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--:-- John Bickley: With Trump in, we can finally exhale. But the fact of the matter is, our nation is broke, and that debt is a house of cards that can't quickly be dismantled.
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--:-- John Bickley: We're now joined by Scott Besant, Wall Street Investment Officer and Economic Advisor to President-elect Trump. Scott, thank you so much for coming on.
--:-- Scott Besant: Thanks for having me.
--:-- John Bickley: First, you spent more than a decade as the chief investment officer to George Soros Money Management Group. How did you end up advising Donald Trump?
--:-- Scott Besant: Sure. The Soros Money Management Organization was kept very separately from George Soros' foundations. And if you look back at the history of the CIOs, whether it's myself, Stan Druckenmiller, Bob Bishop, Bob and I are big Trump supporters. Kind of day one, Stan Druckenmiller is one of the largest Republican supporters. The other thing I always tell people is who are the most anti-communist people you know? It's people who come from communist countries because they've seen what it's like on the inside.
--:-- Georgia Howe: But my real attraction to President Trump is that he's recasting the U.S. and the Republican Party into a multiracial working class party and a party of entrepreneurs and patriots. And I consider myself a businessman and entrepreneur. And having that exposure around the Soros organization, I could see all the globalist tendencies, traveled in those circles, was in Europe, lived in London, at one point was commuting to Tokyo every week. And I could just see how the international system was no longer serving the American people.
--:-- Scott Besant: One of the things that really attracted me to President Trump was his promise of making America work for everybody, because I think that's really my message here. Under Trump 1.0, it worked for everybody, especially working class people. Working class salaries went up more than the managerial class. Working class household net worth went up more than it did for the top 1%. And, you know, the Democrats are divisive. And President Trump's message is America can work for everybody. And I think we're going to have a great four years coming up.
--:-- Georgia Howe: And that dovetails with my next question. There's been a lot of inflationary headwinds, though inflation has cooled over this last year. Do you expect Trump 2.0 to be even more effective? Or is it going to be more difficult to make the kind of progress that he made under his first term?
--:-- Scott Besant: Well, I'll answer your question after I give the framing for the background. I think we're starting with worse initial conditions. I think that the Democrats have gunned the engines for the past several years in trying to get us to November 5th And they pulled out all the stops like you would see in an emerging market They gotten us to a 7 of GDP budget deficit the largest deficit we have ever had in the history of the United States when we're not at war and not in a recession.
--:-- Georgia Howe: So the initial conditions are much worse, but I think the team, the programs, and what was learned in Trump 1.0 is vastly superior.
--:-- Scott Besant: Now, in a letter to investors, you said markets would rally if Trump was elected due to optimism. And that proved true the day after Trump won, the Dow Jones exploded by 1300 points. What's driving the optimism and will it continue?
--:-- Georgia Howe: Well, animal spirits are being unleashed beneath the surface. We had the high inflation. We had all the divisive rhetoric from the Democrats. But what was really hurting business and what we call in economics, something we can't identify, is animal spirits. And it was this huge buildup of the regulatory state, the regulatory state under President Obama, the regulatory state under Harris and Biden. The level of new regulations that Harris and Biden added, will add in their final year, was topped only by Barack Obama's regulations. Those regulations are not free. They suppress GDP. It's a real cost to consumers, to households, and it slows the economy.
--:-- Scott Besant: President Biden's cabinet was the least business-friendly cabinet because there are no business people in it. Even the head of the Small Business Administration, I don't think she'd had a private sector job for years. Look at what we just avoided. Kamala Harris and Tim Walz have never had a private sector job in their adult lives. Never had a private sector job. I hope they can get one starting in January.
--:-- Georgia Howe: Whereas you contrast that, President Trump is a businessman. And when I have discussions with him, he is economically sophisticated, the way he looks at markets and business. And look how he's brought in Elon Musk, one of the greatest business people or the greatest businessman of this generation. And he's going to be part of the administration.
--:-- Scott Besant: Now that Trump has been elected, what would you say would be his chief economic goals, his first actions upon taking office?
--:-- Georgia Howe: Well, I think there are going to be a number of executive orders that are going to push back on the regulation, especially in energy. We are a dynamic energy producing country, and the Biden administration has really stifled that. Senator Sullivan from Alaska half jokingly said, look, the Biden administration has sanctioned Alaska 51 times, which is more times than they've sanctioned Iran.
--:-- Scott Besant: So, you know, I think we're going to come out with deregulation and energy and finance. The most important thing that we've got to do in 2025 is get the Tax Cuts and Job Act renewed or even made permanent. And then I think the other thing that President Trump's going to do is stop the chaos, whether it's Russia, Ukraine in the Middle East, what is developing into a hot zone around Taiwan. And that'll be great for business confidence, pull down a lot of the spending and also cause inflation to go down.
--:-- Georgia Howe: And I think we're going to see private sector hiring because what we've seen under Harris Biden is just this gigantic government leviathan, bigger and bigger with this massive government spending. So for all they've touted on their industrial policy, they've created 18,000 manufacturing jobs. 18 Last year there were only 250 private sector jobs Everything else was government or government adjacent So the way I phrase it is we are going to reprivatize the economy restart the private sector, and the working class people are going to do well. Big business continue doing well. And small business, I think, is going to do great.
--:-- Scott Besant: That's why we saw yesterday, You saw this massive outperformance by the small cap index. I think it was one of the biggest moves in 10 years.
--:-- Georgia Howe: Now, you mentioned tax cuts and deregulation being key priorities for Trump. How do those impact inflation?
--:-- Scott Besant: Well, deregulation directly brings down cost. And again, it's this hidden tax. Like a tax, you see when you fill out your tax return, when you get a bill at a restaurant, You see it at the gas station. But deregulation is this onerous hidden tax. For instance, I'm buying a new home that the Biden administration has put some kind of a tax on Freon HVAC systems. And I've got to get the HVAC installed by or buy it before December 31, or it's going to be $7,000 more on January 1. It's just a whole series of that. it's really a terrible equilibrium because not only is it inflationary, it slows growth. And tax cuts drive growth. And if you keep spending under control with the tax cuts, then that brings inflation down slowly.
--:-- Georgia Howe: I've advocated for President Trump. I call it a 3-3-3. We try to have 3% real economic growth, and that really solves the budget deficit. We average about 1.8%. I think if we deregulate and get the optimism back in the economy, right now we're at 7% of GDP budget deficit. I've told President Trump, I'd like to cut that in half by 2028. And if we can do that, that'll have the effect of bringing down interest rates. And then we can get U.S. energy production back to where it should be. In 2020, the Energy Department released a study that said that by 2024, we should have a million and a half barrels a day more than where we are now. But because of the onerous regulation on energy production of Biden and Harris, that our energy production is down.
--:-- Scott Besant: That increases costs. And I tell you, you get energy costs down, you get interest rates down and you get growth up. And we could have a golden age for the next four years under President Trump.
--:-- Georgia Howe: On the campaign trail, Trump really waxed poetic on tariffs. He said tariff is one of his favorite words. The legacy media is sounding the alarm over this. Would his tariffs really increase consumer costs by $4,000 a year? That's what we're hearing from some of these outlets. That's absurd.
--:-- Scott Besant: The U.S. is a big closed service economy, and it was just a democratic talking point. And, you know, what tariffs do, the U.S., we have about a 30 trillion economy. We only import about 10 percent of our goods and services. So that's three trillion. But a lot of that, those are manufacturing jobs that have gone overseas. So if you were to put on a 10% tariff, the currency appreciates by about 4%. We don't know what the elasticities of demand are. The overseas company may cut their margins. So we don't know that the price is going to go up. And then the other thing is to get production to move. So you could get a small one-time price adjustment, but that's going to be offset by more than the deregulation and the efficiency gains and the energy gains are going to more than offset that
--:-- Georgia Howe: President Trump one of the many reasons that he won on Tuesday night was the economy and the real wage decreases that American working people had under Biden and Harris And I guarantee you, President Trump understands as well as anyone for a great four years and for his legacy, inflation has to be kept under control and real wages for real Americans have to go up, just like they did in Trump 1.0.
--:-- Scott Besant: So Trump supports a strong dollar. We've reported here on this show the importance of keeping the dollar as the primary global currency. That's increasingly difficult. How would his policies keep the U.S. dollar strong while still helping U.S. exports?
--:-- Georgia Howe: Well, to the extent I'm an expert in anything, in my investment career, I've made most of my money managing and trading currencies. And I like studying history. Back under Ronald Reagan, the dollar was very strong. So strong, we had to go to our allies and ask to have it weakened. So we're already seeing it. Yesterday, there was a massive strengthening in the dollar. Because capital is global, fungible moves around the world, and capital goes where it is treated the best. So as we deregulate, as we have cheaper energy, then more and more capital will flow into the U.S. On the other side, as we are able to bring interest rates down because inflation gets under control, then the dollar may not appreciate as quickly or it may go down. But look, President Trump said in a very powerful speech at the Economic Club in New York about a month and a half ago that the U.S. is going to remain the reserve currency of the world. And I believe we'll just see ordinary market fluctuations. But I can tell you, President Trump is very, very bullish for the dollar. And we saw for the brief period after President Biden was removed, Vice President Harris was put on the ticket. The dollar went straight down.
--:-- Georgia Howe: Final question, a sort of big picture question. The Harris-Biden administration has implemented a lot of ideologically driven policies with DEI and ESG type elements. How would you describe the Trump administration's approach to economic policy?
--:-- Scott Besant: I think there are going to be a number of executive orders on day one that are going to push for economic over efficiency over ideology. So the progressive left likes to do social engineering and the Republican Party likes to do civil engineering. They've allocated all this money for the CHIPS Act, but there's so many bells and whistles. And, you know, you've got to have this group and that group. And they haven't been able to get any money out the door. They could meet their own criteria. So I think a huge amount of that is just going to be ripped up and that will go into the productivity bucket. And I think it's going to be very powerful. I think the best people will get the best jobs. And I think that's what we saw. Again, when you see President Trump's popularity with Latino voters, with Black voters, with young people, it was incredible on Tuesday night. That he expanded his coalition of voters was perhaps the major story Tuesday.
--:-- Georgia Howe: That was Trump economic advisor Scott Besant, and this has been a Saturday edition of Morning Wire.
