Scott Bessent：修复美联储、以关税服务国家安全、在2026年解决可负担性问题

Secretary Bessent, welcome back to All-In. We appreciate you taking the time to catch up with us and provide this first-year review. We're excited to have you here and hear how things are going and what's ahead regarding the fiscal condition of the US government and the economic condition of the US economy, including how things are going for Wall Street and Main Street.

Finally, we'd like to broadly discuss some of the administration's policies and decisions, and how they're playing out or will play out from your point of view. I'll start us off by catching up on our last conversation. One of the things I've cared deeply about, and around which you shared an objective, is getting the budget deficit below 3% of GDP. I'd love to hear from your point of view how that's going, how things are looking for fiscal year 2026, the actions that have been taken, and what you think is ahead for that target.

Good to be with you. I'm happy to review the year and talk about next year. There's a lot going on. I would categorize 2025 as a year in which we had some important victories, some important policy announcements, and some important movement. But as I've described it, 2025 was setting the table, and especially on the economy, I think the feast and the banquet are going to be in 2026.

To start with the budget deficit, we didn't get much credit because the numbers came out during the shutdown. The US fiscal year ends on September 30. We had a slight fiscal contraction for the year. It wasn't much, but it was much better than the $2.0 trillion that was estimated. We came down from about $1.8 trillion to $1.78 trillion, so a contraction nonetheless.

For the calendar year, we're making great progress. Just to put it in context, the Biden administration blew things out front trying to get Vice President Harris elected in the fourth quarter. In 2024, 40% of government spending occurred in the fourth quarter in their unsuccessful attempt to convince voters that they weren't in a world of hurt.

I forecast that we will have approximately a $200 billion to $300 billion fiscal contraction for the calendar year, which is between 0.7% and 1% of GDP. We're going to end the year with nominal growth close to 6%, so we will be bringing down the deficit-to-GDP ratio. I believe it peaked at 6.8% for the previous calendar year, and we're going to be in the mid-5s.

It's a very good start on an important journey. I've said that by the time President Trump leaves office, we would like to have something with a 3 in front of it. That will stabilize the deficit-to-GDP ratio, which is an important number, and enable us to start paying down debt.

Scott, it seems like the tariffs have had an enormously positive impact. They've given you a lot of tools in the toolbox to work with. Why do you think so many people got it wrong? A lot of the people you've known and worked with in your prior life as a hedge fund manager—what did they get wrong? What did they miss that you were able to see?

A couple of things. I think people didn't have an open mind. They became the Trump tariffs, which immediately led a large cohort—whether it was government officials, industry people, or the general population—to conclude that because President Trump wanted to do it, it must be bad.

I said the other day that if President Trump cured cancer but caused dandruff, people would say, "President Trump has caused a dandruff epidemic."

Look, there's a lot of orthodoxy that hasn't worked. If we look back to the early 2000s, the orthodoxy was that letting China into the global trading system would mean that they would become more like us. There was a point when I was somewhat sympathetic to the people who believed that, but by 2013, when Xi Jinping came in, great writers like Elizabeth Economy, who had held that view, reversed themselves and said, "He's a different kind of cat."

It's no longer going to be Chinese policies with capitalist tendencies. It's just going to go back to hard communism and Leninism. I think it was a failure of imagination.

I've said several times that when people ask me, "What are you looking for in a Fed chair?" I say it's someone with an open mind. If we go back to the 1990s, Alan Greenspan did a magnificent job because he had an open mind that the Internet and office modernization boom was going to create a productivity bonanza for the US economy. He let it rip, and we had an incredible economy.

We paid down a tremendous amount of debt. By 1998, with the combination of the Clinton administration having gotten religion, Newt Gingrich, and his policies, there was talk that at the end of the 1990s there might not be enough government debt to meet the needs of the financial system, which is the opposite of what we have now.

Again, part of it was simply that anything the president does must be wrong. Part of it was a failure of imagination. There are some very good studies coming out now showing why everyone has been wrong—the measurement problems around the increase in goods prices.

There's a study from the San Francisco Fed, which is not a friend of the administration, with 150 years of data. I would refer everyone to that. It shows that tariffs do not cause inflation; they're actually disinflationary.

Scott, has that been part of the conversation in the administration now that there is this new revenue stream for the federal government? There's an opportunity to cut taxes and cut other sources of revenue for the federal government, and that could potentially accelerate the economy.

But balancing that question against the importance of cutting the deficit, how do you think about the balance between using tariffs as a mechanism for reducing the tax burden on the economy versus using tariffs as an incremental revenue source for the federal government to start reducing the deficit and eventually paying down the debt?

David, before I answer that, another thing I want to go back to is President Trump. I'll give you 2 reasons for the success of the tariff policy.

One is that President Trump uses tariffs for national security. The tariff policy has become part of national security. He was able to use the tariffs to negotiate trade deals. When he ratcheted up some of the tariff levels to 35%, 49%, 50%, and even 145% with the Chinese, it brought people to the table.

In the spring, President Trump put fentanyl tariffs on Mexico, Canada, and China. They've all come to the table to help and partner with the US government to end this scourge on our people. We're seeing fentanyl deaths drop because of the good efforts of China. We made a good-faith move and decreased our fentanyl tariffs by half, down to 10%.

If that's been national security, the same thing happened on October 8, when Beijing announced that they were going to put worldwide export licenses on any product that had 0.01% of Chinese rare earths in it, which would have ground the Western trading system to a halt. President Trump was able to threaten a 100% tariff, and the Chinese immediately came to the table.

The other thing that I would say people missed, and that I was convinced of, is that the Chinese business model is based on volume. It's based on employment, and it's based on a five-year plan. I think everyone neglected the idea that, despite the tariffs, the Chinese were going to keep producing. It's one of those situations where they may lose a dollar on every product, but they make up for it in volume.

Can we forecast these tariffs through 2028, or do you think that we have to have moments where, whether it's the Supreme Court opining on one body of language versus another, it may change your course? Do you feel confident that we can forecast these revenues now through the balance of President Trump's term?

I think the revenues are a combination of revenues. The ultimate goal of tariffs—the revenue collection, I think, is in a way a payback for the imbalances that have gone on over the years. But over time, the real idea is to balance trade, reshore manufacturing, and bring our economy into balance with our trading partners.

What should happen is that, over time, tariff income will come down and US tax receipts will come up, whether it's from factory jobs or more manufacturing and higher payroll taxes. We'll start off at this very high level, then we will rebalance, and domestic tax revenues will come up.

I think it's difficult to know the timing. We know the direction and the destination, but the timing is difficult when it comes to tariffs versus increased domestic tax revenues.

When I got into the investment business in the 1980s, there was always a focus on trade and how much we were making in the US. Again, everything made outside of the US is a decrease in US GDP. As we bring it back, I think we're going to start looking more at the content of trade versus domestic manufacturing as a component of GDP acceleration.

As we wrap up tariffs, we have a Supreme Court ruling coming in January. What happens if that goes against the administration?

I don't think it's against the administration. I actually think it's against the American people, and it will be, again, as I said, a hit to national security. The revenues aren't the focus here. The revenues can be replaced, but all the things that President Trump has been able to do using tariffs on the national security side will be jeopardized.

Would you be able to just work with Congress on them? That seems to be how the Constitution was designed: that Congress would have this authority. So why not just work with them? Is that the fallback plan?

Why would you say Congress would have what authority?

The Constitution has tariff control.

So, that's at least my understanding of the U.S. Constitution, and I think that's why there's a Supreme Court case, correct?

We'll see. The president has the right under IEEPA for licenses. We've also seen—I was at the Supreme Court. For your viewers, a bucket-list event should be going to see a Supreme Court hearing. In terms of any institution that is closest to what our framers designed when they jumped into business in 1789, it is surely the closest to what you would have seen at the court. They're very convivial with each other.

Yeah, I listened to it. It's quite compelling content.

Yeah, and to be there in person—not my political leanings, but Justice Kagan was an intellect of towering impressiveness. I came away thinking, “I am glad that Justice Alito is not my father,” because he is smart, bombastic, and when he got the knife into a couple of the plaintiffs in a line of questioning, he moves it around quite a bit.

But one line of questioning in this that one of the plaintiffs agreed on was—and it was either from Justice Alito or Justice Kavanaugh—“You are telling this court that the president of the United States can do a 100% embargo, but he cannot put on a 1% tariff?” And the plaintiff said yes.

Yeah, and that ruling is coming out in a few months. Is it January or February?

January is the expectation, yeah—January or February. And Jason, to your question, I don't know what the ruling is going to be. My guess is that everyone—I think that framing is very important in any issue, and I think the framing thus far has been very poor because it's viewed as 0 or 1. It's up or down. My guess is it will be more nuanced.

Having been in the room, for instance, I think many in the media were at a different hearing than I was at. So, when Justice Amy Coney Barrett said, “If we undo this, it'll be a mess,” that was viewed as just “It will be a mess,” as opposed to—I believe she was actually leaning toward looking for a reason not to undo it because of the refunds. She was referring to the refunds.

The president has absolute ability, or the executive branch has absolute ability through Section 301, Section 232, and something called Section 122 to raise revenue on trade. So, using IEEPA is not a stretch of that authority.

Okay, so I think the question—and I really appreciate the introspection here on year 1 and the optimism for year 2—is that Wall Street and the tech industry have absolutely loved the results in year 1. My portfolio has surged, so that's fantastic. Thank you. Probably beyond my expectation.

But Main Street is particularly displeased with the Trump administration's first year. Your net approval rating is the lowest on 2 key issues: inflation, with net approval down about 30% on average since the summer, and the economy, at 18% net negative. This is quite paradoxical, obviously, since Trump was elected and considered historically very strong on those 2 specific issues.

My question to you is: Are the American people wrong? Maybe did President Trump set expectations too high during the election? Or do you just need more time to execute, and are you asking the American people humbly to give you more time?

I think it's C, because as Vice President Pence has said, we didn't get here overnight. We inherited a mess, and I think 2026 is going to be a very good year for the American people and for Main Street.

What we are not going to do is A, which is what the Biden administration did, along with many commentators—whether it was Greg Ip in The Wall Street Journal, the toxic Paul Krugman, who seems to have been booted from The New York Times and is relegated to Substack, or the former vice chair of the Fed, Alan Blinder. They said, “Oh no, you don't understand how good you have it. You eat your grit drink your grog, have your bread, peasants. Uh we'll give you a little more that you it's a vibe session and we're going to explain to you why you have it really good.”

We understand that the American people are hurting. I think the way to think about it is that there is a price level that things appreciated to during the Biden administration, and then there is the inflation level. The price level has gotten very high. I think cumulative CPI during the Biden administration was 21% or 22%.

There's a Wall Street firm called Strategas Research. They do something called the Common Man Index, which is what working families need: gasoline, insurance, autos—mostly used cars—rent and staples. That appreciated by 35%. So, people are seething over the high price level.

As we saw in the inflation print this week, inflation is starting to turn down, and affordability is 2 parts. It is getting prices under control. Some things we can decrease. Gasoline is coming down substantially. I would expect that it would come down much more. Oil is down substantially, and gasoline follows it with a lag. Rents are down, and we are now seeing the effects of what 10 to 20 million undocumented people coming into the country did for rents.

This mass, unfettered immigration pushed D.C. rent levels through the roof. There's a study from Wharton that shows that a 1% population increase in a city leads to a 1% increase in rent. So, we can see why rent went up. If the migrants are going home, we are now seeing rents down about 5%. I think that trend will continue. Again, the inflation numbers are starting to roll down, and I think that they will.

The other side is real incomes, which I think are starting to accelerate. Real incomes are up about 1.8% since President Trump took office, and that's back to the Main Street question.

Just one quick follow-up there, and I'll give it back to my compatriots. We need more time. This is not a 1-year project. It's going to take 2 or 3 years, and we're not going to gaslight you. The numbers are looking good.

On that note, we had the shutdown, and the October numbers were not complete. There's a bunch of reports now and hand-wringing over those numbers. I think maybe you could address it. The BLS filled in a lot of the nonsurvey data sources with some zeros, and potentially the criticism now, or the concern on Wall Street and among analysts, is that maybe this 2.7 number is overly optimistic. Maybe you could address people's concerns. Can we trust you with the numbers? I think that's what Wall Street is saying.

Well, again, it's amazing. When a good number comes out, then it switches to that. And Jason, just let me tell you: Every Wall Street predictor on Bloomberg was wrong. So, what do you do when you're wrong? You blame the measurement; you blame the data.

There's always a lot of imputed data in any of these numbers. That's why we get revisions. I was looking at the numbers, and paradoxically, the 2 things that I think are coming down the fastest—rent, also known as owners' equivalent rent, and energy—were actually up for the month. I believe rent has turned negative.

The other thing that was up was energy and gasoline, which we can see is an observable event. Those prices have decreased substantially from September to October. So, I actually think it was a pretty accurate number.

So, you've checked into that. The BLS numbers from October—you feel confident that they put those placeholders and assumptions in correctly? You feel confident in that?

Look, the BLS is problematic. We've seen that the whole time. I have no reason to believe that this is any less robust than any other data series. I would say that with rent and energy, those are very large components that have turned down substantially, but they were actually recorded as gains for that measurement period.

Just to build on that, we had people on our team run our own analysis, both using interpolation and other data points, and we got to exactly Scott's numbers. Frankly, on the margin, sometimes slightly better. So, I think the trend is very much what you and Kevin Hassett have been talking about in the last couple of days.

And gentlemen, I would also point you to Fed Governor Stephen Myron, who came from CEA. He'll be going back to CEA probably in February or March. He delivered a very robust speech at Columbia either 1 or 2 weeks ago, and he made some very interesting measurement points on inflation.

One piece of the inflation component there is financial services, and that goes up based on whether the stock market is up.

That's right.

When, in fact, portfolio-management costs have come down, it is showing an increase in costs. So, back to Jason's question on the BLS: How robust are the numbers? I think there are a lot of changes that could be adjusted to give us a better picture.

Let's stay on the affordability topic, and I would like to go to this essay you wrote, which is incredible: “The Fed's New Gain-of-Function Monetary Policy,” which you wrote in The International Economy. We'll link to this article. A lot of it goes to how the Fed, in many ways, has exacerbated the sense of equality and the actual, factual inequality.

But before I ask you that narrow question, Scott, can you help our viewers take a step back and give us a little bit of historical context on the Fed itself? We had a central bank in the 1700s and the 1800s. Andrew Jackson got rid of it. It came back in the early 1900s. When we established it then versus what it's doing today—and you studied this carefully—can you help us understand and contrast and compare how it started versus how it's going?

Sure. The Fed was created in 1913 as a response to the Panic of 1907, which most people don't know about. It made the crash of 1929 look like a day at the beach.

The Knickerbocker crisis, yeah. The Knickerbocker crisis was just a domino effect within the financial system. There was no central bank. The Bank of England is a very old central bank and had been functioning well.

J.P. Morgan actually had to personally step in during the crisis, and it was deemed that there should be a mechanism for the government to either wind down institutions, provide liquidity, and have greater control in the economy rather than leaving it to private operators. For much of its history, the Treasury had a seat at the table at the Federal Reserve. Post-World War II, that stopped.

If we look at more recent history, after the Great Financial Crisis, we saw this paralysis in the economy. I think a huge part of it—which has been part of my regulatory agenda here at Treasury this year through the Financial Stability Oversight Council—is undoing this poorly thought-out crisis legislation.

Look, I studied and taught the history of financial crises at Yale, and there's always retribution. You go from a lax regulatory regime to an overly constricted regulatory regime. Coming out of the traumatic GFC, for 10 years we had this overly constricted regulatory regime, where the Fed was deemed to be the only game in town.

Imagine one example: a home in North Florida that sold for $500,000 in 2006. All of a sudden, people are handing the keys back, and it is now worth $150,000. Great buy, great affordability, but because of the new financial regulation, and because the banks were in some cases rightly taken to the woodshed for bad behavior, there was no incentive to give credit at the bottom.

What happened? The asset owners—people with money—were able to accumulate assets. We saw very poor growth during the Obama administration. The Fed kept rates low for too long, but what the Fed engaged in, starting, I believe, on March 6 or March 8, 2009, was what we call QE, or large-scale asset purchases.

They went into the market and started buying long bonds. The theory of the case there is that you create liquidity, take safe assets—long-duration, safe assets—out of the market, and then the people who receive that money would buy more risky assets. Ben Bernanke famously said, when he was asked, “What’s the purpose of QE?” he told everyone, “Go buy equities.”

Well, not everyone could buy equities. We ended up with this two-tier economy where either you were an asset holder or you weren't. The Fed definitely kept QE going for too long.

I called the Fed the engine of inequality, and someone said to me, “Would you believe that the Fed is responsible for economic equality in the system?” I said, “Absolutely not. That is not one of their mandates, but they shouldn't be exacerbating it.” They were the leading cause of it.

There's a fantastic book by Karen Petrou. I know Karen Petrou very well. She's center-left, maybe hard left—

Not your politics, for sure.

Not my politics, but her book, The Fed, The Engine of Inequality—

—is excellent, yeah.

So, we just kept pushing up these asset prices. Then we got COVID, and markets became disorderly. The Fed did exactly what it should do: It came in and stabilized the markets.

For some reason, they decided that they needed to continue this QE right up until, I think, February or March of 2023. In essence, they were financing this massive $7 trillion debt increase that we saw during that period.

So, it's a long way of saying that the central bank has become much more involved in the economy. I think a lot of people don't understand that we've gone from what used to be a fairly straightforward rate-setting mechanism to this three-headed beast at the Fed, or this very complex calculus that I don't think anyone really understands, myself included.

You have rate-setting policy, balance-sheet policy—the Fed has a very big balance sheet now—and then you have regulation.

There's a part of your article that was stunning to me, where you describe how the budget of the Fed works. Effectively, when you understand that, there's a part of the Fed that acts like a hedge fund and is taking risk, and the revenues that it generates are used to subsidize its operations.

Can you explain that for folks? I didn't fully realize that was happening.

Yeah. Again, the Fed should make money. The Fed typically used to make money and would remit money back to the Treasury. And back to David's question on the budget deficit, the Fed was sending back about 0.3% of GDP through seigniorage, which is the float on the currency. There are other operations, but then they started QE, and no one told the Fed that you're not supposed to buy high.

They paid a high price for bonds at low interest rates, and their arbitrage turned negative. The Fed's losing about $100 billion a year now.

If you look at one of the key drivers of Main Street's satisfaction with its economic standing, it's the price of debt—the ability to buy a home, to buy a car, to extend their lines. We've got the 10-year Treasury sitting at, I think, 4.2% to 4.6% right now in terms of the rate.

I guess this may be a question that brings in 2 other issues: the fiscal issue and the economic issue. Is that a reflection of the state of the federal government's fiscal affairs, the state of the economy, both, or the state of markets selling off bonds? Doesn't the Fed have an important role to play in bringing those rates down and making rates accessible for Main Street?

I think what the Fed did, unfortunately, is they took modern monetary theory—from, I say, MMT, modern monetary theory, to MMP, modern monetary practice. The Biden administration issued all this debt, and the Fed bought it.

There's a very good study from MIT that shows, in a way that only PhDs at MIT can, very precisely, that 42% of the Great Inflation was caused by the budget deficit. Another 17% was caused by the increase in inflation expectations, which I think you could tie back to that. So, you've got almost 60%, David, that was caused by spending-induced inflation.

To go back to my earlier point, I think what we're not getting credit for here is that if we can stabilize the budget deficit, or even bring it down, that will contribute to disinflation.

If I think about central-bank credibility, no central bank in my career—probably since post-World War II—had more credibility than the Bundesbank up until the advent of the euro. They worked with the German government and with each other hand in hand.

The Bundesbank would say, “If you give us fiscal control, if you are not profligate, if you give us a reasonable fiscal balance, we will work with you. We will foam the runway to allow you to decrease spending, and we will decrease interest rates.” I think that's something we could be doing here.

I'm glad that you 2 are confused by the Fed's actions, Secretary Bessent. I read your article, and while I understand the mandate to get to 2% inflation, I'm curious about your take on why it's 2%, not 3%. I did a little historical archaeology, and I understand somebody in New Zealand came up with the 2% target, as opposed to 2.5%, 1.5%, or 3%. Let's put that aside for a second.

The thing that I think most Americans don't understand is the second mandate: full employment, or robust employment. That seems pretty easy for all of us to understand. But this quantitative easing, and how they purchase, which assets they purchase, and why, seems to have a massively distorting effect on the economy—at least according to your essay and some of the other sources you cite in it, which we have in the notes for people to read.

What should we be doing with this QE at all? If you had your druthers and could just swipe a pen here and clean this up, would you just get rid of the QE portion of what they're doing? How do they pick whose corporate debt they buy? Are you buying Nvidias, Ubers, and Googles because those are great companies, or Microsofts? Or are you buying Fords, struggling companies, or struggling airlines?

How are those decisions made? Should the American people be buying those things, and why?

Yeah, so there's a lot to unpack there. Absolutely, large-scale asset purchases should be part of the so-called central-bank toolkit. But I think if we go back and look at COVID, which was a real test, the Bank of England had the best model.

The markets became unhinged. They stepped in for a period—I can't remember whether it was 36 or 90 days. They stabilized markets, and they were the buyer of last resort, which is classic theory for what a central bank is supposed to do.

They're supposed to provide liquidity. They're supposed to open a window where financial institutions can pledge collateral and do it that way. I'll just point out that when bond yields were quite high, the Fed did buy quite a bit, and they would actually have a large profit if they stopped during that period.

Instead, they continued on when we were near the zero bound. What we've ended up with here is that they pushed asset prices up. Interest rates were low. Many people couldn't buy a house during COVID, but now the interest rate has normalized, and we're just in a much more normal period for interest rates.

We're not in a normal period for asset prices because so many people still have the 3% mortgages they got during COVID.

And back to your question on what the Fed should buy: Traditionally, since large-scale asset purchases began in 2009, the Fed just bought government bonds. They chose the duration. They switched during COVID because there were estimates that we were going to have a 20%, 30%, or 40% GDP decrease, so they were buying indices of high-yield and corporate bonds to stabilize the market.

I think what you're alluding to, Jason, is that during that period, in conjunction with Treasury, there were bailouts. That's done by a facility negotiated between the Fed and Treasury called a 13(3) facility. You identify the strategic industries that may be struggling. It would not have behooved anyone for the airline industry to go belly up because of a virus that turned out to be quite transitory.

Again, I think these are emergency powers. I think they should have them in an emergency, but I think the duration went on much too long.

If you're now in the bond sales game, Secretary Bessent, you've been on the other side of the market, but now you're selling the bonds. What do you see in terms of appetite for U.S. bonds? Has China disappeared, or are they still selling down? Are there other buyers emerging? How do broader capital markets look at U.S. debt in this moment?

Well, it's like John Maynard Keynes said: a lot of economics is a beauty pageant. You're just picking who you think is going to win. The U.S. became the worldwide winner last year. We had the best-performing bond market and best-performing markets since 2020, and I think that was for a combination of reasons.

One was the fiscal progress we made. Everyone went from thinking tariffs were a doomsday machine to thinking maybe tariffs are taking us to the promised land in terms of fiscal paydown. I also think inflation expectations have remained well anchored.

Back to Jason's question: Why 2%? We've chosen 2%, and I think it's very difficult to do a midair refueling or call an audible on 2 when you're above 2, because then it looks like when you're above a level, you will always fudge upward. I think there's a very robust conversation to get to once we're back to 2%, which I think will be in sight. Then we can have a discussion: Is it much smarter to have a range?

What drives me crazy is that the economy and the markets are biology. They're not math, and they're not physics. They're nonlinearities, they're very complex systems, and there are mutations in the system. This idea that we can have this decimal-point certainty is just absurd.

I believe that once we re-anchor to the target, then we could talk about a range. We could decide whether the range is from 2.5% to 1.5% or from 1% to 3%. But I think it's very difficult to re-anchor until you meet the target and maintain credibility.

Maybe as we wrap up on the Fed, can you give us a sense of the candidates being interviewed right now by President Trump: Kevin Warsh, Kevin Hassett, Chris Waller, and Rick Reed? How do you think each of those will try to reshape the Fed more in this constrained mode that you're advocating for?

I think many of them have already come out and said that they do want to shrink it—both the footprint of the institution in the economy and the institution itself. The Fed does not, as we talked about earlier, rely on appropriations. The Fed just prints its own money, sets its own budget, and, as I talked about in the article, has its own police force. We've seen the big cost overruns at the building here in D.C.

If Treasury were looking at new buildings for the Mint and the Bureau of Engraving and Printing, and we had that kind of cost overrun, I can guarantee you that I would be up on Capitol Hill getting a well-deserved earful.

Yeah, you'd be pilloried.

Each one of them has talked about moving back toward the more traditional Fed role, just getting the Fed back into the background. It wasn't meant for the market, the economy, and the American people to hinge on every word. It was supposed to be a predictable process.

Many of them have talked about getting rid of the so-called dot plot, the Summary of Economic Projections. They've talked about what we should do with the regional banks. No one's talking about getting rid of them or the regional bank presidents, but should each one of the regional banks have a specialty and go back to being a center of excellence? Why do we have so many overlapping functions?

For me, as someone who's an economic historian, the interview process has been fantastic because I got to interview 11 of the most knowledgeable people on economics, the Fed, and monetary policy. One time I got to interview 5, another time, and I'll be with 4 of them with the president. I think I understand probably better than just about anybody in the country what needs to be done, and everyone wants to see a smaller footprint and more predictability from what's going on.

So, what happens in 2026 for Main Street? What can you promise them, what can you not promise them, and what is out of your control? We talk a lot about the speed limit on mortgage rates, but you can't, in your position—correct me if I'm wrong—have a dramatic impact on the supply of homes, as one example.

Whatever you put the rates at, it could just drive the prices of those homes up if we lower rates too quickly, and then we have another situation like the Great Financial Crisis, where people are overbidding on the remaining housing stock. What can you actually promise the American people will happen in 2026 on Main Street?

We know Wall Street's going to be fine, and these American entrepreneurs and these companies are firing on all cylinders. Fantastic—lots of regulations taken out of the way. But what can Main Street expect from the administration in 2026?

Jason, two things. One, there's nothing I can promise because there's always a degree of uncertainty. But one of the things we've been doing here at Treasury is loosening the financial regulations. The companies that suffered the most under these regulations were the small banks.

We've seen small and community banks disappear at an alarming rate. About half of them have disappeared since the GFC. What I can promise is that the regulatory regime for those banks is being loosened. There's a saying that there are 8 banks in the U.S. that are too big to fail, and that the policies since the GFC have made small banks too small to succeed. We are doing everything to unleash the lending capability of these banks.

Their profitability will enable them to be part of their communities and lend more. Seventy percent of ag lending, 30% to 40% of real estate lending, and 40% of small-business lending come from these Main Street lenders. So, I can tell you there's going to be a bigger availability of credit.

I can tell you that we are not going to blow out the budget deficit and cause inflation. You will not see an MIT study that says that Trump 2.0 caused inflation through the budget deficit. I can also tell you that we are working to increase working wages.

In President Trump's first term, hourly workers did better than supervisory workers. The bottom 50% of households had a bigger increase in net worth than the top 10%. So, we're trying to level the playing field.

Secretary Mnuchin, this is, I would say, a conservative administration. If you look at the economic policy of traditional conservative administrations, you would not assume that the administration would lead the federal government to make large investments in private industry or participate meaningfully in the economy, as we're seeing with some of the deals that have been done over the last couple of months.

The administration has taken equity stakes in key industries and key businesses and has concurrently provided either a regulatory unlock or some sort of trade participation. Can you comment on what some people are calling state capitalism? Is this, from your view, a set of strategic interests, or is it a permanent shift in how the government plays a role in the economy? And how does that make sense from a free-market perspective?

David, I think it goes back to the idea that pure, unfettered free trade was not fair trade. When you have competitors—China, Vietnam, some others, sometimes in Europe—that have high subsidies, the idea that perfect Ricardian equivalence exists doesn't hold. We can see that from these distortions and the huge capital pools that have developed because of the imbalances.

That's one point, and that's trade policy. But on the other side, there's national security policy. The only good thing I can say about COVID is that it woke us up to national security. It took us out of this paradigm that elongated, free-flowing supply chains wherever they may be were the best, and that the most smoothly functioning system was desirable.

It turns out that the most efficient is not always the safest, most robust, or soundest. We saw that during COVID. We discovered that the Chinese became unreliable suppliers. India and some of the other countries acted—surprise, surprise—in their national interest.

So, if you look at the industries where we are taking stakes and moving forward, we've identified 5 to 8 strategic industries where the U.S. has to have endogenous production, or at least production adjacent to us in North America or this hemisphere.

I think of it as the kind of thing that you would have seen during World War II. We are in an economic war, and we do not want it to become a kinetic war, but we have to be prepared if it could. When we think about the huge amount—80% to 90% of the precursor chemicals that go into U.S. pharmaceuticals are made overseas, with the majority in China or India—we have to address that.

Semiconductors—in my life, I believe that the greatest economic threat to the world economy and to the U.S. economy, more than the Arab oil embargo that I lived through in the ’70s, when I was lined up with my parents at the pump to do odd-even days because of the oil embargo, is that 97% of upper-end precision chip manufacturing, the advanced chip manufacturing, is made in Taiwan. We need to bring a portion of that back to the U.S. The same goes for steel, shipbuilding, and pharmaceuticals. The interventions are all in those areas.

Scott, as we wrap, I’d like to go back to one topic you spoke about at the beginning, which is that you’ve had to overcome a lot of Biden-era difficulty, and a lot of the groundwork, as you said, will be seen in 2026 and beyond. I want to give you a final moment to talk about two topics. One is the tax cuts that will hit starting January 1, and I think it would be good for people to understand what’s coming. The second is the incredible movement and energy around Trump Accounts, which you spoke about yesterday, and the value of compounding and teaching people the financial literacy to understand what’s possible for all these kids.

A couple of points here. What we are going to see next year—if you think about the signature parts of the tax bill, I think the most powerful parts were the immediate expensing for American businesses, permanent for equipment, and then a 4- or 5-year window for factories. We are already seeing a capex boom. 2025 was a capex boom, and I think that is going to accelerate with all the trade deals we’ve done. Just about 6 weeks ago, in my hometown of Charleston, South Carolina, Boeing, the largest employer there, announced that it is increasing its plant by 50% for the Dreamliners as a result of the trade deals, but it’s also part of the tax deal.

We’re going to continue seeing this capex boom turn into an employment boom. For working Americans, I led the administration’s team on Capitol Hill in terms of what was non-negotiable for the president. A lot of traditional Republicans didn’t like his campaign promises to working Americans, but the president never yielded on this: no tax on tips, no tax on overtime, no tax on Social Security, and deductibility of auto loans for American-made cars. The bill was done on July 4. It’s retroactive to the beginning of the year for working Americans and retroactive to January 20 for corporations.

I also had the honor of being the IRS commissioner, and I can see that we’re going to have a gigantic refund year in the first quarter because no one changed their withholding. Working Americans did not change their withholding, so I think households could see, depending on the number of workers, $1,000 to $2,000 refunds. They will change their withholding schedule at the beginning of the year, and they will get an automatic increase in real wages. I think that’s going to be a very powerful combination for corporations and individuals.

These Trump Accounts, I believe, are a game changer. When we look back in 50 years, I think this will end up being more important than what he did for defense and more important than what he did for strategic industries, because this administration will have saved or created the idea that everyone is an equity owner, that everyone has a stake in the market. Right now, about 38% of Americans do not own equities, either directly or through some kind of 401(k) or something. By giving every child $1,000 at birth for these accounts, we’re going to increase financial literacy and people’s optimism in the market.

Here at Treasury, we’re going to do a dramatic amount of financial literacy and financial education, and we’re going to push that out to the schools. I think this idea of every American learning that money can make money for them will close the gap over time. We’ll go from 38% not owning equities—if this continues, hopefully that can be zero—and everybody will get a stake in American prosperity and in the American innovation that you all do. When I look at the polling for young people in terms of their view of socialism and their view of capitalism, I think this is going to make every man and woman a market participant. Huey Long said, “Every man a king.” I think this is going to make every man and woman a market participant, and I think it’s fantastic.

I began the announcement the other day by saying I’ve talked about parallel prosperity—Wall Street and Main Street. This is the biggest merger in history because it is merging Main Street and Wall Street. I grew up in a small town in South Carolina, and the only thing I knew about Wall Street was that something bad had happened in 1929. I was fortunate to go to Yale and then go to New York, but you shouldn’t have to have that path.

If you want to stay in your hometown but participate in the market and learn a lot about it, this is the ultimate program for that. Parents, family members, and employers can add $5,000. Philanthropists like Susan and Michael Dell are going to put in $6.25 billion to top up the accounts, and we’re up to probably 20 states that are also going to top up the accounts. Employers, credit card companies, and banks are already on board, and they’re just going to keep pushing more money into these accounts. Americans are the most generous people in the history of the world. We have never had a direct way to get rid of the friction of philanthropy and give money directly to American children.

Yeah. Fantastic. On that note, it’s a real watershed moment. Secretary Bessent, we appreciate your leadership and your service, and for spending the time with us here today. You’ve been open and articulate as always, and we thank you for that. We appreciate it.

For Chamath and Jason, this is the All-In podcast, and thank you, Secretary Bessent.

It’s an honor to serve the American people, so thank you all.