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I want to talk about the economic mission, how you see the administration, the policies, but there's a lot been written, said, books about President Trump. You see him almost every day. What is his management style and how do you describe it?
First of all, it's non-stop. That, as many of you have heard me say, is probably over the past 15 or 16 months, one of my most frequent refrains has been, 'No sir, you didn't wake me. I'm always awake at 1:51 on a Tuesday night.' President Trump is high impact, high return, high performance, and he is juggling a myriad of things. And he has a viewpoint and he pushes it, and he is very good at pushing and pushing and then knowing when to pull back. I think he's put together a great team in terms of the cabinet, White House staff, and he really sweats us in terms of what he expects.
And what's your management style? Treasury secretaries operate differently. What's yours?
I'm very fortunate to walk into a great building that everyone had told me, 'Oh, Treasury, it's not like a typical DC department. The career staff is great. We have great politicals.' People come in, you know, you probably are not, you know, fighting the establishment if you're at Treasury, that you want to either domestic finance, terrorism finance, international finance, make a difference. And my style is to find very smart people and give them lots of room and to have a very iterative process that, you know, at the end of the day we only have four years. And what I've tried to do, as I outlined a year ago, we want to do substantial financial deregulation, and we have not my numbers, but some outside consulting firms think that we've created three trillion of extra lending capacity in the regulated banking system. So my style is to have some very long-term objectives which I think we're meeting. One was the maximum economic fury on Iran, to deregulate the banking system, get the one big beautiful bill done, but try to — it was the same thing I did in my private career. Try to stick to the prize, and the prize may not be immediate and not as much, but the Washington news cycle is built within an hourly cycle, a daily cycle, a weekly cycle, and we try to ignore the cycle.
Well, I fall in there too, I'm sure. When you ask people in any state, polls across the board say they see the economy underwater, that the numbers are not good as far as approval on the economy for the president. Why is that? And do you think it's going to turn around and when?
Well, I think one thing we're not going to do is what the previous administration did, was tell people they don't know what they're feeling. Because this idea, this narrative that maybe some journalist who should be ashamed said, 'Oh, it's a vibe session. The American people don't know how good they have it.' Well, the American people got torched. There's 21.5% inflation that probably the worst in 50 years, and a big drop in real wages. I know Jason Furman has an index that measured how working families — you bundle of goods and services in terms of groceries, rent, insurance, car payments — that their inflation was probably 35%. So people are still hurt from that. We had a price level change which is very difficult to bring down. But what I can tell you is what I had very good luck in my private business was looking at what's the sentiment versus what are people doing, and right now we're still seeing consumers spend. We are seeing no backup in credit card delinquencies. So we are working every day to try to bring the inflation back to target, more importantly, get real wage growth. In President Trump's first term, real wage growth for hourly workers did better than management. The bottom 50% of economic households did better than the top 10%. And you know what we've seen this time too from the one big beautiful bill, also known as a working families tax cut, was that it was a home run for working Americans because I am also in charge of the IRS and 44% of the returns we got this year took advantage of at least one of the no tax on tips, no tax on overtime, reduced taxes. Only 15% of our seniors pay taxes on their Social Security, and deductibility of auto interest for American cars. So, you know, we are pushing that, and I think that, you know, now that we are, I believe, on the other side of this conflict, gas prices will come back down, inflation will come back to target, and the real wage gains — we had seen real wage gains in every month of President Trump's presidency until April.
If you were to characterize the overall mission economically of this administration in an elevator pitch, what is it?
Well, a couple of things. One is to restore sovereignty. I've been quoted many times as saying the only good thing about COVID was it was a beta test for what could happen if we were to get into a hot war with another major nation. So we are bringing back critical industries. We are deregulating and letting the economy go, and we are pushing innovation and economic freedom.
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Behind the scenes, there have been reports that you get a little fiery. There's a new book out that suggests there was another incident. There was something with Bill Pulte. What's the behind the scenes with Scott Bessent and other members of the administration?
Look, I think I've been described as having a long fuse, but when the powder keg blows, you don't want to be near it. And look, I think it's important to make one's opinion known. But as I've said too, it's not unlike a sports team where you can have disagreements in the locker room, but when you get on the field, you want to do your best. And I think we're all pulling together very well.
What's something that we're not covering a lot of that you're proud of as far as your job up until now?
Look, I think that what we've seen in terms of the banking system — I am a big proponent of small and community banks. I have met with hundreds of those bankers in the past year. I think that I am proud to say that I am an economic historian, not an economist. And you know, having studied the patterns of financial traumas like we had in the '07, '08, '09, there's always an overreaction. And it's human nature, and we overreacted, and the financial straitjacket for our regulated institutions became much too tight. And you can see that, like, private credit is a regulatory arbitrage. And I think what will go probably unnoticed in the history books is through the financial deregulation that we are bringing lending back into the regulated financial system where we can oversee it. Where if there is — everyone, you know, was asking me about private credit and a downturn, and I think private credit is a great new innovation in terms of our U.S. financial markets. I do think it was a regulatory arbitrage, but what always worried me about private credit was that you wouldn't be able to use private credit in a downturn to restart the economy. Whereas, if we had a downturn, the Fed chair and I would be able to use the regulated financial system through window guidance on supervision, through opening windows, through facilities to restart the economy. So I think it will be reinvigorating — or one thing that has gone unnoticed is reinvigorating from the G-SIBs to community banks, the regulated financial system.
Two more quick things. You mentioned the Fed chair. There is a new Fed chair, Kevin Warsh. Rates stayed the same this past time. The president has been very vocal that he'd like to see interest rates come down. In this environment where things stand now, do you think that there is increasing pressure on Fed Chair Warsh to drop rates even though it might not be possible?
I am confident that the Fed chair will optimize the path for both inflation and economic growth, and that the president said at the chair's swearing-in that he would be independent, that he should do what he wants. And look, the president understands — he and I have talked about it quite a bit — that howitzers have taken out more governments, or excuse me, the bond market has taken out more governments than howitzers. So I believe that he has complete confidence in the Fed chair to do the right thing.
Last thing, the Trump accounts. This is something that I don't think a lot of folks fully have appreciated or taken advantage of. Is that fair?
I think both. I think the president's going to have a long-lasting legacy, but I think we will look back in 20, 30, 40, 50 years — some of us will be here in 50 years for the 300th — that we will look back and think that this is the most important benefit for young people since the GI Bill. I have been a big advocate for financial literacy. 38% of American households have no exposure to our great equity markets. They do not participate in the innovation, they do not participate in the American capital markets. And this, I believe, is a substantial and necessary step toward changing that. So, parents can open the accounts for children from newborns to age 18. Children born during President Trump's term will receive an initial $1,000 seed investment that will be put into a low-cost index fund. For children not born during this administration, parents can add up to $5,000 a year. Employers can add $5,000, but foundations, states are going to add. Some great philanthropists, Michael and Susan Dell, have contributed $6.25 billion. When Michael announced it, the president said, 'Michael, 250 million is a lot. 6.25 is really a lot.' And they have done a bespoke program where their money will go to families who are not in the top 20% income zip codes, and that is going to work out to about $250 per child. Ray Dalio from Bridgewater has adopted Connecticut. Brad Gersonner adopted his home state of Indiana. Harold Hamm has done Oklahoma. So there's going to be a lot added to this. But I think more importantly, it is going to be a real-time experiment in financial literacy that many of these families that have never thought about the stock market, looked at things like this. It's going to be on the phone every day. It's going to become a topic at the dinner table, like I'm sure no one in this room brings their work home. But I do think that this has the potential to change the course of these young people. We've got about 6 million signups so far, but, you know, that's only about 10% or less.
