00:00:00
Secretary Bessant, it's uh wonderful to see you. Before we maybe deep dive into AI, do
00:00:07
you want to give us um the highlevel update on the 333 plan? How are things going? Um you you had an incredible clip, by the way, with Maria Bardomo where you talked about some of the
00:00:18
things that were happening economically. Maybe just level set everybody on what's going on. So just just for good framing
00:00:25
during the campaign IDA 333 plan I think his microphone's off. Can we get the microphone on for Scott? Test test
00:00:32
test. There it is. Okay, good. So I had a plan that I I called 333. And the idea was to get the
00:00:41
budget deficit, which was running about 6.7% of GDP under the Biden administration,
00:00:48
high highest that we'd ever had when we weren't at war or in a recession down to
00:00:53
3% uh 3 plus% economic growth on a persistent basis and to create 3 million more barrels of energy equivalent. So oil and gas um before President Trump
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leaves office and look we're full speed ahead. Uh we had the first June was the first positive June for the Treasury since 2015. We
00:01:23
actually had a surplus and we we did that in a good way. We took took in more revenues, some from tariffs, and we brought down spending.
00:01:35
And when when I think about what we can do here that what I'm really excited about is the idea uh you know with AI that we can go back to the paradigm
00:01:49
when I I was younger in the '9s. Allan Greenspan was able to run the economy very hot in the 90s and because of you know it
00:02:00
was the IT boom and we had this very uh powerful non-inflationary growth and I think that there that it's highly likely we could have that now and so that kind
00:02:16
of growth would bring down the deficit very quickly. you uh there's been a lot of talk today about the amount of capex spending that needs to go into AI and all of the jobs
00:02:28
that it creates and you uh posted as well actually a couple days ago and you talked about that there's just been an
00:02:35
inflection point that you've seen in capex spending sort of as a steward of the US economy. Can you tell us about
00:02:40
what what's happening? So it it's com combination and it's a barbells. So, uh, I I've been in
00:02:48
Pittsburgh twice in the past four weeks. Four weeks ago, I went with President Trump when he announced the US Steel Nippon Steel deal, substantial
00:02:59
investment by Nippon Steel into an old very important industry. And then last week on Tuesday, there there was an A AI summit in in Pittsburgh, all the big
00:03:13
players. And Pit Pixsburg is a natural location uh for AI. Uh lot lots of cheap energy. Carnegie Melon Pit uh are there. And so it was very interesting to see
00:03:27
the juxiposition there. But we are seeing uh this incredible capex. The hyperscalers are have obviously been in an arms race kind of you know the big
00:03:39
five the big seven. We estimate that that is approximately 1% of GDP a year. Wow. So $300 billion. Wow. That's being spent on AI. And in my
00:03:52
perfect world, which never happens, uh, we would go through this big capex boom and then sometime in 26, the capex boom would hand off to a productivity boom. M
00:04:06
I mean it's an incredible thing because it's sort of you mentioned alluded to this a little bit earlier but it does
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violate a lot of economic theory in the sense that it just hasn't had the negative pernicious effects. Do you think is that is that a yet thing or do you think that we're in a structurally
00:04:22
different kind of economy now? You mean the AI boom? Yeah. Well look we we've seen uh throughout
00:04:30
history that technology can can drive these things. If you go back, I'll talk about the ones I was around for. I was not around for the railroads, but eight
00:04:42
18, but I I used to teach economic history. 1880s, 1890s, the the railroads made it 10 times faster to cross the United States. We had this incredible productivity boom. It was the gi
00:04:57
gigantic GDP growth and it was disinflationary. So imagine you're having doubledigit GDP numbers and inflation was -2 -3 -4%
00:05:11
just cuz the costs were coming down. Then in the 1980s uh under Reagan we had what I would call a deregulatory
00:05:22
boom because hard for anyone everyone in this room to remember but everything used to be regulated. you know, price of airline tickets, the uh te telephone
00:05:34
bills, uh banking services. So, uh 1980s we had a deregulatory boom, you know, Paul Vulkar brought down inflation, but it was also the deregulation.
00:05:47
1990s which I previously mentioned we had had a electronic buildup and then finally it kicked in especially in office work um
00:06:00
and that led to a big productivity boom and we paid down paid down the national debt right you know I mean had a surplus we we had a we we had a surplus and I
00:06:13
mean it it seems crazy I found a paper the other a that people were wondering, well, what are we going to do if there aren't any government bonds? But we didn't have the But we fixed that. There are plenty of
00:06:24
government bonds. But I I I do think there's a chance now that we could have this growth acceleration and I if I'm shooting for 3%, but I I
00:06:38
can tell you the trajectory of the debt path really changes. And if we can also uh have lower interest rates because it's non-inflationary and I I I think the Fed's going to have
00:06:53
to be open to this idea. So let me ask two questions on that. The first is at that the examples you gave
00:06:58
we didn't have some of the tariff that since we last talked several of these trade deals have been negotiated out
00:07:04
further. You have better clarity probably on what the tariff rates are going to be. what do you estimate the dampening effects on the growth rate to
00:07:10
be if any associated with the tariffs in those trade deals and uh second is love
00:07:16
to hear your point of view on the Chinese report of s selling half of their US treasuries and where's the
00:07:22
market for treasuries going to kind of fall over time here so two parts uh so um
00:07:28
to address the interest rate yeah so I I think that um in terms of the well I I'll I'll take the second one first. Uh we we expect
00:07:42
that that the Chinese will slowly divest, but that with the passage of the genius legislation last week, I I think that we could see several trillion
00:07:55
dollars of demand for T bills because the way the legislation works, it it's under 90 days. And I I think that that's really going to lock in the US dollar in
00:08:08
terms of uh you know individuals on the street in whether you know it's it's Nigeria qual are are going to be using stable
00:08:21
USbacked stable coins and if I think about the alternative um you know if you think about a central
00:08:27
bank digital currency China Euro or ECB or even Canada. You know, a lot of you will remember during COVID,
00:08:39
the Canadian government, they didn't like what some truckers were doing and they seized and froze their bank
00:08:45
account. So, with a central bank digital currency, you could put out a mean tweet. Not that any of you are, but if if you put out a mean, no one up here is known for doing that
00:08:56
ever. uh uh that if you have a government backed then they they can shut you down as opposed to this kind of unbridled
00:09:10
uh choice that consumers are going to have for US dollar stable coins. And on the first question about growth rates being hampered by tariffs, is is the revenue you're seeing offsetting
00:09:22
effectively the rates? We we we haven't seen that yet. And I I think there's a good chance that we
00:09:29
could see. So if we think about China, so chi China's are you China has a high tariff rate. It's 30%. The Chinese business model is like the the brooms
00:09:43
and the water buckets from Fantasia. They they just keep they they just keep going. And it's an it's an employment agency. I'm thinking of the song. I know the the
00:09:53
piece. Yeah. A and it's an employment a so they they will just keep cutting costs to uh maintain market share. So so we haven't seen that thus far and a lot
00:10:07
of the other foreign producers have cut cut price to maintain market share. A lot of the US companies have eaten into their margins to maintain market share.
00:10:21
And then but the other thing we're seeing is the tariffs are creating the onshoring. So you might have seen can't remember whether it was yesterday the day before
00:10:34
Astroenica said that they were going to build 50 billion 50 billion incredible plant here. So we're seeing this this big onshoring move that I think can
00:10:47
accelerate all that. So yeah, I I think there's a very good chance that we see just like with AI, we're seeing now we're in the construction boom phase, then we're going to be in the use case,
00:11:00
right? I I think we could have this massive construction boom and then the factories get populated.
00:11:08
And part of the President Trump's one big beautiful bill, the most powerful part of that is the 100% immediate expensing, right, of equipment, and we also did it for
00:11:22
factories. So, not only are we trying to make the US the the best destination regulatorywise, we're also making it tax-wise. So, you you can immediately write off all the
00:11:37
equipment for the next 5 years. You're going to be able to write off the factory structure and I I saw
00:11:44
Secretaries Bergamman right and we're going to have cheap energy. Yeah. Which seems like a pretty good combination. Should the Fed remain independent? Sorry,
00:11:55
the Fed, should it remain independent? Should uh Trump replace the Fed chair? You know, you guys seem a bit frustrated with him. Uh what are your thoughts there? Because you guys have done such a
00:12:06
good job in terms of the confidence in the markets. CPI went up a little bit in June and it does seem like the economy
00:12:13
is very strong and people are very confident. So then poly market is showing no rate cut is the most likely
00:12:18
case in September. So how do you think about the Fed? Well, I I think if you if you look that the Fed publishes
00:12:25
something called the summary of economic projections and it's it's pretty politically biased. Uh but we're we're seeing that we could see one two rate
00:12:36
cuts this year and I think that once we see o over the next one two months that the tariffs haven't been inflationary and you I I have breakfast with chair
00:12:54
Powell almost every week and you know I just keep saying that a one-time price level increase is very different than the notion of a persistent inflationary spiral. I think that you uh we used to
00:13:09
say TDS was Trump derangement syndrome. I now say TDS is tariff derangement syndrome, right? And when you think about it, the market crashed, then it had the fastest
00:13:21
recovery in history over a 54-day period. We're back at a new high. So I think the market's looking through all this to next year with the productivity boom. And to to the question,
00:13:36
I think minimum on a forward 12-month basis, we're going to take in at least $300 billion in tariff income. Yeah. Are they punishing you in a way for maybe the roll out of the tariffs
00:13:49
was uh a little bit shock and awe or a little bit uh effervescent, however you want to describe it. It was pretty
00:13:55
intense. Is the Fed sort of punishing you for that in your mind? Uh, no. I I think that they're they're
00:14:02
just stuck in in an old way of thinking. How much should they cut? What should they How should they think?
00:14:08
Uh, look, I'm only going to talk about the mistakes they made, not the mistakes they're going to make. Um, but the the I
00:14:17
I I I do think at a at a point they're just going to have to kind of admit that they have have been wrong because if if you think about it, I don't believe that
00:14:29
a tariff is a consumption tax. Right. Right. But if tomorrow we put on a 1% consumption tax, you would never say that's 1% inflation. That's right. Right.
00:14:41
So I I am I am hoping that in their infinite wisdom that the I can't remember it's 350 PhD economists which I I said on TV it
00:14:56
was either yesterday or the day before. My worry is that the Fed is turning into
00:15:01
universal basic income for PhD economist. Right? That I I don't I don't know what
00:15:08
they do. They're never right. If you if you were to maybe you should double the number of PhDs if you go to 700 they might get it
00:15:14
right. Well, well, look, I I mean, if you were to look at the central value tendency ver versus how they've done it,
00:15:22
it's shocking. It's shocking. I said like if air traffic controllers had did this, no one would get in an airplane.
00:15:28
They do seem to put a little tail on everything. Last the last question maybe as we wrap this up. Secretary as a economic
00:15:34
historian maybe just very briefly tell us the lessons of these previous economic expansions technological booms
00:15:43
what we need to learn from those things whether it was railroads or whether it was the agrarian revolution or the industrial revolution so that we don't
00:15:50
screw up the AI revolution what are the few critical things we need to do right well I I think the most important thing
00:15:57
that that we are doing is getting out of the way and setting the the conditions for it because I I would say one of the surprises that
00:16:09
I I've had and I've had a lot of them when I went from civilian to a public servant has been that in the US we've made it so hard to build things.
00:16:21
Right. Right. And it's just very frustrating. I'm I'm sure Doug Doug and Chris will talk about
00:16:27
it, but this idea TSMC wants to build a gigantic fab system in Arizona and I I think it might be able to prod produce up to 7% of the
00:16:42
chips that the United States needs. and they're dealing with local building inspectors who said and you know evidently like the these chip design
00:16:54
plants are moving so quickly. You know you you're constantly calling an audible and you're saying well like
00:17:03
3 months ago it looked like this but in 18 months we've now decided it needs to look like this. And you you've got
00:17:09
someone saying well you said the pipe was going to be there not there. we're shutting you down.
00:17:15
So, a and you know just the level of permitting we always talk about how I I think I may have even talked about it on your podcast how Germany had de-industrialized, right? We even made the decision to
00:17:27
de-industrialize through our environmental regulations. And I think the most important thing we
00:17:34
can do is make it easy to build things again and uh stay out of the way and not overregulate. Secretary, thank you. Thank you very much. Thank you guys for being here. I know
00:17:50
it's been uh a rushed afternoon. We did not expect the uh uh the incredible turnout that
00:17:57
we've had, but thank you both. Um, you're the chair and the vice chair of the National Energy Dominance Council.
00:18:03
We've talked at length today about the boom underway in AI. Uh, we've talked about this on the podcast. The US energy
00:18:10
production capacity, electricity production capacity is about a terowatt today, growing to an estimated 2 terowatt by 2040. China's going from 3
00:18:18
to 8. They're adding in America every 18 months. Um, maybe you guys could just give us an update on the National Energy
00:18:24
Dominance Council, how that work is going to try and accelerate energy production in the United States to help
00:18:30
enable this AI boom. Well, h happy to do that. And I just want to say again, thanks to the all-in
00:18:36
for pulling together this amazing uh team and Hillen Valley. Yes. And Hillen Valley, too. Thanks,
00:18:42
Christian. uh we uh when when we look back on this day when historians look back on uh the the the challenge of our
00:18:49
times which is like the summit called winning the AI arms race I think one of the things they're going to dis conclude
00:18:54
is that the reason why the United States won the AI arms race was because of President Trump and and I'm not saying
00:19:00
that as a political statement. I'm saying that the policy of the Trump administration is more energy fast and
00:19:07
an understanding of how important it is uh for the AI arms race. And so with that, as you've just outlined, we've got
00:19:12
a huge challenge ahead of us. Uh you know, China uh is deploying everything. I mean, they added 94 gawatts of coal last year. 1 gawatt's Denver. Uh they're
00:19:23
60 over 60% of their power is still coming from coal. They're just pouring uh pouring that on. The Wall Street
00:19:29
Journal ran an article yesterday talking about what a great job that China was doing with EVs and with solar. I read
00:19:35
the whole article. They never mentioned coal. It's twothirds of their electrical power. And and so then just by
00:19:41
definition, I mean twothirds of the the EV cars in China should have a bumper sticker that says powered by coal. Uh so
00:19:47
they are this is a we're in a race of our lifetime. They're also doing nuclear. They're doing hydro. They've
00:19:53
got no permitting issues. I mean they build a hydro dam. It'd be like the equivalent of us putting a dam on the Grand Canyon what they were doing on the
00:19:59
Yang Sea. So we've got real competition. We can lead in technology but we haven't been leading on electric production. So,
00:20:06
the National Energy Dominance Council, part of the job that Chris and I have is helping through cut red tape, uh,
00:20:11
produce more electricity, whether it's hydro, geothermal, nuclear, uh, and and and, and of course, LG, natural gas is a
00:20:20
key part of this. And then bringing back coal and making sure that we stop shutting down base load in America, uh,
00:20:26
has been a key part of what we're doing. Yeah. And he's just to riff off that where United States gets electricity today in order natural gas by far then
00:20:36
nuclear then coal those three sources are 75% of US electricity and 90% of what matters which is electricity that's there whether the sun's shining or the wind is blowing. Um but we had in the
00:20:50
previous administration's plans to remove three and a half gawatts of hydro power. We're going to stop that. There's
00:20:56
plans between now and 2030 to close to close a 100 gigawatts of power plants. 100 gigawatts. Um and we're stopping most all that. Yeah. Just I I see the head nodding. Right. If we need to add a
00:21:09
hundred after the meetings they had this morning, I think it's more than 100 gigawatts in the next five or seven years. The first thing to do is stop
00:21:16
subtracting 100 at the same time you want to add a hundred. Um but I think America became great by big bold people
00:21:24
making big bold investments. That's where we got here. And then we've just drifted off track the last bunch of
00:21:29
years and made it so hard to build something so easy to stop something and just a crazy love affair with intermittent unreliable energy sources.
00:21:40
You're talking about solar. Why are you so down on solar? This is the cheapest thing you can install. Batteries are
00:21:45
here and they're being produced at a incredible rate. Why Why are we so anti-olar?
00:21:50
Or why are you so anti-olar? Oh, I'm not anti- solar. So why do you keep saying then that like this
00:21:56
unreliable solar if you put batteries on it it's totally reliable if you take all the batteries in the United States you could store 5 minutes
00:22:02
of power 5 minutes of the entire country but if we've had many days in California and in Texas
00:22:08
where solar has been the majority of it so why are you so down on solar it it can be the majority on a sunny day
00:22:14
in the summertime that's not what matters you in PJM where we are right now at peak demand this year 97% % of electricity, wind, solar, and batteries
00:22:26
delivered 3%. That's when it matters. If you're 20% cherry picking DC, you're cherrypicking
00:22:32
DC. Let's talk about California and Texas. These are very voluous states in terms of population. Absolutely. Let's talk Texas. So, the
00:22:39
peak demand times in Texas have been cold spells, low they're high pressure systems in the wintertime. Yep. Wind and
00:22:45
solar go on vacation. They're 35% of the capacity in Texas, 8% of the delivered power at peak demand. Talking about 2 weeks. I live in Texas. Yeah, but those are the two weeks that matter, right?
00:22:56
No, the other 50 are the ones that matter actually. But sure, in in in in Yuri when they weren't
00:23:01
ready, over 200 people died. We we don't want people to die. We want the lights to go on when people need them. And and
00:23:07
it's the system cost that matters. If you're not there at game time, all you are is a parasite on the systems that is there. Let me redirect this uh back to AI
00:23:17
because um Good idea. Good idea. So if you if you actually forecast the growth of just the servers and then the
00:23:28
robots and all of these things um we're going to need terowatts and terowatts that's on one side and so the obvious solution would be to build right to drill to do what we need to do and
00:23:41
then on the other side is this latent fear that some people have that this will somehow upset the apple cart
00:23:48
sustainability the climate etc. How do we create the logical bridge so that people really understand that this is all possible that this is not going to destroy the earth and that we can get
00:24:01
this abundant energy especially because as you guys have said very well if we don't do it and somebody else has
00:24:07
marginal costless energy they will de facto win. So how how do we frame the argument so that people can understand this better? Yeah, I've been writing and talking about that for 20 years and and
00:24:18
you're 100% right. And to me, it comes down to the same thing AI is focused on, which is on data and facts. We've
00:24:24
increased atmospheric CO2 by 50%, 100%. It absorbs infrared radiation. It's been
00:24:30
a force for warming. That's all true, but if you look at the trade-offs on it, it's not in the top five problems the
00:24:37
planet focuses. And what has been the biggest source of decarbonization, not just in the United States, but globally,
00:24:44
has been market forces. Cheap natural gases, displaced coal, and and what what's what's a lower carbon energy source? Nuclear. That's on all the time. So, this administration all in to get
00:24:54
the nuclear industry moving again. Natural gas is the fastest growing energy source on the planet. Get out of
00:25:01
the way of that. Let natural gas grow. It's the cheapest source of electricity in the US. I'm pro solar as well. I just
00:25:07
don't want taxpayers to pay for it. I want businesses to pay for it. But solar is going to keep growing. Solar is going
00:25:12
to keep growing. When you got nuclear expansion, I just want to talk about nuclear expansion for one second. So, um, how do we actually
00:25:19
build these things faster, have the capability and the, you know, the technical construction knowhow so that
00:25:26
these aren't 15-year projects, but also how do we incentivize the states to basically get out of the way, uh, or like, you know, these other organizations that can launch the frivolous lawsuit, slow it all down. How
00:25:38
do we do that? So, lot of regulatory firm things. One, we're working on FK, right? FK has this
00:25:44
inefficient Q system that just gets gummed up with mostly stuff that's never going to happen. FK came out yesterday
00:25:50
with a new system where you're going to prioritize things that matter. They're going to move through faster.
00:25:56
Uh you saw the Supreme Court decision on on NEPA. We got to get NEPA back to where it was. A process check on the environment, not an avenue for lawfare to stop things and kill things. So
00:26:08
there's structural changes. There's just common sense reforms. We're going to get rid of Clean Power Act 2.0. 0 that says
00:26:14
you're going to have to have carbon capture and storage, you know, 15 years out on any natural gas is what's going
00:26:20
to power AI. Let's just be honest. What's going to be the main source of new electricity in the United States by
00:26:25
far and away? Natural gas just because it's cheapest, fast, it's reliable and dependable. Solar is going to play a
00:26:31
role. Nuclear's going to play a role. Hydro, geothermal, stop closing coal, lots of pieces, but it's dominantly
00:26:37
going to be natural gas. It's the fastest growing energy source, not just in the US, but in the whole planet.
00:26:43
There's a reason for it. It's cheap. It's massively abundant. It burns clean. The machinery lasts longer than
00:26:49
machinery burning oil or coal or something else. Um, but it's a let businesses, Doug and I are not here to
00:26:56
tell anyone what to build and what not to build. We're here to get roadblocks out of the way so capitalism and and
00:27:02
consumers and investors can decide where I mean, that's the good news. Solar is cheaper than coal plants, right? So,
00:27:08
okay. So some some of the um some of the the scal the scalability of nuclear as simple as that. Yeah. The scalability of nuclear I think is unbounded. Um and what we've seen in
00:27:19
China in the past couple of years is these generation 4 nuclear reactors. This pebble bed reactor is probably the
00:27:25
most elegant, beautiful energy system designed in human history. It's incredible what it can do, the scalability, the the cleanliness of it,
00:27:31
how it works. We have no effort in this country today to build and deploy Gen 4 reactors because there's no economic incentive. It the path to get there is so far. The cost is so high. What can
00:27:42
the energy dominance council? What's what are you guys doing in your roles to make Gen 4 reactors? Because everyone's
00:27:48
like go back to the AP 1000, these old Westinghouse designs from like 50 years ago and build that for nuclear. Why
00:27:54
can't we build for the future? And what can we do to create the incentive to make this work? I was gonna say, I mean, the one thing
00:28:00
that's already happened if if people are interested nuclear, which doesn't help us in the near-term race that we're in,
00:28:05
the near-term race, as Chris said, is going to be won by us uh getting natural gas power online and stop shutting stuff
00:28:12
down. But President Trump signed four executive orders on nuclear about 6 weeks ago. Uh and there's been a flood
00:28:18
of capital, fresh capital coming in. We've got a bunch of venture capital going towards, you know, over over close
00:28:24
to a dozen different uh SMR startups. Uh there's a lot of interest going on in that field. Chris's work with the
00:28:30
national labs redirecting that. Uh I mean nuclear's got a future, but it's it's not the thing we need in the next
00:28:37
24 months right now. That's got to keep moving ahead. President Trump's executive order has helped that, but we've got to get focused on getting more
00:28:43
power right now. Nuclear is the single biggest issue I work on. We will have three next generation Gen 4 reactors
00:28:50
critical in Idaho National Lab next summer. M um we have we we're supplying Halo, the fuel for these next generation reactors to the we've already committed to five and we'll give it to a dozen of
00:29:03
these next generation reactor companies. We worked in the one big beautiful bill to keep in the nudge the the tax credits
00:29:11
for nuclear because the government smothered the industry and killed it for three decades. Even a free market guy
00:29:16
like me thinks we need to get a little help to get it started. How far away are we till it's free market running?
00:29:23
uh probably 10 years 10 years 10 years because it's just a learning curve with the the small modular reactors you got
00:29:28
to build up the supply chain you got to build up and build them in volume the cost can come down dramatically but the
00:29:34
first ones as you guys look at your energy demand curves do you account for this revolution happening in physical AI
00:29:40
because every time I look at it's data centers this and buildings that but no one talks about physical AI which is
00:29:46
batteries in robots and some people are estimating hundreds of millions or billions of these things being built
00:29:52
trillions. Is this part of the the energy calculus as you think about demand? It it is it is a meaningful part of it
00:29:59
and and and yes, the more you look at that, the more you see increased consumption of energy there and the more
00:30:04
excited I get. The more we can build things at scale, the better we can get the economics. One one other data point
00:30:10
we put out at the Department of Energy. We got 16 locations to build data centers. We said, "Who wants to come
00:30:16
build one? We'll permit them right away. We'll help you build power generation right next to it." We got 300 responses.
00:30:22
We we will announce tomorrow the first four of those sites that will be developed and then you'll hear many more
00:30:28
coming behind that. How do we solve the um the supply chain issues around the turbines and the other
00:30:34
enabling technologies that we need for things like Matt Gas because I I agree with you. Um I have a data center
00:30:40
project in Arizona. It's a gigawatt and it'll be $25 billion of capital. But we're stuck in this weird situation
00:30:46
where onshoring the the nat gas turbines are extremely difficult. Then you know you see certain people will just buy the nack gas entire plants and then ship them over. So how do we solve the supply
00:30:59
chain constraints to generating the energy we need? Well, I wouldn't say if if again back to
00:31:04
the immediate need right now. We need more power and we need power for factories that are producing AI like
00:31:09
using Jensen's word which I think everybody should stop saying data centers because a data center if you're
00:31:15
have a data center the way America thinks about them you're processing a shopping claim you know it helps the the
00:31:21
seller the buyer and maybe a third party if you're processing a healthcare claim it's a provider a payer and a patient
00:31:27
but in an AI it's general purpose technology it we're we're actually literally manufacturing every day over
00:31:32
and over more intelligence and so that's different. It's not data centers. It's AI factories. And we've taken a look at
00:31:39
NEC at the supply chain. If any of you are trying to build an AI factory and you need power and you haven't talked to
00:31:45
Chris and I and our team inside the White House at the National Energy Dominance Council, you need to come and talk to us because we're mapping out
00:31:52
talking to everybody in the industry. We're we're a neutral party, but we're saying here's where the shortages are.
00:31:57
We've talked about things like the Defense Production Act. We've talked to companies that are producing turbines. everything we're doing, we say, "Hey,
00:32:03
you've got to amp up because some of these people are sleeping on the sidelines." And they don't think there's going to be real demand. And we're
00:32:08
saying, if anything, the demand is underestimated. So, we're trying to jack up the supply into the supply chain, but
00:32:14
please contact us. Uh, we're there. Think of us not we're not a group that writes papers. We're a group that helps
00:32:20
people build. We We help people build projects. That's what we do. Can't wait to visit. Just Just build a
00:32:25
data center, Jake Helen. You'll get an invite. So, AI factory. AI factory. Somebody else can build data center.
00:32:31
We got enough data. Secretary Bergen, right, can you as we finish up hit on the point we were talking about a little bit earlier, which is that you take a step back. The
00:32:37
focus here upstream on these prioritizations from energy to critical minerals is not just you have a new
00:32:43
market obviously on the AI side and there's huge demand and this buildout's important for national security. This buildout is important for winning uh the
00:32:49
AI race. But the derivative impact is what's most interesting, right? These are thousands of jobs, tens, hundreds of thousands of jobs. And then on any of
00:32:55
these manufacturing buildouts, particularly in factories, nuclear uh capabilities, they're going to lead to
00:33:01
usually 10x the amount of indirect jobs as well. Back to Chim's point on the supply chain for these things. Can you talk a little about the job impact now
00:33:07
that we're seeing? And then if we're successful here in this building at capacity, how many jobs are we talking about? How much how much can we actually
00:33:12
help the middle class here? Well, it's a fabulous question, Christian, and I'm so bullish on the US economy because as our
00:33:18
our friend Scott, who was just on here before us, but I mean, you take the combination of of lower taxes,
00:33:24
dramatically lower regulation, accelerated permitting time, just accelerating permitting, uh there could
00:33:29
be a trillion to a trillion half dollars stuck in this two to fouryear federal government permitting thing. we
00:33:35
accelerate that expenditure of capital, the onshoring uh the greatest economic developer in history bringing foreign
00:33:42
direct investment back to the United States, President Trump with these tariffs. You know what do we announce in Pittsburgh? It's $15 trillion that's
00:33:48
coming back. So with AI, software has always been the one things that extended human capability more than any other in
00:33:54
our lifetimes. And now with AI, it it's just a massive multiplier of that. But to make the factory happen, we're going
00:34:01
to have an explosion in in jobs in the trades. I mean, you're going to be able to skip college, go directly into
00:34:08
develop a trade, you know, make 150. Yeah. 150 grand, 120 to start in my home state. Uh, and and again, and for people that are spending money on site selection, I'll tell you one thing. You want to build it faster, go to where the
00:34:21
stranded gas is, build your power plant there, build the AI factory next to it. You don't have to permit a transmission
00:34:28
line. You don't have to permit a pipeline. Those are the two things. Linear infrastructure has been weaponized by the people that are
00:34:34
opposed to energy development in this country. They weaponized the blocking of those things. I say pipeline, you say
00:34:39
protest. You know, so go to the go to the same place and colllocate. President Trump himself has said in speeches, we're going to let you operate off the grid. We can build all this stuff and and and keep rates for electricity for
00:34:52
small businesses, consumers down because we've got to add to the supply. But, you know, which if you're going to go to where the gas is, there's sweet places
00:34:58
to go. The Marcellus, the Perian, or the Bacan. And uh and you can save tens of millions hiring sight selection guys. Go
00:35:04
find the people with stranded gas and get going. Great. All right. Well, Secretary Wright, Secretary Bergam, thank you for being with us. That was
00:35:10
great. That was great. Well done. Thank you. Really great. Nice to see you, brother. Everything guys to see you.
00:35:18
Welcome back to doing it. How are you? Nice to see you. Howard, I noticed you had that incredibly smooth, refined
00:35:24
tequila at your birthday. How was it? Take us through it every 14 minutes. Just let's get let's get to it. Let's get to it. Yeah. Smooth. Yeah. Well, thanks for being gonna kick
00:35:35
us off. So, the White House just rolled out a massive deal with Japan, which obviously
00:35:41
plays a critical part of the semiconductor supply chain. Could you tell us a little bit about what the
00:35:46
nexus is between this new exciting trade deal with Japan and how it fits with our the current debate around winning the
00:35:53
race on artificial intelligence? So, it was fundamental for Japan to lower their tariff because their car
00:36:00
industry and their manufacturing industry is fundamental to their economy. And they paid a $550
00:36:09
billion what the president likes to call a signing bonus. Right. the greatest signing bonus of all time. So they've
00:36:16
committed $550 billion to finance projects in America that are important to the president and to American infrastructure. So we can build power means we could build 10 nuclear power
00:36:29
plants. We could build fabs, right? We could build critical minerals. We could do ship building power. We could do
00:36:37
anything and they will finance it and we split the profits of the project. 90% for America and 10% for Japan. And I
00:36:49
don't think people can actually understand how powerful that is. This is the national security sovereign wealth
00:36:57
fund, the United States of America, funded by President Trump's tariff policy, right, that produced that kind of money committed to America. It's
00:37:09
Will that actually go into Congratulations. Will that go into a sovereign wealth fund that you've been
00:37:15
talking about and the president has been talking about? No, I think this is this is separate. The what the president says about the
00:37:21
sovereign wealth fund is we do a sovereign wealth fund that invests when we've done paying off our deficit. Okay?
00:37:28
Right. First, we got to pay off our deficit before we're trying to make money. So what this is is this is the
00:37:34
Japanese government says I will finance and I will pay for right not finance I will pay for you want to build a nuclear facility build it. You want to build 10 nuclear facilities you
00:37:45
go build them. You want to go build a pipeline you go build it. You want to build uh fabs you go build it. Whatever
00:37:51
you think is necessary you build it. We'll pay for it. You net lease it to an operator and we'll split the lease payments. 90 for you, 10 for Japan. It's
00:38:04
a blockbuster if there ever was one. But it's an incredible deal structure. How do how do you get to that?
00:38:11
Well, I got to that. So this I came up with this idea in uh in January and then I kept restructuring it to try to figure out how to do it because I met with some
00:38:23
uh Japanese senior executives while uh before election before inauguration day and they said you know I understand your tariff policy but Japan's never going to open right they're just never going to
00:38:36
open I mean in in 1850 Perry took an armada and tried to break it open in 1850 50 couldn't open it open the Japanese market. So come up with another
00:38:46
idea and the other idea was they buy it down and so what structure we used how they did it they offered us they originally started offering us loans or loan guarantees and the president's like I don't need someone else to loans like
00:39:00
I don't need to borrow money from someone else and then finally we figured out that really it just needed to be
00:39:06
committed capital to back projects that we want and so it was five months in the making and and I'm me talking to the
00:39:13
president about about doing different structures and eventually in the middle of last week we came to the structure
00:39:20
the president said okay I like it let's bring him in and talk and then the president made the deal better
00:39:26
are you going to replicate this is this like a new blueprint or is it unique to Japan which is protectionist and its own
00:39:33
unique culture well I mean the problem that Korea has is they're staring at it you know they view themselves deeply competitive to
00:39:41
Japan they both produce huge amounts of cars they both produce huge amounts of electronics. They both do these things
00:39:47
and now they're looking at the price, right? And they're thinking, "Ouch." So, you
00:39:53
know, how quickly did they come to see me? Let's say when we announced the deal and uh they were in my office uh today.
00:39:59
So, the Koreans were Oh, yeah. Fantastic. How much how much have you prioritized market access for American businesses
00:40:05
into some of these countries versus some of the other kind of uh trade considerations? Where does it
00:40:11
prioritize? And we've talked about this a lot particularly as it relates to AI. And I think that part of this is in the
00:40:17
uh the action plan and in the EOS being signed later today, but this is a broader question for American
00:40:22
businesses. I work in agriculture. It's very hard to access overseas markets. Um
00:40:28
and there's not a lot of par. Is that become key to some of these conversations? And where does it sit on
00:40:33
the priority wrong? That that's the priority rule. So the rule is you must open your market. open, open,
00:40:41
open. And and let's be clear, these markets have never been open. We have Stockholm syndrome in America. These
00:40:48
markets have never been open. There's tariffs. There's non-tariff trade barriers like you can't sell an American
00:40:55
car in these locations. Whether you want to or not, you're not allowed or they won't buy them because the seat belt is
00:41:01
like this or the this is like they make these rules. So, we are demanding the markets are
00:41:07
open. And the issue with Japan was they were never gonna open it. So what are we going to do? And the
00:41:13
answer was all right. That's where he came up with this uh you know signing bonus, right? So reciprocity or something interesting
00:41:21
if you want something more bespoke. Vietnam completely open, Indonesia completely open, Philippines
00:41:29
mostly open, small deficit relatively higher tariff. Right? So it's all there's a sort of a lot of levers and you pull those levers. When are you going to wrap all this up? This has been like a really shocking and
00:41:43
now I think kind of you know more mundane methodical approach. So when does it all wrap up and we can kind of put the tariff issue behind us? Okay. So on August 1st whatever hasn't
00:41:56
been settled will be settled and the tariffs go into effect. Right. So all this 10%, they'll all just pop up to some higher number. He sent a letter to a lot of people, right? And now
00:42:09
nothing stops them from negotiating the next day, but they're paying on that day. So that's next Friday. I mean, that's not that far away. So we're very
00:42:20
busy because a lot of people are now coming to the table with their best best offer. But the price has gone very very
00:42:26
high. And let's be clear what that price is. You will open your market to America.
00:42:33
You will open it to ranchers, farmers, fishermen. You will open it, you know, you couldn't sell lobster to all these
00:42:39
places. Like for instance, Indonesia is completely open except for two products.
00:42:45
Muslim country, no pork, no alcohol, right? We're talking India obviously no beef, right? I mean, you do things like that. You say, "But we need it open." If they don't want it open,
00:42:57
there's your tariff. It's 26% 27% 31% 19% whatever it is and then if you decide to open it later come on but that's what we're doing. You'll find out over time what other
00:43:11
kind of regulatory processes they have put in place. This is always the issue when any any of us work in foreign
00:43:17
markets. You've worked in foreign markets and you go in and then you find out well there's this thing I got to do and this thing takes 18 months or 36
00:43:24
months and they make it hard to get the permit or the whatever you need. There's always a way. Does this become like a
00:43:29
continuous policing exercise for your department? And how does this become part of American trade? Like is this an
00:43:36
ongoing kind of kind of iteration iterative process here? They've bought their tariff rate down by
00:43:44
opening the market. So if they mess with that, they're messing with the president. And I don't know if you guys
00:43:51
have seen him on TV, but that doesn't really work well. Yeah. Okay. So the idea is he's making the
00:43:59
deal, he's closing the deal. So the way we we talk about it together is I set the table, right? And he closes the deal and and he is the best negotiator
00:44:10
because he's just he's done this his whole life and he's the president of the United States. So that's an amazing
00:44:15
power and he wields it to get the best deals. Well, let's talk about the big issue, China. Where are we going to wind up
00:44:22
with China reciprocity, Tik Tok, the whole shebang? Is this going to be one big grand bargain? Taiwan, Tik Tok,
00:44:29
there's so many issues. Is there any way to thread the needle on this? I I think the way I think about uh China
00:44:36
is draw a line. Okay, there's below the line like they sell us uh baby clothes and we sell them soybeans. That stuff we need to do more of it. They we want to
00:44:49
buy more of that. They want to buy more of ours. We need to open that. get this Dayton stuff, you know, where we're just
00:44:56
flowing below the line. Got it. Above the line would be, you know, our best chips, Blackwell chips, H, you know, 200s and 100s, right? We don't want to sell them our best stuff. They
00:45:09
don't want to sell us hypersonic missiles either, right? We would say if it was open, we'd say, "Well, let's take a couple of your hypersonics. Let's see
00:45:15
what you got. Right? So, that's not happening." So, that's above the line. And then the question is, what's the line?
00:45:23
That's the proper negotiation, right? Be open, below the line, let's get it on, good for both economies. Above the line, we're competitors. Let's just call it what it is and and stick with it. And
00:45:35
then what we can really negotiate when we're together is the line. Where's Tik Tok in all this? Jacob and I
00:45:41
are both pretty uh adamant this is spyw wear. This is something that should not be on a 100 million Americans phones. It is way too dangerous. They've proven themselves to use it to spy on
00:45:53
journalists already. And the fact that they won't divest from it, I think, tells you everything you need to know. They see this as a critical weapon
00:46:00
against the United States. Where what do you think? What does the administration think? Well, the the president is reasonably
00:46:07
positive about Tik Tok provided it goes into American hands and it's controlled by American technology. Right. I think
00:46:13
that's his view is that they've got to be out of it. It's got to be on an American technology stack and it's got
00:46:20
to be owned by Americans, period. And then how we work it on through there. Uh we'll figure it out. Right now it it's sort of in that uh straddling the line. Yeah. You're sort of staring at each
00:46:31
other, but eventually that'll get sorted out. I I think that deal will happen and uh America will buy Tik Tok because the
00:46:38
alternative is just shuts it off and that just seems illogical. Can I go back to the above the line,
00:46:43
below the line? Love that. Love that saying by the way. Um how do you think about the and you talked about the chips. How do you think about these export controls to various
00:46:55
countries in various regions? What's your risk calculus about where those things should be? And and if I could just actually add a question that builds on top of that. You've talked about creating AI economic zones where trusted
00:47:08
partners could get preferential access for American technology. So could you describe a little bit what your vision
00:47:13
is for that? I think what we're wrestling with and this is we're really discussing literally the intellectual
00:47:19
wrestle we're going through now is is the idea that we are comfortable with allies buying significant numbers of chips right and having a large cluster
00:47:31
provided that cluster is uh operated by an American a trusted American operator and the cloud is a trusted American operator so that we know that giant cluster is surrounded by us.
00:47:44
Right. Right. As you go down from there, right? That's where we go. Okay. If they want a
00:47:50
smaller cluster, would you expand the number of people who are trusted, right? And the answer
00:47:57
would be probably yes, right? And then when you go down from there to a smaller and smaller cluster, right? How do you
00:48:03
deal with that? So I think it's cluster size is sort of the a way of thinking rather than saying uh you know because I went to Poland and I was in I was in Poland on a on a mission for the for the
00:48:16
government and the prime minister of Poland chases me down and says what did I do to America to be tier three and I
00:48:25
was like I thought you were part of Europe you know like I didn't understand what it could possibly be the issue so I
00:48:32
think the answer is ally or not, right? Cluster size and who controls it or not.
00:48:39
I think once once you sort of wrestle with those ideas and anybody who has ideas along those lines and you want to
00:48:45
come and talk to us about it because this is this is really the thinking right now and we're sort of debating that right now.
00:48:51
Howard, I just want to say thank you for it's so great to have a sharp negotiator and and such a creative mind
00:48:57
representing America. It makes me feel like really great about the 90% carry there. There may be fun.
00:49:03
How do we get 90% carry? I love it. Yum. Yum. I love said that you're a New Yorker. Yeah,
00:49:09
I I am. But the negotiator chief, New York. Uh I grew up on Long Island. My kids have grown in Manhattan, but uh the negotiator chief is Donald Trump. That's nice that he's got you right.
00:49:20
He's amazing. Well, thanks for coming. We're going to make uh make some room for the president. He's going to get ready. Howard, thank you for joining us. That was great. Thank you.