred billion. It's probably going to be a trillion this year, and it's now estimated over the life of this thing that it could be a four and a half trillion hole in the deficits.
So hold on a second. Does that mean that you expect Donald Trump to try to unwind it, put a halt to it, okay, but not unwinded.
Well, I'm not sure what unwine means. I mean, you're not going to level the eight charging stations that we got for eight billion dollars.
I guess here's the question, and this is the reason why you had the Congressional Budget Office come out saying that Donald Trump's proposals will actually increase the deficit more than Kamala Harris's. We had a story on Bloomberg talking about how potentially Donald Trump's proposal could increase the collective costs as much as a ten and a half trillion dollars over the next decade. I mean, how do you offset that?
Well, first of all, and you all know that Bloomberg is one of my favorite venues. But I do have to say that that story yesterday in the ten and a half Trillion was poorly written, poorly edited, and compared apple st oranges. The ten and a half trillion was everything Donald Trump and Jade Evance have ever said, and they took it to the highest end. Then they took a score from the Wharton School and said, well, this is the Harris budget or the Biden Harris budget. It's
apples and oranges. If we were to take everything the Vice President Harris, including what she said in Raleigh, twenty five thousand dollars or twenty five thousand dollars for housing, including for new arrivals, that would be substantially in excess.
But the Democrats and Biden's budget now and Kamala Harris is part of the administration, have revenue increases. Where are the revenue increases to offset all of these tax cuts that Trump is talking about.
Well, look, I think they are paid for us here. So it's the cut spending. We do not have emory. We do not have a revenue problem in this country. We have a spending problem. So traditionally the government revenues, federal government revenues are seventeen and a half to nineteen percent of GDP. We're right there now. Since two thousand, we've averaged about a three percent budget deficits, so spending has been twenty one twenty two percent. This administration, led
by Vice President Harris, has blown out the spending. We're at a seven percent budget deficit right now. And what do we have to show for it. We had job we had the employment numbers revised down by eight hundred or nine hundred thousand jobs. We had two hundred and fifty thousand private sector jobs. So the idea here is what we have seen with Paris Biden. It's what's called in Grand Prix driving two footed driving. You've got one foot on the accelerator, the FED is putting one foot on the brake.
Scot, forgive me because I've got ten seconds left that I don't want to cut you off, So just stick around. Scott Besson's of Keysquak Group from New York. This is Bloomberg. Typically we talked to Scott beston a Keysquak group a lot about politics, given his potential to be the next Treasury secretary. Score We've also got to talk about what's happening in this market because you've got positions in it. I know that you've been long Gold, You've been long
the Japanese yen. Are you keeping those positions?
I am, and thanks for focusing on my day job. You know, I think in the Japanese yen it's an extraordinary opportunity because as central banks around the rest of the world are an easing cycle, Japan for the first time in almost two decades, is in a hiking cycle. So you know, we'll see if they're like sokatas they only come out once every seventeen years, or whether this turns into a real hiking cycle. My thought is that there is the potential for this to keep going, So.
You want to keep riding this trade. We're at one forty now, we were pushing through one sixty previously. What kind of numbers have you got in mind? Well, it's two sides to this.
Japan is strengthening inflationary impulses picking up. The other side is, as I've said, the US. I believe the US economy, I said it recently is buckling, and we're starting to see it in the numbers. I think we're going to it's both industrial numbers and labor. And I think what's funny here on the Democratic side of the aisle, and I will put politics back in for a minute. They've
been screaming for a rate cut all year now. You know, even Claudia sam who's been chewing off her arms since February for a rate cut, doesn't want to come out and say, well, my rule got triggered. And anytime my rule gets triggered, we're in a recession. So they don't want to use the R word before November fifth.
So the longdon Nippon steel way, it's the cheaper this still gets right essentially for them?
Well, yes, exactly is they may have, through some terrible timing get a better price. We'll see what happens.
Wak me through what you think should happen, and let's finish there. Harris says she wants to block the deal. Ban is given the signal he wants to block the deal the form of price, and it's given us the second he wants to block the deal. The company has come out to the Wall Street Journal in the last twenty four ans and say, if you block the deal, job losses are on the table. We're going to be moving out of Pittsburgh. How do you recalibrate the policy now with that in mind.
Well, I think we've seen and it was very surprising because I've been going to Japan since nineteen eighty nine and Japanese companies traditionally have a very high regard for all stakeholders. I remember the first time I went and you talking about shareholder value and they said, oh, no, you know, Bess and Son. We have our customers, we have our employees, we have our banks, we have our community, and the shareholders are last. And now you know, they
reverse that. They're putting shareholders first. And I was surprised to see a Japanese company that didn't check in with the US stakeholders. They didn't check in with the community, they didn't check in with the unions, they didn't check in with the customer.
That's the mistake the mascot. And this is where we are. And now we've got to deal with the police. See on the campaign trail. Are we going to offer them state aid? How do we keep this company in business in a way that doesn't end up with job losses?
Well, look, I think that the you know, maybe the deal will be resurrected. Cleveland Clips actually forced Nippon Steel's hand with their bids, so maybe a domestic buyer will come back.
You don't see space for state aid. Sorry, you don't see space for state eight.
Well, I don't see why we need it right now is what we did state aid with Intel, and Intel just laid off fifteen thousand employees. The stocks down sixty percent this year, and they're probably going to be pushed out of the Dow.
They got their own problems. Scott, it's good to see you. It's nice to touch on markets too. Yeah, let's do that again next time I go into a key Square group. We like your day job. Too, Thank you, sir,