Scott Bessent: Fixing the Fed, Tariffs for National Security, Solving Affordability in 2026

Summary

Treasury Secretary Scott Bessent joins the All-In hosts for a first-year review, arguing that 2025 'set the table' with a modest fiscal contraction, tariff-driven trade deals and a capex boom, and that 2026 will be the 'feast' for Main Street. He defends tariffs as a disinflationary national-security tool, says inflation is rolling over as gasoline and rents fall, and blames the Fed's prolonged QE for inflated asset prices and inequality while describing the Fed-chair search. He also outlines community-bank deregulation, government equity stakes in strategic industries (semiconductors, pharma, steel, shipbuilding), a coming Q1 tax-refund wave and Trump accounts to broaden equity ownership.

• Bessent forecasts a $200-300B calendar-2025 fiscal contraction with nominal growth near 6%, taking deficit-to-GDP from 6.8% to the mid-5s, targeting a 3-handle by the end of Trump's term.
• Tariffs are framed as national-security leverage (fentanyl, rare earths) and disinflationary per a San Francisco Fed study; a Supreme Court IEEPA ruling is expected in January-February, with 301/232/122 authorities as fallback.
• Affordability: gasoline expected to keep falling behind oil, rents down about 5% as migrants leave, real incomes up about 1.8%; the October BLS inflation print is defended as accurate.
• Fed critique: QE ran far too long, inflated asset prices and inequality, and the Fed now loses about $100B a year; chair candidates Warsh, Hassett, Waller and Rieder favor a smaller, more predictable Fed.
• Bessent wants a Bundesbank-style bargain in which fiscal restraint lets the Fed cut rates, noting US Treasuries were the best-performing bond market last year.
• Community-bank deregulation aims to unleash Main Street lending; government equity stakes are concentrated in 5-8 strategic industries including semiconductors, pharma precursors, steel and shipbuilding.
• Tax bill: permanent expensing drives a capex boom (Boeing expanding its Charleston Dreamliner plant 50%), Q1 2026 refunds of $1,000-2,000 per household, and Trump accounts to move the 38% of Americans without equities into the market.