TRANSCRIPT

                         March 13, 2025

                          NEWS PROGRAM

                                

             SCOTT BESSENT, U.S. TREASURY SECRETARY

                                

                                

                                

    CNBC INTERVIEW WITH SCOTT BESSENT, U.S. TREASURY SECRETARY

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     CNBC INTERVIEW WITH SCOTT BESSENT, U.S. TREASURY SECRETARY

     MARCH 13, 2025

     SPEAKERS:
     SCOTT BESSENT, U.S. TREASURY SECRETARY

     SARA EISEN, CNBC HOST 

SARA EISEN, CNBC ANCHOR: And good morning to you, Mr. Secretary, in Washington. Thank you for joining us.

SCOTT BESSENT, U.S. TREASURY SECRETARY: Good morning, Sara.

EISEN: Let's start right there, because Carl just went through the markets. It's another sort of turbulent day here. The volatility has really picked up. We're down another more than 3.5% for the week, almost 10% from the recent highs. I know that you guys have brushed this off, but I do wonder if you're starting to get concerned now that these losses are picking up.

BESSENT: Well, look, Sara, what we're focused on is -- we're focused on the real economy. Can we create an environment where there are long-term gains in the market and long-term gains for the American people? I think having been in the markets for 35 years, I know the market is prone to big unwinds like this. I think we've seen, you know, a lot of position unwinding, and I can't really speak to that.

EISEN: I guess, you know, and this has been consistent with your view, but 62% of Americans own stocks. I mean, it's near 20-year highs. So how can the White House not be concerned about hardworking Americans' 401(k) plans?

BESSENT: Look, Sara, I didn't say we're not concerned. I'm not concerned about a little bit of volatility over three weeks because if you look over the long term, the reason stocks are a safe and great investment is because you're looking over the long term. If you start looking at micro horizons, stocks become very risky.

So we are focused over the medium and long term. And I can't tell you that the market is going to go up today, tomorrow, next week. But I can tell you that if we put proper policies in place, it's going to lay the groundwork for both real income gains and job gains and continued asset gains.

EISEN: Understood that you're focused on the long term. And, you know, part of it is these tariffs. But now there's concerns about a possible government shutdown. Senate Minority Leader Chuck Schumer is saying the Democrats are going to reject a government funding bill. We have this deadline tomorrow night. What is your expectation, Mr. Secretary, and how destructive would this be?

BESSENT: Well, it would be incredibly disruptive. And, look, Sara, I know you said you've been in Singapore all week. But I think the underreported story of since January 20th and of the past few weeks is this incredible Republican unity and this Democratic disarray that we've seen Speaker Johnson get through with President Trump's help, a tax bill get it over the Senate.

We saw a clean CR bill. And if Senator Schumer wants to reject it, hurt the American people, close down the government, and they're going to own any of the problems that go with it, including economic slowdown. And if this is all they got, then they ought to regather and think about what they're doing to the American people and the economy.

EISEN: You do think that this shutdown would cause economic harm?

BESSENT: It can't be good.

EISEN: Yeah, I mean, look, the market's been really focused on tariffs, Mr. Secretary. And it's been another sort of up-and-down ride this week. A lot of uncertainty among business leaders.

This morning, President Trump threatened a 200% tariff on Europe on wines, champagnes, and alcoholic products coming out of France and other E.U. countries. And I do wonder how that comes to be. Was this premeditated? Did you know about this? This is in retaliation to what Europe did, in retaliation to the steel and aluminum tariffs. But 200%?

BESSENT: Look, I was with the business roundtable yesterday. I think it was 135 CEOs. And, you know, I talked to them about our plan, which includes tariffs, deregulation, and what I call reprivatizing the government and bringing down this incredible level of government spending. And one or two items with one trading block, I'm not sure why that's a big deal for the markets.

EISEN: I think the big deal for the market is just not knowing what's next and what the target is necessarily going to be, and also not knowing where this stops. Because if we ratchet up tariffs, they retaliate, we go higher, then what?

BESSENT: Well, look, Sara, it could go the other way, too. Look, that's the nature of these reciprocal tariffs, that all President Trump is asking is for countries to take theirs off. So we have identified some strategic industries, steel, aluminum, likely autos, but everything else is up for grabs, and that's going to be a decision that's made by our trading partners.

EISEN: Yeah, that was one of my questions, which is, how these tariffs come off if that is ultimately the. Because it feels like once they go on, it just gets out of control from there.

BESSENT: Well, again, that's a decision by our trading partners. If they want to ratchet things up, and I can tell you, as somebody who's studied the history of this, it is the surplus country that takes the greatest hit. You know, we -- we have a big trade deficit with these countries, so in the event that there's a back-and-forth with tariffs, I would counsel these government leaders that they are on the losing side of this argument economically.

EISEN: You mentioned the business roundtable that you attended yesterday. What did you hear from CEOs on this -- on this issue? How much frustration or nervousness is there?

BESSENT: Look, I think that we were always going to have a transition from this incredible, unsustainable level of government spending that we had. I think last week I called it a detox, and generally they're very supportive of that, and we're going to have a transition. We are going to delever the government and relever the private sector, both through the regulated banking system and through industrial deregulation.

They were very excited about that, and the one thing, in terms of certainty, that everyone was the main topic is the tax bill, and we're working on that every day. I had a meeting with the Senate House leadership, and Kevin Hassett from the White House yesterday, so that's moving forward nicely. And you know, I'm confident that that's on track. We're not going to have the biggest tax hike in history on Jan. 1. We're going to -- we're shooting to get this done this summer. And I think that's going to provide a lot of certainty for American households and for industry.

EISEN: I definitely want to get to that in your meeting and where that's going on Capitol Hill with the tax cuts, but just while we're on trade, and the response from corporate America, you know, when you say that we're in a period of detox, you used that word on CNBC last week, is that a euphemism for recession?

BESSENT: Not at all. It doesn't have to be, because it'll depend on how quickly the baton gets handed off. You know, our goal is to have a smooth transition. But I tell you, Sara, the easy thing -- the easy thing for us to have done would have been to come in and just keep this massive spending level going, and it's unsustainable, but could we have kept it going for a year, two years, maybe even four? Maybe. But you're risking a financial calamity. So, you know, we are trying to get this tax bill done. We are controlling expenses, and when we get the tax bill done, so if you can change the trajectory up revenues, up economic growth, hold expenses flat, or do the unthinkable and cut expenses, then that's a pretty good trajectory on growth.

And you know, if we go back to the model in the 90s, that's exactly what happened. You know, we'd see interest rates come down, we'd see the private sector take up the slack from the government, because right now we have excess employment in the government, and those people can be moved to the private sector.

EISEN: Yeah, I mean, the question is what's realistic when it comes to cutting the debt. I mean, I think you yourself have said you want to get to a 3% deficit to GDP, or what, almost 6.5% last fiscal year. DOGE is working on it. $115 billion in DOGE savings so far, though, so that's not going to make a dent. Where -- where do you see the meaningful cuts coming from when you talk about rebalancing away from the -- from the government?

BESSENT: Well, look, I don't know what your family budget is like, but to me, $115 billion is a lot of money. That's 5% of the deficit last year. So I think that's a pretty good start, and it's only been 6 or 8 weeks, so there's probably a lot more that we can do. And you know, there's two parts to this. It's accelerating the economy, growing the revenue base and controlling expenses.

The U.S., we do not have a revenue problem. We have a spending problem. Government revenues are right at the long-term baseline that the previous administration just blew things out to the upside, and we're trying to get this under control.

EISEN: What about the economic signals that you're seeing right now? We saw this surge in small business optimism after the election because of some of the policies you're talking about, and then for the second month in a row now, we've seen a drop.

Also, the Atlanta Fed, for instance, is forecasting a negative growth rate for the first quarter. I could go on about some of the confidence warnings right now, but I am curious if you're concerned about what you're seeing in the underlying economy.

BESSENT: Well, Sara, I think you've been away, but I think the Atlanta Fed has revised up their number to a positive number. That was due to gold imports, which was kind of an anomaly. So, you know, I'm not worried about a very noisy indicator.

And again, as I told the Business Roundtable yesterday, as I tell your viewers, what we're trying to do is create economic certainty. We're going to do it with the tax plan. We're going to do it with deregulation.

And, you know, I also said to the business roundtable, you know, I think it was 135 CEOs yesterday, if you came out with a plan similar to what DOGE wants to do with the federal government, all your stocks would go up 15 or 20%. You know, it would be considered a miraculous restructuring, cost savings, and put you on a sustainable course. So I think we're not getting credit for this yet. I think we will, so.

EISEN: Yeah, I mean, and part of what you want to do is lower interest rates, which you've said, and that should happen if the government cuts spending. I do wonder, we've seen a drop in rates, as you've said, from near 5% on the 10-year, down to 4.3. But it's happening for the wrong reasons, right? It's happening because of economic slowdown concerns, and it's moving in the opposite direction as stocks. So do you want to see rates fall even if that's why it's happening?

BESSENT: Well, look, you know, let's disaggregate, Sara, why rates are going down. We had a surprise CPI yesterday on the downside. We had a flat PPI. So maybe the inflation is getting under control, and the market's going to have some confidence in that. You know, there are a lot of reasons that rates can come down.

EISEN: I wonder also what you make of the U.S. dollar. This is right in your territory as hedge fund manager, I know, and also Treasury secretary. U.S. dollar's been weakening as well, which wasn't necessarily what was supposed to happen with the tariffs. And whether that speaks to anything about foreign demand for our assets in the U.S. right now.

BESSENT: Well, Sara, I don't have to tell you or anyone on this show, markets live in the future, and the U.S. dollar priced in a lot after President Trump's victory and the Republicans' sweep. So, you know, a lot was priced in that it's natural to see an adjustment, and I think the markets adopted a wait-and-see attitude. And the other good news for global consumption is that for the first time in 25 years -- 25 years, the Germans are going to take off their debt break.

You know, this is something that the French leadership had tried to do, the Italian leadership, the whole E.U. had been very frustrated with German spending. And President Trump has gotten them to up their spending on military. So we could see an upside growth surprise in Europe. China seems to have stabilized with some of their working groups, so that other countries are doing better. It's natural that, you know, after this big surge in the dollar, that, you know, other currencies could do well.

EISEN: Yeah, and we have seen the euro shoot up like that. Since you mentioned China, I'm curious if there's a dialogue going on between you and your Chinese counterpart, whether there's any talks scheduled for President Trump, and Xi, just given the U.S. has amped up the tariffs to 20% on Chinese goods, whether there's any capacity or scope for discussion about what to do about that or a potential deal.

BESSENT: Well, there's always capacity for discussion, and a lot of what President Trump does is maneuver into a good position for a deal. So I've had one conversation with my Chinese counterpart. We had a very, very good discussion.

I talked about some of our national security concerns, about them buying sanctioned Russian oil, sanctioned Iranian oil, the fentanyl crisis. And, Sara, the other thing that we've seen, that with President Trump's initiative, with the tariffs on Mexico, on Canada, on China, we've seen the fentanyl imports at the border down 40%, 40%. And think how many American lives, think how many families that's saved.

So, yes, we're having a dialogue, and I'm sure at some point the president, President Xi, will engage in high-level talks. I can't tell you when.

EISEN: Right. So you did mention that you met with congressional leaders on Capitol Hill about extending the tax cuts. Where are we? What are the biggest challenges so far in getting this done?

BESSENT: Look, I think it's just coordination. Speaker Johnson did a fantastic job of getting it out of the House. It's with the Senate now, and you know, I'm hoping that they could get to a joint markup sometime in the coming weeks.

EISEN: Isn't it hard enough to roll over the 2017 tax cuts? How do you pay for some of the other stuff that they want to put in here and that the president wants to put in here, increased salt cap, tax on -- no tax on tips or Social Security, that sort of thing?

BESSENT: Well, Sara, I think to a lot of people it's not obvious that if we extend or make permanent the TCJA, other than getting back full expensing, there's no stimulus there. So we are just keeping the economy on the same level that it is. So it's important to add the president's initiatives here to give the economy some impetus.

And, again, that's going to be through a combination of growth and some spending restraint. And, look, I've been in the investment business for 35 years. I thought I understood CBO scoring from the outside. Shame on me. Now that I'm on the inside, I see how crazy some of this scoring is. And, for instance, CBO, it's all in a 10-year window, assumes a 1.7%, 1.8% growth rate no matter what.

If we have the biggest tax hike in history, CBO will tell us we're going to grow 1.7%, 1.8%. And if we are able to get the tax bill through, get some new stimulus in, then we're still going to grow at 1.7%, 1.8%. Neither one of those scenarios really holds water in the real world. So we're trying to put some of the real-world projections together, share those with the House and Senate leaders, and they're very receptive to those.

EISEN: I also wanted to ask you, while we have time on Ukraine and on Russia, because I know you've been involved in these discussions, you've been to Kyiv, met with President Zelenskyy. President Trump threatened this week, if Russia doesn't sign on to this ceasefire, there will be financial repercussions that would be very damaging, devastating, he said, for Russia. And I know you've said also last week in New York that you're prepared to go all in.

So what exactly does that look like? And have you drawn up plans for further sanctions or tariffs on Russia to pressure them to do this deal?

BESSENT: Well, I'm not going to show -- you know, I'm not going to lay our cards out on worldwide TV. But I could tell you that I was very dispirited for -- during the Biden administration's sanctions level because they -- I thought, went at a minimal sanctions level because they were worried about domestic energy prices.

You know, we've seen crude come down about 15%, 13%, 15% since Inauguration Day, and that is with the Biden administration, Jake Sullivan, deciding that they're no longer worried about crude prices.

So, you know, if we just take kind of a scale 0 to 10, that I think the Biden administration sanctions on Russia were probably a 3. On the way out the door, they took them to a 6. And I can tell you, we wouldn't hesitate to take them up to 10. And, you know, again, this is all part of President Trump setting the table for successful negotiations. He's willing to apply maximum pressure on both sides.

EISEN: No, I know you were very strong on this during the confirmation hearings on your views on this. Finally, you know, we talked about DOGE. I mean, I'm just curious, how would you describe Elon Musk's engagement with Treasury at this point? We know that there were some early stories about the access, but how closely are you working with him at this point, and how much room is there to cut in the Treasury itself?

BESSENT: Well, look, there's always room for better performance, especially when we think about the federal government. And, you know, Sara, what I like to emphasize -- I emphasized it yesterday to the business leaders. I want to emphasize it to your viewers. Let's remember, the E in DOGE is efficiency. It's not elimination. It's not extinction.

We are trying to make the government do better for the American people and right-size it. And I don't think that there is anyone who is happy with the bundled services they get from the federal government.

So, you know, you're sitting in Singapore. I met with some leaders from Singapore yesterday. And Singaporeans love their government. You know, they think that it does good things for them. And they spend about 18% of GDP on their government. If we were to balance the budget, we'd be at 18% of GDP. So why can't we have the government do a better job for the American people at a better price?

EISEN: Well, we certainly appreciate the time, Mr. Secretary, on all the issues that you're focused on in your portfolio. Sorry for the delay from Singapore. Next time, hopefully in person. We appreciate it very much, though.

BESSENT: Good. Good. Have a safe trip, Sara.

EISEN: Thank you very much.

That is Secretary Scott Bessent, the Treasury Secretary of the United States.

END