00:00:00
Secretary Bessant, it's uh wonderful to see you. Before we maybe deep dive into AI, do
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you want to give us um the highlevel update on the 333 plan? How are things
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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
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budget deficit, which was running about 6.7% of GDP under the Biden administration,
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high highest that we'd ever had when we weren't at war or in a recession down to
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3% uh 3 plus% economic growth on a persistent basis and to create 3 million
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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
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first positive June for the Treasury since 2015. We
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actually had a surplus and we we did that in a good way. We took
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took in more revenues, some from tariffs, and we brought down spending.
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And when when I think about what we can do here that what I'm really excited
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about is the idea uh you know with AI that we can go back to the paradigm
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when I I was younger in the '9s. Allan Greenspan was able to run the economy
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very hot in the 90s and because of you know it
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was the IT boom and we had this very uh powerful non-inflationary growth and I
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think that there that it's highly likely we could have that now and so that kind
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of growth would bring down the deficit very quickly.
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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
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that it creates and you uh posted as well actually a couple days ago and you talked about that there's just been an
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inflection point that you've seen in capex spending sort of as a steward of the US economy. Can you tell us about
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what what's happening? So it it's com combination and it's a barbells. So, uh, I I've been in
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Pittsburgh twice in the past four weeks. Four weeks ago, I went with President
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Trump when he announced the US Steel Nippon Steel deal, substantial
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investment by Nippon Steel into an old very important industry. And then last
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week on Tuesday, there there was an A AI summit in in Pittsburgh, all the big
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players. And Pit Pixsburg is a natural location uh for AI. Uh lot lots of cheap
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energy. Carnegie Melon Pit uh are there. And so it was very interesting to see
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the juxiposition there. But we are seeing uh this incredible capex. The
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hyperscalers are have obviously been in an arms race kind of you know the big
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five the big seven. We estimate that that is approximately 1% of GDP a year.
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Wow. So $300 billion. Wow. That's being spent on AI. And in my
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perfect world, which never happens, uh, we would go through this big capex boom
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and then sometime in 26, the capex boom would hand off to a productivity boom. M
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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
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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
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about the ones I was around for. I was not around for the railroads, but eight
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18, but I I used to teach economic history. 1880s, 1890s, the the railroads
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made it 10 times faster to cross the United States. We had this incredible productivity boom. It was the gi
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gigantic GDP growth and it was disinflationary. So imagine you're
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having doubledigit GDP numbers and inflation was -2 -3 -4%
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just cuz the costs were coming down. Then in the 1980s
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uh under Reagan we had what I would call a deregulatory
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boom because hard for anyone everyone in this room to remember but everything
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used to be regulated. you know, price of airline tickets, the uh te telephone
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bills, uh banking services. So, uh 1980s we had a deregulatory boom, you know,
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Paul Vulkar brought down inflation, but it was also the deregulation.
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1990s which I previously mentioned we had had a
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electronic buildup and then finally it kicked in especially in office work um
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and that led to a big productivity boom and we paid down paid down the national
00:06:08
debt right you know I mean had a surplus we we had a we we had a surplus and I
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mean it it seems crazy I found a paper the other a that people were wondering,
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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
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this growth acceleration and I if I'm shooting for 3%, but I I
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can tell you the trajectory of the debt path really changes. And if we can also
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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
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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
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to address the interest rate yeah so I I think that
00:07:34
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
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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
00:08:01
under 90 days. And I I think that that's really going to lock in the US dollar in
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terms of uh you know individuals on the street in
00:08:15
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
00:08:33
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
00:08:51
tweet. Not that any of you are, but if if you put out a mean, no one up here is known for doing that
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ever. uh uh that if you have a government backed then
00:09:04
they they can shut you down as opposed to this kind of unbridled
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uh choice that consumers are going to have for US dollar stable coins.
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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
00:09:36
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
00:09:48
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
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costs to uh maintain market share. So so we haven't seen that thus far and a lot
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of the other foreign producers have cut cut price to maintain market share. A
00:10:14
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
00:10:27
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
00:10:39
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
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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
00:11:15
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
00:11:30
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.
00:11:49
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?
00:12:00
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
00:12:30
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
00:12:45
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
00:13:00
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
00:13:14
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
00:13:27
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
00:13:42
$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
00:14:23
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%
00:14:36
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
00:14:47
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
00:16:03
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
00:16:14
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
00:16:35
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
00:16:49
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
00:17:20
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
00:17:44
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.
00:19:18
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
00:20:31
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
00:20:43
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.
00:21:03
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
00:21:34
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
00:22:19
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
00:22:50
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
00:23:12
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
00:23:23
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
00:23:33
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
00:23:54
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
00:24:12
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
00:24:49
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
00:25:32
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
00:26:01
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
00:27:13
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
00:27:37
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
00:28:56
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
00:30:52
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
00:34:14
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
00:34:45
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
00:35:29
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
00:36:23
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.
00:36:43
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
00:37:02
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
00:37:39
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
00:37:57
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
00:38:17
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
00:38:28
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
00:38:41
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
00:38:52
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
00:41:35
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
00:41:49
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.
00:42:01
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
00:42:14
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
00:42:52
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
00:43:04
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
00:44:04
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
00:44:44
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
00:45:02
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,
00:45:28
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
00:45:47
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
00:46:26
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
00:46:49
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
00:47:00
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
00:47:25
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
00:47:37
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
00:48:09
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.
00:49:15
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.
