The Michael Knowles Show: Interview with Treasury Secretary Scott Bessent

Episode: Secretary of the Treasury & Michael Knowles: Scott Bessent White House Interview
Release Date: March 30, 2025

In a compelling episode of The Michael Knowles Show, host Michael Knowles engages in a substantive discussion with Treasury Secretary Scott Bessent. The conversation delves into pivotal economic policies, focusing on interest rates, tax cuts, fiscal strategies, and the administration's approach to reshoring American manufacturing. This summary encapsulates the key points, discussions, insights, and conclusions drawn during their exchange.

1. Reduction of Long-Term Interest Rates and Mortgage Rates

Michael Knowles opens the dialogue by highlighting the administration's success in reducing long-term interest rates and mortgage rates since the inauguration. He notes, "You have made a priority, the reduction of long term interest rates and of mortgage rates. And since the inauguration, both of those have come down materially" (00:25).

Scott Bessent emphasizes the significance of these reductions in addressing the affordability crisis, particularly in the housing sector. He attributes the initial spike in rates to the Biden administration's policies and the Federal Reserve's aggressive rate hikes aimed at curbing inflation. Bessent stated, "The Biden administration created an affordability crisis... mortgage rates" have been a central issue (00:44). He underscores the administration's efforts to lower rates through permanent tax cuts, deregulation, and energy price reductions, linking these measures to a hopeful decline in inflation.

2. Extending and Expanding Trump's Tax Cuts

Transitioning to fiscal policy, Knowles inquires about the administration's efforts to extend and expand President Trump's tax cuts amidst concerns from fiscal hawks about the burgeoning budget deficit.

Bessent categorically frames the extension and expansion of the tax cuts as a "pass fail" scenario, warning that failure to enact them could result in "the biggest tax hike in the history of the United States," projecting a staggering $4.5 trillion deficit (02:16). Highlighting the bipartisan collaboration within the "big six" leadership team, he expresses optimism about the legislation's passage, stating, "It looks like this could get done sometime in the early summer" (03:48).

Addressing fiscal concerns, Bessent outlines a balanced approach that includes growth-oriented components like full expensing and incentives to reshore manufacturing, alongside strategic spending cuts. He emphasizes the administration's commitment to deficit reduction without stifling economic growth: "Every 300 billion that we cut is 1% of GDP we didn't get here in a year" (04:02).

3. Fiscal Strategies and Deficit Reduction

The conversation delves deeper into the specifics of the proposed tax legislation. Bessent details several key provisions aimed at stimulating economic growth and addressing affordability:

• No Tax on Tips and Social Security: Eliminating taxes in these areas to increase disposable income for workers.
• Tax Deductions for Auto Loans: Making auto loans deductible for vehicles manufactured in the United States, thereby promoting domestic production.
• Spending Cuts on the Green New Deal: Criticizing the Green New Deal for its fiscal implications, Bessent mentions, "The CBO scored it at about 250 billion over 10 years. It's up 2 1/2 x" (05:15), advocating for prudent spending to manage the deficit.

He balances these measures with a realistic approach to deficit control, projecting a gradual reduction over the next four years with the goal of balancing the budget within a decade.

4. Reshoring American Manufacturing and Trade Policies

Addressing the administration's strategy on reshoring American manufacturing, Knowles raises concerns about the interplay between tariffs, trade barriers, and their impact on jobs and revenue. He poses a critical question: "They do seem to be a little bit in conflict with each other" (05:15).

Bessent deflects the ranking of priorities to President Trump, aligning the current administration's policies with those of Alexander Hamilton, the original advocate for tariffs. He explains, "President Trump has added a third leg for negotiations... as a way to prevent people from trading with Venezuela" (06:18). Bessent elaborates on the multifaceted approach to trade, addressing not just tariffs but also non-tariff barriers such as safety standards, labor costs, subsidies, and currency manipulation.

He anticipates further clarity on tariffs post-April 2nd and remains optimistic about syncing fiscal legislation with trade policies to invigorate the economy. Bessent concludes, "early summer we're going to get this tax bill done" (07:51).

5. Conclusion and Forward Look

In wrapping up the interview, Knowles acknowledges the dynamic and sometimes unpredictable nature of the Trump administration's policies, remarking, "Unpredictability is wait and see when we get the announcement on April 2nd" (07:51). Bessent reinforces the administration's strategic plans to navigate economic challenges through comprehensive tax reforms, strategic spending cuts, and robust trade policies aimed at revitalizing American industry.

The episode underscores the administration's commitment to fostering economic growth, enhancing affordability, and maintaining fiscal responsibility. Through collaborative leadership and targeted policies, Treasury Secretary Bessent and his team are portrayed as pivotal in steering the nation's economy towards stability and prosperity.

Notable Quotes:

• Scott Bessent (02:16): "If we don't get this done, it's going to be the biggest tax cut in the history and excuse me, biggest tax hike in the history. United States, 4.5 trillion."

• Scott Bessent (04:02): "I'm a deficit hawk, but I'm also a realist."

• Michael Knowles (05:15): "They're counting as one of its great strengths. Unpredictability is wait and see when we get the announcement on April 2nd."

This episode provides listeners with an in-depth understanding of the current administration's economic strategies, highlighting the interplay between tax policies, fiscal responsibility, and trade initiatives aimed at bolstering the American economy.

Note: This summary is based on the provided transcript and may not cover all aspects of the full podcast episode.