Treasury Secretary Bessent Speaks With CNN's Jake Tapper After US Loses Last Top Credit Score

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On Sunday, Treasury Secretary Scott Bessent spoke with CNN's Jake Tapper on "State of the Union" after Moody downgraded the United States credit score.

Transcript

00:00Jake, first of all, the history of rating agencies, by the time they get to a downgrade,

00:05everything's already in the market. Larry Summers and I don't agree on everything,

00:09but in 2011, the last time or two times ago when he had a downgrade, he poo-pooed it.

00:17What I think is important is that President Trump has just come back from this historic

00:22Mideast trip, and there's trillions of dollars coming into the U.S., so we are seeing confidence

00:29from investors, so I don't put much credence in the Moody's. The downgrade comes as Republicans

00:35are trying to pass the big, beautiful bill, as the president calls it. It's a massive bill that has

00:41tax cuts, spending cuts. The nonpartisan committee for a responsible federal budget says that this

00:47bill, if it passes in its current form, will add between $3.3 and $5.2 trillion to the national debt

00:54over the next decade. Now, the debt is a concern of yours. You talked about our debt being on an

01:00unsustainable path earlier this month. Won't this bill just make it worse?

01:05There are several components there, and so if we unpack it, there is the growth, the potential growth

01:12of the debt, but what's more important is that we grow the economy faster. So what we've seen under

01:18the past four years, and what we inherited, I inherited 6.7 percent deficit to GDP, which was

01:26the highest deficit when we were not at war, not in a recession. So we've been trying to bring down

01:32the spending, and we are going to grow the revenue side. So we are going to grow the GDP faster than

01:39the debt grows, and that will stabilize the debt to GDP, which even Secretary Yellen and I agree is the

01:48most important number. So when, in the first Trump administration, you were not a part of it, but

01:53obviously President Trump was, there were tax cuts passed, and the Committee for a Responsible Federal

01:57Budget says that those tax cuts added $2.5 trillion to the national debt and did not, I mean, there's

02:03always a hope that it will bring about so much revenue growth that it will pay for itself, but that

02:08didn't happen. Well, we also had something called COVID, and so there was a rescue plan.

02:15This is separate from that, but I'm aware of the COVID trillions. Yeah, but the CBO scoring was about

02:21a trillion and a half off, and again, what matters is the growth, and during President Trump's first

02:29term, up until March of 2020, we had very high non-inflationary growth, and that's what I think we can

02:38have again this time. Let's turn to trade, because that's obviously where there's been a lot of

02:42focus. President Trump just put 150 countries on notice that their tariffs are about to go higher

02:47in the next few weeks if they don't reach a trade deal with the U.S. How exactly will you decide what

02:53those new tariff rates will be? Will they be what was previously announced on April 2nd, so-called

02:57Liberation Day, and when will they actually go into effect? So, Jake, we have a 90-day pause. There are 18

03:04important trading partners, probably another 20 strong relationships. President Trump has put them

03:12on notice that if you do not negotiate in good faith, that you will ratchet back up to your April

03:192nd level. So the 90-day pause isn't just China, it's everybody? No, the 90-day pause was put on

03:27about a week after April 2nd. Oh, that first 90-day pause. The first 90-day pause. Yeah. And I can tell

03:34you that with a few exceptions, the countries are coming with very good proposals for us, and I look

03:42at these proposals, and they want to lower their tariffs, they want to lower their non-tariff barriers,

03:48some of them have been manipulating their currency, they've been subsidizing industry and labor,

03:53and I look at these proposals, and I think these are excellent proposals, but I wonder,

04:00how did we get here? How did the previous administrations allow this to happen to the

04:04American people? So 150 countries have been put on notice. How many deals do you think you're going

04:09to be able to announce, and how quickly? Well, again, it will depend on whether they're negotiating

04:16in good faith, and there are a lot of smaller trading relationships that we can just come up

04:24with a number. My other sense is that we will do a lot of regional deals. This is the rate for

04:32Central America. This is the rate for this part of Africa, but what we are focused on right now

04:37are the 18 important trading relationships. Walmart announced this week it's going to have to raise

04:43prices on some goods, and they blame Trump's tariffs, particularly the tariffs on China. Here's

04:50the CEO. Take a listen.

05:14So President Trump went on Truth Social and says Walmart should eat the tariffs. In other words,

05:19not pass on the prices to consumers, doesn't that inherently serve as an acknowledgement that

05:29tariffs are essentially a tax on consumers? Because initially, President Trump said, well,

05:36other countries, you know, that's not true. Countries pay for the tariffs. But here we have a perfect

05:40example. The countries, China gets these tariffs, and then Walmart has to raise its prices, and consumers

05:48end up paying for that. Well, Jake, in essence, what you're saying is you're saying taxes are

05:53inflationary, so let's pass the Trump tax cuts, and that'll be disinflationary if we continue that line

06:00of thinking. I don't know that you can put me on as endorsing anything, but go ahead. Well, let's just

06:06keep everything consistent. I did speak to Doug McMillan, who I have a very good relationship yesterday,

06:12just to understand what he had to say. And, you know, understand that came from an earnings call.

06:18On an earnings call, because of SEC requirements, they have to give the most draconian case.

06:24So Walmart will be absorbing some of the tariffs. Some may get passed on to consumers. But the other

06:30thing that's happening is that inflation is down. We had the first drop in inflation in four years under

06:38President Trump. The other thing that Doug mentioned to me is for his consumers, for his buyers, the most

06:45important thing are gasoline prices. And this administration has gotten gasoline prices down.

06:50Service prices are down. So overall, I would expect inflation to remain in line. But I don't blame consumers

06:58for being skittish after what happened to them four years under Biden. We had the worst inflation in 40 years.

07:04So ever since Liberation Day, April 2nd, I have a weekday show called The Lead. And ever since then,

07:10every day pretty much, we interview a small business owner. Some of them are Trump supporters. Some of

07:15them are not. Some of them are tariff supporters. Some of them are not. The one thing I hear from

07:19almost every one of them is the uncertainty. They don't know how to plan for the future because they

07:28have no idea what's going to come. The other thing I hear is that their margins, these are small,

07:34small business, their margins are so thin, five to 10 percent max. And they say that these tariffs are

07:41just taking away all of their profit margin. So I guess my question is, what do you say to people

07:48concerned about the uncertainty? And what do you say to people who say, small business owners who say,

07:53we need relief? Because as they say, like, I'd love to buy lithium batteries in the United States,

07:59but you can't. They're only available for small businesses from China. Well, a couple of things to unpack

08:04there, Jake. One is that we didn't get here overnight in terms of this terrible trade situation we have

08:14with China, but also with the rest of the world. And President Trump is renegotiating these.

08:21And strategic uncertainty is a negotiating tactic. So if we were to give too much certainty to the

08:30other countries, then they would play us in the negotiations. I am confident that at the ends of

08:37these negotiations, both the retailers, the American people, and the American workers will be better

08:43off. What we saw with China, China was the only country post-April 2nd to escalate. So both sides

08:54escalated. We got to an untenable level. We were at 145 percent. They were at 125. And we had a meeting

09:04in Geneva last weekend. And both sides came down 115 percent. So the U.S. is now at 30. A 10 percent

09:14reciprocal tariff that's on a pause and 20 percent fentanyl tariffs. Those were put on back in February.

09:21So those are already in the system. So I think most of the small businesses you're talking to,

09:27they were probably referring to the very high triple-digit tariff levels, which have now been

09:36brought down. Yes, some of them were. But there's also just this idea, a lot of them saying, look,

09:42I support what President Trump wants to do. I support the idea of wanting to bring manufacturing

09:46back to the United States. But it can't be done in a month or three months or even a year that there

09:53is just an entire infrastructure in this country that is lacking. They can't buy what they would

09:58love to buy. Most of them, as you know, if not all of them, are patriotic. They want to buy American

10:02goods. But a lot of this stuff just isn't made in America. I mean, this is, we could go into a long

10:07history about the hollowing out of the manufacturing base that is neither the fault of you, me, or President

10:12Trump. But it did, it does exist. And it will take years to make the manufacturing infrastructure

10:18that these small businesses rely on. Well, Jake, I think what we're going to see, just like we saw

10:24with the UK trade deal, my sense is it's what we'll see with China. We don't want to decouple with China.

10:30And President Trump actually wants to open up China for business. So the manufacturing we want to bring

10:37back. We had, during COVID, we realized that we had some very strategic shortfalls, whether it was

10:44medicines, semiconductors, steel, the other products. So the long term, the medium term goal is to bring

10:53back these strategic industries as quickly as possible. And I think we will continue trading with

10:58China in the kinds of products that these small businesses are talking about at lower tariff levels.

11:06Before you go, you joined President Trump on his Mideast trip, and he's been defending from

11:11criticism from both liberals and conservatives to accept this $400 million luxury jet as a gift

11:16from Qatar to use for the duration of his presidency. And then, I believe, for his presidential library,

11:22Trump says he's giving it to him as a nice gesture. You're a hard-nosed businessman. Even if

11:28Qatar isn't asking for anything in return now for the jet, I mean, that's a bill that could come too.

11:32Nobody in the Middle East gives things just to, or anywhere in the world, just gives a $400 million

11:37jet just to be nice. Well, I don't know, Jake. The French gave us the Statue of Liberty. The British

11:42gave us a resolute desk. I'm not sure they asked for anything in advance. And the more important

11:47airplane deal was there's 100 billion of orders from Qatari Airlines to Boeing. Kelly Ortberg, the CEO of

11:54Boeing, was with us in the Middle East. This is the biggest order in the company's history. So, you know, I think

12:04that that plane deal is much more important than this other one. Well, I will just say about the Statue of Liberty,

12:09I mean, that was authorized by Congress, and it belongs to the American people. It doesn't belong to whoever was

12:14president at the time. Well, I think that this plane would be a gift to the American government.

12:18We're going to make this happen.

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