Scott Bessett, the 79th U.S. Treasury Secretary, unveils the "Big Beautiful Bill" as a historic $X tax cut—permanently extending 2017 cuts, eliminating taxes on tips/Social Security, and slashing business regulations stifling 70% of agricultural lending. A Trump-aligned libertarian, he contrasts Biden’s crypto hostility with his pro-digital-currency push, aiming to prevent offshore collapses like FTX while cutting U.S. tariffs on China from 145% to 30%. With gas at $1.93/gallon and yields near 3.9%, Bessett dismisses deficit fears, targeting Fed rate cuts via bank deregulation and a post-2028 sovereign wealth fund fueled by Ukraine’s economic recovery—projected at trillions if the war ends. Rural healthcare and small-business revival anchor his growth agenda. [Automatically generated summary]
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The Stone Zone on the Red Apple Podcast Network.
Welcome back in the Stone Zone.
I'm joined now by the 79th Secretary of the Treasury of the United States, Scott Bessett.
In his business career, Scott Bessett was widely recognized as one of the world's foremost macro hedge fund managers.
He's given that up to serve the American people.
Scott Besson is a free thinker, a libertarian, strong supporter of digital currency, but above all, he is a Trump loyalist who is playing a key role in implementing the president's strategy for the golden age.
Scott Besson, welcome to the Stone Zone.
Roger, it's great to be on.
We're very honored to have you.
There's so much I want to ask you, but let's start here.
How do you see the implications for the passage of the new budget reconciliation bill, also known as the Big Beautiful Bill?
I think it may be, I think it is, the largest single tax cut in American history.
The president's critics keep pointing to, oh, this is going to balloon the deficit.
They don't understand economic growth.
Tell us the implications from your point of view.
Yeah, Roger, this one big, beautiful bill is the most important piece of legislation that's going to pass this year.
The president's economic agenda is the three-legged stool.
It's trade, it's taxes, and it's deregulation.
And all I hear is Treasury Secretary, all I hear from people who don't like the tariffs is uncertainty, uncertainty, uncertainty.
But then the same people who complain about uncertainty about the tariffs, they are trying to block this tax bill.
And I can tell you that the certainty that will come from this tax bill is a stimulus in and of itself.
And as you said, if you want to see a deficit blowout, don't pass this tax bill because the growth will collapse.
And this is the we're making the 2017 Tax Cuts and Jobs Act permanent.
We are putting in full expensing for equipment and machinery.
We're putting in full expensing for factory structures.
So not only is the U.S. the best place to have a factory, it's going to be the most tax-effective place to build one and furnish it out with equipment.
And then this bill also contains the president's campaign promises of no tax on tips, no tax on Social Security, no tax on overtime, and tax deductibility for auto loans for American-made cars.
And so, Roger, every Democrat who voted against this bill voted against a tax cut on Social Security.
Every single one of them.
Secretary, this morning I saw that you met with community bank leaders from both in and outside New York, as well as small business owners.
What did you hear from them?
How is the Trump administration approaching small business overall?
One of the things I respect about you is you're a man who understands both Wall Street and Main Street.
I think this is particularly relevant at this time.
You know, Roger, when you're from Little River, South Carolina, and then moved to Park Avenue, you understand Main Street and Wall Street.
And Wall Street's done great.
Now it's Main Street's turn to share in the prosperity.
Both can continue to, or both can do well.
It's not one or the other.
It's time for Main Street to play some catch-up.
And I think that one of the key elements for Main Street playing catch-up are these small community banks, small town banks, or small regional banks that have just been throttled in their growth prospects and inability to serve their communities by all this excess regulation that we got coming out of the great financial crisis.
Small Town Banks Thrive00:15:17
And I used to teach economic history, and the history is that when you have a crisis, there's always an overreaction.
And what these small bankers from mostly New York, but some from around the country, have told me is that this regulation is killing them.
They want to go out.
They want to help their communities.
70% of agricultural lending is from small banks.
40% of small business lending.
And we've got to get these banks on their feet, healthy, and lending again.
And they're chomping at the bit to go.
They just need the right policies, which is what the Trump administration is trying to do.
The previous administration, as we know, was extraordinarily hostile to digital currency, cryptocurrency.
You have long been a proponent of it.
The president has embraced cryptocurrency as a vibrant industry in our country and an alternative monetary system.
Why is crypto, why is digital currency so important?
Well, Roger, it was even important as the Biden administration was trying to kill it.
What's important is for the U.S. to be the digital asset leader as we are the technological leader in every other aspect, whether it's AI or CRM solutions.
And it is important for the U.S. to be the leader because we will bring crypto and digital assets on shore.
We're going to have a thriving ecosystem here.
Everything from Bitcoin to stable coins and everything in between.
We're going to apply U.S. best regulatory practices, which is safe, sound, and smart.
And those will go out to the rest of the world.
These blow-ups that you see in the rest of the world, like Sam Bankman-Free down in the Bahamas, that wouldn't have happened if we'd been onshore in the U.S.
And the U.S. was getting left behind.
And fortunately, these companies and the crypto entrepreneurs persevered through what could have been an extinction phase the past four years.
And now it is a pleasure to work with them and set up the proper regulatory framework for the U.S. to take the lead and push this important.
It's such an interesting combination to me As somebody who has studied fiscal policy and monetary policy, and then you combine that with technology, and the U.S. absolutely has to have the lead in this.
I think this is one of the most important and exciting things that the president is doing.
And it is, you're absolutely right.
We need to be the world's leader.
You have, in many ways, been the point man for the Liberation Day tariff negotiations.
I saw that you were in Geneva meeting with the Chinese.
I saw some new announcements in that regard today.
I saw we had one down day in the market after the Liberation Day tariff negotiations, and then the market bounced back nicely.
What is the latest in our tariff negotiations, and how do you think we're doing?
I think we are doing very, very well.
And, Roger, you've known President Trump a lot longer than I have, but I can tell you the joy of working with him is that he has created maximum leverage for his trade team by pushing so hard on both our allies who have taken advantage of us and some of our adversaries or competitors,
trade competitors, military competitors like China.
He's pushed hard on both of them to bring them to the table.
Your listeners should understand that there are 18 important trading relationships, and we are pushing those first.
We reached a deal very quickly with our oldest ally, the U.K.
It's going to mean between $5, $10 billion of new trade for U.S. companies and ag products that is going to benefit the American people.
We went to, we had had an unfortunate escalatory phase with China because on Liberation Day, we had said, do not escalate.
Come and bring us your offers.
And if you escalate, then we will raise the tariffs.
And the Chinese were the only ones who escalated.
We got up to, we were tariffing them at 145%.
They were tariffing us at 125%.
That created something akin to an embargo.
So we've got a 90-day pause here.
We both came down 115%.
We are at 30% for the 2025 tariffs.
They're at 10.
But what's important to also remember, there were 20% tariffs on China from President Trump's first administration.
So we're really at 50.
They're at 10, which I think is a pretty good deal.
And they are negotiating hard, like they always do.
But we have good leverage over them.
Because the important thing to remember, Roger, is we are the deficit country that we have a trade deficit with China, the likes of which the world has never seen.
So if trade gets cut off with them, then we lose some products.
They are the surplus country.
If our trade gets cut off with them, I think that if we hadn't done some kind of a deal, they would have been laying off 10 or 20 million workers in the next few months.
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Behind every one of those patients are doctors, nurses, and caregivers working tirelessly to keep people healthy and safe.
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I think I read someplace that your target for the 10-year Treasury note was in the range of 3.9%.
Do you still think that is a realistic yield?
And how do you feel about that today?
I do because, again, Roger, the mainstream media is working with the Democrats to try to blow up the president's economic agenda.
And I feel like I am just dodging these crazy arrows that they're shooting all the time.
And the better the agenda gets, the crazier the things they say get.
So last week, bond yields went up.
And they said, oh, it was because of the president's tax bill.
And this is what's going to happen to deficits.
Well, you know what?
Bond yields went up around the world.
And the Japan yields went up much higher on a percentage basis.
Same in Germany.
And I think once we see that there is not an inflationary impulse from the tariffs, that energy prices continue coming down.
A cousin of mine called me.
He was in Daytona Beach.
And he said, great job, Mr. Secretary.
Gasoline is at $1.93 and diesel is at $3.
I said, well, you know, I wish I could take credit for it, but it's the market and it's the president's policy of energy and dependence.
And then other inflationary aspects, service inflation is coming down.
So I think once this kind of fear-mongering that we're going to have this big wave of inflation comes down, we will go back, Roger, to President Trump's something similar to President Trump's first term, where we had high levels of growth and it was non-inflationary.
And that is what creates the golden age.
Mr. Secretary, do you think that the chairman of the Federal Reserve, Jerome Powell, should cut interest rates?
You know, Roger, I made the pledge when I was confirmed that I wouldn't talk about the mistakes that the Fed is going to make.
I would only talk about all the ones that they have made.
But I will, I do think that inflation is under control, but growth is good.
Growth continues to surprise all the pundits and the naysayers.
The jobs numbers are strong.
The economic numbers are good.
So We'll see what happens with rates.
Yeah, the president has said he believes that the Fed should cut rates, so neither you nor I need to say it.
I think the president is absolutely right.
How close are we to a bank deregulation deal?
Would that not make it easier for banks to hold those treasury notes we spoke of?
Yes, I think we will get something over the summer.
There's a technical term called the supplementary leverage ratio.
And Roger, I began my career in Wall Street in 1984 as a banks and insurance analyst.
So I know how these beasts work from the inside and how bank regulation should work and could work.
And we are pushing to have this supplementary leverage ratio either reduced or removed.
And it will allow banks to buy more treasuries.
It's the craziest thing you've ever seen.
They're going to take a big capital charge for holding a risk-free asset.
So during COVID crisis, there was an emergency lifting of the supplementary leverage ratio and caused rates to go down tens of basis points.
So I think we could see anywhere from 30 to 60 basis point decrease in rates based on this over time.
That's very, very exciting.
The president had announced the creation of the sovereign wealth fund as the administration's priorities include paying down the national debt.
For the time being, they have paused those plans.
There's plenty on the president's plate and on yours.
At what point will you feel comfortable getting that fund up and running?
And what types of investments do you think it would make?
Well, Roger, the president is moving at breakneck pace.
Nobody knows that better than you, but he's doing peace deals, trade deals, and tax deals.
And once those settle down, I would think that once we get over the hump and this deficit to GDP starts going down,
the total debt to GDP stabilizes and starts going down, and we are paying down debt, then the sovereign wealth fund will be on the table because I'd like to focus on this as a real legacy asset for the president.
Because what I have observed, and I'm a professor, what was a professor too of economic history aside from my day job, President Trump is the first president in centuries who wants to create assets for the American people and not debt for the American people.
So I think if on the back side of the in excuse me, in 26, 27, 28, we can stand up this sovereign wealth fund, it would be a great lasting legacy for a president who wanted to create assets.
And I could see a range of things being in it.
The president created the idea of this Ukraine economic partnership.
He's the first president not just to write blank checks for military aid.
I could see that going into the sovereign fund and sitting on the balance sheet there because Roger, this isn't the kind of thing that's going to produce big gains for the American taxpayer over the next couple of years.
But if this terrible war in Ukraine is able to end, which the president is pushing hard for, and Ukraine rebuilds successfully, and I think because of the partnership with the U.S., they will rebuild more successfully, this partnership could be worth in the hundreds of billions or over a trillion dollars.
If you're just tuning in, folks, we're talking to Secretary of the Treasury Scott Bessett.
You're in the stone zone and we'll be right back.
Rural Health Care Lifelines00:00:53
Rural Americans deserve access to the best our nation has to offer, especially when it comes to health care.
Across every state and every community, America's rural hospitals are the first line of defense, protecting our families, neighbors, and loved ones.
No matter where you live, hospital care doesn't clock out.
They're there 24 hours a day, seven days a week, 365 days a year.
Each year, America's over 5,000 hospitals care for millions of patients, providing 24-7 emergency care, delivering babies, cancer treatments, and other life-saving care that patients rely on.
Behind every one of those patients are doctors, nurses, and caregivers working tirelessly to keep people healthy and safe.
Hospitals are our community's lifelines.
They employ our neighbors and keep our families health.
But now, some in Congress are threatening access to care.
Tell Congress, protect patient care to keep America strong.