Mark Curtis sits down with Secretary of the Treasury Scott Bessent

[00:00:00] Speaker 1: Secretary, the president has signed an order to restore integrity to community banks. How are they reacting to that, and what would you like to see? [00:00:11] Speaker 2: Well, thank you for having me today. And I think the community banks have been very enthusiastic with everything we've done. We've re-emphasized Main Street over Wall Street, and small and community banks over big banks. And what you're specifically referring to is to make sure that the lending standards within the banks and the security that they have, we're just calling attention to any potential problems. They've been great partners. More than the big banks, the community banks, KYC, know your customer. It's frontline. They know their communities. They know the needs. They know their customers. [00:00:55] Speaker 1: Should community banks, with the pressure that they face today, be involved in the war on illegal immigration? [00:01:03] Speaker 2: Well, again, no one knows their customers like community banks, and we aren't asking them to work at the border. We're just asking them to remain safe, sound, and smart. So, you know, I used to be a banking analyst. That was my first job out of college. And what we know, one of the biggest high-yield bankruptcies last year was a company called Tricolor, which was an auto finance company that made its business mostly lending to illegal people in the United States in the United States, the United States, the United States, and the United States, and the United States. It's a credit issue as well as a security issue. [00:01:50] Speaker 1: One of the things that you have done that I think is admirable is, and you talked about this, getting out from behind your desk and getting out there onto Main Street. Yesterday, you were in Casagrande visiting a factory. What is your honest appraisal of what people on Main Street are going through financially? [00:02:13] Speaker 2: So, I have said that it's like a medical trauma that the beating that Main Street took under the Biden administration. First, we had to stop the bleeding. I think we've done that, and now I think we're in the recovery phase. But look, it's been a big hole to dig people out of, and there are two ways to do it. So, we had a terrible inflation, 21.5% during the Biden years, probably more like 35% for the package of goods and services that working families buy, rent, groceries, insurance. And so, we have tried to stop the price increases. Core inflation remains pretty quiescent. We've had a blip up here over the past five to six months in energy prices. So, one side is containing costs. The other side is seeing real wage gains. So, just like in President Trump's first term, we've seen 5.5% real wage gains for the bottom 25% of earners, 4.7% for the median earners. Inflation is at 3.5%. And so, I think being able to see some daylight, get some real wage growth. And then, I also run the IRS. And we could see that of the President's four signature tax policies, especially no tax on tips, no tax on overtime, and reduced taxes for seniors on Social Security, that tax refunds were up about 11%. And what that doesn't measure is people who actually had to pay taxes last year and got a refund this year. [00:03:59] Speaker 1: I think it was much higher. How much of what you feel and what you are telling me would you say at this point is aspirational versus what is really happening on Main Street? [00:04:09] Speaker 2: Well, I think we are just starting to see in the data what is happening and what we are not going to do is what the Biden administration did and tell people they don't know what they're feeling. You know, it was a vibe session. The beatings will continue until morale improves. We've tried to take real policies, whether it's the tax bill, the re-industrialization, the job growth. We're 15-year high in some of the factory building that we're seeing. So I think we are now seeing the turn. I think it's been masked by the uptick in energy prices and those will come down. [00:04:50] Speaker 1: So you get it when people say there's an affordability crisis in this country and I'm paying $4.55 for a gallon of gas and all of those things that allow me to live my life as an American taxpayer. It's very tough out there. [00:05:07] Speaker 2: Right. So average national price is below $4.55, but sure, you know, we get that. And again, as I said, there are two ways to get out of this. There's control inflation, which we're doing, and a lot of that is through deregulation and lowering tax bills, right? And then the other side is through real wage growth. But yeah, look, I agree. They got torched. It was the worst inflation since I was a teenager and I'm not young. [00:05:37] Speaker 1: Trump accounts, I know that that is a subject near and dear to your heart, not just because it's putting money, making money available to American families, but because it's teaching financial independence for Americans that may not have financial literacy. [00:05:57] Speaker 2: Well, I think it's very important 38% of households have no exposure to the equity market. And, you know, aside from my believing, everyone deserves a piece of the action and it re-anchors your faith in the American system. The other thing that we are going to see here is a real life, real time financial learning experiment that, you know, look, I was a kid in rural South Carolina. What did I know about the stock market? Something bad had happened in 1929. Now we are going to see we've had 7 million families sign up. 93% of those make less than 200,000. 1.7 million of them have the $1,000 seed investment from Treasury. We're going to get up to 70 million households and we want to get that 38% number down to zero. And at Treasury, trumpaccounts.gov, you can see we have 15 learning modules because we think a big part of the cohort who are signing up for these will have never been in the market before. And I do believe that in nutrition, we talk about food deserts when families are not able to get the clean, fresh or even a variety of nutritious food that I've studied this and there are financial deserts with 30, 40% of Americans can't meet a $500 hospital bill. They certainly don't have online brokerage accounts, but this is for everybody. And I think it's going to make a big difference. [00:07:36] Speaker 1: Speaking of food, and we've reported on this, the food stamp crisis in Arizona at least is very tangible. The big, beautiful bill cut way back on food stamp availability. What would you say? And listen, I would be the first person to say there was fraud within the system. And I can understand why the administration wants to cut back on that. But what do you say to the families who weren't cheating the system that truly need those food stamps and the children that are going hungry? [00:08:12] Speaker 2: Look, I think that over the period during the Biden administration that we saw this huge amount of fraud and we had to bring that down back to a normalized level. And what I would say is that we want to make more available for the people who need the SNAP benefits, not for the people who don't. [00:08:38] Speaker 1: I wanted to get into your background a little bit, former hedge fund guy. How do you think your acumen in running hedge funds and being on Wall Street has helped and influenced what you do as secretary? [00:08:54] Speaker 2: Well, a couple of couple of things. So I would also say I was a college professor, so I taught economic history. And I think there's a balance there of what's going on in the markets every day. And then what's the long arc of history? What have we seen before? What haven't we seen? So one thing when I combine those two, I like, you know, someone will say, well, where's the crisis? Why are you acting this way? And, you know, having studied this and lived through, you know, I've been in the financial sector for 40 years, that I try to get ahead of things and not wait until they metastasize. Someone said, well, why did you do that? I said, well, the crisis is avoiding a crisis. So, you know, history doesn't repeat, but it rhymes. And it's always a combination of greed, fear, and opaque transactions. So we're always trying to kind of look around the corner for risk. And we're trying to see what's worked, whether it's in the U.S. or around the world. What would you want to be known for? [00:10:04] Speaker 1: I mean, some of your predecessors were known for things like trickle-down economics and things like that. What about your financial system? [00:10:12] Speaker 2: That we reinvigorated Main Street. So the Wall Street Journal, some of the editorial board called me an Ivy League populist. And I said, well, of course you did because you're called the Wall Street Journal, not the Main Street Journal. And Wall Street always does fine over time. Main Street's been neglected. That's one of the reasons I'm here today for small and community banks. Senator Warren was like, oh, we might have a bank go under. Well, 50% of small and community banks have disappeared since the great financial crisis. We worried about too big to fail, but we didn't do anything about too small to succeed. Because we put in this fierce regulatory agenda. And now we've got to get back to Main Street lending. Small community banks only have 15% of the deposits, but they do 40% of small business lending. Huge amount of the ag lending. [00:11:08] Speaker 1: There are a lot of people sitting on the sidelines right now, afraid to buy that home, afraid to invest in something, afraid to invest in Wall Street, because they hear there's this tsunami coming. Based on all of your instincts, what do you see over the next couple of years as far as the American economy? [00:11:27] Speaker 2: Well, I'm not sure which tsunami they're referring to, but I think that we are getting back to good practices. The reason I came out from behind my desk, look, I was living in Charleston, South Carolina, my home state. I had the most beautiful walk in America to work, and I gave that up in honor of a lifetime to come and have public service. But the reason I did is I was worried about the trajectory of the country. And I think that if we can grow the economy, constrain spending, then we can get back on a good financial footing for the country. [00:12:07] Speaker 1: Because it is pretty interesting. Wall Street's doing great. The market seems to be doing great. But there are still people on Main Street who are saying, "I'm not seeing it." [00:12:16] Speaker 2: Well, again, that gets back to what we are trying to do is to spread-- I call it parallel prosperity. We are trying to get out there and do that. I was very counterintuitive, but one of the things that we're seeing, that AI, which is this technological change that we're going through, is leading to a big increase in, they call it, one-person businesses. So we think that small business filings are up 80% over the past year. And much of that is that if you wanted to go and start your own business, maybe you needed 5, 10, 15 people to do it before in critical mass. But now, Wall Street Journal had a good article last week, one-person startups. [00:13:07] Speaker 1: What about gas prices, Secretary? You know, this war seems to be dragging on. What is the endgame with Iran, knowing what you know about how shifty and unconventional that government can be? [00:13:29] Speaker 2: Well, look, we're never going to let them have a nuclear weapon. That's right. We had epic fury, which was the kinetic portion. At Treasury, we did economic fury. So what goes a little publicized is, you know, on the kinetic side, Air Force is wiped out, Navy is wiped out, a big portion of their missiles, more importantly, their missile production. On the economic side, we have them by the throat, and they've got 150, 180% food inflation, not able to pay the troops. So I think shortly, maybe even today, tomorrow, we are going to see an agreement, 30, 60-day ceasefire, and the strait will be open. Energy prices should come down. [00:14:21] Speaker 1: There are some who have speculated the strait will never go back to being the way it was before. What would you say? [00:14:26] Speaker 2: I would say -- I would take -- I think they're saying that in a doomsday sort of way. I would say it in another way. The strait is never going back to the way it was because the Iranians have used -- or tried to use it as a choke point. What we are going to see over the next two years, the strait's going to become irrelevant. It is going to become just another body of water. And I would say that more than 50 or 70% of the energy that moves through the strait now is going to go through underground pipelines. [00:15:01] Speaker 1: And when it comes to tariffs, I've heard you speaking on tariffs on companies that are hoping to retrieve some of that money. What about the people? Will the American people, do you think, that have paid more ever see any of that? [00:15:17] Speaker 2: Well, it's unclear if they did pay more because did the companies absorb it? But I said this going into the Supreme Court case that this would be corporate welfare because the money has to go back to the corporations. And they collected it. And some of it -- I don't know if you've gotten UPS, FedEx, DHL from out of the country -- sometimes they have had like a tariff level on it. So you had to pay it. You should get it back. But it's going back to them. So -- and this is what all the Democratic attorney generals who filed the suit against the Trump administration wanted. They wanted it to go back to the corporations. And unfortunately, they got what they want. [00:16:04] Speaker 1: As a financial guy, a guy who's done everything in finance, how do you feel about tariffs? Are they effective? [00:16:12] Speaker 2: I think they're very effective because there's no such thing as free trade. And we want to have fair trade. And what we've seen is, you know, I'd go and see that Jameson Greer, who's the USTR ambassador, just has stacks of -- I'll pick on Indonesia -- 9,000 non-tariff barriers or tariffs that they have on us. The EU had 10% tariffs on our cars. We had three on them. Why is that fair? So, you know, we are bringing down the tariffs. We are bringing down the non-tariff trade barriers. We're bringing down subsidized labor. And we're bringing jobs back. We're seeing, like, manufacturing jobs come back like we haven't seen in 15 years. [00:17:00] Speaker 1: You mentioned the IRS. And as Secretary of Treasury, you are in charge of the IRS. I'm curious because people are talking about it. Should any president, whether it's President Trump or a future president, be given any kind of immunity when it comes to the IRS? [00:17:16] Speaker 2: That's been done through the DOJ. So that's not in my area. But what I will tell you, what should never happen to the president of the United States or any taxpayer, President Trump had his tax returns leaked. And his family, but not only were their tax returns leaked, every employee of any part of the Trump Organization had their tax returns leaked. And that, one of the things that we regard as sacred of the IRS, it's Rule 6103, is taxpayer privacy. [00:17:53] Speaker 1: Thank you for your time today. Good. [00:17:55] Speaker 2: I appreciate it. Good to see you. [00:17:57] Speaker 1: Great conversation.