Scott Bessent on Musk, DOGE, Privacy, Dollar, Fed

I WILL TURN IT OVER TO MY COLLEAGUE SALEHA MOHSIN WHO IS LIVE AT THE TREASURY DEPARTMENT WITH THE NEW SECRETARY OF THE TREASURY. THANK YOU, I'M HERE WITH SCOTT BESSENT HERE IN WASHINGTON. THANK YOU FOR JOINING ME.

MR. SECRETARY, WE ARE INSIDE THE CASH ROOM AT THE TREASURY DEPARTMENT. ALMOST IMPOSSIBLE TO OVERSTATE HOW IMPORTANT THE WORK THAT IS DONE IN THIS BUILDING IS TO THE U.

S. FINANCIAL SYSTEM. YET RIGHT NOW THERE IS WIDESPREAD CONCERN ABOUT THE D.

O. G. E.

TEAMS ACCESS TO SENSITIVE PAYMENT SYSTEMS. ARE YOU WORRIED AT ALL THAT THAT ACCESS, THAT TINKERING OF THE PAYMENT SYSTEMS COULD AFFECT THE TREASURY'S MARKET, CAUSE ANY DISRUPTIONS? SEC.

BESSENT: THANK YOU FOR ASKING ME ABOUT THAT BECAUSE THERE IS A LOT OF MISINFORMATION OUT THERE. WHEN YOU SAY THE D. O.

G. E. TEAM, THESE ARE TREASURY EMPLOYEES.

TWO EMPLOYEES, ONE OF WHOM I PERSONALLY INTERVIEWED IN. HISFINAL-ROUND THERE IS NO TINKERING WITH THE SYSTEM. THEY ARE ON READ ONLY, THEY ARE LOOKING, AND THEY CAN MAKE NO CHANGES.

IT IS AN OPERATIONAL PROGRAM TO SUGGEST IMPROVEMENTS. WE MAKE 1. 3 BILLION PAYMENTS A YEAR.

THIS IS TWO EMPLOYEES WHO ARE WORKING WITH A GROUP OF LONG-STANDING EMPLOYEES. SALEHA: THE LETTER THE TREASURY DEPARTMENT SPENT EARLIER -- SENT EARLY THIS WEEK TALKED ABOUT HOW THE TEAM CURRENTLY DOESN'T HAVE ACCESS TO CHANGE THE SYSTEM. HAVE THEY AT ANY POINT THIS YEAR HAD THE ABILITY TO MAKE CHANGES?

SEC. BESSENT: ABSOLUTELY NOT. THIS IS NO DIFFERENT THAN YOU WOULD HAVE AT A PRIVATE COMPANY.

EITHER WAY, THE ABILITY TO CHANGE THE SYSTEM IS AT THE FEDERAL RESERVE. IT DOESN'T EVEN LIE IN THIS BUILDING. THEY COULD MAKE SUGGESTIONS ON HOW TO CHANGE THE SYSTEM BUT WE DON'T EVEN RUN THE SYSTEM.

SALEHA: IF THEY ASK, REQUEST FOR THE ABILITY TO CHANGE THE SYSTEM, WOULD YOU GRANT THAT? SEC. BESSENT: AGAIN, THEY HAVE NO ABILITY TO CHANGE THE SYSTEM.

I HAVE NO ABILITY TO GRANT THAT CHANGE. THEY CAN MAKE SUGGESTIONS. THAT IT WOULD GO TO THE FEDERAL RESERVE.

JUST LIKE ANY LARGE ERP SYSTEM, THERE WOULD BE TESTS, THERE WOULD BE THIS AND THAT, AND THEN THE FED WOULD DETERMINE WHETHER THE CHANGES ARE ROBUST OR NOT. SALEHA: AS THE SECRETARY OF TREASURY YOU ALSO OVERSEE THE IRS. DO YOU KNOW WHAT KIND OF ACCESS THE TEAM HAS TO IRS DATA, INDIVIDUAL TAXPAYER DATA?

SEC. BESSENT: I'M GLAD YOU ASKED THAT, TOO. THE IRS, PRIVACY ISSUE IS ONE OF THE BIGGEST ISSUES.

OVER THE PAST FOUR YEARS, WE HAVE SEEN A LOT OF LEAKS OUT OF THEIR, IRS SYSTEMS WERE QUITE POOR. WHEN I STARTED IN COLLEGE IN 1980, I LEARNED THE PROGRAM IN COBALT. I THINK THERE ARE 12 DIFFERENT SYSTEMS AT THE IRS THAT STILL RUN ON COBALT.

AS OF NOW THERE IS NO ENGAGEMENT AT THE IRS. SALEHA: IF THEY REQUEST THAT ACCESS, WOULD YOU SIGN OFF ON THAT? SEC.

BESSENT: THEY HAVE IT, WE WILL TAKE THAT WHEN IT COMES TO IT. I THINK THERE IS A LOT TO DO THERE. THE PRESIDENT WAS ELECTED WITH A BIG AGENDA.

TO THE EXTENT OF GETTING THE IRS IN BETTER SHAPE IS PART OF THAT, SURE. WITH THE IRS, WHAT AM I CONCERNED ABOUT? I AM CONCERNED ABOUT COLLECTIONS, ABOUT PRIVACY, AND I AM CONCERNED THAT THE SYSTEM IS ROBUST.

AND CUSTOMER SERVICE. SALEHA: BUT DO YOU THINK, IF THEY ASK FOR ACCESS, THAT IS SOMETHING YOU WOULD CONSIDER SIGNING OFF ON? SEC.

BESSENT: A LOT OF THINGS I WOULD CONSIDER. WE ARE IN THE MIDDLE OF THE TAX FILING SYSTEM RIGHT NOW. -- SEASON RIGHT NOW.

WITH THE GOVERNMENT BUYOUTS THAT EXPIRE AT THE END OF TONIGHT, WE HAVE MANDATED THE IRS CUSTOMER-FACING EMPLOYEES, THAT THEY ARE NOT ELIGIBLE FOR THAT UNTIL MAY 15. I DON'T IMAGINE ANYTHING WILL GO ON AT THE IRS UNTIL THEN OR BEYOND. SALEHA: ELON MUSK HALF AN HOUR AGO TWEETED OUT THAT TREASURY NEEDS TO STOP APPROVING CERTAIN PAYMENTS.

HAS YOUR STAFF TRY TO BLOCK ANY PAYMENTS HERE AT TREASURY? SEC. BESSENT: WE HAVE NOT, AND I'M GLAD THAT YOU ASKED THAT, TOO.

ELON AND I ARE COMPLETELY ALIGNED IN TERMS OF CUTTING WASTE AND INCREASING ACCOUNTABILITY AND TRANSPARENCY FOR THE AMERICAN PEOPLE. I BELIEVE THIS D. O.

G. E. PROGRAM, IN MY ADULT LIFE, IS ONE OF THE MOST IMPORTANT AUDITS OF GOVERNMENT, CHANGES TO GOVERNMENT STRUCTURE WE HAVE SEEN.

WHEN I WAS IN MY 20'S, WE HAD THE GREASE REPORT. THERE ARE SOME GREAT SUGGESTIONS THAT CAME OUT OF THAT. NEVER IMPLEMENTED UNDER CLINTON AND GORE.

I THINK IT WAS GOVERNMENT EFFICIENCY. NOTHING HAPPENED. PRESIDENT TRUMP CAME IN, THERE IS A BIG AGENDA.

I THINK THERE ARE A GIGANTIC COST SAVINGS FOR THE AMERICAN PEOPLE THERE. IT IS UNFORTUNATE THE WAY THE MEDIA WANTS TO LAMPOON WHAT IS GOING ON. THESE ARE HIGHLY TRAINED PROFESSIONALS.

THIS IS NOT SOME ROGUE BAND GOING AROUND DOING THINGS. THIS IS METHODICAL AND IT WILL YIELD BIG SAVINGS. SALEHA: AT ANY POINT WOULD YOU HEED WHAT MUSK TWEETED AND STOP PAYMENTS COMING THROUGH TREASURY?

SEC. BESSENT: MOST OF THAT HAPPENS ABOVE US. IT COMES FROM THE DEPARTMENT AND AGENCIES.

WE ARE DOING A COMPLETE REVIEW. 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 THE AMERICAN PEOPLE ARE GETTING THE BEST PRACTICES.

I DON'T THINK THAT IS HAPPENING RIGHT NOW. SALEHA: THE SYSTEMS HERE AT TREASURY ARE KNOWN TO BE A LITTLE ANTIQUATED BUT VERY SENSITIVE, BUT ALSO THEY ARE WORKING. AT BLOOMBERG WE HEAR A LOT ABOUT INVESTORS BEING CONCERNED THIS COULD HIT MARKETS IN SOME WAYS OR START TO CAUSE A LOSS OF CONFIDENCE.

AS A LONG-TIME HEDGE FUND INVESTOR, DO YOU HAVE A RESPONSE TO THOSE CONCERNS? SEC. BESSENT: PEOPLE SHOULDN'T BE CONCERNED.

AT TREASURY, WE MOVED DELIBERATELY, AND WE FIX THINGS, THAT IS THE WAY WE WORK. EVERYONE SHOULD KNOW THAT ALL THE PAYMENTS ARE GOING TO BE MADE, THEY ARE GOING TO BE IN GOOD ORDER. AT THE END OF THIS REVIEW, THERE WILL BE SUBSTANTIAL SAVINGS FOR THE AMERICAN TAXPAYER.

SALEHA: MR. SECRETARY, YOU HAVE EXPERIENCE AND CURRENCY MARKETS AND IN YOUR NEW ROLE, YOU OVERSEE U. S.

CURRENCY POLICY. I WOULD LIKE TO ASK YOU WHAT DOES A STRONG DOLLAR MEAN TO YOU? SEC.

BESSENT: FIRST OF ALL, THE STRONG DOLLAR POLICY IS COMPLETELY INTACT WITH PRESIDENT TRUMP. VERY HAPPY THAT HIS ECONOMIC CLUB OF NEW YORK SPEECH IN AUGUST WHEN HE RE-EMPHASIZED THE IMPORTANCE OF RETAINING THE DOLLAR RESERVE CURRENCY STATUS. A STRONG DOLLAR REALLY MEANS FOUR THINGS.

WHEN WE THINK ABOUT A FIAT CURRENCY, A PIECE OF PAPER'S CREDIBILITY. A STRONG DOLLAR IS CREDIBILITY, AND A RULE OF LAW THAT IS BACKING IT UP. TWO, IT MEANS A COMPOSITE PRICE ON THE SCREEN, THE BLOOMBERG CURRENCY INDEX, IS THE DOLLAR MOVING UP AGAINST THAT?

THREE, IT IS A BILATERAL PRICE. WHAT IS IMPORTANT TO REMEMBER IS THE DOLLAR IS EITHER WEAK OR STRONG VERSUS SOMETHING ELSE. WE WANT THE DOLLAR TO BE STRONG.

WHAT WE DON'T WANT IS FOR OTHER COUNTRIES TO WEAKEN THEIR CURRENCIES TO MANIPULATE THEIR TRADE. AND FOURTH, WE WANT TO HAVE THE BEST POLICIES THAT CREATE THE ENVIRONMENT FOR STRONG DOLLAR. SALEHA: LET'S TALK ABOUT OTHER NATIONS AND HOW THEY MANAGE THEIR CURRENCIES.

THE PRESIDENT HAS ASKED FOR A TARIFF STUDY FROM SEVERAL OF HIS INCOMING CABINET OFFICERS. DUE APRIL 1. THE TREASURY PIECE OF THAT IS TO ASSESS HOW TO HANDLE WHEN FOREIGN NATIONS MANIPULATE THEIR CURRENCIES.

DO YOU SEE ANY EVIDENCE OF MANIPULATION IN FOREIGN EXCHANGE MARKETS RIGHT NOW? SEC. BESSENT: WE WILL WAIT UNTIL THE STUDY COMES OUT, BUT INTUITIVELY, YOU AND I COULD AGREE, WHEN YOU SEE THE ACCUMULATION OF THESE LARGE SURPLUSES, THERE IS NOT A FREE-FORM TRADING SYSTEM THAT IS GROWING.

IT COULD BE DUE TO THE LEVEL OF THE CURRENCY, COULD BE DUE TO TRADE RESTRICTIONS, IT COULD BE DUE TO SOME INTEREST-RATE REPRESSION POLICY. IT CAN BE ANY OF THOSE. SALEHA: ARE THERE ANY COUNTRIES THAT YOU ARE WATCHING OR MONITORING SPECIFICALLY NOW?

IN THE PAST CHINA HAS BEEN LABELED AS A CURRENCY MANIPULATOR BY THE PRESIDENT. ANY OTHER COUNTRIES THAT YOU NEED TO CLOSELY WATCH? SEC.

BESSENT: WE WILL SEE ON APRIL 1. AS YOU KNOW, CHINA IS THE MOST UNBALANCED ECONOMY IN THE HISTORY OF THE WORLD. THEY ARE IN A DEEP RECESSION RIGHT NOW.

THEY ARE EXPERIENCING DEFLATION, AND THEY ARE TRYING TO EXPORT THEIR WAY OUT OF THAT. WE CANNOT ALLOW THAT. WE WANT FAIR TRADE.

PART OF THAT IS TAKING A STRONG POSITION ON THE CURRENCY AND THE TERMS OF TRADE. SALEHA: YESTERDAY, THE TREASURY DEPARTMENT HAD ITS FIRST QUARTERLY FUNDING SINCE YOU WERE CONFIRMED. DO YOU HAVE ANY PLANS OF LOOKING AT HOW TREASURY'S DEBT ISSUANCE STRATEGY COMES TOGETHER?

SEC. BESSENT: I THINK THE GOOD NEWS IS THE TRAJECTORY OF THE BORROWING IS DROPPING. I WAS HAPPY TO SEE THAT, ONE OF THE FEW SURPRISES.

THE TRAJECTORY IS GOOD. THE GOVERNMENT IS WELL-FINANCED UNTIL THE END OF THE THIRD QUARTER. I BELIEVE, AS IT BECOMES APPARENT THAT THE PRESIDENT'S AGENDA IS WORKING, WE WILL SEE A GREAT DEAL OF NON-INFLATIONARY GROWTH.

I THINK THAT WILL HELP US CALIBRATE WHAT THE DEBT POLICIES SHOULD BE. BUT I DON'T FORESEE ANY CHANGES IN THE ISSUANCE FOR THIS -- FOR THE FORESEEABLE FUTURE. SALEHA: DO YOU THINK T BACK IS THE MOST EFFECTIVE WAY TO GET FEEDBACK FROM THE MARKETS?

SEC. BESSENT: I WANT TO THANK ALL THE MEMBERS HERE THIS WEEK. THEY ARE A VERY ELITE GROUP.

I THINK THAT MAYBE OVER TIME WE HAVE TO THINK ABOUT THE STYLE OF ENGAGEMENT. IT HAS TURNED INTO MORE OF A RESEARCH THINK TANK THAN DIRECT MARKET ENGAGEMENT. THAT WILL REQUIRE SOME CHANGES FROM BOTH SIDES.

I BELIEVE WHEN T BANK WAS STARTED, IT WAS SUPPOSED TO BE A MARKET FEEDBACK MECHANISM, LESS OF A THINK TANK. WE HAVE BEEN ASSIGNED RESEARCH PROJECTS. I THINK THERE IS SOME RECALIBRATION ON BOTH SIDES.

I THINK WHATEVER WE DO, T BANK WILL STILL EXIST. SALEHA: MR. SECRETARY, YOU SAID YESTERDAY IN AN INTERVIEW THAT THE TRUMP ADMINISTRATION IS MORE FOCUSED ON LONG-TERM DEALS 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 COMING DOWN THE PIKE AND ALSO THE INFLATIONARY RISKS AHEAD? SEC. BESSENT: ONE OF THE THINGS I WANTED TO EMPHASIZE, WE ARE NOT FOCUSED ON WHETHER THE FED WILL CUT, NOT CUT.

WHAT WE ARE FOCUSED ON IS LOWERING RATES. WE ARE LESS FOCUSED ON THE SPECIFICS OF RATE CUTS, HOW TO BEGET THE WHOLE CURVE DOWN. I MENTIONED THE 10-YEAR I BELIEVE IS THE IMPORTANT PRICE TO FOCUS ON, MORTGAGES, LONG-TERM CAPITAL FORMATION.

I THINK WITH THE PRESIDENT'S POLICIES OF ENERGY DOMINANCE, DEREGULATION, NONINFLATIONARY GROWTH, I THINK THE 10-YEAR WILL NATURALLY COME DOWN. ON TOP OF IT, WHAT IF WE DO GET SOME BIG SAVINGS ON THE SPENDING SIDE FROM THE D. O.

G. E. PROGRAMS?

LET'S THINK OF A NAIVE FORMULA. GOVERNMENT MINUS SPENDING EQUALS TAXES. FOR MY CAREER AND BEYOND, MAYBE EVEN BACK TO PRE-FDR, GOVERNMENT EQUALS SPENDING MINUS TAXES, THE REPUBLICANS, WE LIKE SPENDING.

WE JUST WANTED TO RAISE IT LESS, DEMOCRATS WANTED TO RAISE IT MORE. TAXES, DEMOCRATS WANT TAX INCREASES, WE WANT TAX CUTS. BUT WHAT IF THE S ACTUALLY WENT DOWN?

WHAT IF IT GOES DOWN BECAUSE OF EVERYTHING THAT WE ARE DOING NOW? SALEHA: WHAT ABOUT THE INFLATION CONCERNS STEMMING FROM THE TARIFFS AND TARIFF THREATS? SEC.

BESSENT: I AM NOT SURE WHERE THIS NARRATIVE, THE COUNTRY PUTTING ON THE TARIFFS, THAT IT IS INFLATIONARY. WE COULD HAVE A SMALL ONE TIME PRICE ADJUSTMENT, AS WE SAW IN TRUMP 1. 0, THOUGH DEREGULATION AND THE OTHER POLICIES STAYED RIGHT AROUND THE FED'S TARGET LEVEL.

I AM UNCONCERNED ABOUT THAT. ESPECIALLY CHINA NOW, GIVEN ALL OF THEIR EXCESS CAPACITY, NO MATTER THE LEVEL OF THE TARIFFS, WILL END UP EATING QUITE A BIT. SALEHA: A LOT OF UNCERTAINTY AROUND TARIFFS.

WE SEE THEM THREATEN, SIGNALED, THEN TAKEN BACK. IT APPEARS AS IF THIS ADMINISTRATION MAY BE UNFRIENDLY TO BUSINESSES, IS THAT RIGHT? SEC.

BESSENT: REALLY? I THINK IT IS JUST THE OPPOSITE. I THINK THIS IS THE MOST PRO-BUSINESS ADMINISTRATION IN HISTORY.

EVERYTHING WE ARE DOING IS GOING TO INCREASE THE AFTER-TAX RETURN OF CAPITAL. AS A RESULT, WORKING AMERICANS WILL HAVE VERY HIGH REAL WAGE GROWTH. WHAT WE HAVE SEEN OVER THE PAST FOUR YEARS IS THE GOVERNMENT AND GOVERNMENT-ADJACENT SECTORS PROVIDING THE IMPLEMENT GROWTH -- EMPLOYMENT GROWTH.

WHY DO WE HAVE THIS AFFORDABILITY CRISIS? MASSIVE SPENDING MEANT BY REGULATION WHICH CAUSED INFLATION, AND THEN GOVERNMENT AND GOVERNMENT-ADJACENT JOBS DID NOT HAVE REAL WAGE GROWTH BECAUSE THEY MOVE UP AT CPI. I THINK WE ARE NOT ONLY GOING TO BE BUSINESS FRIENDLY BUT VERY FRIENDLY FOR WORKING AMERICANS.

SALEHA: WE ARE SEEING COMPANIES ALREADY UNDER STRESS FROM THE TARIFF THREATS. CHINA IS INVESTIGATING GOOGLE. AS YOU ARE WELL AWARE, BUSINESSES LIKE TO BE ABLE TO PLAN AHEAD BUT WITH SO MUCH POLICY UNCERTAINTY, THAT PREDICT ABILITY FACTOR IS GONE.

THAT ALL POINTS TO A LITTLE TOUGHER ENVIRONMENT. SEC. BESSENT: I THINK THE BEST THING WE CAN DO FOR PROTECT ABILITY IS MAKE THE TAX CUTS AND JOBS ACT PERMANENT.

THAT WOULD BE THE SINGLE BEST THING WE CAN DO FOR PROTECT ABILITY. WE CAN GO BACK TO THE 100% EXPENSING, AS NEW FEATURES, THAT THIS IS WILL BE HAPPY WITH, BUT THE MOST IMPORTANT THING IS THAT IT FILTERS DOWN TO WORKING WAGES, WHICH IS WHAT WE SAW IN PRESIDENT TRUMP'S FIRST ADMINISTRATION. HOURLY WORKERS DID BETTER THAN SUPERVISORY WORKERS.

SALEHA: LET ME ASK ABOUT A TAX PLAN THEN. ON THE CAMPAIGN TRAIL, TRUMP FLOATED NO TAXES ON TIPS, CUTTING THE CORPORATE RATE, A LOT OF OTHER PROPOSALS. HOW WILL YOU?

WHICH CAMPAIGN PROMISES ARE HIGH ON THE PRIORITY LIST FOR THE BILL, CONSIDERING HOW COSTLY EVERYTHING WOULD BE? SEC. BESSENT: WE ARE JUST STARTING THE PROCESS NOW.

PRESIDENT TRUMP WILL GIVE US HIS PRIORITIES. I CAN TELL YOU THE REAL PRIORITY IS FIXING THIS AFFORDABILITY CRISIS FOR THE AMERICAN PEOPLE. YOU THINK ABOUT NO TAX ON TIPS, NO TAX ON SOCIAL SECURITY, NO TAX ON OVERTIME, POTENTIALLY PUTTING BACK IN AN AUTO LOAN DEDUCTIBILITY.

ALL OF THOSE BENEFITS ACCRUE TO THE BOTTOM 50% OF INCOME EARNERS IN AMERICA. THEY HAVE REALLY TAKEN IT BETWEEN THE EYES FOR THE PAST FOUR YEARS, AND THAT IS UNSUSTAINABLE. SALEHA: BEFORE I LET YOU GO, MR.

SECRETARY, I WANT TO KNOW IF YOU HAD YOUR TRADITIONAL WEEKLY MEETING WITH FED CHAIR POWELL YET. SEC. BESSENT: WE DID, I HAD AN AWAY GAME AT THE FED, NICE BREAKFAST.

CHAIR POWELL AND I DON'T KNOW EACH OTHER VERY WELL, SO IT WAS VERY CONSTRUCTIVE. SALEHA: HOW DO YOU VIEW THAT RELATIONSHIP? THOSE BUILDINGS ARE MEANT TO WORK CLOSELY TOGETHER AND YOU HAVE HAD SOME CRITICISMS OF HIS WORK IN THE PAST.

SEC. BESSENT: AS I'VE SAID IN THE HEARING, EVERYTHING THAT THE FED HAS DONE IN THE PAST, PROSPECTIVELY, MONETARY POLICY, I WILL NOT COMMENT ON.