the economic edge, worse than anybody else. thank you, mr. chairman. thank you. senator warnock? >> thank you, chairman crapo. i'm thankful and grateful to be on this committee. i look forward to working with you and ranking member supports working families, protect social security, medicare and medicaid, and promote trade policies that work for georgia businesses and that boost our economy. mr. bessent , good morning and good to see you again. i enjoyed our conversation earlier this week. in that conversation, you outlined ambitious goals for the federal government and deficit reduction. i would like to follow up on our discussion about your economic plan. according to a new report from the tax policy center, the largest tax cuts from extending the donald trump tax bill would go to those with the highest income.

especially those in the top 1%. making more than $1 million per year. in fact, the top 1% of owners will take him roughly 1/4 of the benefits of the law and the top 5% will get almost half of that. do you believe that the wealthiest 1% of americans deserve or need an additional tax cut? senator, i greatly enjoyed visiting with you. i think, a better way to look at it is on a percentage basis. when i think about the distributional aspects of the tax cuts and job act that most of the benefits accrued for the working and middle people as opposed to the upper end. in absolute dollars, as you read , that is correct, but

important to look at it in percentage terms. >> you believe the tax cut, that provided one quarter of the benefits of the law to the top 1% and top 5% getting almost 1/2 of that benefited those at the bottom more than it did those at the top? is that your testimony? >> i believe, in 2018, 2019, the households in the bottom 50% of income earners, the wealth increased in those households three times higher, three times higher than the wealth increased for the top 10% of americans. >> we should continue to move in that direction and give more tax cuts to those at the highest -- to talk about how deficits, as a national defense problem, and i agree with that. we need to be fiscally responsible he, we need to close the debt. in 2013, congress

extended the bush tax cuts for everyone except those making more than $400,000 per year, this bipartisan decision save the treasury $600 billion, hoping to narrow the deficit. do ou agree that stopping the tax cuts for those making more than $400,000 would help close the deficit and reduce our national debt? >> senator, i do not. i believe that you would capture an inordinate amount of small business people who largely are in that cohort of $400,000 to $1 million. >> what about $1 million? >> again i believe these are small business pass-through owners and i believe that -- as i said before, wall street has done great, time or main street to do well and small businesses need to drive what i call the

re-privatization away from this government spending. >> i agree it is the time for main street, i am from atlanta and i will say peachtree street, and other locations in my state what about those making more than $10 million? would we reduce the deficit by extending those tax cuts for folks making about $10 million? >> again , i think it is important we put in incentives for them to invest, so, going back to the 100% appreciation for equipment that i think -- >> so, i don't me to keep interrupting but i am the pastor and we are known to be loquacious of speech but i'm running out of time, what about $1 billion? >> again , i think these are the job creators. >> there is no income level for

which you would support raising taxes? is that fair? >> no income level i do not think we should continue the tcja as it was. >> all right, i think our country is facing structural deficits. however, i think to continue to reduce taxes for the wealthy and letting them avoid taxes based on what they already owe will not get us out of that problem. >> before we go on to senator blackburn, and a lot of facts have been thrown around, i will restate one, of the 4.3 to $4.6 trillion tax increase that could happen, this is actual dollars, $2.6 trillion of that goes to families and individuals

who make less than $400,000. that is the distribution of this tax increase. senator blackburn? >> thank you , mr. chairman, for bringing that clarification. if we do not extend the tax cut and jobs act, it is, that for trillion dollar tax hike, that people will see. i appreciate your comment about a main street small business recovery. that is something that is so vitally important as the chairman knows, we have had much discussion over the last few years, with the joe biden administration, over how they determined that $400,000 number. if it is the gross, if it is the adjusted gross that they came up with a term of total positive income, which is everything you make. we note that the biden

administration approach on this would be a killer for main street businesses. we know that 199a is vital to them, and they need to see that in the donald trump tax cuts. some of it we can have that main street, small business recovery and revival. i appreciate that. and i appreciate that president trump has nominated you for treasury secretary because you are sensitive to that. and what your work means to main street, and to individuals and getting the irs under control and looking at these provisions that are going to be in front of you. so we appreciate that you would come back a third time and look at public service.

and that john, and your family, by the way, they are behaving so beautifully, whatever they want, they get. send in orders. we will be there to support them. cbdcs, and the push that the biden administration, they did an executive order for treasury to research and development of a cbdc in the u.s. this causes us heartburn because we look at what the ccp did with the digital yuan in connection with the olympics. upon confirmation, how would you approach this discussion of cbdcs , are you for them or

against them? would you stop the biden administration process to create a u.s. cbdc. >> senator blackburn, thank you for your remarks. i mahave trouble disciplining the two behind me as i am sure i would hear a u.s. senator will vouch for their behavior. on cbdcs , i see no reason digital currency. in my mind, a central bank digital currency is for countries who have no other investment alternatives. if we think about a reserve manager, a high surplus country, whether saudi arabia, singapore, who in zap with -- who ends up with the yuan, if

you own a currency, you have to have something to invest in. there is very little to invest in if you want to will the currency. chinese government bonds do not yield -- to your view is a negative view? >> i viewed many of these countries are doing it out of necessity were asked the u.s. , if you have u.s. dollars, you could have a variety of secure u.s. assets. >> i appreciate that i appreciate your comments earlier to the senator about the pillar 2 negotiations, this is something we would be well served to extract ourselves from this. currently, the preliminary data we have, 40%, right at 40% of the total pillar 2 tax burden is on us and china, of course, has found a way to exempt themselves from this. that is in need of a revisit. i

look forward to you doing that. and standing with our companies. i think you can just submit to me this in writing. advanced persistent threat, apt, china overrode treasurer security system and remotely access workstations where they reported access to unclassified documents. of course, this is chinese communist party at work again. we found this out, after finding out from the treasury inspector general, that 2800 irs employees still had tiktok on their government devices. when confirmed, will you take steps to improve treasury

security systems? >> senator blackburn , one of the earlier questions was, what policies of the current treasury secretary do you disagree with? as you noted, the december 8th hack into treasury was through a work from home system. as treasury secretary, if confirmed, i plan to be in the office every day i am in washington, d.c., and i expect all the other employees to do that, too. as a matter of national security , for everyone to be at 1500 pennsylvania avenue. >> thank you, well received. >> senator welch? >> thank you. delightful to be a new member of the committee and i look forward to working with you and our colleagues. mr. bessent, thank you for your visit yesterday and welcome to the family as we discussed, the situation for a lot of

people who work incredibly hard , is very tough, vermont actually has one of the widest if not the widest gap between what people can earn and what the expenses are. it is tough at the end of the month to pay all the bills. the grocery bills, the health care bills. all of these things. we are talking abstractly about this tax plan. the reality, for most folks in this country, for the past 40 years, working americans have had a pay cut not a pay increase. my hope is that, whatever tax policy we have, will start with a commitment to making life better for the mainstreet folks that you mentioned. there will be a logical decision on how to pay for these tax cuts. one of the

things that will be on the block is something that is very important to people in vermont, that is the affordable tax care credit. in vermont, the healthcare is incredibly expensive for everybody. an electrician in bennington, vermont who is making $67,000 per year, with the tax credits that are set to expire, that family would have a $700 per month increase in their althcar hammer them but that is like $9000 to my question to you, in putting together this tax proposal where you will make recommendations about how to pay for it, will we continue to provide this help to

electrician, so he does not get hit with healthcare premiums well beyond what he can afford? >> senator, as we discussed in your office, i have not had time to do my homework on this. i think i told you, i want my family friends and business colleagues, i get sick of hearing the phrase no data, no opinion. i will get up to speed. >> and i appreciate that. but there is a couple of things that make a difference for working americans in south carolina and in vermont, the child tax credit, when we had that that reduce poverty by children by 50%, elemental for hard-working families. in premium upport where healthcare is a brutal expense for employers, too, by the way. my hope is, by the design, we will start by making certain we do no harm to working people in vermont and south carolina. second, on the tariffs, i am in

support of the china tariffs , that is defending us against unfair trade practices by china. i am concerned about the impact of tariffs on canada and what that does to us in vermont. our major business partner is canada, export partner, from what we have seen, it would raise the cost to businesses, probably cost jobs and cost consumers. with reassurance, from the donald trump administration, that there will be a do no harm policy to american consumers and vermont workers and small business with the tariff policy? >> very difficult for me to isolate vermont, especially, but, in terms of working americans, i believe that president trump understands that it is working america, he had a

very unique coalition. >> he does and i hope the policy will reflect that i appreciate the opportunity to work with you on that. >> i look forward to working with you. i think he understands it is the affordability crisis. >> it is the last thing, very little time, we were talking about credit card rates for consumers, credit card fees for small businesses are the highest in the world. why can't we bring them down and pay what europe pays? small businesses, like the second or third highest expense for them you will have some impact on that the cost on our small businesses, including the pastor businesses i would like to get them down and get your help in doing that. >> i look forward to working with you on this issue if confirmed. >> thank you very much. >> thank you.

senator marshall? >> great to join the finance committee. as i listened, it seems like so many of us share the same goal, we want americans to be prosperous, we want them to live the american dream, we disagree how to get there oftentimes that we have the same goal, we want americans to be prosperous. mr. bessent will welcome and congratulations on your nomination as well. i think it could be said that rural america in many ways is the base of president trump, of the 77 million people who voted for donald trump, eight lot came from rural america. i could argue that 90% of rural americans voted for donald trump and no one has suffered more these last four years than rural america. what can we do to help mainstreet help small businesses and help rural america? everyone knows you are a

financial wizard and been successful on wall street. i just want to understand your commitment to small-town america, you are from a small town. i think you understand agriculture from our conversations, and even background in community banks how important our community banks to the small towns and what is your commitment to rural america? >> senator marshall, maybe one of the treasury secretary nominees in a recent time who occasionally listens to farm radio on weekends. i can tell you, after the silicon valley debacle, that farm radio was focused on the potential loss of small and community banks. they are important pillars for

those communities. i think examining, in terms of what is the regulation, what is the supervision, are they being unduly burdened? they are not able to help the communities. what are the supervisor -- what is the supervisory edict? again, as i said earlier, china has not made good on their ag purchases for four years. if confirmed, next week, i would start pushing for them to resume the purchases and i would then conference with president trump on whether he believes there should be a makeup period. >> staying on rural america and talk about tax credits, 45z, a

tax credit to help rural america and he standpoint we help take some of our feedstocks, whether soybeans or corn, and turn it into biodiesel, renewable diesel which will lead to cleaner air and is very important to rural america and i would ask you look into it, we cannot let china benefit from it. any tax credit should not impact foreign entities. a few background thoughts on this tax credit from you. >> as we discussed in your office and you gave me a good overview of how the chinese back door into this program. that is obviously unacceptable. i look forward to working with you on the 45z. >> i want to finish up on the donald trump tax cuts and how important it is to make the permanent i do not understand what $4.6 trillion is but

families in kansas were able to keep about $1000 per month in their pocket after the trump tax cuts took effect. if we lost them, i would assume those same families would be giving the federal government $1000. this issue is vitally important to rural america to the tune of $1000 per month. my question for you, beyond making the current donald trump tax cuts permanent, what else would be on the menu that would help the economy as far as other tax cuts? >> i think president trump has talked about, not specifically a rural issue, but it is something that impacts the lower two quintiles of the income distribution more, no tax on tips, social security, no tax on overtime, and making auto

loans tax-deductible again. that would go to address the affordability crisis to that is a great start. thank you, chairman. >> i very uch appreciate our colleague mentioning 45z, the clean fuels production tax credit, part of the clean energy tax credits that we got into law and i look forward to working with you on it. >> let me just -- mr. bessent , so you understand how we are going, thank you for your patience we have senator warren, scott, whitehouse, senator wyden would like to ask one more question and then we will make a few brief remarks

as we wrap up. and we will be finished at that point. senator warrenn? >> welcome . last month, donald trump said he supports repealing the debt limit. so do i. donald trump and elizabeth warren are singing from the same hymnal. let's make it a trio, do you agree that the debt limit should be repealed? >> senator warren, i enjoyed our visit in her office and appreciate that you said let's talk about what we have in common, our love of cape cod, the red sox, and addressing the affordability crisis and he housing shortage. the debt limit is a very nuanced

convention. what i would like to do is get back to you and president trump . i would like to do a survey of market participants with this amount of debt, it is very fragile equilibrium that we sell bonds in. >> mr. bessent , forgive me, i'm not asking whether or not we should increase our debt, i am asking a very different question. that is, whether or not we should have a statute in place that says there is a debt limit. if we do not increase the debt limit, that would cause us to default. that is not an economic analysis, earlier, you were citing the congressional budget office. have you seen the congressional budget office projections of what would happen if the united

states government defaulted on its debt? that is, if we hit the debt limit and kept on going without raising it or eliminating it. >> the united states will not default on its debt if i am confirmed. but, i will tell you, for people who do not understand the debt limit, it may be taking out your handbrake in your car, you can still hit the brakes, but, one less feature. >> you just said you would never use it. a handbrake that appears to be there but is not connected to a braking system, literally never been used. >> i have never pulled the handbrake going 60 miles per hour in my car. >> the reason is the enormous cost, i assume, of a debt default and the congressional budget office said that, or

moody's estimated a debt limit breach would cost the u.s. economy $12 trillion in cost 6 million people their jobs. i think this is the reason donald trump set eliminating the debt limit is the smartest thing congress could do and i would like for congress to do the smartest thing. that is eliminate the debt limit so we do not have this problem. >> senator warren, when he takes office, and if confirmed, if you want to eliminate the debt limit, i will work with him and you on that. >> great because i agree with donald trump that the debt limit should be repealed. that is not what congressional republicans plan to do as last month they committed to raising the debt limit by another $1.5 trillion. why do republicans want to raise the debt ceiling?

because their plan is to shovel new tax cuts to billionaires and that would increase the debt by more than $1 trillion in the next four years. during his first term, president trump's only major legislative achievement was his 2017 tax cuts that mostly got sucked up by millionaires, billionaires, and giant corporations. most of these tax cuts were good for only eight years so that republicans, who were designing them, could claim that the cost was only $2 trillion. eight years of cuts that added $2 trillion to the debt. now, we are talking about republicans and donald trump want to give those same rich people and giant corporations more years of tax cuts. i want to be clear, we understand each other, that, i think it was

senator warnock, any bill you are rich enough you would not support a tax cut for going forward? >> ot wise to single out -- >> rich people? >> any individual. >> okay, a group of billionaires? you can pick a dollar figure and there is more than one above that. >> i could give you a glib answer but i won't. again, that is not where the money is. at one point, when president obama was debating mitt romney that the moderator said, sir, that would make collections go down, but he said it was about fairness. i am about collection. >> i understand, i like to

think fairness is about billionaires paying their fair share. >> senator scott? >> welcome, mr. bessent, welcome and thank you for your willingness to serve, a sacrifice to you and your family. i think it is an investment for the country , we need people willing to sacrifice on behalf of the greater cause and this is generations of americans you will likely never meet but will be better off because we do the right thing. one of the things i think about as the right thing, i know you grew up in a working class family and i grew up in a single-family household with poverty, having stability in our financial system where we need the greatest ability is for our banks silicon valley bank and other banks that failed. as chairman of the banking our banking system. vantage point, can you provide your assessment of the current safety and soundness of the u.s. banking system and what

steps do you believe are necessary to ensure long-term stability? >> scott bessent testified in front of the senate , giving investors a first glimpse at his approach to everything from tariffs to the deficit i am kelly evans and welcome to the exchange the biggest headline , when asked about the tax cuts, he said failure to extend them would cause the economy to come to a sudden stop. there were a lot about the key moments featuring tariffs and we have those highlight from megan vanselow. >> reporter: tax cuts dominated by from the start and he said not extending those 2017 tax cuts would bring economic calamity, and board primarily by working americans and the middle-class he sent paul wall street has done well the past couple of years, mainstreet has suffered and extending the tax cuts would be a way of reversing those fortunes. he was asked about tariffs and here is one exchange.

>> they are going to be paid for by our workers and small businesses all through the campaign, we heard foreign countries will pay it but i think that is baloney, it will be paid for by workers and small businesses. your response? >> senator, i would respectfully disagree. >> he went on to say that, under the trump administration, tariffs will be used in multiple ways and one will be as a revenue raiser that gives the administration broadly way to impose these it also is a way to try to raise money. bessent spoke briefly about the federal reserve . listen to this. >> do you think that there should be independence? >> on monetary policy decisions, the fomc should be independent. >> he was the advisor who would initially raise that idea of a shadow fed chair, something that spooked lawmakers want to make sure to preserve the fed independence. he was clear about that today, bringing some

confidence to some of our viewers of >> thank you. tom is joining me to talk about market reaction. a quick response, we will have more time to get further into this. tom, the biggest takeaways? >> a victory in the markets did not move. from my perspective, the economics perspective, it was great he did not drive home that there would be some sort of broad-based like it tariffs. the idea that he believes in fed independence is great. >> dan, a quick word? >> a very pragmatic leader in a time of crisis with big deficit issuances, big treasury influence, and a software program he laid out, but this is the conceptual stage. he is

saying the team will get together when i am confirmed and the president is sworn in. and these hard decisions will have to be made. this was a very good first step . what i thought was interesting, tax cuts were the dominant subject because that is what is consuming the discussion on capitol hill. there were very few questions about treasury issuance and the financing of the treasury debt as we go through the process. what you are seeing, tariffs will likely be on china, still remains to be seen if there will be a global tariff. that is where the markets are headed. >> jocks -- stocks generally don't want to do 1%, thank you. one of the bigger movers to the upside the past day or so has been citigroup which has a fourth quarter profit and defeated on the bottom line, they say they will reshape and invest in the business and shareholders are hoping that means better returns. here to iscuss that an incoming donald trump administration is the ceo of

citi. >> jane, thank you for being here, a big day yesterday with earnings coming off the scott bessent hearing, i want to start on the deregulatory push which has been a huge overarching theme in terms of the banking industry and the way investors have been treating it over the last few months. you were just elected chair of the financial services forum which is the eight largest -- eight largest banks in the u.s. going to washington with a wish list. what is at the top of the wish list? >> when we look at regulation, good regulation supports innovation and investors, it supports consumers and enables growth. that is what we are looking for. when you overdo it, you have factors that inhibit competitiveness and not going for growth and are great for consumers. our goal is to make sure hat we have a framework that supports america's competitiveness.

that supports growth in america and gives access to consumers and small businesses to credit so they can grow. above all, i say this as a former rit, -- a former brit, this is the world's greatest financial market, let's keep it that way. >> a timeframe and the specific regulations that you are looking to be more accommodative of your business, involving capital rules? is that the top priority for you? is it involving credit card rates? that was discussed with bessent in terms of the donald trump plan to cap interest rates on credit cards at 10% . what is the number one thing you are hoping to accomplish? >> i say there are two things, one, for our clients, that they also have a regulatory environment that is conducive for them to be able to do the transactions and take the moves they need to. the system has been gummed up for quite a long time. second piece is to make sure

that, as the largest banks in the country, we want to make sure that the financial system works very effectively to support clients and consumers. and that we have a level playing field. we want to make sure the capital structure is looked at holistically and we have the right amount of capital in the system but not over capitalized because that impedes growth and has a big impact trickle-down effect on the rest of the economy. >> yesterday, you announced a multi-year $20 billion buyback. why now? also, how much of that is predicated on changes to the capital rules that were first proposed in june of 2023 but have since been watered down a bit in terms of their proposals? >> i was very pleased to announce the 20 billion program yesterday. as well as an increase in our

share buybacks for this coming quarter. why now? capital return is very important to our shareholders. i know that, we know that, and we are very committed to doing it. much of this is a reflection of the fact that our strategy is working our earnings power is strong we are excited about the upside and it puts us in a good position to do that. the worst-case scenario has been taken off the table. we have been having some good constructive dialogue around what the capital structure should look ike with the fed. and we are optimistic about those discussions resulting in a better system for the financial system and for our clients. >> if the basel iii proposal goes away entirely or becomes capital neutral, do you see raising that figure beyond $20 billion? >> we want to see what the actual structure looks like . we believe that our bank has

done a good job in taking down risk, making the risk profile stronger. we feel very good about our capital levels and feel good about our reserves. we feel very good about our liquidity. we would not be supporting our clients and getting to the right level. >> you took down your turnaround targets for the return on tangible common equity, you said they will be between 10% to 11% by 2026. during the fourth quarter, -- what is the pathway to bridge that gap over the next 12 months? >> we view 2026 as a way point, not the destination of our strategy. i feel very good about the progress our businesses have made you look at the fourth quarter in the third quarter results, the four year result, the businesses are performing

the way we intended them to. the strategy is working. we had a 40% increase in net income. we had record years for personal banking and the u.s., for wealth business, for our services business. i look at services, i call it the crown jewel. it will take a competitor at least 10 years to get to the type of capabilities that we have around the world. our wealth business, last year, a big turning point year for the business. we had a 40% growth in our investment assets that came in. sharpening the focus on investments. the upside of our bank is tremendous. we will row our revenues and we have a lot of confidence behind us continuing that momentum. we know what we need to do on our expense base. making sure we invest in the long run. not taking short-term decisions

for expediency that will hurt us in the long run, that ill not happen on my watch. we know what we need to do and we are getting on with it, the progress is tangible we are not there yet but we will be. >> a part of the supplication is to cut layers of management, you have exited 14 international markets, and you have -- >> in our consumer business >> and restructured the bike around five key businesses. is there more left to do in that simplification? >> we have simplified our business make sure to get five interconnected businesses together and went through, last year, finished about nine months ago, the reorganization of the bike around that. we are still working on making our process is simple for -- simpler and investing in technology and making sure we are automating our controls, getting our risk and controls in the shape that everybody would expect them to be. we have some more work to do but we are definitely at the right end of that workflow.

>> you have a unique perspective of geopolitics and tariffs being a global bank, as you look at the world order and potential changes next year, what do you think it means for citi? >> what it means, the macro environment plays to our favor we have seen global lanes changing around the world, in food, energy, security, in the financial flows, certainly technology. for us, no matter what the dynamics is, it means we are very agile and able to support clients as they make the changes. this environment is good for our firm because of our unique positioning. where i see the bright spots, i see them in the middle east, i see it in japan, india, asia, those are countries on the front foot, many of the global trends are working in their

favor. some push and pull factors, but in the u.s. a lot of roads are leading to the states at the moment. you never bet against the american entrepreneur. look at healthcare will look at technology, look at the energy space, financial services, this is where a lot of the action is happening globally. from our point of view, we are helping clients around the world participate in, either investing their wealth in the states, or in making sure parts of their operations are here so they can participate and help support americans in the bright spots around the world. as well as a few of the not so bright spots. >> it makes sense that you would be a unique player in terms of helping multinationals, and restructured the supply chains in anticipation of tariffs. are you worried about the potential for it to hinder growth or cause another inflation spike? and what that would mean a

particularly for the bright spots in the u.s.? >> i am not overly worried. i think it will take time for the tariffs to play out and there is likely to be some offsetting benefits in terms of taxes and other areas. until we really see the details, it is hard to know. the u.s. is a very competitive economy, a very important one in the global supply chains and systems around the world. we will have to wait and see. i am not overly worried about it. >> thank you so much for taking the time today and coming off a fourth quarter earnings yesterday, those new targets, the buyback announcements, great to hear your perspective on it all and we really appreciate it. kelly, i will send it back to you. >> thanks. on power lunch, the bank of america ceo about one hour from now at 2:45 p.m. eastern. big bank shares are taking a breather today after the big

surge yesterday the same goes for the broader market and this is even as bond yields continue to deflate with a 10 year about 4.6% today. our investors sued by what they heard from scott bessent? let's go back to the question of with the coaching investment strategist at john hancock investment management and dan clifton and tom back for more. matthew? >> i love hearing no new taxes, that was the word, the theme, what we are seeing is the midwest is booming, small business optimism is surging and the u.s. economy is re- accelerating. but, the old macro playbook of how to play this has changed, small caps were the best way to play a acceleration of the economy but we do not see that right now small caps, the russell 2000, 40% of the

companies do not make money. what they would prefer is low interest rates and capital given to them instead of making the profits. mid-cap is the new small-cap. the profitability of mid-cap, starting to see the relative strength improve in mid-cap, more industrials tilting of the midwest, this x that will be coming to the economy, it is cheap, a valuation buffer to the highflying growth names and we are playing mid-cap into 2025. >> i love the passion. no new taxes, that was the message, is there anything on the deficit, treasury issuance and interest rates, which goes back to your point about the russell? anything on tariffs? great, no new taxes but anything on the tariff front that concern you? >> we want more u.s. revenue exposure than anywhere in the world. if you look at global equities over the last decade, the best way to invest is by looking at the companies and where they are focused on the

business, where the revenue comes from. you want to be u.s.-focused and large-cap, 40% of revenues are brought and then the global multinationals that will be struggling with the tariffs you were the aerospace industry constituents saying this is something we are watching. you are much more u.s. focused, nearly 80% to 90% of the companies, revenue our u.s. domicile and we think that will help. yes, inflation issues and a deficit we will have to deal with, we have to be careful with interest rates but higher rates may be better things for the banks, more cyclicals, we may see m&a come back with deregulation. something to think about in terms of where you position in the proponent. >> tom, how are you modeling it out? >> i think, nothing that he said today is a surprise.

if anything, the bigger news was probably not him but the comments about the potential for cuts even in the first half of the year. that is what got the market moving. in terms of bessent, it was very status quo of which to say a good thing from an economic perspective trump was handed a nice economic backdrop and now his job to perpetuate it. >> what is in the model for this year, gdp, jobs? >> north of 2% growth about 2.2% growth, full year. the unemployment rate probably stays roughly here maybe drifting slightly higher and inflation drifting downward. as the year progresses. that should open up the possibility of the fed to continue the process of cutting. they have stepped to the sidelines which is the prudent thing to do, wait and see what unfolds with donald trump.

very much in scope for the fed to continue easing. >> dan, you thought those comments were significant? >> he is really arguing the idea that if we do tariffs on china, there will not be inflationary and room for the fed, a very important point if the fed gets the policies wrong, we will be in the same place as in 2018 with them being overly tight. listen to what bessent said today, china is the problem, we will go after china and the currency will adjust and that ill soften the blow. the yuan has come down by 4% since the election, a 10% increase, the market is already pricing this in . if you pull that together with what matt was talking about, too much focus on the negative side, they are important and we had to incorporate them, but if there is a cut in the tax rate for domestic manufacturers, the impact -- a corporate tax rate cut, the impact of the tariffs will be less onerous, exactly

what happened in 2018 overall. you have to look at the policies in totality and, my sense is this is a very well thought out plan from the donald trump people and they have been planning this for four years and they will come out guns blazing when he is sworn in. matt said no new tax cuts, we have heard that emphasized, congressman frank polo critical of salt, the way you frame the discussion, i do not want donald trump giving a handout to corporate america on the backs of my working-class people , something that joe biden last night, we have that, let's play what joe biden said about that issue last night in his farewell address. >> today, an oligarchy is taking shape in america of extreme wealth, power, and influence that literally threatens our entire democracy our basic rights and freedoms.

and a fair shot for everyone to get ahead. >> senator sanders was hammering at this point with bessent today . 13 billionaires on the cabinet how do they sell this one big bill for two bills they have to pass to continue the tax cuts the street is looking for with this kind of messaging coming out against it? >> this is the new democratic messaging, something you will hear over and over again joe biden started that off yesterday. that is very different than this bill which is a massive middle-class tax increase on january 1st if the tax cuts are not extended the tax cuts will be extended, kelly, a debate on how to extend the tax cuts and whether there will be tax cuts, nuanced, inserted into it. the salt issue is important, he was my congressman, and i worked on many of these public finance issues. there was going to be likely an increase in the

salt reduction, with a $30,000 for a married couple or higher or lower, it would be higher than what it currently is or no bill will be able to pass. you are getting your existing lower income tax rate and a higher salt diligent and a higher child tax credit which will lower tax cut, lowered tax costs for the middle class and that is the message the republicans are having to come out with over a long time. kelly, i came on your show during the debate in 2017 and everybody said it was a tax increase tax increase, and the past and was like, no, a net tax cut i know s.a.l.t. is tough and people associate that with having their taxes raised , but a massive income tax rate cut, a change in the standard deduction and expansion of child tax credit, number alternative minimum tax. nearly every single american got a lower tax rate. this will expand on that and that will be the key message coming from the republicans. >> matt, what else did you pick

up from the discussion this morning? >> just a dollar and being a reserve currency, at the end of the day, the dollar has been strengthening. it is about the dollar strengthening, that lowers import prices and lowers commodities because they are priced in dollars. it can be just inflationary and overwhelm some of the tariff inflation. also, as a global equity investor, you have to think about currencies, if you invest in other countries, you will be picking up other currency exposure, stronger dollar could weaken those returns we are overweight u.s. equities because we believe the dollar is of the strongest currencies in the world and we think it will remain strong and that is why we are overweight u.s. on a global basis. >> is it a headwind for he economy? it has moved considerably and near the highs we've ever tested since the early 1980s? >> we have the prospect set up for a really nice economic backdrop in the extension of the truck tax cuts is a

foregone conclusion. i think bessent is quite right , if you don't, that you .2% growth i mentioned, that changes. >> is that in our model, what would that do? >> over time, we would hit it until the end of this year, in 2026, a different growth profile in the united states. not that it would force a recession, nothing that dramatic, but is part of putting a floor underneath growth. >> thank you for your reaction, markets are closed monday for mlk day, but live coverage of the inauguration of donald trump starting at 8:00 a.m. eastern on cnbc california wildfires have killed 27 people and destroyed more than 12,000 structures from the three biggest incidents we are watching it burn through more than 40,000 acres of the palisades fire is 22% contained, 50% is the eaton,

hurst is fully contained contessa brewer spoke with the ceo of usaa at their disaster relief -- do we have scott bessent ? >> are you okay with gradual tariffs? >> no comment. are you concerned about the amount added to the debt? >> mr. bessent -- >> no comment, don't follow! >> no comment, no follow. again. >> doing our best to chase down the treasury nominee, scott bessent , contessa, back to you. >> reporter: i am at the

disaster response situation for usaa, insurer dedicated to military and veteran families, insurers are getting -- thousands of claims from customers affected by the california wildfires. we have seen other disaster response sites like this one. this is at an ace hardware in santa monica, not far from the palisades fire helping customers with claims questions. they have already received 3000 claims and told me that they are streamlining payments to members, forgoing the normal documentation requirements. just hanging 100% on the home which they can see from overhead imaging 75% of content upfront, wayne peacock is the outgoing ceo at usaa and has been here talking with his team and with us. >> continue with reforms to streamlined the process for new

rates, using all the data and analytics about future risk and bring that into rates. we need to be able to move at a much faster pace and have the ability to price appropriately. >> reporter: he is talking about the future health of the insurance market in california. kelly, that has been a big issue and in question, not just because of these fires but in the years leading up to it where they could not get the rate to justify the risk. they saw losses exceeding what they were bringing in the investigation continues into what caused the fires. the eaton, looking transmission lines from california edison and they said the wind last week was not high enough to trigger the lines, but the responsibility of utility, would make a difference with the insurance because they could recoup some of those losses possibly. >> thank you for all the

reporting you have been nt bweng to us. coessarer in los angeles that is it for the exchange, i will join brian for power lunch right after this break.

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