Treasury Secretary Scott Bessant (2:27)

Been in a massive autopile up, you're a little skittish about driving and Joe Biden crashed the economy.

Joe Kernan (2:35)

I'm CNBC producer Cameron Costa. Squawkpod reports from the AT&T Pro Am at Pebble beach begins right after this foreign.

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Treasury Secretary Scott Bessant (3:47)

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Treasury Secretary Scott Bessant (3:52)

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Treasury Secretary Scott Bessant (3:59)

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Treasury Secretary Scott Bessant (4:08)

And the influencer did get us 53 new followers though.

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AT&T business Wireless Connecting changes everything.

Joe Kernan (4:22)

Welcome back to Squawk Pod where Joe Kernan is in pebble beach and one of his interviewees is in Washington, treasury secretary Scott Bessant.

Joe (4:31)

Mr. Secretary, thank you for gracing us today. Even though I'm out. I wish you could be here.

Treasury Secretary Scott Bessant (4:38)

Joe, good to see you and thanks for getting up so early.

Joe (4:41)

Yeah, you are. And work with me on this if I get a little groggy or my questions don't make any sense. You do have some news this morning for us. I think it might relate to what we've seen in various states around the country and maybe with Doge and elsewhere. But there's a new initiative from the Financial the Treasury's Financial Crimes Enforcement Network for whistleblowers that can actually be compensated if they come forward. Why wasn't this done before? It seems like a no brainer.

Treasury Secretary Scott Bessant (5:14)

I don't know Joe, but it's very exciting. I think it's going to be a great way to ferret out waste, fraud and abuse. Starting in Minneapolis, which has been ground zero. So we are encouraging whistleblowers who know about fraud, people who are stealing from the American taxpayer to come forward. At treasury we're setting up a website and we will be giving rewards up to 10 to 30% of the fines that we levy.

Joe (5:43)

So what are go into some of the things that you're talking about? What type of tips are you looking for surrounding what type of fraud and abuse?

Treasury Secretary Scott Bessant (5:55)

Again, anything that has to do with government programs where there's a lack of common sense. What we saw in Minneapolis were daycare centers without children. The programs where they're claiming that 80, 80% of the children in the programs had autism. Public or senior transport companies with no vehicles. So it's kind of like they say at tsa, if you see something, say something. And if you say something and it turns out that you have helped us make a big recovery, we want to pay for that.

Joe (6:35)

And it's fincen.gov whistleblower and who's eligible? Anyone in the United States, I guess. Where will the money come from to pay out again?

Treasury Secretary Scott Bessant (6:47)

It's going to come from the recoveries that we get, the fines we let fines we levy. And again, you know, we want to call this back for the American people. These Minneapolis numbers are astounding. They keep getting bigger and bigger. The lack of oversight. Attorney Minnesota Attorney General Keith Ellison was in front of Congress yesterday and I thought he gave some very unsatisfactory answers. And it seemed like from what I saw, that there was a circular system where that people were stealing from the federal government, then donating back to politicians.

Joe (7:23)

Secretary let's shift the ears to something everyone's watching closely. Obviously, Kevin Warsh, the president would like to have him confirmed in a timely manner. And there are some obstacles in one. Senator Tillis, I think you proposed, I guess you'd call it an off ramp, some type of an off ramp. If the investigation would move from justice to the Banking Committee. I can't tell. I'm looking at what his comments are. He says, well, yeah, we could, we could certainly have some type of investigation, but that would not replace the investigation for the doj being that needs to be dropped first. Do you know where we stand on that, how this is going to play out?

John Stankey (8:13)

Yeah.

Treasury Secretary Scott Bessant (8:13)

Again, Joe, the administration has no influence on what the U.S. attorney for D.C. does. What I was proposing was that the Senate Banking Committee also investigate this very large overrun on the Fed construction project. We'll see where the investigation goes with Jeanine Pirro's office. There were subpoenas issued, but that doesn't have to mean that there are charges. They reached out to the Fed in December via email, didn't get responses, and then issued subpoenas. So we'll see what the state of that is. I think what's important here is that at this I spoke on Tuesday at a Republican Senate working group. And what I think is important, my understanding is that we are going to proceed with the hearings. Senator Tillis wants to keep a hold on any vote with Kevin Warsh leaving committee, making it to the full Senate. But I think it's important to get the hearings underway, and I think we have an agreement to do that.

Joe (9:26)

Do you, I think Senator Scott has weighed in as well. Do you agree that the Justice Department may have overstepped in this? I guess you may not want to weigh in on what the DOJ does, but there are a lot of people just intimating it's a pretext just to try to force the Fed and Jay Powell to lower rates.

Treasury Secretary Scott Bessant (9:50)

Again, Joe, I'm not going to comment on the ongoing Justice Department investigation, but I will point out Senator Scott, my home state senator, who I'm very close to, did say that Jay Powell is guilty of one thing, incompetence. And this building project is out of control, way over budget. And the Fed, unlike other branches of government, does not work on appropriations. They have magic money. So when they go over budget, they just print more money. And I'll remind your, your viewers that due to some terrible bond market purchases, The Fed's losing $100 billion a year.

Joe (10:32)

Did we know that the Senate was ready, the committee was ready to move ahead. Is that, that so? You just confirmed that that is the case.

Treasury Secretary Scott Bessant (10:41)

That is my, that, that's my belief that what was settled, what came out of the meeting I was at on Tuesday. So I think we move ahead with the hearings and Senator Tillis will exercise his right to hold up a vote. But I think it is important that we get to the hearings. Chair Powell term as chair ends mid May. And anyone who cares about the integrity, the independence of the Fed is going to want to see continuity with Kevin Warsh. He's a great candidate. Last time he was voted on for governor, he received a. And he got 100% of the votes. And unbelievably, he was sponsored by his home state Senator Chuck Schumer. We can see how things have changed since then. Joe.

Joe (11:32)

Yeah, that's an understatement. Before we move on to that jobs report, which was better than expected, there's some news out this morning. Mr. Secretary, is the team, the Trump team, working to narrow the scope of some of those metal tariffs? I think over 50% at one point I directed at China, but there were maybe some collateral damage. Can you shed any light on whether there are things going on behind the scenes that would, you know, that would, you know, make the EU feel a little bit better?

Treasury Secretary Scott Bessant (12:06)

So, Joe, I'm not going to get out ahead of the President here. I spoke to USTR Ambassador Jamison Greer on my way into the studio this morning and you know, we'll see if there's kind of a narrowing. My understanding is if anything is done, and I don't think it's great reporting that we saw today, if anything is done, I think it would be sort of clarification on some incidental objects. But again, that's going to be the president's decision. I don't think we have great reporting this morning.

Joe (12:38)

Market wasn't so great yesterday. That's a great this morning. But 50,000, Mr. Secretary, 130,000 jobs, more than double what was expected. 4.3% unemployment, closed border. What is wrong with the mood of the country? What are, what are people feeling that they have some polls showing that people miss Joe Biden's economy. How does that work? Where's, where's the disconnect again, Joe?

Treasury Secretary Scott Bessant (13:06)

You know, what was even more impressive about the numbers is the, the private sector numbers were more than 170,000 and government jobs were reduced by more than 40,000. More than 30, 30,000 of that was federal jobs. We're at the lowest ratio of government jobs to total jobs since 1966. And this is part of President Trump's plan to re privatize our economy. And I think, as I've said many times, 2025 is about setting the table. 2026 is going to be a banquet for the American people. The economy is taking off. We saw 40,000 new construction jobs. Everyone says to me, oh, where are these factory jobs that you planned? And unlike what you and I see in the financial markets, you can't push a button and build a factory. There's lead time. But what we are seeing is big, big commitments to these factories are going to be built. First we'll get the construction jobs and then the factory jobs are going to come. So I think we're going to see the tremendous groundbreaking. I think we're going to see a lot of factory completions this year. And I think thanks to the work and families tax cut on one side of the balance sheet, we are seeing corporate capex, the surging and capex jobs always follow. And then on the other side, we are seeing the President's signature policies, no tax and tips, no tax and overtime, no tax on Social Security deductibility of American made cars. I can tell you I'm also the IRS commissioner and that tax refunds thus far and it were very early in the season are up 22%.

Joe (14:50)

You know, Mr. Secretary, with an election coming, you will see Maybe not feet of clay, but you're going to see some members of the Republican caucus thinking about what happens in November. I don't know if that's how you tie this tariff, how you tie the tariff vote and what the point is because it probably going nowhere. But the deficit itself in getting down to 3% where you'd like to get the deficit to GDP ratio, do you trust these CBO numbers or do you think that growth is being underestimated because the tariffs they do point out, the tariffs do offset some of what the big beautiful bill's provisions do to widen the deficit. I mean, maybe there's on the other end, there's growth that's going to come from a lot of those programs. But in the meantime, the deficit widens offset by tariffs. So why don't some of the Republicans in Congress see that that's a rationale?

Treasury Secretary Scott Bessant (15:51)

Well, Joe, look, the CBO missed what went on last year. So if they can't do the near year, how can they do 10 years out? And they're a static scoring system. And it's, I don't know what they're thinking because they assume GDP growth is 1.7, 1.8%. If we'd had the biggest tax hike in history, they would have assumed that if we, in fact what we did, we gave the biggest tax cut in history. And we'll never have to talk about these tax cuts again because thanks to President Trump's leadership, Mike Johnson, Leader Thune, we now have great permanence, we have great certainty. So, you know, I'm not sure what the CBO is saying. And for just to give your viewers some context, Joe, 2024 deficit to GDP was 6, 6.97%. 2025 went all the way down to 5.4%. That's constraining spending and growing the denominator. So when we have high growth, then the deficit to GDP comes down and that's how we pay down this debt. Interest rates. We had the 10 year bond, the best that it had since 2020. Last year we were the best performing G7 economy in the bond market. And one of the reasons that the bond market has been so tame is because we are getting our fiscal house in order. So I will take the market over the CBO any day.

Joe (17:27)

Can we just touch on China quickly? I know you're going to meet with the vice Premier in the next few weeks ahead of the president's visit to China. Is this the same thing you've always sort of felt a term of fair rivalry or Is that a little bit of a softening, this sort of an acknowledgement that these two countries, we need each other in terms of trade?

Treasury Secretary Scott Bessant (17:50)

Joe, what, what it's acknowledging is China. China is the second largest economy in the world. And, you know, I've been very consistent when I said we don't want to decouple, we don't want to decouple. We need to de risk, you know, President Trump. It's a dual strategy here. We want to engage with the Chinese. We want fair trade. Turns out since the China shock, fair trade, free trade was not fair and our great American workers got wiped out. We're bringing back factory jobs, but we are going to de risk.

Joe (18:27)

Secretary, the more as time goes by, and I think things happen even more quickly. We remember some of the transformational technological advances in recent decades. I could dwarf, you know, could dwarf the Internet, could dwarf the cloud. But 15% is what the president said in terms of, I guess he's talking about maybe nominal growth if, if the new chairman of the Fed were to lower rates. I don't know whether, obviously that sounds like a, an exorbitant number, but I don't. I think we could underestimate some of the advances we get from AI deregulation, everything else that that happens. What do you think is possible?

Treasury Secretary Scott Bessant (19:16)

Look, I've spoken to the President quite a bit about it. As you know, the President is an optimist. And we saw numbers last year both in terms of inward investment to the US Economy, tens of trillions of dollars coming in. We are also the GDP numbers for what while President Trump was fully in office. 4.1%, 4.1%. We'll see where the fourth quarter comes out, but good chance will be at 3 or over 3%. And again, that's a private sector economy, Joe. And I think what the President's looking back at is when you have these transformational technological breakthroughs back to the 1880s and the railroads, we could see something that we couldn't imagine. On the upside, I'm not going to put specific numbers on it like the president, but I think there's a very good chance we're seeing this productivity boom, we're seeing this investment boom, and most of all, we're seeing inflation come down, Joe. This terrible tax that the Democrats put on the American people the most, the onerous tax is inflation. So 21.5% under President Biden, thus far under President Trump, 2.7. And it is coming down. I would predict that we could be back near the Fed's 2% target in the middle of this year.

Joe (20:46)

The, some of the numbers, some of the recent numbers on inflation have people wondering whether the Fed has the, the leeway to lower rates. Additionally, I guess your thesis would be that for productivity reasons, and I guess we keep hearing the President posit that growth is not necessarily coincidental with higher inflation, but doesn't cause higher inflation.

Treasury Secretary Scott Bessant (21:15)

Well Joe, I'll tell you what causes higher inflation. It's what the Biden administration did. They created a demand shock with this government led tax and spend, but they created the demand shock with spending. But then this regulatory burden that they created, they constrained supply. So when you've got demand, demand up, supply down, that's how you get inflation. President Trump's done the opposite. He's created, we have a demand shock through, through the private sector, through tax incentives and capex and then we have the dramatically deregulated. We're going to continue to deregulate. So we are creating supply whether it's through deregulation or through all the productive capacity that's being put into the economy. So I think we should have an open mind here that we could see something very similar to what we saw in the 1990s when there was also a technology boom then. And we've got to get away from this, this idea that growth automatically has to be tampered down because growth per se is not inflationary. It's growth that leaks into areas where there's not sufficient supply. And everything this administration is doing is creating more supply.

Joe (22:45)

I mentioned that, you know the stock market we didn't even have, we usually would print up hats. I know Santelli had a 50,000 hat, but it came fairly quickly. You talk about some GDP numbers that we haven't seen in a while. 4.3% unemployment is almost full employment. I'm still trying to figure out the affordability question and why Americans are glum about their situation. Is it housing? Are there other think about oil prices, Gasoline prices are how much lower than they were when they ran up during the beginning of the Biden administration from all the over regulation. What, what needs to happen to make Americans feel better to maybe increase the Republicans chances of holding the House and Senate?

Treasury Secretary Scott Bessant (23:37)

Well Joe, if the Democrats want to compete on the 2026 economy, I think Republicans, House, Senate and local candidates, they are willing to do it. As I said, we're seeing things kick in now. But look, you know, after you've been in a massive auto pileup, you're a little skittish about driving and Joe Biden crashed the economy. Whether it was Joe Biden, Elizabeth Warren, Kamala Harris, these policies were a disaster for the American people. As I said, 21.5% cumulative inflation, loss of real purchasing power. And our friend at strategists, Jason Trenor, had something called the Common Man Index. So for working Americans, the numbers weren't at CPI. It was up in the 30s in terms of groceries, insurance, rents. And we're seeing, we're bending the curve on all those. And there are two ways to fix affordability. There is bringing down prices and things like energy. Energy is coming down. Energy is a core component of everything for consumers. So as that comes down, we will see the inflation levels come down. But on the other side, it's real income increases. And we've seen real. We saw real wage growth in 2025. I think it could be very strong in 2026. And I think the American people are going to start feeling it. In my career on Wall Street, I always looked to see what was performing well in the stock market to tell me about the economy. And as we've seen, there's been some volatility in big tech. But if you look at the broad indices, whether it's the equal weighted S and P or the small cap indices, they're doing fantastic. The cyclical indices are doing well. Regional banks are doing well. So that tells me the stock market is saying that Wall street is saying that Main Street's going to have a great year in 2026. And I think the American people will feel that.

Joe (25:43)

Finally, Mr. Secretary, just a. An overall comment on the political environment that we find ourselves in. A complete lack of civility. In some of the things I've seen, you don't pull any punches. A lot of times I've seen you recently in some interactions with senators or from the other side, there is going to be some real hardball play. Do you think. Would you tell the President or Republicans to push for an end of the filibuster? Because maybe this is the last real chance to do anything before. Before November. I mean, the Democrats probably would get rid of it if they took the House.

Treasury Secretary Scott Bessant (26:29)

Well, Joe, the President couldn't have been more clear. I couldn't have been more clear. A couple months ago, I had an editorial in the Wall Street Journal just saying we got to get rid of the filibuster. You know, in game theory, the best known game is the Prisoner's Dilemma, and it's like, who moves first? And if you have bad actors in the Prisoner's dilemma, which the Democrats are, then you should Move first. It's kind of kill or be killed. And clearly that Joe Manchin, Kyrsten Sinema, the Democrats basically had nuked the filibuster, but they refused to go along with it. And guess where they are? They're both sitting at home now, hopefully watching your show. And you know, I think the Republicans need to be smart about this and I think that they're, maybe the filibuster doesn't get withdrawn for everything, but there are things that we, we've got to do, you know, like, like voter integrity and we've got to keep the government open. I mean, look, we are on the verge of another government shutdown and the Democrats think this is the way to hurt President Trump, but they're willing to hurt the American people. We had the biggest or the longest shutdown in history. The economy still did great because all the initiatives we put forward. But I think that we have to get on with the people's business. And if the Democrats shut the economy down again, it is a sign that they are good, that they are bad actors. They don't care about the American people and we ought to move forward, not let the government shut down, have voter integrity and many other of our signature issues.

Joe (28:18)

And I thought of one more that, you know, while we thought quite a half hour yet, which I really appreciate, Mr. Secretary. Crypto bills moving forward. Bitcoin a little bit dicey here at this point. You wonder about the leverage in the system. Any comments?

Treasury Secretary Scott Bessant (28:38)

Yeah, Joe, the history, if we take bitcoin as a proxy for crypto, Bitcoin has a history of volatile movements. We went back and looked. I believe the average sell off is been about 58% and we're coming into that zip code right now. And crypto holders are mostly in it for the long term. They are used to the volatility. So it's, it's important that everyone knows what, what they're buying. But part of the volatility here is self induced because and this is one thing where there has been bipartisan working group and Democrats, there is a group of Democrats who want to work with Republicans on getting a market structure bill. It's called the Clarity Bill. But there are a group of crypto firms who have been blocking it. They said, well, we'd rather have no legislation than this legislation. And that doesn't seem to have been good for the overall crypto community. So in a time when we are having one of these historically volatile sell offs, I think some clarity on the Clarity bill would give great comfort to the market and we could move forward from there. So it's very important to get this done. And I think if, if the Democrats were to take the House, which is far from my best case, then the prospects of getting a deal done will just fall apart. I mean, look, look what the Democrats did to crypto under the Biden administration. It was almost an extinction event. And President Trump has worked to make the US the digital asset capital of the world. There's a lot of innovation that goes on adjacent to crypto in the blockchain in Defi. So I think it's important to get this clarity belt done as soon as possible and on the president's desk this spring.

John Stankey (30:43)

Great.

Joe (30:44)

Mr. Secretary, as always, thank you. Thanks for all your time this morning as well and hope to see you again soon.

Treasury Secretary Scott Bessant (30:50)

Okay, good. Thanks, Joe.

Joe Kernan (30:55)

Next up on Squawk Pod, Joe Kernan is sitting down with AT&T chairman and CEO John Stanke. He is building out the Internet's future. How he's investing in fiber infrastructure and when his own investors can expect to see returns.

John Stankey (31:10)

After you get all the railroad tracks in, then you run the trains. And so when we get over that investment hump, and as we said, by 2030, we'll be over most of that, you should see CapEx as a percent of revenue start to tick down.

Commercial Narrator (31:27)

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Treasury Secretary Scott Bessant (31:35)

It can be pretty strange, stressful.

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Joe Kernan (32:27)

Not every sale happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.

Commercial Narrator (32:51)

Sometimes AT&T business Wireless Connecting changes everything.

Joe Kernan (33:01)

You're listening to Squawk Pod, where Joe Kernan is in the field. Well, on the green is probably more accurate.

Joe (33:08)

No place like it. Welcome back to Squawk Box. Live from the AT&T pebble Beach Pro Am. We're joined now by John Stanke, AT&T chairman and CEO.

Treasury Secretary Scott Bessant (33:17)

Hey. Good morning.

Joe (33:19)

Good morning. It's good to see you.

John Stankey (33:20)

It's good to be here.

Joe (33:21)

You're glowing.

John Stankey (33:23)

It's kind of hard not to when you're out here.

Joe (33:24)

It is. And when your stock's doubled and after you made all those hard decisions, I was reading something.

John Stankey (33:30)

Does that happen?

Joe (33:32)

I was really. You didn't notice? You're not really. Yeah, you're working too hard. You said you've never made a decision too quickly.

John Stankey (33:41)

Yeah, that's true. I think we all look back and say, sometimes we should have taken our intuition.

Joe (33:46)

So that wasn't quick when you came into this place and said, everything we've done, we're undoing, and we're gonna focus on what we need to do from here on out.

John Stankey (33:56)

Well, I've kind of been in the middle of it, so. So there's obviously contemplation that goes on. And then, as you know, it was.

Joe (34:04)

Before you were in a position to do it, you were thinking about, yeah.

John Stankey (34:07)

You walk into this job, and then you don't find out the day before you take the job that you're going to be taking the job, and you start thinking about, what are you going to need to do when you walk in?

Joe (34:15)

Right. We just. We're going to get to what you've done. But. So this tournament is old. AT&T's, you know, been associated with it for such a long time. You just heard this is the model for where the PGA wants to go.

John Stankey (34:29)

It felt like last year we got the mix and the formula right. I mean, we had a really successful last year, and as you know, that was kind of the flip of things like ratings and viewership for the Tour.

Joe (34:40)

And.

John Stankey (34:40)

And then they had a great year last year, moving into it. And so this year, it's refining it. And I do think we have something that's working really well, and it gets down to quality and having a great leaderboard, and I hope we see that on Sunday.

Joe (34:52)

Does it make sense to. To stay committed to this? For AT&T? You've made other decisions that, you know, to Go against what's been the convention for years and years. I think it's a great.

John Stankey (35:04)

You're asking if I'm going to.

Joe (35:05)

Yeah, I'm asking.

Treasury Secretary Scott Bessant (35:05)

Yeah. Reverse.

John Stankey (35:06)

41 years and $250 million of donations to charities.

Joe (35:10)

Yeah. I mean, it seems like it helps a lot of people.

John Stankey (35:14)

It does. It's a great. This is a particularly unique property and asset, in my view, and it's done fantastic things for the community. We've been great partners with the Monterey Peninsula foundation, of course, Paddlebowl beach company. And when you have those kind of good partnerships that make a difference, you tend to kind of ride them as long as that makes sense. And this one's been really good for us.

Joe (35:34)

You probably weren't thinking about artificial intelligence two or three years ago.

John Stankey (35:40)

Well, yeah, not maybe.

Joe (35:42)

Not the way maybe two or three years ago. And yet the company was on the right track to end up where it is right now because of. What would you call connecting. Just connecting everyone everywhere.

John Stankey (35:54)

I think what we absolutely were believing and what I was thinking about five years ago when we made some of the changes you were alluding to earlier, is that workloads were going to increase no matter what, meaning data workloads. There was going to need to be more data moved around, whether it was from autonomous vehicles or if it was coming from more capable devices that people had in their hands. And that was fundamentally the underpinning of the bet which was to get this back to a communications company because we believe we had to invest at the. The of.

Joe (36:21)

Top.

John Stankey (36:21)

Top of the market, which we've done. We've been dramatically higher than our peer group getting ready for this moment. And it's. It's all about the amount of fiber we put in the ground.

Treasury Secretary Scott Bessant (36:30)

We.

John Stankey (36:30)

We don't have fiber networks and fixed networks. You know, what we have are just fiber networks with different access technologies on. So wireless. It needs fiber just like anything else.

Joe (36:41)

And you set a goal of 60 million by 2030?

John Stankey (36:45)

Yes. And we're going from the end of last year at about 32 million. We'll be 40 million at the end of this year.

Joe (36:53)

How did Lumen help? How much does that add?

John Stankey (36:56)

Yeah, it picked up about 4 million total. And we're going to use their build engine to build faster, and that's what gets us from 32 to 40.

Joe (37:03)

So in trying to figure out exactly what the world will look like, everybody's going to be connected everywhere. Even I don't know if you're out in the middle of nowhere now, it's going to be some type of satellite connection. And there are people saying near term you have the right strategy, but maybe long term T mobile has the right strategy with I learned about LEO satellites versus SpaceX Starlink and is there a.

John Stankey (37:34)

Reason I fundamentally disagree with you on that? I think the issue is who has the right long term strategy.

Joe (37:40)

Long term you think we are far better positioned and can you explain for people that may not know what we're talking about, like me?

John Stankey (37:48)

The way I think about it really simply is there's one Internet and why should people pay multiple times to connect to the Internet? AT&T's job is to make sure that customers if they need to get on the Internet and go to one place and get it done. So we've done that over the course of time by obviously owning and operating the best fixed technology, which is fiber. We've got a great national wireless network and now as you said lower earth orbit satellite is going to fill in those places that those robust capabilities can't get to.

Joe (38:16)

You just need more.

John Stankey (38:17)

And so we have partnership with AST Space Mobile and we're doing other things in the industry to make sure that we can bring that technology in and marry it with our other two and the customer doesn't have to worry about it.

Joe (38:28)

Ten years from now, will Starlink be better at doing this?

John Stankey (38:31)

I don't think universally you're going to ever beat fiber in many places. And I think what's sometimes missed is that a third of our capital investment goes inside of buildings, inside hospitals, inside stadiums, inside universities. Satellite's not going to be the best technology to get everything connected. It's going to be a great technology to fill in the balance of other places and also serve as a primary vehicle some of the less densely populated parts of our territory.

Joe (39:02)

So how should shareholders feel? Are they going to be. Is there going to be return to shareholders? Can you service debt? Can you make all these capex expenditures and there's enough to go around AT&T.

John Stankey (39:16)

Shareholders should feel really optimistic where they are now. They should feel got to keep going right 100%. They've been doing that for 150 years. And if I start to think about what we've been investing in the last few years to put that rich fiber foundation and also investing in our wireless network with new spectrum acquisitions that give us great upstream bandwidth from the device up into the network, really important in an AI world that those upstream workloads are handled differently than they've historically been handled. We're in a great position to be.

Joe (39:48)

Able to grow five years from now. What will Capex be? Will it be less? It'll be more?

John Stankey (39:52)

No, it'll start to taper off. The beautiful thing about fiber is it's expensive. Expensive to put it in the ground. You know, it's a civil works project. It's like building the interstate, interstate highway system or the railroads. But after you get all the railroad tracks in, then you run the trains. And so when we get over that investment hump, and as we said by 2030, we'll be over most of that, you should see Capex as a percent of revenue start to tick down. And we're running somewhere in the 18 and a half, you know, maybe in a peak year, 19% of revenues will be down in the mid teens area as a result of that. And that's what gets that generation of cash flow going that's so encouraging for the future.

Joe (40:30)

So what has AI caused you to reconsider in everything right now?

John Stankey (40:35)

And the rate and pace, to your point, Certainly saw it three years ago. We were talking about it and we knew what it could do. But the rate and pace at which it's coming on every aspect of the business, whether it's operational, strategic, societal, it's coming like a freight train.

Joe (40:52)

Does it disrupt AT&T, disintermediate AT&T?

John Stankey (40:57)

I think AI disrupts virtually every company that's out there in some way, shape or form. And you have to adjust to it. I don't know that there's many that are going to be.

Joe (41:04)

It can be a positive, not a negative 100%.

John Stankey (41:06)

If you navigate it well and you make the right decisions, it can do really good things for customers. We're already seeing that in some ways we're deploying the technology. It makes us better. It allows us to do things on a customer's terms and with the insights we've never been able to do before. It allows us to do things to run our networks better. So we're doing all kinds of things right now. And how we allocate spectrum out in different places, understanding that the machine learning can do things that humans can mentally do, but we couldn't do at scale. So it can be really, really good. But it also has some things that like any new technology that we're all going to be surprised by.

Joe (41:44)

Do you. Are you constantly thinking about the changes that can happen in D.C. or it's out of your control?

John Stankey (41:53)

No, you can't say it's out of your control because it's relevant to how you run your business. But are the Changes more frequent? Is it more dynamic? And are we exploring?

Joe (42:03)

Do you like where it is right now?

John Stankey (42:05)

Do I like where it is? I love where our industry is. And I've said this publicly.

Joe (42:09)

Regulations.

John Stankey (42:10)

I've been in this industry 40 years and I've never seen the lineup of the right regulatory policy for investment and communications that's driving that peak investment. I just talked about that we're bullish on. I've never seen tax policy that incents the right kind of investment. I've seen technology dynamics that are going on.

Joe (42:27)

It could all go away, John.

John Stankey (42:28)

It could all go away, sure. But you know, We've been here 150 years. You go through the desert at times and sometimes you're out on the lush green prairies and we're certainly in a lush green prairie moment. Telecom right now, that's when you refuel and then you're ready to go through the desert and get to the Oasis at some point. So that's just the way it is.

Joe (42:48)

How about, so the dividend, will that change? Does anyone care at this point when a stock doubles? I guess not. Probably. It used to be a big difference.

John Stankey (42:57)

I think investors care a lot about what goes in their pockets and it comes to them at a variety more Buybacks, though we have committed, we're doing 45 billion more return over the next three years. We, we're up by 50% last year of what we returned to shareholders. Certainly that helps the stock and we have a combination of what we can do in our return characteristic, both equity appreciation, what we do with dividends and what we're doing. The dividend sacred. It's not going away.

Joe (43:24)

Reading back your memo about, hey, you got a job, you need to come in if you want to keep your job. And if you don't, maybe AT AND T is not the right place for you. And people got mad. It's like, what is he saying? What happened? How did we get here? The pandemic. Why is that a novel? Why did you get backlash for saying either come in or maybe go elsewhere?

John Stankey (43:50)

Did you bump into people that got mad? I don't know. I wasn't aware.

Treasury Secretary Scott Bessant (43:53)

No, I was reading.

Joe (43:54)

I was reading it in the notes. It was written up in the media a lot. Your memo.

John Stankey (43:58)

It was written up a lot. And it was, in my view, it was maybe not fully understood in the context.

Joe (44:04)

You knew it was going to happen, right?

John Stankey (44:05)

Yeah, I figured at some point this.

Joe (44:08)

Is another one of those decisions you made and it came out immediately.

John Stankey (44:11)

Well, sometimes what I find is you guys are as effective at communicating to my employee base as I am. And so if there's dynamics that I have to get a message out, I'm perfectly okay if you help me get that message out.

Treasury Secretary Scott Bessant (44:26)

Okay.

John Stankey (44:27)

And my point of view is, as it said in the memo, there are a lot of things we've been doing over the last several years to get this company where it is today and generate the kind of improvement that you.

Joe (44:37)

Were talking about, you guys, is kind of like saying you people when you.

John Stankey (44:41)

Said, well, you are part of the media, aren't you? You have to identify, I don't want to be you people, so I'm not part of that, as you pointed out earlier.

Joe (44:50)

Thank you. Thanks for your time this morning.

John Stankey (44:52)

Absolutely. Absolutely. Thanks for having us in. It's good to have you here.

Joe Kernan (44:58)

That's Squawk Pod for today and for the week. Thanks for sticking with us. Squawkbox is hosted by Jill Kernan, Becky Quick and Andrew Ross Sorkin weekday mornings on CNBC at 6am Eastern to get the smartest takes and analysis and the newsiest interviews from that three hour TV show right into your ears. Follow Squawkpod wherever you get your podcasts. We'll meet you right back here on Tuesday. Have a great long weekend.

Commercial Narrator (45:32)

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