Treasury Secretary Bessent, the Future of Democrats, & ‘Embrace Rage’ 11/25/25

Summary

Squawk Pod (11/25/25): Treasury Secretary Bessent, the Future of Democrats, & ‘Embrace Rage’

Overview

This episode of Squawk Pod delivers a packed agenda focused on international relations, monetary policy, local politics, artificial intelligence, and the internal conflict within the Democratic Party. Key voices include Treasury Secretary Scott Besant on the evolving U.S.-China dynamic and monetary policy, plus longtime Democratic adviser James Carville advocating for economic anger and political clarity. Notable recurring themes are the intersection of AI and markets, New York politics, and rising concerns about affordability.

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Key Discussion Points & Insights

1. Tech & Market Moves: Alphabet, Nvidia, and the AI Arms Race

Segment Timestamps: 02:35–07:27

• Alphabet’s surge: Shares rose 4% after a 6% gain the previous day, nearing a $4 trillion market cap. Optimism surrounds its updated Gemini AI model and Google’s AI chips (TPUs).
• The “chip wars”: Reports that Meta is in talks with Google to buy its AI chips directly could disrupt Nvidia’s dominance and change the AI infrastructure landscape. Nvidia shares fell 4%.
• Competitive pressure: Other tech giants have tried to make in-house chips, but Alphabet/Google is the first to rival Nvidia’s scale and success.
• Personalizing AI: Andrew Ross Sorkin compares different LLMs (like Gemini vs. ChatGPT), suggesting that AI relationships could become more “personal”—and even jokes about “dating” AIs.

Memorable Exchange:

• Andrew Ross Sorkin: “It for me is better at doing certain things, but it doesn’t know me as well as ChatGPT does, just because I’ve been on ChatGPT religiously for so long now...” (06:19)
• Joe Kernan, joking: “So you’re married and off the market?” (06:51)
• Sorkin: “I don’t know if I’m married and off the market because I might have... found, you know, a better date.” (06:58)

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2. US-China Relations & Soybean Tariffs: Interview with Treasury Secretary Scott Besant

Segment Timestamps: 15:37–31:24

• US-China phone diplomacy: President Trump spoke with President Xi Jinping. Key issues: Russia-Ukraine, soybeans, and Taiwan. Both agreed to multiple meetings in 2026 for "stability."
• On Soybeans: China is keeping up with its commitment to buy 87.5 million metric tons of U.S. soybeans over 3.5 years. Besant, himself a soybean farmer, emphasizes the deal’s steadiness.
  • Scott Besant: “...the Chinese are right on schedule in terms of the cadence of their purchases.” (13:27, 16:25)
• On Taiwan & Ukraine: US policy remains unchanged; both leaders agree on seeking peace in the Ukraine conflict.
  • Besant: “We’re always going to be rivals. That’s natural. But are there things we can do together? Yes, we have the relationship in a good place.” (01:17, 17:44)
• Trade stability: Besant highlights the value in leaders meeting frequently to “give the relationship great stability.” (17:44)
• On the Federal Reserve: Five candidates are in the running for Fed Chair. The process weighs candidates' understanding of the Fed’s complex modern role:
  • Besant: “The Fed has become this very complicated operation. It’s no longer just a price setting of money.” (19:15)
  • Announcement possible before Christmas (20:35).
• On Fed Policy and Politics: Besant advocates for the Fed to become “background” instead of dominating headlines, and criticizes the growing distance of regional Fed bank presidents from their districts.
• Interest rates & economy: Besant argues for lower rates, referencing negative GDP impact from this year’s government shutdown. He sees historical productivity gains (likening now to the 1990s) allowing for “lower interest rates, higher growth, and higher productivity.” (29:52)
• On New York’s New Mayor & Democratic Policy: Besant praises Zohran Mamdani’s political campaign but is skeptical of “old ideas that have never worked,” calling him “the leader of the Democratic Party now.” (26:00)

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3. Shifts in New York City Politics

Segment Timestamps: 08:43–13:16

• Transition team dynamics: Newly elected Mayor Zohran Mamdani is appointing business leaders, including former Partnership for New York City president Katherine Wild, to city economic advisory roles—a surprising move given earlier skepticism from the business community.
• Hosts express hope that business voices will influence policy but uncertainty about the administration’s willingness to be flexible.

Key Quote:

• Joe Kernan: “You want voices from business who have some input... My hope is that Kathy and the other people will speak pretty plainly about what needs to happen from the businesses’ perspectives in New York City.” (10:16)

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4. The Future of the Democratic Party: James Carville Calls for ‘Economic Rage’

Segment Timestamps: 33:34–43:09

• Main argument: In a time of high economic anxiety and “affordability” crises, Carville advocates for Democrats to “embrace rage” and confront economic disparities head-on.
  • Carville: “I think US Capitalism needs an intervention because it’s... producing wealth, but the wealth is all going in one place and that’s not to a lot of people.” (01:53, 34:15)
• Internal split: He notes the spectrum from capitalists to socialists within the Democratic party, referencing debates over whether to push supply (market) solutions vs. rent control/stabilization.
• on Minimum Wage & Wages: Carville pushes for raising the minimum wage and reforming the tax code to incentivize higher wages.
  • Carville: “If prices go up 3% a year and your salary goes up 1%, it’s not doing you any good. And we should... do something about the minimum wage.” (36:59)
• No current party leader: Carville stresses that only a presidential nominee can define the party's direction.
  • Carville: “We're not going to have a leader until we have a presidential nominee.” (31:47, 38:23)
• On taxes: He proposes a return to the 1990s 39.5% top federal tax rate, calling it both pragmatic and moral.
  • Carville: “Raising taxes on high income people to a rate of 40% is not only the economically wise thing to do, it’s the moral thing to do.” (40:36)
• “Let the rich leave”: Of high earners who threaten to move, Carville shrugs: “If...40% is too much, go, go to Switzerland.” (41:41)
• Carried interest targeted: Both Carville and Sorkin decry the tax treatment of carried interest as immoral and overdue for reform.

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Notable Quotes & Memorable Moments

• On AI’s personal touch:
  Andrew Ross Sorkin: “Some of these dates may know you a little bit better and you may like that more. I don’t know. We’ll see. This is a bad analogy. I should probably stop right now. I’m married.” (07:15)
• On America’s economic crossroads:
  Scott Besant: “This is pass fail that if we don’t maintain our AI leadership then everything else we’re doing will be put to aside.” (29:52)
• On Democratic strategy:
  James Carville: “You just got to win elections. But we’re not going to have a leader until we have a presidential nominee.” (31:47, 38:23)
• On tax morality:
  Carville: “If you can’t live in a country with a 40% tax rate on come above a half million dollars, then go, dude, we don’t need you.” (41:41)
• TV business critique:
  Joe Kernan, on Fed speeches: “Why don’t they actually just come out and talk about the, you know, meaningful issues in the American people rather than a short term view of the next meeting?” (21:00)

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Important Timestamps

• Tech & Markets:
  • 02:35–07:27 Alphabet, Nvidia, AI market analysis
• US-China Relations & Trade:
  • 15:37–31:24 Treasury Secretary Besant interview (includes Fed discussion and New York City politics)
• NYC Mayoral Transition:
  • 08:43–13:16 Katherine Wild, business involvement in Mamdani administration
• Democratic Party & Economic Messaging:
  • 33:34–43:09 James Carville interview

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Tone & Style

The discussion oscillates between light-hearted banter (mostly on tech and personal AI assistant analogies) and high-stakes, urgent political commentary—especially around international relations, monetary policy decisions, and domestic economic pain points. Carville’s tone is fiery, urgent, and unsparing in its critique of both capitalism’s excesses and Democratic Party hesitancy. Besant, characteristically measured, provides insider context on economic policy, but pulls no punches on criticizing operational drift at the Fed and in Democratic leadership.

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Summary Takeaways

• The accelerating competition in AI is not only transforming markets, but also affecting global business strategy and investor sentiment.
• US-China relations remain ambivalent yet stable, with agriculture, tariffs, and Taiwan at the forefront.
• The evolving power dynamic in New York City politics signals uneasy alliances between business and new left-leaning leadership.
• Within the Democratic Party, James Carville’s call for economic “rage” and focus on fairness marks a clear pivot towards emotional as well as policy-driven appeals, as the party seeks its post-election footing.
• Across all discussions, the episode weaves together urgent economic, technological, and political themes defining 2025.

Transcript

[Keith Lansford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update.

[Becky Quick]

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[Andrew Ross Sorkin]

Bring in show music, please.

[Becky Quick]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, tariff talk makes the world go round. Treasury Secretary Scott Besant joins us on President Trump's call with China's President Xi.

[Treasury Secretary Scott Besant]

We're always going to be rivals. That's natural. But are there things we can do together? Yes, we have the relationship in a good place.

[Becky Quick]

And news on the president's plan to nominate a new head of the U.S. federal Reserve.

[Treasury Secretary Scott Besant]

I think that there's a very good chance that the president will make an announcement before Christmas, but it's his prerogative whether it's before the Christmas holidays and the New Year's.

[Becky Quick]

Then longtime Democratic presidential campaign adviser James Carville wants his party to get angry.

[James Carville]

I think US Capitalism needs an intervention because it's producing wealth. But the wealth is all going in one place and that's not to a lot of people.

[Becky Quick]

Plus, all the rest of today's news, like New York's mayor elect building his transition team and is Alphabet's Gemini AI your new girlfriend.

[Andrew Ross Sorkin]

It for me is better at doing certain things, but it doesn't know me as well as ChatGPT does.

[Joe Kernan]

So you're married and off the market.

[Andrew Ross Sorkin]

I don't know if I'm married enough. The market because I might have, at least for now, found, you know, a better date.

[Becky Quick]

It is Tuesday, November 25th. Squawk pod begins right now.

[Treasury Secretary Scott Besant]

Stand Becky. Bye. In three, two, one. Q, please.

[Joe Kernan]

Good morning, everybody. Welcome to Squawk Box right here on cnbc. I'm Becky Quick along with Andrew Ross Sorkin. Joe is out today. If you take a look right now, you'll see Alphabet shares are higher in the premium market, up by about 4%. That is a big move for such a big cap company comes after yesterday's 6% gain. Those shares are up double digits just in the last week. For the last week, it's up by about 16 and a half percent. The stock closing in on a $4 trillion market cap investors becoming more optimistic about the company's place in the AI race. Last week, Alphabet announced an updated version of its Gemini large language model. Earlier this month, SEC filings showed that Warren Buffett's Berkshire Hathaway had built a nearly $18 million share, 18 million share stake in the company by the end of the third quarter. Alphabet's performance yesterday also boosting some other names including Broadcom, Micron, Palantir and amd. And then there's this other big Google headline and I think that is the big reason for the stock's move this morning.

[Andrew Ross Sorkin]

Andrew well, let's tell it to him. Let's tell the audience. Headline the information reporting that the company pitching some of its cloud customers on using Google's homegrown AI chips in the company's own data centers. This is rather than Google's data centers, the article saying that Facebook parent Metta is speaking with Google about potentially spending tens of billions of dollars on Google's AI chips. This may be a big factor in Nvidia's slide this morning as well. So you get it coming both ways effectively. And you can look right now at the stock in Nvidia that's down about 4%. Of course, the most interesting aspect about how Google has built its AI and inference program has been on its own chips. It has not been using Nvidia chips along the way. And now there's this potential move where Meta and others might actually buy chips from Google. So this could be transformative in so many ways. We're watching both the large language model that they've built appear to be now the best one in market, if you will. Plus now the idea that they could be selling their chips or at least access to those chips, you know, layers a whole new, whole new story on top of this.

[Joe Kernan]

Becky yeah, some of the, some of Nvidia's biggest customers have been working on their own homegrown grown chips. If you look at a Microsoft, if you look at an Amazon, but nobody has had quite the success that that Alphabet has to this point, that Google has to this point. Sergey Brin has gone back into founder mode. By all reports that he's really kind of digging into this and they have had some success with this. If they can get a big customer like a Metta to spend billions of dollars on chips to go in and I think the information is reporting that could happen as early as 2027 for those chips to go into their data centers. If that's the case, it would represent some new competition. Obviously in video is the only game in town at this point. They have more demand than they can possibly meet at these moments. But with the stock that has done so well. We spoke with an analyst yesterday who just pointed out, hey, they are looking for any reason to not continue to see this growth going for forever. That analyst said that he doesn't think it's going to be this year, it's not going to be next year, but we'll see. And market does trade ahead year to date. Nvidia shares still up by about 30%. But again, people are looking everywhere with AI to try and poke any holes on what might make a problem for some of the big gainers or what could make another entrant look like they are taking off in another way. And again, it's not just the chips. It was also Gemini 3 and the really great reports that people have been giving on what an improvement it is at this point.

[Andrew Ross Sorkin]

I've been playing with it. It's pretty good. The question that I have, and it's the thing we've been talking about for a long time about these large language models is this persistent memory question and whether there's a lock in effect or not. So it for me is better at doing certain things, but it doesn't know me as well, for example, as ChatGPT does, just because I've been on ChatGPT religiously for so long now and it has so much of my information that when I ask it a certain kind of question, it knows things from my history and my past and this and that, that obviously Gemini doesn't, doesn't know. And so.

[Joe Kernan]

So you're married.

[Andrew Ross Sorkin]

Do people. What did you say?

[Joe Kernan]

So you're married and off the market?

[Andrew Ross Sorkin]

I don't know if I'm married and off the market because I might have, I might have, at least for now, found, you know, a better date. The problem is it's possible that chatbots will become a better date in a month or two and who knows where anthropic is going to be in two months from now. So that's, that's the thing about this. So you can keep looking for the better date all the time, but Some of these dates may know you a little bit better and you may like that more. I don't know. We'll see. This is a bad analogy. I should probably stop right now. I'm married.

[Joe Kernan]

Sorry I led you down that path. We'll continue to watch it again. Nvidia shares right now off by about 3.7%.

[Andrew Ross Sorkin]

Meantime, we should tell you about this story this morning. President Trump now holding a telephone call with Chinese President Xi Jinping in which Trump said that the two leaders spoke about the Russia, Ukraine war, also soybean purchases and more. Several reports saying that she initiated that call. There was a post on Truth Social which President Trump said that he accepted an invitation from Xi to visit China in April and that he invited Xi to a, to the United States for a visit later this year. Now, during the phone call, the Chinese Foreign Ministry saying that she stressed the importance to his country that Taiwan be quote, returned to it. Trump didn't mention Taiwan in his social media post. Later, Trump spoke with Japan's prime minister. She's dealing with a dispute she triggered with China recently when she made remarks over how Japan might respond to a Chinese attack on Taiwan. So a lot of things to consider going on in China. Obviously, Taiwan has been the chess piece in the middle of this whole story.

[Joe Kernan]

And we're going to get the chance to speak with Treasury Secretary Bessen a little later about all of these issues and much more.

[Andrew Ross Sorkin]

New York City Mayor Elect Zoran Mondami appointing hundreds of people to his transition team, including several people from the corporate world. This one's interesting, Becky. Partnership for New York City President and frequent SQUAWK guest Katherine Wild is now going to serve on Mondami's Committee on Economic Development and Workforce Development. We'll talk about that in a second. She's going to be joined on that panel by former Goldman Sachs partner Margaret Anadu and more than a dozen other people. You know, for the last couple of months, we had Kathy come on the broadcast representing the Partnership for New York, which represents the biggest companies that are headquartered and work here in the city. And we would ask her about Zohran Mamdami. And she was, to be blunt about it, much more supportive of him publicly on our broadcast than the kind of text messages and emails and conversations I was having with the membership of the New York City partnership and the CEOs in New York. And I would ask her, every time she'd come on. I'd say, you know, your view does not seem totally to add up to the view of the partnership. There's two things going on here. One is that she's leaving the partnership, which we did know, but what we didn't know was that she was going to go work for the Mamdani, effectively the administration. And I just point that out to all of us now because I don't think that was known to us at the time. And boy, do I wish it was.

[Joe Kernan]

Well, I mean, it may not have been a plan that was in the works before. The only thing I'll say to that is you want voices from business who have some input into that. I think it would be a more concerning issue to have a Mamdani mayoral, mayoral position and not have input coming in from business. I think that would be the most concerning. I don't know how effective those voices will be in terms of advocating for business. And, and maybe that's really where the rubber hits the road. We'll see. You want to have some back and forth. You want to have some contributions from it. But my hope is that Kathy and the other people will speak pretty plainly about what needs to happen from the businesses perspectives in New York City to make sure that they are still involved and active. We'll see what suggestions they make and we'll see if this administration takes those suggestions seriously and puts them into play. I guess I'll withhold judgment to see that. I wouldn't want this administration to not have input from people representing the businesses. But you're right to point out that.

[Andrew Ross Sorkin]

Don'T get me wrong, that her take.

[Joe Kernan]

Over the last couple of months was much, was much more, more simpatico, much less concerned than the businesses that she was representing at that point.

[Andrew Ross Sorkin]

That's the only point that I'm making. And I was, as I said to you, I was talking to people inside that New York City partnership who run businesses in the city who are saying she may be the head of our organization or look like she's the head of our organization, but she is not representing our views and our perspectives. And it's interesting to me now that.

[Joe Kernan]

Let'S see what the, this is the.

[Andrew Ross Sorkin]

Role that she's now in.

[Joe Kernan]

Let's see what the recommendations are to the Mamdani administration and then let's see if that administration takes into account those concerns and issues that are brought up. I guess we'll watch and see the relationship.

[Andrew Ross Sorkin]

We'd love to have her back on. We can talk all about it.

[Joe Kernan]

Yeah, for sure. And look, the relationship when Mamdani went to the White House was not what a lot of us had been anticipating. So we'll see if it means that some of the views are kind of softened and, you know, made to a situation where it kind of works better for all aspects of the city. Great. I don't think any of us were thrilled with what we were hearing hearing just in terms of what might be coming from a Mamdani administration. So if it softens those views, I'm all for it. But I think we'll have to watch very closely what advice is given and whether that advice is actually taken.

[Treasury Secretary Scott Besant]

Cheese will be next.

[Becky Quick]

Up next on Squawk Pod, Treasury Secretary Scott Besant, the Federal Reserve tariffs and the American farmers caught up in a trade war with China.

[Treasury Secretary Scott Besant]

As far as the soybeans, the Chinese are right on schedule in terms of the cadence of their purchases. Over the next three and a half years, we're going to see the 87 and a half million metric tons purchased by the Chinese minimum.

[Becky Quick]

In addition to his role in the administration, Secretary Besant has a soybean farm of his own. That interview is next. With savings over $390 this shopping season, VRBO helps you swap gift wrap time for quality time with those you love most. From snow on the roof to sand between your toes, we have all the vacation rental options covered. Go to VRBO now and book a last minute week long stay. Save over $390 this holiday season and book your next vacation rental home on verbo average savings $396 select homes only.

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[Keith Lansford]

Is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading data. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[Becky Quick]

This is Squawk Pod Roll Pro A.

[Andrew Ross Sorkin]

Uptrack Stand Andrew by in three two one. Q Andrew, you're watching Squawk Box on cnbc. I'm Andrew Sorkin along with Becky Quick. Joe is off today.

[Joe Kernan]

President Trump announcing that he will be visiting Beijing in April following a phone call with Chinese President Xi. The two continued their discussions on China's agreement to purchase U.S. soybeans while the U.S. lowers tariffs on China. Joining us right now with more on the U. S. China trade latest is Treasury Secretary Scott Besant. And Mr. Secretary, thank you very much for being with us this morning.

[Treasury Secretary Scott Besant]

Good morning, Becky. Good morning, Andrew.

[Joe Kernan]

Why don't we start with this latest what we're seeing right now and what we've heard from this conversation with President Trump and President Xi. The readouts from, from the two countries were a little different. Obviously, the United States has a very important push on making sure that China does step up its purchases of soybeans. How is that going?

[Treasury Secretary Scott Besant]

Well, first of all, Becky, to set the record straight, President Trump initiated the call 30 days after the historic meeting in Busan, South South Korea between the two leaders. They have a great relationship. And as far as the soybeans, the Chinese are right on schedule in terms of the cadence of their purchases. Over the next three and a half years, we're going to see the 87 and a half million metric tons purchased by the Chinese Minimum, minimum. And they are right on schedule.

[Joe Kernan]

There have been some reports coming from China where their take on this talk is a little different. At least what they emphasized in the talks was a little different. They bring up both Ukraine and the US Position and the China, the Chinese position on Taiwan. What is the US Position on Taiwan at this point?

[Treasury Secretary Scott Besant]

US Position on Taiwan is unchanged. And on Ukraine, President and party Chair Xi agreed that the peace in this Ukraine conflict, they must move forward and they agreed to work together on it.

[Joe Kernan]

Am I right to think that this is a truce, but maybe a little bit of an uneasy truce at this point? How secure and settled are you feeling with where we stand with China right now?

[Treasury Secretary Scott Besant]

Well, we have, we have a one year. What I would say pause. And Becky, what I feel very good about is the relationship between the leaders because when the leaders can have calls like this at the highest level, then bad, bad things don't happen. It was the strong relationship. President, President Trump showing leadership that sort of calm things down between the two countries. And look, we're, we're always going to be rivals. We're always going to be rivals. That's natural. But are there things we can do together? Yes, we have the relationship in a good place. President Trump is going to do a state visit to Beijing. Xi is going to come to the US for a state visit. He'll also be in the US for the G20 at Doral. And President Trump may attend the APEC summit in Shenzhen in November. So if there are four meetings during the year, I think that that gives the relationship great stability, and stability is good for the American people and good for the world economy.

[Andrew Ross Sorkin]

Mr. Secretary, I wanted to pivot the conversation. We've been talking all fall with you about the prospect of the President selecting a new Fed chair. And as we get closer to the end of the year, I wanted to get an update as to where things perhaps stand right now.

[Treasury Secretary Scott Besant]

Yep. So we're going to have the last interview in the second round today, Andrew. We got five very strong candidates. I am impressed with all of them. And, Andrew, I'll tell you one of the things in terms of the criteria that I've been looking for that I have morphed a bit on in the fall when we started with 11 candidates, is in talking to these candidates, I realized the Fed has become this very complicated operation. It's no longer just a price setting of money. There's this very complicated calculus between the monetary policy, the balance, the balance sheet, and regulatory policy. And we've really emphasized in the interviews what's the interplay for that calculus in terms of the best way forward for the American economy? And what, what is each person's point of view in terms of protecting the American people, protecting the economy, and moving forward with the dual mandate?

[Andrew Ross Sorkin]

Can you give us a hint? We often talk about the two Kevins, Kevin Warsh and Kevin Hassett, being the frontrunners. Is that still the case?

[Treasury Secretary Scott Besant]

Andrew? I still got one interview left, so I don't think it would be prudent to give any hints. And, you know, I think that there's a very good chance that the President will make an announcement before Christmas, but it's his prerogative whether it's the, before the Christmas holidays, in the New Year's, but think things are moving along very well.

[Joe Kernan]

Mr. Secretary, last week, the president, I'm not sure if he was joking or how serious he was about. He said he loves everything you're doing, but if you don't get the Fed to lower interest rates soon, he might fire your butt.

[Treasury Secretary Scott Besant]

Well, Becky, if you were in the, if you were in the room, he, he was joking. And, you know, the. Again, I think that we've gotten to this point where monetary policy has gotten very complicated and it's more than just cutting rates. We've got this balance sheet and what, what are we going to do with it. You know, the Fed has taken us into a new regime and what is called ample reserves regime. And it looks like that might be fraying a bit here in terms of whether the reserves are actually ample in the, in the system. There are all these facilities and operations, the standing repo facility. And, you know, I think we've got to kind of simplify things. I think it's time for the Fed just to move back into the background like, like it used to do, calm things down and work for the American people, set monetary policy on a good course. This, this isn't the, you know, this isn't sport, it's people's lives. And I think we just need to calm down all these speeches by these bank presidents that are just redundant. Why don't they actually just come out and talk about the, you know, meaningful issues in the American people rather than a short term view of the next meeting?

[Joe Kernan]

Well, to be fair, the Fed governors or, you know, the presidents of the banks at least, are hearing from people in their districts and each of them may be hearing slightly different things about where the job market lays, where inflation lays. And that's probably useful information to hear from around the country. I guess my bigger question.

[Treasury Secretary Scott Besant]

Hold on for a minute, Becky. Is that the. But that's not what they're talking about. That's not what they're talking about in their district. You know, they're talking about some, some macro.

[Joe Kernan]

Well, Susan Collins was saying she hears about inflation. She was just on last week with Steve Liesman, the Boston Fed president, and she was saying that she does hear a lot about inflation from within her district. That was kind of of the part of that interview that jumped out to me the most.

[Treasury Secretary Scott Besant]

Well, the other thing I'll tell you that I find very interesting is these regional presidents were supposed to be people from the district and it was supposed to break the New York hold on the Reserve Banks. And we've got at least three, maybe four of the reserve banks where people were hired from outside the district. They don't, they don't even live in their district. They commute back to New York. So these are New Yorkers going out into the country and then coming back on weekends. I'm not sure that's the way the Federal reserve was designed.

[Andrew Ross Sorkin]

Mr. Secretary, curious how you grapple with this question. The President and I believe yourself, have talked about perhaps the need to lower interest rates. The President's clearly made that case. You know, if you listen to some of these Fed governors, including Neel Kashkari and others, as they're trying to balance what appears to be, you know, an increase in unemployment or seemingly a little bit more unemployment against inflation fears. How do you balance that in your mind right now given the sort of clash of those two issues?

[Treasury Secretary Scott Besant]

Well, Neel Kashkari is a regional bank president, not a governor. And what I think is interesting is that the governors seem to be leaning the toward cutting rates. And you know, again, Andrew, what it, what to go back to is we've now got this very complicated calculus. And I believe when you're looking at monetary policy, you know what happened in the past. The you try to have a view of what's happening now and then you have a view of the future. And I think that the mistake that we're seeing a lot of times is either one looking at them, looking in the rearview mirror. We're flying a little blind with the numbers here, but we've had two cuts thus far. And what do we know that this Schumer shutdown, the longest in history, has shaved 1.5% off GDP, at least an 11 billion permanent hit. So we know the economy hasn't gotten better. So I'm not even sure what the discussion is here.

[Andrew Ross Sorkin]

And Mr. Secretary, I had actually maybe a curveball, maybe not. It was a curveball, I think, for all of us. I was curious what your reaction was watching the meeting between the president and the mayor elect of New York. Mamdame, we've talked about the mayor elect us on the air before and some of the president's views about socialism and the like. It does seem like they were at least buddy, buddy on the issue of affordability.

[Treasury Secretary Scott Besant]

Well, Andrew, I was in the room and I think that you've got to have some admiration for a candidate who ran a campaign the way he did. It was a great, great campaign. He is clearly the leader of the Democratic Party now. And I think it speaks to how open minded the president is that he invited him into the Oval. Senator Schumer never endorsed him. I don't even know if he's met with him. And President Trump wants the best for New Yorkers, I can tell you. My impression of the mayor elect is he's a young man with a lot of old ideas that have never worked. And point point to one example where policies like his have led to anything other than a decline. But President Trump wants the best for the American people and he hopes that New York will, will do well. It's easy to run a campaign, but the practical, every day of keeping keeping people safe, picking up the trash, making the subways run on time. We'll see.

[Joe Kernan]

Secretary Besant, Affordability is certainly been the key word, particularly since those elections, not just of Mamdani, but of the Democrats who won in both New Jersey and in Virginia. And there are a lot of questions about how to get our arms around those things. Health care is a big issue. The ACA tax credits being a big issue, too. There were reports that yesterday the president had been considering saying that he would extend the Obamacare tax subsidies at least for a year until things can get worked out. Ms. Now and other places are reporting that that was kind of shut down. But I wonder if you could tell us what the administration's plan is on this front, what you think the best way forward is just in terms of trying to figure out what to do on both a short term and a long term basis.

[Treasury Secretary Scott Besant]

Well, let's go back and just talk about affordability. On March 20th, 12th, 2024, I wrote a piece that got published and it was on the three eyes that were hurting the American people. It was immigration, interest rates, inflation. We can come back to it. I would add the insanity and the insanity on the Democratic side. So we got four eyes. Immigrate this mass. Unfettered immigration is now under control, the border secure, which couldn't be done. That was putting substantial downward pressure on working class wages, upward pressure on rent for working people to interest rates have come down. The bond market's had its best year since 2020. So you can, you can mark those off. And now we're working on the inflation and this insanity of the Democratic Party shutting the government down. Now we've got this. They wanted we'll reopen the government if you'll talk about health care. They wouldn't. And now here we are kind of on the eve, but I'm not involved in the conversation. I know President Trump wants working Americans to keep more of their money, cut out the insurance companies and we'll see. He's the president of solutions and I'm sure that we will have a solution to this.

[Joe Kernan]

The front page of the Wall Street Journal has an article today talking about how the economy is kind of addicted to spending. It points out that business investment in AI might have accounted for as much as half of the growth in the gross domestic product, adjusted for inflation in the first six months of the year, and questions whether if growth in that sector slows down, whether it tanks the entire economy. What's your thought on that?

[Treasury Secretary Scott Besant]

Yes. So, Becky, two weeks ago I was at my hometown in Charleston, South Carolina. Boeing was doing a substantial expansion of their plant for the dreamliner thousand new great high paying jobs and I think next year all the trade deals and thanks to the tax bill we're going to see, we're going to see a broadening out of the capex cycle. So what we are seeing is a capex is spreading out and historically capex always leads to more jobs. This AI buildout has been tremendous. It will continue to be in the, in the competition with the Chinese. This is pass fail that if we don't maintain our AI leadership then everything else we're doing will be put to aside. But I'm very excited about the prospects for substantial non inflationary growth last year because also the deregulation is going to kick in. And you know to go back to your question on the Fed, this is where I think we may be in a 1990s scenario. And Alan Greenspan had the ability to have a framework before looking look at the productivity that was going on and I think we're seeing that same kind of productivity here. So that's why I think you can have lower interest rates, higher growth and higher productivity.

[Joe Kernan]

Secretary Besant, thank you for your time. We appreciate it, sir.

[Treasury Secretary Scott Besant]

Good. And tell Joe I hope he feels better.

[Joe Kernan]

We will. Thank you.

[Becky Quick]

Coming up on Squawk Pod, the future of the Democratic Party with veteran presidential campaign adviser James Carville. He's urging his fellow Democrats to embrace economic rage. His party's in shambles. His words.

[James Carville]

We're not going to have a leader until we have a presidential nominee where the party goes.

[Becky Quick]

Until then, after this break, the heaviest.

[Andrew Ross Sorkin]

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[Keith Lansford]

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[Becky Quick]

You're listening to Squawk Pod from cnbc. Here's Andrew Ross Sorkin.

[Andrew Ross Sorkin]

Longtime presidential campaign adviser James Carville says it's time for the Democrats to focus on economic pain. He's got a New York Times op ed out and Carville says Americans are mad over affordability and always blame the party in charge, giving the Democrats a platform to build on. He's arguing for some rage on the economic issue, of course. He's a consultant for the Democratic super PAC American Bridge. Want to welcome him to the broadcast. Good morning to you, James. Help us understand not just the argument about economic rage, but, but how the message would work.

[James Carville]

Well, the message, the overall message, I would call you as an argument. You have a message when you have a candidate. But the argument is, is that the government more overwhelmingly sized with the people who have power as opposed to the people who would like to have power. And everything that this administration does, in fact, almost everything this country does, is tilted toward wealthy people, is tilted toward older people. It's tilted toward people that already have things, and it's tilted away from people that are trying to acquire things. And I think US Capitalism needs an intervention because it's not, it's, it's producing wealth, but the wealth is all going in one place. And that's, and that's not to a lot of people.

[Andrew Ross Sorkin]

So the question therefore becomes, you know, we were talking about Mamdani with the secretary of treasury earlier this morning and you know, he won on this message of affordability, which even the president seems to be trying to capture to some degree. The question, of course, is not just diagnosing the problem of affordability, if you think that that's the issue, but how do you deal with it on the other end? And there clearly are even two camps within the Democratic Party about that. There are, there are still a lot of quote unquote capitalists with a capital C in the Democratic Party. But then there is Mamdani, who is, you know, self described socialist. Where do you think the party needs to be on that score?

[James Carville]

First of all, I certainly believe in capital. I don't capitalism, but I've seen all this Mandami socialism is like Sweden. Is it like something else? I don't know. People have different terms. But what I know is we got to get on and we have terrible disparities in wealth. We have a lot of immorality in our tax code. Somebody tell me the morality of carried interest and I'll fall out of this chair. And there are things that we can do to make this country work for more people. Andrew, the other thing now, electricity cutoffs are up 21%. To me, in a nation like this, it would just kind of produce this kind of wealth. And we got 40% of our people just going, maybe more than that, going paycheck to paycheck.

[Andrew Ross Sorkin]

Here's the question, though. It goes back to really sort of how you approach the problem. You know, arguably one of the problems with electricity in this country is we don't have enough of it. And as a result, and by the way, there's, there's some monopolistic practices as well, but it's a combination of the two. You need more supply when it comes to housing, arguably, if you're a capitalist, you'd say we need more supply. If you're a socialist, you'd say we need rent stabilization. And that, that becomes, I think, the crux of so much of this.

[James Carville]

Well, I believe the supply will bring, if you have supply to start to bring prices down. But you know, the other thing we talk about costs going up. What can you do about cost going up? One of the things you can do is give people a race. All right, I know people say, oh, we haven't raised the minimum wage since, I don't know, God knows when. All right, so if prices go up 3% a year and your salary goes up 1%, it's not doing you any good. And we should put pressure and we can do something about the minimum wage. We can do something to have a tax code that profits companies from paying people. That's the problem here is the people don't have any money. And you say, well, electricity, it's, it's about they didn't open this generator or something. The highest electricity calls. That's something like Missouri and Iowa and places like that that are doubt of over regulated states. But sure, the bum. The housing, we didn't have enough housing supply. So what do we do? Let's build more houses. And how do we build more houses? Well, we tax rich people and we use that money to build more houses. That's my idea.

[Andrew Ross Sorkin]

How do you ultimately, and maybe I'd say who, who within the party right now do you think represents the party? You know, Scott Besson, by the way, said he thought that mamdani represents the party. I don't know if that's true either.

[James Carville]

No one represents the party. The only person that can represent the party is a presidential nominee who will be chosen by the party members who vote in the primaries. Congressional parties don't have a defi. Generally don't. And we certainly don't have a defining person. And that's what people say, well, there's no leader of the party. No, there won't be. But that's what Democrats are going to decide. And they'll also decide in what direction that the party is going on. You know, the greatest game in the world. Well, who's the leader?

[Treasury Secretary Scott Besant]

Well, I don't know.

[James Carville]

It's not true. Well, maybe it's just. No, I don't believe that. Well, they can't be one. But what can happen is we can make a good argument and we can win a ton of elections while everybody in the press is sitting on a table saying, well, Democrats have lost a Hispanic vote, they've lost the young vote, they've lost a male vote. Of course, it all came back. You just got to win elections. But we're not going to have a leader until we have a presidential nominee.

[Andrew Ross Sorkin]

Let me ask you a different question. Senator Schumer, who is facing quite a backlash even within the Democratic Party, I'm curious where you think he lands as a continued face of all of this or where you think Hakeem Jeffries lands relative to some of the other newcomers.

[James Carville]

Well, I certainly not a person about the senator, don't get involved in that business. 24 Democratic senators, as I appreciate he can do anything they want. But I do know for a fact that Senator Schumer is quite popular and quite thought of. But the Senate has to make its decisions in 24 Democratic senators can do whatever it wants. I don't have any sense. I don't. I don't know. That's. I just don't follow that.

[Andrew Ross Sorkin]

Let me ask you a different question about taxes, because I think taxes historically, you know, Republicans have called for lower taxes, Democrats have called for higher taxes. Philosophically. And given the inequality and wealth disparity in the country, what do you think is an approach that actually makes sense and makes sense to those being taxed as well, even those at the highest rates.

[James Carville]

Let's try 39 and a half, which we had during the 90s, which most prosperous decade we've had since World War II. Why don't we try that? And there is not a iota of evidence that says that cutting taxes on wealthy people creates Anything other than more wealth for wealthy people. So also if you look at under Democratic presence, economic growth, stock market growth, GDP growth, it's not even close. So this is. Raising taxes on high income people to a rate of 40% is not only the economically wise thing to do, it's the moral thing to do.

[Andrew Ross Sorkin]

Do you think people will leave? I mean one of the things that we've seen obviously within the the United States and I thought this, you know, look, 10 years ago if you had asked me whether people would leave this, leave New York City or leave certain states, I didn't believe it. I don't think I appreciate it, especially now. You know, people of great wealth have access to private planes, can jump on planes. It's a whole new word. The mobility of people has shifted in a way that I don't think I, I expected.

[James Carville]

If you got to pay all the things that people have paid for in this country and all the sacrifices they've made, if you can't live in a country with a 40% tax rate on come above a half million dollars, then go, dude, we don't need you. Go, go somewhere else. And you sit here and drive on the highways and you workforce that's been developed by American taxpayers, the defense that you got and you know, 40% is too much. Go, go to Switzerland.

[Andrew Ross Sorkin]

Real quick though, what do you think about a lot of the blue states in America? And I say that because in New York, you know, most people at the highest rates are paying 50, close to 55%, maybe more if they're living in New York City, sometimes closer to 60%. What's, what's sort of the top for you?

[James Carville]

I don't know. I mean, I know it was 39 and a half in the 90s. Okay, that, that was what. And by the way, Manhattan existed in the 90s, it still exists today. If all millionaires are leaving, why don't I run over them left and right when I'm walking down Park Avenue? But again, if a person's value of the country is relative only to its tax code, then that's a moral judgment that you've made. But you can't tell me that we can't have a tax rate of 40% on all income above say, half a million $400,000 a year. You just can't tell me that. And you can't tell me that carried interest is moral. Thank you.

[Andrew Ross Sorkin]

Well, you and I agree violently on carried interest. I've been talking about carried interest for close to 20 years now. James Carville want to thank you for being with us this morning very, very much. Hope we can talk again.

[Becky Quick]

And that is the pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Please follow Squaw Pod wherever you get your podcasts. We'll meet you right back here tomorrow.

[Treasury Secretary Scott Besant]

We are clear.

[Andrew Ross Sorkin]

Thanks, guys.

[Commercial Narrator]

We all take good care of the things that matter. Our homes, our pets, our cars. Are you doing the same for your brain? Acting early to protect brain health may help reduce the risk of dementia from conditions like Alzheimer's disease. Studies have found that up to 45% of dementia cases may be prevented or delayed. By managing risk factors, you can change make brain health a priority. Ask your doctor about your risk factors and for a cognitive assessment. Learn [e-mail].