‘DROP DEAD’: Bessent’s blunt bailout warning for NYC

Welcome back. Good Wednesday morning, everybody. Thanks so much for joining us this morning. I'm Maria Bartiromo, and I hope you're having a good morning. It is Wednesday, September 24th. It is just before 8 a.m. on the East Coast.

President Trump delivering a fiery speech yesterday at the 80th United Nations General Assembly. He called out world leaders right to their faces over their failures within their own countries. He touted America's success and he told you the impact of wide open borders.

Watch.

We are rapidly reversing the economic calamity we inherited from the previous administration. Energy costs are down. Gasoline prices are down. Grocery prices are down. Mortgage rates are down, grocery prices are down, mortgage rates are down, and inflation has been defeated.

The only thing that's up is the stock market, which just hit a record high. Growth is surging, manufacturing is booming. Workers' wages are rising at the fastest pace in more than 60 years. In my first term, I built the greatest economy in the history of the world, but this time it's actually much bigger and even better.

President Trump meanwhile canceled his planned meetings with Democrats, Chuck Schumer and Hakeem Jeffries. They were supposed to meet on Thursday, but he's calling their demands to avert a government shutdown on serious and ridiculous. He left the door open for future negotiations, however. Meanwhile, the Treasury and the IRS outlining this week which workers could qualify for

the no tax on tips deduction in President Trump's big beautiful bill. Joining me now to talk all about that is the U.S. Treasury Secretary of this great nation, Scott Besant. Mr. Secretary, it's great to see you.

Maria, always good to be with you.

Thank you so much for joining us. You have so much on your plate, and first I want to thank you for all that you're doing, Secretary. Thank you. Well, Maria, it's all the President. It's easy to follow his lead, and it's so exciting to implement the policies the American people elected him for. I bet.

The American people elected him for change, and he is doing it every day. Can you believe it's just been eight or nine months? The amount that he's gotten done?

No, I cannot believe it's only eight months. Tell me about that speech yesterday at the UN. What was your biggest takeaway of President Trump calling out others on that stage?

Well, President Trump, as you know, Maria, is all about solutions. Why have we accepted that things don't work? He asked, like, why is the federal government not delivering for people? Why are our cities unsafe? So he came to New York, and he has great respect for the United Nations, great respect for the United Nations,

but he called them out for it not working. The president has done seven peace deals, and the U.N. never got in contact with him. How does that work? He called out the rest of the world The president has done seven peace deals, and the UN never got in contact with him. How does that work? He called out the rest of the world

and our allies for their failures, whether it was on immigration, on energy, on their economies, and he excoriated them, but then he said, this is American leadership. Come with us if you want to. We will lead.

And Maria, this is what American leadership looks like and I think people missed it for four years, whether in the US or on the world stage, and the US is back.

A lot of common sense there on policy. Alright, so Jay Powell yesterday signaled that the Federal Reserve is going to move slowly on interest rates. He said that, he also said the stock market was high. I don't know why he said that and why he would wade into that territory, but what is your thought about the macro story right now? I want to get your take on where we are with regard to economic growth and what's ahead.

Well clearly the Federal Reserve has been too high for too long, and we're going into an easing cycle here. And I'm not sure why Chair Powell has backed up a bit here, because, you know, as we can see, we inherited a mess. And it's unclear now. We've had almost 2 million, 2 million downer revisions in the jobs number. There was almost no private job creation

in the Biden administration. And with these revisions, we know that something was wrong beneath the hood. And now we could see in terms of the housing market that affects consumers, working Americans, rates are too restrictive, they need to come down.

And I think we will go into a cycle. And I'm a bit surprised that the chair hasn't signaled that we have a destination before the end of the year of at least 100, 150 basis points. And I will add, President Trump's pick for the Federal Reserve Board, Stephen Myron, as Stephen has

said more in a week, more in a week than the Biden administration appointees have said during their entire tenure. Yeah.

And he wanted a 50 basis point cut, you know, Jay Powell cut 25 basis points. Stephen Myron wanted 50.

Well, these meetings are supposed to be a discussion you're supposed to have going to them with an open mind. And I think, not unlike the UN, we've seen a lot of mistakes, a lot of rigidities, and it's good to get some new blood in there.

Who would be your best pick for chairman of the Fed at this point?

Marie, I'm interviewing 11 candidates. We've got a couple who have surprised me in the strength of their candidacy during the interviews. Okay.

Who surprised you?

I'm sorry? I'm not going to talk specifics.

So you don't want to break that news right now?

Maria, if I could I would because you're my favorite, but I'm going to be interviewing more candidates this week. We respected the Fed's quiet period, and we didn't interview any sitting Federal Reserve board members or presidents, so there's going to be a lot of interviews next week. I think the first round will be done for the first week of October. Then we'll start another round, and I look forward to being able to discuss it with President

Trump, present him with three or four very strong candidates.

Do you think given what we've seen in the labor market for the last three months, you know we've seen this weakening in the last three months, I don't know if you believe the numbers or not at this point, but do you think that tiptoes into recession at some point?

I am less concerned about a recession. I'm concerned about the distributional aspects that we've got going here. You know, I'm concerned that working Americans are getting hit harder just because of the high rates. I'm concerned that a lot of the housing affordability crisis is on the mortgage side. So you know, I am very concerned and I believe that we do need rate relief, we need to get at least back to neutral.

Isn't it odd that when you talk about lower rates and the Fed expected to cut another time at least once more, that rates go up? I mean, do you think it's a certainty that as the Fed lowers rates that you're actually

going to see a real impact on, for example, mortgage rates? I do believe that we are seeing, we'll see a substantial drop in inflation. I think that the housing numbers are done through imputed rent that we're going to see, they run on about a six month lag. Everything that President Trump is doing in terms of deregulation, which I think is the underrated third leg of his economic policies, that's all disinflationary. And we'll see what happens with this AI boom. Back when the railroads came in, we had this wonderful inflationary growth.

At the end of the century, we had the same thing in the 1990s and everyone asked me what am I looking for when I interview potential Federal Reserve chairs and it's just someone with an open mind. Someone with an open mind who's not looking in the rear view mirror, who's looking forward, who thinks maybe this could be like the 90s where we saw the office electronics came in. We saw the internet boom. So could the AI boom be like that?

Could we have a disinflationary period? Is our star, if it exists, going to move up or down? What's NARU? So I want somebody who's looking forward, not backward.

It's such an interesting scenario to look at AI, because on the one hand, you know that AI is going to replace some jobs, right? I mean, obviously. But on the other hand, we didn't know we needed coders 20 years ago. We didn't know we needed all these engineers.

So other jobs, even in energy, will be created. But do you have a plan for those jobs that will go away as a result of artificial intelligence?

Maria, we're working on it now. We actually have what I call an AI czar at Treasury, and she is developing a plan, a roadmap that can help us with the U.S. economy. I'll be talking about that in speeches this fall. And we don't know which way it's going to go. And again, I think we've got to have an open mind.

But one of the things, as you know better than anyone, President Trump's trying to bring back precision manufacturing jobs to the U.S., this blue collar boom that we're going to see, and those jobs aren't going to be taken by A.I.

Yeah, I love what President Trump is doing with the supply chains. It is so important. And I understand this is national security. We're all wondering if there's sort of an outward outlier out there that is going to turn things around and I want to get your take on Argentina because Mr. Secretary Argentina's peso sliding, politics and capital outflows rattling investors there. Javier Millet I guess has lost the

confidence of investors. They're pulling their money out of Argentina. They're fearful that he will scrap his defense of the peso. You say all options are on the table, from swap lines to direct currency support. What's the plan in terms of supporting Argentina? Is there one?

The plan is, as long as President Muy continues with his strong economic policies to help him, to bridge him to the election, you know, I call this the screens moving to the streets. We are not going to let a disequilibrium in the market cause his backup in his substantial economic reforms. I don't think the market has lost confidence in him. I think the market is looking in the rearview mirror and is looking at

decades, if not a century, of terrible Argentinian mismanagement and people are concerned, people are skittish. It's very hard to believe that it is different this time, but I believe with President Millet it is. It is. The president call is

also pledging strong backing. He's calling for Xavier Miller's reforms critical for that stability that you're talking about. But Senator Warren, Elizabeth Warren, says that this is a taxpayer-funded bailout and is more about politics than U.S. interests. What do you want to say to Elizabeth Warren here?

Well, I tweeted it out yesterday. Senator Warren and her protege, Mr. Mondami, who's running for mayor of New York, they are American Peronists. They want to do to the U.S. economy what the Perons, the General and Evita, did to the U.S. They want to take control.

So, and I guarantee you, I guarantee you, and there are not a lot of things in life that are sure, that New York City will be coming to the federal government for a bailout if the Mondavi plans are implemented.

And are you going to give them that bailout?

It will be the same thing that Gerald Ford said.

Drop dead.

Drop dead.

But look, oh my God. When you're talking about this mayoral race, this is the capital of, you know, the capital of capitalism, right? I mean, New York's mayor race matters, right, for the country.

It does, but you can't enact policies like this and expect to be bailed out. I lived here in the 80s, David Dinkins was a very nice man, but I remember that rejoicing the night Rudy Giuliani was elected, and the city went on this great path that we all took for granted. We all took for granted Giuliani to Bloomberg, and then Bill de Blasio came in, terrible leadership, things sort of went sideways under Eric Adams and this lurched down under Mondami.

Everyone who stayed now wants to leave. All the high earners, all the businesses. If we go back over the past five years, we have seen the greatest transfer of wealth in US history from Manhattan County to Palm Beach County. That's right.

Palm Beach County. The Mondani could be the greatest thing for Florida real estate.

Unbelievable. Do you think we're going to see a government shutdown next week? You've got this that is on your plate as well. I'm sure you've been talking to lawmakers about funding this government.

Maria, I don't know. What I can tell you is that the Democratic proposals are unserious, that they, you know, this $1.5 trillion, they blew out the deficit when they were in charge. We're not going to let them do it this time. Senator Schumer did the right thing in the spring, right thing in the spring, compromised, brought Democratic senators along, kept the government open.

But again, you've seen Senator Schumer's poll numbers. He's got AOC nipping at his heels. He talks about Social Security a lot. I think it's because he's afraid he's going to be out of the Senate and have to draw it

down.

Well, I mean, look, you're talking about expiring Obamacare, Affordable Care Act subsidies, I guess for 22 million Americans. And what we learned this week was that they also want those subsidies for illegals, right, in this country. Is that what they want in this package before agreeing to fund the government?

Well, Maria, let's go back to President Trump's speech at the U.N. yesterday, and it really parallels what the Democrats have tried to do to America. Well, let's go back to President Trump's speech at the UN yesterday, and it really parallels what the Democrats have tried to do to America. He talked about how countries have open borders. That's what the Democrats tried to do to us. They talked about, he talked about this emphasis on renewables and how we got behind the curve

on energy security and energy dominance. That's what the Democrats want to do to America. We talk about the sky-high debt. That's what the Democrats did to America. President Trump's not gonna let him do it and you know I have great confidence in him, Speaker Johnson, Leader Thune. Yeah. And you know we will get to the other side of this but you know this Democrat, the Democrats don't understand.

President Trump was elected for change to right the ship, and we're not going to let them bring down the ship.

Well, they still don't like what's in the big beautiful bill, and you worked so hard on that. And I know for a while you were saying President Trump is doing tax deals, peace deals, you know, and what, tax deals, peace deals, and trade deals. Thank you, because I thought that was so spot on, and I've been using that as well. In terms of the big beautiful bill, the no tax on tips element, how do we know which

tips are not taxed? Do you want to tell us who's eligible for no tax on tips?

Well, Maria, it's a big list. You know, I'm also the IRS commissioner now, so you can go to the IRS website. We are outlining that. And what we're not going to do is let people game the system. We have records of who's gotten substantial tip income. And again, this is the strongest point of the bill, because on one side, it gave full

depreciation to businesses, so it's spurring a CapEx boom. On the other side it was President Trump's unique blend of economics for working Americans, no tax on tips, no tax on Social Security, no tax on overtime, and interest deductibility if you buy an American car. And I think what's going to be very interesting here is most Americans have not changed their

withholding for 2025. So they'll be getting substantial refunds in 2026, they'll change their withholding in January, and they will get an automatic take-home pay increase. So I think 2026 could be a great year for working Americans.

That is a big deal. Do you want to see a second reconciliation package and would you propose a cut in capital gains taxes in it?

We'll see. I'm not going to get out of the in front of the president here, but I think all options are on the table. Right now at Treasury, we were tasked with, along with the White House, along with the Senate and the House, getting the bill across the line that was pass-fail. No one believed it could be done by July 4th. President

Trump's leadership with assistance from Speaker Johnson, Leader Thune, unbelievable it was done on July 4th. At Treasury, we're in charge of implementation, so we're just worried about implementing this one in a fast, reliable, and safe way for the American people.

Mr. Secretary, a lot of viewers want to hear about Fannie Mae and Freddie Mac, and you've got big plans here. The last time we were on the show, we discussed the portions of these companies going public. You're going to take, what, 5 percent, or between 3 and 6 percent of going public. You're gonna take 5% or between 3% and 6% of them public. Everybody's buzzing about this $30 billion IPO, possibly the largest IPO we've seen,

more than the Saudi Aramco deal. What can you tell us about the plans here? What do you wanna do?

Well, Maria, I can tell you that we are moving forward, but in a very deliberate, deliberate fashion. And we will have announcements in the coming months. But the IPO is important. But the really important thing here is that we either maintain mortgage spreads or narrow them further to help the American people. So as we are negotiating this sale of a government stake,

we want a fair price, a good price for the taxpayer because this is gonna be a lot of money for Treasury. But the most important thing here is that mortgage rates stay benign or even get better for American people because you know we're in this housing affordability crisis we talked about it I think the Fed lowering rates will bring it down and you know we are working on this every day so you

know but with Fannie and Freddie our North Star is mortgage rates and then the sale to the public.

Well, I mean, there's a lot of ways to do that, right? The sale to the public. And I'm sure you're looking at different ways in terms of doing this. Every bank wants in on it. Investors think this is going to be, I mean, would this be a good investment for someone who's looking at buying into it?

Tell me about these companies.

These are the American dream. They're American home ownership. It is the American government. These are regulated entities that went astray during the financial crisis. They were mismanaged. And we are going to make sure that they have proper governance and

when we bring them public, I don't want to talk about perspective, but I can tell you everything will be in place for their success. I think that they are unique as financial institutions. I think that they are unique as consumer institutions and we are looking for a range of institutional investors who will be long-term holders, but we also wanted the American people and small

shareholders to have a stake in these companies too. We want them to be part of the American dream. The idea of government owning portions of public companies, this is something that free market people have to get their heads around. They're not clear about your agenda. So walk us through what you're thinking. The government took a 10% stake in Intel.

The government is talking about taking a stake in a minerals company. The government will own, obviously, conservatorship with these companies, even if they sell 5% of it. What should we think about that? Because some people say, well, look, if government owns a portion of a company, then that's going to mean that that company gets better treatment than another company. For example, I spoke with the CEO of Figure, who's also a mortgage originator.

Here's what he said.

Watch this.

In terms of the market that is available to you right now, the potential market, what would that look like?

One of the big ones that we're going after is First Lean Mortgage. So we're now competing directly with Fannie Mae and Freddie Mac using blockchain technology as an advantage.

And for certainly loans under $500,000, we're winning in that competition right now.

And Fannie and Freddie are likely going to see their own IPOs once again, right? President Trump expected to take 5% of those companies public. Does that sort of even pony up the competition that much further?

Well, we like competing against them as private enterprises. They get a little bit of an unfair advantage as a government-backed entity. So it levels the playing field a little bit. But right now, we're winning irrespective.

So broadly speaking, is it an unfair advantage when government has a stake in a public company? And you could look at Fannie Mae, you could look at Intel.

Well, Maria, there are decisions that the U.S. government makes that we believe is good for society. We believe home ownership is good. So therefore, the government wants to be involved. And I can tell you, like having come into government from the private sector, that what we have seen here is that there was a breakdown in our supply chains.

And whether during COVID, whether it was semiconductors, whether we're seeing it with the Chinese, putting export controls on rare earths. So there are some things for national security or that we have made the decision as a society we want to do. But I can tell you, like the Intel has now been validated that Nvidia has come in and taken a stake. Huge.

The biggest company in the world. President Trump, again, he looks for solutions. Why were we subsidizing Intel? Why shouldn't the American taxpayer have some of the upside?

Yeah, it's very interesting.

You're monetizing the balance sheet.

But exact monetizing the balance sheet because I can tell you every day President Trump wants to be the president who creates assets for the American people, not debt.

Not debt. So you'll be investing in more companies if it meets that national security requirement.

Well, again, we realize that across five six seven industries we are so vulnerable and we've got to do they have something about that there's a group of us in the government led by President Trump who believes that when we leave in January 29 that we will have failed if we have not made resilient supply chains for these key industries and we're not going

to fail. Is China going to go along with all of this? What can you tell us about the rare earth minerals flow from China? Is it going to flow? It is flowing and

look we're not without levers on our side. We have plenty of products that they depend on us for so there is a back and forth. We do not want to decouple from China, we need to de-risk.

And in terms of those rare earth magnets and minerals, they were pushing back. What is the leverage point? Is it airplane parts? What is the leverage point with China?

There's a big group of products, but it could be aircraft engines and aircraft parts, it could be certain chemicals that are used in production of plastics, it could be the ingredients for silicon, and it's a wide range.

Secretary, I want to take a short break and then come back because your portfolio also includes the sanctions and we've got Russia on the move and China on the move. We'll take a short break and come right back with Treasury Secretary Scott Bassett. We'll take a short break and come right back with Treasury Secretary Scott Bassett.

Stay with us.