Treasury Secretary Bessent: Government shutdown starting to hurt the economy 'up to $15B a day'

Key Concepts

• America First Policy: A political stance emphasizing domestic interests, particularly in trade and industrial policy.
• Foreign Direct Investment (FDI): Investment made by a company or individual in one country into business interests located in another country.
• Regulatory Certainty: Predictability and stability in government regulations, which encourages business investment.
• Tariff Policy: Government policy concerning taxes on imported goods.
• Government Shutdown: The cessation of non-essential government services due to a failure to pass appropriation bills.
• Clean CR (Continuing Resolution): A temporary funding bill that continues government operations at current levels without significant policy changes.
• Small Business Confidence: An economic indicator reflecting the optimism of small business owners about the economy.
• Industrial Policy: Government efforts to promote the growth and competitiveness of specific industries.

The Investment Boom and "America First" Industrial Policy

The discussion at the CNBC Invest in America Forum, featuring Treasury Secretary Scott Bessent, centered on the current investment boom in the United States and its sustainability. Bessent asserted that this boom is "just the beginning" and attributed its unleashing to President Trump's "America First" policies.

• Sustainability and Drivers: Bessent argued the boom is sustainable, citing "pent-up demand." He contrasted the Biden administration's four-year total of $1 trillion in foreign direct investment (FDI), with an estimated $250 billion in the last year alone, suggesting Trump's policies are accelerating this trend.
• Trump's Policy Contributions: Key policies highlighted include:
  • Trade and Tax Policies: Specifically, the tariff policy, which Bessent claimed provided "great certainty."
  • "One Big Beautiful Bill": A reference to comprehensive legislation that provided clarity and stability.
  • "America is Open for Business": A clear message to global investors to conduct business in the U.S., promising "energy tax certainty," access to the "biggest market in the world," and "regulatory certainty."
• Regulatory Impact on Manufacturing: Bessent expressed surprise at the U.S.'s diminished ability to manufacture goods, largely attributing it to excessive regulation and permitting hurdles. He gave an example of the difficulty in building a factory or crossing state lines with a pipeline, emphasizing that President Trump has been "all in" on addressing these regulatory barriers to unleash industrial growth.

The Government Shutdown: Blame, Impact, and Political Dynamics

A significant portion of the discussion focused on the ongoing government shutdown, which Bessent identified as the "only thing slowing us down." He squarely placed the blame on the Democrats.

• Attribution of Blame: Bessent contended that Democrats are using the shutdown as a tactic after failing to stop President Trump's policies through the courts (losing in the Supreme Court) and through media narratives. He accused them of "folding their arms and not getting anything done," thereby hindering the private sector's ability to drive economic progress.
• Call for Bipartisan Action: Bessent urged "moderate Democrats to come across the aisle, reopen the government," promising they would be "heroes." He also suggested that if moderate Republican senators were to cross the aisle in a similar situation, they would be hailed as heroes, implying a double standard in media coverage.
• Economic Impact: The shutdown, on its 15th day, was estimated to be hurting the economy by "up to $15 billion a day." Bessent also noted a drop in "small business confidence" and expressed concern about its potential impact on overall "confidence" and the "labor market."
• Military Paychecks: He mentioned that the Pentagon was using "surplus funds" to ensure military personnel were paid, highlighting a critical immediate impact of the shutdown.
• Critique of Media Coverage: Bessent criticized the "mainstream media" for what he perceived as complicity, arguing that if Republicans had shut down the government, there would be "screaming" and examples of things going wrong, but because Democrats are responsible, the coverage is muted.
• Political Motivations: Bessent suggested the shutdown was influenced by Democratic leaders' poll numbers and internal party pressures. He specifically named "Chuck Schumer and Hakeem Jeffries," referring to them as "two guys from Brooklyn who are completely detached from America," and claimed Senator Schumer's collapse in poll numbers after passing a clean CR in the spring led to the current impasse. He also speculated that Representative Jeffries might face a primary challenge from the left, indicating extreme internal party dynamics.
• Republican Efforts: In contrast, Bessent highlighted that Speaker Mike Johnson had passed a "clean CR" and that "three Democratic senators have come over," with Senator Thune holding a vote every day, indicating a willingness from the Republican side to negotiate after reopening the government.

Synthesis and Conclusion

The CNBC Invest in America Forum segment, as presented by Treasury Secretary Scott Bessent, painted a picture of a robust and growing American economy driven by President Trump's "America First" policies, particularly in trade, tax, and regulatory reform aimed at fostering domestic manufacturing and investment. However, this economic momentum is perceived to be significantly hampered by the ongoing government shutdown, which Bessent attributed solely to the Democrats' political maneuvering and internal party struggles. He emphasized the substantial daily economic cost and the erosion of business confidence, advocating for immediate government reopening through bipartisan cooperation, particularly from moderate Democrats, to allow the private sector to continue driving growth. The discussion underscored a deep partisan divide, with strong criticisms leveled at Democratic leadership and the mainstream media's portrayal of the situation.