This Bloomberg TV interview with the 79th Secretary of the Treasury, Scott Besson, covers a wide range of economic and geopolitical issues, offering insights into the Trump administration's economic policies and priorities. Besson frames his approach as shifting from an outside market observer to an insider responsible for shaping policy and understanding its market and economic implications.
A key focus is the debt market. Besson acknowledges maintaining the previous administration's Treasury issuance plans, indicating a short-term continuation of existing policy. He expresses confidence that the Trump administration's overall policies will be disinflationary, citing efforts to reduce energy costs, deregulation, and potential permanence of tax cuts, all leading to increased revenue and decreased costs. He emphasizes a medium-term perspective, contingent on these policies taking effect and market response. He also suggests that if the Fed ends its balance sheet runoff, it may become easier for the Treasury to extend the term of the debt. He says it is path dependent, and when inflation starts to drop, then they will see.
Regarding the Federal Reserve, Besson declines to comment on what the Fed "should do" but analyzes past actions. He acknowledges that the Fed's rate cuts haven't always resulted in lower long-end yields. He emphasizes the necessity of addressing the affordability crisis in housing and auto payments to stimulate growth.
Besson defends the "Doge" program as a crucial audit of government efficiency, distinguishing it from past efforts by emphasizing its on-the-ground implementation rather than academic theory. He laments what he perceives as unfair attacks on the program, indicating that entrenched interests are being challenged. While suggesting $5,000 potential Doge checks are not out of the question if brought down, and mentions revaluing gold is not on the table.
On the topic of national security, Besson is reviewing sanctions policies to ensure their effectiveness and relevance in the 21st century. He expresses disappointment with President Zelensky's remarks in Munich and the failure to finalize the minerals deal, emphasizing Trump's original plan to strengthen U.S.-Ukraine economic ties as a foundation for security.
The topic then moves to tariffs with a discussion of reciprocal tariffs as well as a fair trade. He emphasizes that they are wanting to work together and the tariffs are in response to the fentanyl crisis originating in China. He does re-iterate that the US still has a strong dollar policy and does want to remedy the currencies that are undervalued, specifically China, and that the government is dedicated to rebalancing their economy in favor of consumption.
He then touches on the European countries and their contribution to NATO funding which he states is a key focus. He notes that the sanctions on Russia are very much still on the table depending on how the talks go. He iterates the president is committed to ending the conflict quickly.
He characterizes Elon Musk as incredibly focused and energetic, constantly questioning existing practices and pushing for solutions. When asked about reports of employees experiencing financial hardship or mental duress from layoffs, Besson expresses sympathy but emphasizes that this is an experience many Americans face daily and it is necessary for the administration to move quickly to shake up the status quo. Besson also highlights the quality of the Treasury staff and the push to bring employees back to the office.
The interview closes with a reflection on Besson's transition from a market participant to a policy maker. He acknowledges the feedback mechanism he gains from his colleagues and notes his proximity to decision-making within the White House. He concludes by reiterating Trump's commitment to disrupting the status quo and fulfilling his mandate.