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--:-- Host (Jessica Mendoza): Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, November 26th.
--:-- Guest (Andrew Restuccia): Yeah, we've been sort of chasing our tails over the last few weeks, trying to figure out what the president is going to do before he does it. But this is a big one for us.
--:-- Host (Jessica Mendoza): On Friday, the president-elect announced that he was going to pick Scott Besant to run the Treasury Department. Scott Besant. He's a 62-year-old hedge fund manager from South Carolina.
--:-- Guest (Andrew Restuccia): And unlike some of Trump's other cabinet nominations, this one took some time. There were plenty of other decisions that happened quickly. The defense secretary, the attorney general. big positions that happened in just a matter of days.
--:-- Host (Jessica Mendoza): The fact that this took more than two weeks says a lot about the political importance of the economy for Trump.
--:-- Guest (Andrew Restuccia): I mean, he knows that this is one of the issues that sunk Biden and then later Harris. And he knows his political fortunes are really tied up in it.
--:-- Host (Jessica Mendoza): And the Treasury Secretary is key to making his economic promises happen.
--:-- Guest (Andrew Restuccia): The Treasury Secretary, if Besson is confirmed, will be at the center of the entire economic agenda for the president-elect.
--:-- Host (Jessica Mendoza): He has made the economy kind of the centerpiece of his political campaign, and the Treasury Secretary will be at the center of all that.
--:-- Guest (Andrew Restuccia): And whether he succeeds or fails will, of course, be at the feet of the president, but will also really be at the feet of Scott Besson.
--:-- Host (Jessica Mendoza): Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
--:-- Guest (Andrew Restuccia): I'm Andrew Restuccia, and I've been watching Scott Besant's nomination closely.
--:-- Host (Jessica Mendoza): So, let's talk about Scott Besant. What do we know about him?
--:-- Guest (Andrew Restuccia): So, he's a longtime Wall Street investor. He started his career at Soros Fund Management, the investment firm founded by the billionaire George Soros.
--:-- Host (Jessica Mendoza): Soros, by the way, has been a big supporter of liberal causes and a big target of the right wing.
--:-- Guest (Andrew Restuccia): Back in the 90s Besant worked with Soros team to short the British pound a move that led to a billion windfall.
--:-- Host (Jessica Mendoza): Later Besant co his own investment company called Key Square Capital Management.
--:-- Guest (Andrew Restuccia): He sort of spent his entire career in this sort of investing world.
--:-- Host (Jessica Mendoza): And for someone like Donald Trump, a businessman who thinks in terms of dollars and cents, that's really important.
--:-- Guest (Andrew Restuccia): He really likes people who have experience on Wall Street and people who have, in his view, been successful on Wall Street.
--:-- Host (Jessica Mendoza): He sees That is a really important asset, particularly at the Treasury secretary role.
--:-- Guest (Andrew Restuccia): Remember, in his first term, Stephen Mnuchin, who was a Wall Street guy, was his first term Treasury secretary and maintained a relatively good relationship with Trump throughout his term.
--:-- Host (Jessica Mendoza): Which is remarkable. It's unusual. It's unusual for Trump.
--:-- Guest (Andrew Restuccia): Yeah. I mean, you saw a lot of people come and go during the first term. Some lasted, you know, only weeks or months.
--:-- Host (Jessica Mendoza): And for someone to stick around for years is really notable.
--:-- Guest (Andrew Restuccia): So what's Bessent's relationship like with Trump? Do they know each other well?
--:-- Host (Jessica Mendoza): They know each other well now, but it's a relatively recent relationship.
--:-- Guest (Andrew Restuccia): Bessent has known the Trump family in a sort of acquaintance type way for decades, but he really started getting to know Trump about a year ago.
--:-- Host (Jessica Mendoza): Trump was impressed with Bessent's unequivocal support at a time when a lot of people on Wall Street were backing people like Nikki Haley or just staying out of it altogether.
--:-- Guest (Andrew Restuccia): So he really caught Trump's eye when he was on TV, you know, praising him up and down.
--:-- Host (Jessica Mendoza): I think what's very interesting about President Trump, he understood, you know, he's been in the financial markets through his real estate holdings.
--:-- Guest (Andrew Restuccia): He under, he has a deep understanding of financial markets as opposed to most politicians.
--:-- Host (Jessica Mendoza): And then they met at Mar-a-Lago and he traveled with him to some campaign events.
--:-- Guest (Andrew Restuccia): He at one point was brought up on stage by Trump, where he praised him and called him one of the smartest people on Wall Street.
--:-- Host (Jessica Mendoza): Can you come up here, please? Just come up here for a moment.
--:-- Guest (Andrew Restuccia): He is considered one of the most brilliant men on Wall Street.
--:-- Host (Jessica Mendoza): So Besant is a Wall Street guy. That's a check for Trump.
--:-- Guest (Andrew Restuccia): He is somebody who has defended Trump, also a check for Trump.
--:-- Host (Jessica Mendoza): Is there anything else about Besant that sort of speaks to why Trump is picking him?
--:-- Guest (Andrew Restuccia): So two things we were told after he made the decision.
--:-- Host (Jessica Mendoza): One and the most important thing is they had a personal rapport and Trump came to trust him.
--:-- Guest (Andrew Restuccia): And he trusted that he would be the best positioned people of all these other candidates to actually implement his agenda.
--:-- Host (Jessica Mendoza): And then secondarily, and this is quite secondary, Trump has also told people that he likes the way he looks.
--:-- Guest (Andrew Restuccia): Like his physical appearance.
--:-- Host (Jessica Mendoza): His physical appearance.
--:-- Guest (Andrew Restuccia): Trump talks about someone one of the highest forms of praise from Trump is when he describes someone as straight from central casting.
--:-- Host (Jessica Mendoza): It means that they look the part.
--:-- Guest (Andrew Restuccia): And Scott Besant does look the part.
--:-- Host (Jessica Mendoza): He has sort of gray hair and it's swept back and he wears glasses and he looks sort of almost professorial.
--:-- Guest (Andrew Restuccia): And he looks like the kind of guy that you sort of want to be the face for the treasurer's secretary, at least in Trump's opinion.
--:-- Host (Jessica Mendoza): Besant seemed like a natural fit, but he wasn't the only name in the mix.
--:-- Guest (Andrew Restuccia): There was also Howard Lutnick, the CEO of a financial services company called Cantor Fitzgerald.
--:-- Host (Jessica Mendoza): Lutnick is a close Trump ally and a strong supporter of Trump's economic plans.
--:-- Guest (Andrew Restuccia): So he actually has known Trump for quite a while.
--:-- Host (Jessica Mendoza): They have a relationship that dates back decades from just being in New York circles in the 80s and 90s.
--:-- Guest (Andrew Restuccia): He was also a fierce defender of Trump on television.
--:-- Host (Jessica Mendoza): And that's how he ended up, in part, getting this job as co-chair of the transition team.
--:-- Guest (Andrew Restuccia): And he developed a really close relationship with Trump over these last few weeks in particular, as he was sort of going over the ins and outs of what the administration should look like.
--:-- Host (Jessica Mendoza): Lutnik had won the backing of some high-profile people in Trump's inner circle.
--:-- Guest (Andrew Restuccia): Over the last week and a half, Trump allies come out in favor of Lutnik for Treasury.
--:-- Host (Jessica Mendoza): And that is Elon Musk, the businessman, and Robert Kennedy Jr., who's now the nominee to lead the Health and Human Services Department.
--:-- Guest (Andrew Restuccia): And they both came out on social media and said, you know, he's our guy, essentially.
--:-- Host (Jessica Mendoza): And not only that, Musk sort of directly criticized Besson, arguing that he was a more business-as-usual approach and that he wouldn't sort of shake up the Treasury Department in the way that they wanted him to.
--:-- Guest (Andrew Restuccia): So what's wrong with the business-as-usual approach, according to Besson's critics?
--:-- Host (Jessica Mendoza): And, like, what was it that Lutnick was bringing that they felt was more desirable?
--:-- Guest (Andrew Restuccia): So one of the biggest things is their approach to trade.
--:-- Host (Jessica Mendoza): Besant up until recently has taken a more traditional Wall Street view of trade and he described Trump sweeping plans for aggressive terrorists on basically all U imports as a negotiating tactic as something that when you sit down with other countries this threat is enough to reach an agreement that is beneficial to both sides.
--:-- Guest (Andrew Restuccia): And then ultimately, some of these big campaign promises might not come to fruition because of that.
--:-- Host (Jessica Mendoza): Lutnik has been a little bit more of a just straight up cheerleader for Trump's trade agenda with fewer caveats.
--:-- Guest (Andrew Restuccia): And so there was a sense that, like, he was a more true believer MAGA-type guy.
--:-- Host (Jessica Mendoza): Lutnik's last-minute play for the Treasury job almost derailed Besson's nomination.
--:-- Guest (Andrew Restuccia): And Andrew says the infighting got pretty fierce.
--:-- Host (Jessica Mendoza): One Trump advisor called it a knife fight.
--:-- Guest (Andrew Restuccia): It was pretty intense.
--:-- Host (Jessica Mendoza): So these are some veteran people that lived through a lot of fighting in the first term.
--:-- Guest (Andrew Restuccia): And they even were surprised by the degree to which not only were they sort of bad-mouthing each other behind the scenes, but also how aggressively and public the campaign became.
--:-- Host (Jessica Mendoza): You had multiple candidates, you know, sort of publicly making the case on Twitter and elsewhere and interviews for the job.
--:-- Guest (Andrew Restuccia): And it irritated Trump, according to people that we talked to, to the point where he actually broadened the search at the last minute beyond Lutnik and Besant to include other people like Kevin Warsh, who's the former Fed governor, and Apollo global management CEO Mark Rowan.
--:-- Host (Jessica Mendoza): But ultimately, Trump went with Besant.
--:-- Guest (Andrew Restuccia): What made him come to pick him over Lutnik or any of these other folks?
--:-- Host (Jessica Mendoza): So one thing happened in the interim, which is what he decided to give Lutnik the commerce secretary job.
--:-- Guest (Andrew Restuccia): So that ended up taking him out of the running.
--:-- Host (Jessica Mendoza): Notably, he also was giving Lutnik a pretty broad portfolio, including oversight of trade itself.
--:-- Guest (Andrew Restuccia): And I just think he wasn't happy with the other candidates.
--:-- Host (Jessica Mendoza): And so I think he decided that his first initial gut instinct was the best one.
--:-- Guest (Andrew Restuccia): How Besant might implement Trump's big economic ideas? That's next.
--:-- Host (Jessica Mendoza): Agent today at the Hartford.com slash small business.
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--:-- Host (Jessica Mendoza): Okay, so Trump has nominated Scott Besant for Treasury Secretary.
--:-- Guest (Andrew Restuccia): What do we know about Besant's plans if the Senate confirms him for the job?
--:-- Host (Jessica Mendoza): So Besant did his first interview with the Journal just the other day, and he laid out a few things that he's, at least in his initial thinking.
--:-- Guest (Andrew Restuccia): So the sort of first and biggest thing is making the 2017 tax cuts that Trump oversaw permanent.
--:-- Host (Jessica Mendoza): That's going to be a massive undertaking that's going to unfold in 2025.
--:-- Guest (Andrew Restuccia): That's going to involve lots of negotiations with lawmakers.
--:-- Host (Jessica Mendoza): He also wants to follow through on the campaign promises that Trump made.
--:-- Guest (Andrew Restuccia): So that's including eliminating taxes on tips, social security benefits, and overtime pay.
--:-- Host (Jessica Mendoza): And he wants to focus on rolling back regulations, which is at the core of Trump's campaign pledge.
--:-- Guest (Andrew Restuccia): Bessent also pitched Trump on a plan to stimulate economic growth.
--:-- Host (Jessica Mendoza): And he gave the idea a catchy name, 333.
--:-- Guest (Andrew Restuccia): It is based on Shinzo Abe, the former prime minister of Japan's approach to sort of turning around the economy in the 2000s.
--:-- Host (Jessica Mendoza): And there are sort of three planks to that approach.
--:-- Guest (Andrew Restuccia): So they include cutting the budget deficit to 3% of gross domestic product by 2028, spurring GDP growth of 3% through deregulation, and also producing an additional 3 million barrels of oil per day.
--:-- Host (Jessica Mendoza): So that's the 3-3-3.
--:-- Guest (Andrew Restuccia): Yeah, I mean, he was smart to kind of create a name for it because I think Trump thinks that way.
--:-- Host (Jessica Mendoza): He sort of thinks in slogans and it's unclear if Trump will like explicitly adopt this 333 approach, but it was certainly a powerful selling point for him behind the scenes.
--:-- Guest (Andrew Restuccia): But the big thing that many people are watching for is what Besant does about tariffs.
--:-- Host (Jessica Mendoza): During his campaign, Trump talked a lot about tariffs.
--:-- Guest (Andrew Restuccia): Trump has even said he wants to put a tariff on every import into the U In a post last night on Truth Social, he said that one of his first executive orders will be to impose a 25% tariff on all products coming from Mexico and Canada and an additional 10% tariff on products from China.
--:-- Host (Jessica Mendoza): But remember, Besant had in the past taken a less aggressive position on tariffs.
--:-- Guest (Andrew Restuccia): And that was a sticking point for some inside Trump's transition team.
--:-- Host (Jessica Mendoza): During the campaign, one of the things that he said was that he saw tariffs as a negotiating tool.
--:-- Guest (Andrew Restuccia): In a letter to investors, he said, the tariff gun will always be loaded and on the table but rarely discharged.
--:-- Host (Jessica Mendoza): Which is an indication that he believes that these are a useful negotiating tool and a threat, but that you should really only use them when you have to.
--:-- Guest (Andrew Restuccia): That really differs from the way that the president-elect thinks about tariffs.
--:-- Host (Jessica Mendoza): I mean, he got up on the campaign stage time after time and said, I'm going to slap 60% tariffs on China.
--:-- Guest (Andrew Restuccia): I'm going to do up to 20% across-the-board tariff on all U.S. imports.
--:-- Host (Jessica Mendoza): He's talked about a 200% or higher tariff on vehicles from Mexico.
--:-- Guest (Andrew Restuccia): These were not framed as simply negotiating tactics during the campaign.
--:-- Host (Jessica Mendoza): Now, I should note, Besant has sort of tried to tweak that position, especially because it was one of the reasons why people were trying to take him down in the final days.
--:-- Guest (Andrew Restuccia): And he published an op-ed on Fox News' website just days before the announcement where he basically said that, you know, I'm a true believer on tariffs.
--:-- Host (Jessica Mendoza): And he criticized people who criticized tariffs.
--:-- Guest (Andrew Restuccia): So he said in the op-ed, the reflexive opposition to tariffs represents political ideology and advocacy, not considered economic thought.
--:-- Host (Jessica Mendoza): So it sounds like he could go either way on tariffs?
--:-- Guest (Andrew Restuccia): It remains to be seen how he'll actually approach it if he's confirmed and becomes Treasury Secretary.
--:-- Host (Jessica Mendoza): And my guess is at the end of the day, there's going to be a lot of very spirited fights about this behind the scenes.
--:-- Guest (Andrew Restuccia): What does it say to you that Trump went with him as his Treasury Secretary?
--:-- Host (Jessica Mendoza): I think it says that for all the bluster and for all of the campaign rhetoric, Trump wanted a relatively steadying force at the Treasury.
--:-- Guest (Andrew Restuccia): And then he was worried that if he picked someone that was a little bit more unknown or didn't have a whole lot of bona fides on Wall Street, that the market would be spooked.
--:-- Host (Jessica Mendoza): He just really didn't want to see the market's downturn as a result of whoever he chose.
--:-- Guest (Andrew Restuccia): And in the days leading up to his decision, he called people on Wall Street and asked for their advice.
--:-- Host (Jessica Mendoza): And the advice that they gave was that Besant would be seen as a sort of steady leader and that they would reassure the markets, and it did.
--:-- Guest (Andrew Restuccia): Besant still needs to be confirmed by the Senate early next year.
--:-- Host (Jessica Mendoza): How is that process likely to go for him?
--:-- Guest (Andrew Restuccia): Yeah, so this is just starting now.
--:-- Host (Jessica Mendoza): He does not have a lot of strong relationships on Capitol Hill, so he's going to have to go to the Senate and meet and introduce himself to senators.
--:-- Guest (Andrew Restuccia): As of now, we see no indication that he's not going to get confirmed.
--:-- Host (Jessica Mendoza): Remember, the Republicans now control the Senate.
--:-- Guest (Andrew Restuccia): But they will certainly ask about his investment history.
--:-- Host (Jessica Mendoza): Republicans, I'm sure, will be curious about his longtime affiliation with George Soros.
--:-- Guest (Andrew Restuccia): But as of now, we're not seeing any red flags that should slow down the confirmation battle.
--:-- Host (Jessica Mendoza): But it's something we're going to be watching closely.
--:-- Guest (Andrew Restuccia): And so nominations for cabinet posts are continuing to roll in.
--:-- Host (Jessica Mendoza): What do these picks tell us about Trump's second term?
--:-- Guest (Andrew Restuccia): One of the things that Trump talks a lot about and his close allies talk a lot about is they want to do things slightly differently than they did the first time.
--:-- Host (Jessica Mendoza): In the first term, they felt that they had too many people that were rowing in a different direction than them and that opposed fundamentally some of the things they were trying to do.
--:-- Guest (Andrew Restuccia): This time, though, the thing that they've really stressed is that, like, yes, there will be disagreement on the specifics, but you have to sort of be in line with Trump ideologically in order to serve in his administration.
--:-- Host (Jessica Mendoza): And we'll see if that is actually the case, if there are people who harbor some concerns about some of his policies behind the scenes.
--:-- Guest (Andrew Restuccia): But they really want people sort of all on the same page.
--:-- Host (Jessica Mendoza): That's all for today, Tuesday, November 26th.
--:-- Guest (Andrew Restuccia): The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Host (Jessica Mendoza): Additional reporting in this episode from Ben Schwartz, Nick Timmeros, Alex Leary, Peter Rudiger, and Gregory Zuckerman.
--:-- Guest (Andrew Restuccia): Thanks for listening.
--:-- Host (Jessica Mendoza): See you tomorrow.
