Bessent: Iran's currency in FREE-FALL under economic pressure

[00:00:03]Welcome back. Good Tuesday morning everybody. Thanks so much for joining us this morning. I'm Maria Barto Romo and it is Tuesday, July 21st. It is just before 8 a.m. on the button on the East Coast. We've got breaking news right now. The Treasury Department announcing the successful implementation of a new governmentwide payment verification process. The process designed to help stop federal payments uh being sent to deceased individuals. the department identifying nearly 5,000 payments worth approximately $99 million all linked to dead people and deceased payes. Joining me now is the Treasury Secretary himself, US Treasury Secretary Scott Bessant. Secretary, thanks so much for spending the time. Can you walk us through the Treasury implementing this new safeguard to stop payments to deceased people? How significant an issue has this been?

[00:00:52]>> Well, Maria, good morning and good to be with you. And look, that this is part of what President Trump calls his common sense agenda. It's it's common sense.

[00:01:01]And he issued President Trump issued an executive order uh for us to be able to go to the do not pay to have it interact with the Treasury payment systems. And as a result, uh so far we've saved about a hundred million uh payments that didn't go to uh deceased people and that would would have gone out. We think that there's up to 350 uh million that we can stop before the end of this year. And that goes along with the vice president's task force on eliminating waste, fraud, and abuse in the government. The GAO estimates that it might be this number might be up to 500 billion dollars, which is about 1.66% of GDP. So, you know, that could go a long way towards pay paying down the debt, providing uh more services. Uh and this this is just the start. Maria, >> that is incredible. I mean, for all of the fighting that we see back and forth between the Republicans and the Democrats about governing and about allocating capital and spending money on projects, to think that there's all these millions of dollars or tens of millions of dollars that have actually been, you know, on the cutting room floor because of fraud and waste that people just weren't paying attention to.

[00:02:20]I mean, is that all it is that people didn't look and and investigate this the way President Trump has directed his agencies to?

[00:02:28]Well, look, in the in the Biden administration, HHS uh got rid of about 50 or 60 of the people who were charged with monitoring uh fraud. And Maria, what's important here is that we are stopping the money from going out. So once the money gets out, trying to retrieve it, it's very very difficult.

[00:02:50]So stopping it at the source here is our goal. And there's hundreds of billions of dollars here. And this this is the start. We are off to a great start.

[00:03:00]You're you're seeing the vice president's task force uh the unear things, you know, all all across the health care system, too.

[00:03:07]>> Yeah, for sure. All right. Well, we've got a spotlight on it and we're covering it. Uh because this is incredibly important, particularly as uh many of Congress complain about debt and deficits. Here you have real efforts to actually save and eliminate uh fraud and waste and abuse. But I want to get your take on the war and the economic pressure that you have been putting on Iran at Treasury. You've said that the Treasury is fighting an economic war against Iran and you've done uh sanctions against Iran. I want to get your take on that. You put major sanctions on Iran's shipping empire [snorts] earlier this month, sanctioning a network tied to Muhammad Hussein Sham Kami, targeting more than 200 vessels.

[00:03:47]In addition to the Navy blockade and the president's tough stance and retaliation against Iran, can you tell us what's left in terms of your purview uh sanctions and the economic warfare that can still happen against Iran?

[00:04:02]>> Yes. So we we we had the very successful EP the epic fury which was six six weeks campaign eliminated uh the Iranian Navy, the air force, a large large part of their missile and drone stockpile uh destroyed most if not all of their capability to rebuild. And then we moved on to what we call economic fury and that's a one-two punch. It's the blockade and then what we're doing at Treasury and we are tracking these accounts all over the world. Uh we froze a crypto wallet linked to the uh IRGC the other day about $130 million. Uh we have found the money man for the Ayatollah. We are tracking the Ayatollah's uh properties around the world. We hope to soon be able to print his hundred million uh dollar plus properties and show the addresses. And we we're preserving this money for the American people, but most of all, we are constricting the regime. Their currency has collapsed. It is at an all-time low versus the dollar. It's in freef fall.

[00:05:08]And we we think the inflation rate is upwards of 180% in in Iran. So, uh, you know, the the government is the, uh, causing the the people to suffer, and we're we're going to keep pressing, but we're also going to marshall the resources and save the resources that we recover for the Iranian people when we get on the other side of this.

[00:05:32]>> So, so how much of Iran's ability to finance the IRGC, would you say, has been disrupted? And are you prepared to put sanctions on, for example, Chinese banks if in fact you find out that Chinese banks or Chinese companies are continuing to purchase Iranian oil and trying to support the IRGC?

[00:05:51]>> Well, we we have sanctioned uh chi Chinese what are called so so-called teapot refineries which are the private refineries and we've seen a substantial decrease in their purchases of Iranian oil. The Chinese in general uh because of the the prices and because they have a very large uh strategic petroleum reserve uh have dropped their purchases of crude over the past few months by about 40% and that's directly pressuring uh the Iranian the Iranian regime and we put the blockade back and I tell you the blockade is powerful financially but I think it's also very powerful psychologically.

[00:06:31]It cuts Iran off from the rest of the world. And we also have the ability to interdict the Iranian dark fleet once they are out in the Pacific.

[00:06:42]>> Yeah, that's incredible. We're going to be watching all of that. Secretary, I want to move on to AI because of course we are uh producing and programming a special week this week talking to the most important companies and individuals in this AI race uh and this amazing buildout. Uh the Lindsey Group recently reported that the Federal Reserve found that the capex of Amazon, Google, Meta, Microsoft, and Oracle reached 412 billion in 2025 or 1.3% of GDP. Some estimates for 26 are north of 700 billion. We just heard one estimate at 1 and a4 trillion in terms of spending on this buildout. Can you uh assess for us what the impact of the AI buildout and this infrastructure uh that is happening massively? What's the impact on the economy?

[00:07:33]>> Uh well, Maria, this this is a generational technological booth.

[00:07:38]President Trump came in and be became uh one one of the great supporters of this very important technology. And it it starts with we have to have the energy for AI. Pre President Trump is allowing uh the AI companies and the data centers to build uh their own power generation.

[00:08:00]So we're seeing it there. We're seeing it the uh up the the supply chain and this is kind kind of a one once in a generation or uh buildout and it it's very powerful. And on the other side of this, we are going to see big productivity growth. And really, that's how you increase national wealth is through productivity growth. And the look the the US is the home for this.

[00:08:29]And one one of the things I wanted to say today is we've seen a lot of talk about, you know, open open-source models coming and, you know, threatening uh the large language models in the US. Uh what I will tell you is uh the this administration supports open-source models but what we do not support is IP threat IP theft and if we see especially that overseas models are stealing from our great companies uh we have the ability to sanction them uh because of this theft.

[00:09:03]>> Yeah, that is a really important point and that's exactly where I was going next. The Wall Street Journal this morning writes this. Top American AI executives are sounding the alarm on Chinese models. Uh, Silicon Valley in Washington debating a multi-billion dollar question. Should American companies be able to use Chinese artificial intelligence models? And what does that mean for IP theft knowing that we've been watching the Chinese steal intellectual property from America, from the West for decades?

[00:09:31]Well, we we are we are finding watermarks of our our uh US large language models on many of the Chinese models and you know that that's unacceptable, Maria. So, we're going to be looking at that in the coming days or weeks. But again, uh the government, US government supports open source, but what we do not support is IP theft. Uh yeah, the the other question might be uh should companies that are using Chinese models have to disclose that to their customers?

[00:10:02]>> Yeah, it's a good point. I mean, you know, we we're talking now about this Chinese Kimmy K3. It was competitive with US models and some on some benchmarks and secretary, the US is going to be holding these AI talks with China in September. You'll be leading that delegation to discuss this with the Chinese counterparts. It comes from a new report from Axio says there's quote a secret Trump administration battle to fight Chinese AI, including behind the-scenes moves by the Commerce Department, the National Security Agency, and the White House Office of the National Cyber Director, saying that even they're considering implementing an executive order saying US companies could only host Chinese models if they could guarantee security and take liability if it were breached.

[00:10:46]Well, again, the these models have to be held to the same standard that US models are, but more importantly, you know, are are they using stolen materials? You know, there there there's a very technical AI word for it called distillation, but you and I would call it theft. you know, they they go and they they they have the hundreds of millions of hits against the uh the large language models here in the US and they, you know, try try to reconstruct their their code and uh the the thought process of the models and that that's unacceptable. Well, the Chinese are coming out with these open-source models, and they're cheaper. And for, you know, an ordinary company, not necessarily one of the big major companies with the wherewithal to spend whatever they can spend on on their own AI infrastructure, they, you know, a smaller company may need to go cheaper and may want to use the Chinese, the Chinese version. Are they doing basically what they did when they dumped cheap steel into the market? I mean the Chinese now doing that with with open a uh with AI models.

[00:11:53]>> Well, I I think the difference here, Maria, is we are we are starting to see the emergence of some US uh open-source models. I believe Meta has two coming out. Nvidia has one. Uh there's a private company called Reflections that is going to be debuting in the fall. So it's not exactly synonymous to what happened with steel because we are we are actually com the creating competitors the largest uh European model mystery is a combination open source and proprietary source there there's a Japanese uh com combo open source but again uh you know the the lowest cost you you can't use counterfeit goods you can't use counterfeit goods Maria Yeah. So, so what you're saying is there are big opportunities for AI certainly and there are also areas that we need to be aware of in terms of theft, potential theft by adversaries. Can you walk us through where you see the biggest opportunity for AI on the economy because no doubt there's hundreds of billions of dollars moving into the US economy for these buildout in infrastructure. We understand that that's leading to a productivity boom which we've already seen by the way is just extending it.

[00:13:07]But what about the big opportunities in terms of industry?

[00:13:11]>> Uh well, it's going to be industry by industry, but it it'll be all along the supply chain management. It will be in inventory management and optimizing inventory and it it will be in employee productivity. I listened to your earlier guest and she was exactly right. And you're you're exactly right too because you know a AI what we've seen thus far AI is not taking anyone's jobs. As a matter of fact companies that have implemented large-scale AI implementation have been increasing jobs at a faster rate than the overall corporate pool. So it's important especially for young people the person who will take your job is someone who knows how to use AI. Yeah. So, you know, anything you can do uh to get trained up on that and you be be proficient. I I would encourage everyone uh no matter what age they are.

[00:14:07]>> Yeah, great great advice for our viewers there and particularly those people looking for a job coming out of college.

[00:14:12]Let's talk about the macro story, Secretary. This economy has been on fire and now we see evidence that in fact inflation is going down. US consumer prices declining in June for the first time in six years. You had the June CPI showing inflation to three and a half% month over month. Prices were down 4/10 of a percent uh driven by a big decline in gasoline prices since 2022. You say inflation will keep coming down as AI stands to double productivity. How would you assess the macro story today, sir? I I I would assess the macro stories as being very healthy because if if we look the what what gives me the great confidence is the underlying economy the general trend of the economy is very strong and importantly on the other side the core inflation number the has not accelerated due to the short-term rise in energy prices. So, you know, we've got strong underlying growth, core inflation under control, and that that's a formula both for great economy and for strong markets.

[00:15:21]>> What would be your expectation for growth in the second half of the year?

[00:15:24]Secretary.

[00:15:26]>> Yeah, I I I'm not going to the uh give a guess, but I I think uh that 3% is uh minimum not unreason not unreasonable and I think we can start coming back towards the the Fed's target level. I think uh P PCE inflation versus uh CPI inflation. PCE has some quirky things in it where you know like the the stock market goes up and because of portfolio management costs the costs are going up.

[00:15:58]I I think those are going to be adjusted this year. So I think in inflation's under control. Uh the what the president and HHS uh Bobby Kennedy uh Dr. Oz have done on drug pricing is just fantastic.

[00:16:13]You know we're seeing the drug pricing down and you know that that affects all Americans.

[00:16:18]>> Yeah. I and one of the best parts I think of the president's agenda is how he zeroed in on the fact that the supply chain needs to be in America for the things that America relies on. And you talked about this recently. The supply chain coming back to America has been critical to ensure that the US can make and produce our own like pharmaceuticals and semiconductor chips, the things that are national security related. So much so that the US government took a stake in Intel. What a move the stock has soared since you actually made that investment. Same with MP and and and the rare earth companies. Will there be more companies that you're expecting to take stakes in?

[00:16:58]>> Well, you know, Maria, what we're trying to do is create market signals and show the market where we're going. You know, in essence, trying to tell investors, okay, here's where the puck's going to be. skate to it quickly because, you know, we want private sector solutions and and we're seeing that. But what you're talking about is resilience and we we inherited an economy uh that was a mess. But one of the under reportported things was the lack of resilience. As I've said many times, the only good thing about CO was it was a beta test for if we the supply chains were to be cut off, you know, during a pro protracted major power conflict. And you unfortunately we we discovered that we had been thinking too much about efficiency, too much about low cost, and not enough about resiliency. So I can tell you that this administration across all agencies whether it's Treasury, Commerce, DOW, the U USR, uh, everyone is focused on resiliency and President Trump is going to hold us to that standard.

[00:18:07]>> Yeah. And of course, this week is a big week for tariffs because section 122 tariffs expire, section 301 tariffs to be implemented, and the president is poised to unleash new tariffs, fresh tariffs on dozens of countries soon as this week, we're told, as the president has imposed a 50% tariffs on some Canadian goods, including cars, alcohol, and daily uh dairy products. What is the trade discrimination that is at hand causing the president to hike tariffs here on Canada?

[00:18:37]Well, I I think it's something that we we've discussed with our Canadian colleagues for a long time, and they haven't done anything about it. You they're highly discriminatory on dairy products. Uh US u US alcohol and beverages have been removed from Canadian shelves. So, you know, this is really just reciprocity in terms of what they they've done to our our great US companies. Uh, Secretary, this is an incredible week. It's the final week for the House before their August recess, and they're juggling a lot of things. They've got reconciliation 3.0. They've got a continuing resolution, NDAA, uh, perhaps a Congress stock ban on the agenda.

[00:19:20]What's most important in terms of priority? Because we're all expecting the Democrats to shut down government again in October. and and um we just spoke with one of our guests uh Congressman Schwiker who said we are borrowing $93,000 every second. So whatever whatever is in this reconciliation 3.0 he says it has to include strict dollar for-doll and year-over-year spending cuts to ensure fiscal sanity. What's your take on all of this? Where to cut, where to save money, and what is a priority uh before the midterms in terms of legislation in your view?

[00:19:55]>> Yeah, a couple of things, Maria. So, first of all, let let's go back to the top of your show that in in terms of the waste, fraud, and abuse. If if we can save hundreds of billions of dollars on that, then we don't need to cut programs. So, that that's why this is the all all areas of government, all hands on deck to get this done. part part of it is uh to balance get us into balance and bring bring down this terrible deficit to GDP that we inherited. We're also working on the Clarity Act to uh make the US the best place for digital assets and I think we're at the one yard line on that. It's at in the Senate now. So, we'd like to see that passed before Congress heads home. And as you said, we we don't need another government shutdown. La last year, the Democrats, the longest shutdown in history. And when I when I was up on the hill testifying, some of the Democrats had the temerity to say, "Oh, you were wrong in her GD uh pe projection." They said, "Yeah, it was because you shut down the government."

[00:21:01]>> Yeah.

[00:21:02]>> So, you they're willing to hurt the American people to score cheap political points. And somehow there there's this narrative that you can you can see brewing in Democratic circles uh you know where they say well that because the that the the the president or the republicans have the presidency the house the senate the American people will blame it on Republicans and I I think just like some of these failed candidates who they've had to pull off the stage the American people are smart and aren't going to fall for that.

[00:21:32]>> Yeah. Real quick before you go, Secretary, the president is going to be remarking and promoting the Trump accounts at Wheeler High School in in Georgia uh this week. And I it's been nearly a month since the launch of the Treasury Department's historic Trump accounts. Great idea. More than six million children have already enrolled for these tax deferred investment accounts with more than a million newborns eligible for that $1,000 Treasury contribution. How would you assess the program so far? And what do families need to know to get a piece of that? Uh well, what what they need to know is just go to Trumpacounts.gov.

[00:22:05]Uh anyone with a child 18 or under should create the account. If your child's born during President Trump's term, Treasur Treasury is going to seed the account uh with a thou thousand seed investment that'll go into a lowcost index fund. But we're also seeing some of our great philanthropists like Michael and Susan Dell who are putting 6.25 billion up for, you know, America's children. We we've seen some people like Harold Ham has adopted state of OK Oklahoma. So you don't have to be eligible for uh the treasury seed because great philanthropist foundations are putting money in. uh many corporates are putting the are putting money in and you know we're we're seeing uh I I think that this is the most important social benefit for young people since the GI Bill and I have been an advocate for financial literacy for more than a decade. It's very important to me. My family has been one of our philanthropies and I think that this is going to be great for financial lit literacy. 38% of American households don't own equities and the the goal of this is to eradicate that and it be a lot more viewers for you Maria.

[00:23:21]>> Yeah, I agree with you and I'm also an incredible supporter of financial literacy have been for a long time. I was delighted to see this policy.

[00:23:28]Secretary, it's great to see you this morning. We so appreciate your time.

[00:23:31]Thank you, Sarah.

[00:23:32]>> Good to be with you.

[00:23:33]>> All right, Secretary Scott Bessant joining us this morning in Washington.

[00:23:36]Stay with us. We'll be right back.