The Wall Street Journal
Opinion: Potomac Watch
WEDNESDAY, APRIL 15, 2026
4/15/2026 1:08:00 PMShare This Episode
Paul Gigot in Conversation with U.S. Treasury Secretary Scott Bessent
Speaking at WSJ Opinion Live in Washington, D.C., WSJ Editorial Page Editor Paul Gigot and U.S. Treasury Secretary Scott Bessent discuss economic uncertainties amid the war with Iran, the AI competition between the U.S. and China and President Trump's postponed summit with Xi Jinping in May.
• in conversation with /ˌɪn ˌkɑːnvərˈseɪʃən wɪð/ ～との対談
• Treasury Secretary /ˈtrɛʒəri ˈsɛkrəˌtɛri/ 米財務長官
• discuss /dɪˈskʌs/ 議論する
• economic uncertainty /ˌiːkəˈnɑːmɪk ˌʌnsərˈtənːti/ 経済の不確実性
• amid /əˈmɪd/ ～の最中に
• competition /ˌkɑːmpəˈtɪʃən/ 競争
• summit /ˈsʌmɪt/ 首脳会談
• postpone /poʊstˈpoʊn/ 延期する
Speaker 1: From the opinion pages of The Wall Street Journal, this is Potomac Watch.
Paul Gigot: Welcome to a special edition of Potomac Watch. This week we're in Washington DC at a WSJ Opinion Live conference. And so today we're bringing you a taste of that in-person journalism. To see more from WSJ Opinion Live, please visit wsj.com where the events are being streamed. And here's my conversation with Treasury Secretary Scott Bessent. Welcome, Mr. Secretary. Thanks for doing this. And first, I just want to clear the air on one point. There was an editorial we wrote a while back you took some umbrage at. Not the first time that's happened in my career, but
Scott Bessent: Won't be the last.
Paul Gigot: Yeah. You called us, I think you said, "The editorial board is run by grumpy old men." And just for the record, I can accept old. Okay? I concede in my case that's true, but grumpy, I'm the epitome of cheerfulness.
Scott Bessent: I don't know. I think if you were in a movie, Walter Matthau would play you.
Paul Gigot: Ouch.
Scott Bessent: And I can say that maybe the women are grumpier.
• in-person journalism /ɪn ˈpɜːrsən ˈʤɜːrnəˌlɪzəm/ 現地取材
• clear the air /klɪr ði ɛr/ 誤解を解く
• take umbrage at /teɪk ˈʌmbrɪʤ æt/ 不快に思う
• for the record /fɔːr ðə ˈrɛkərd/ 記録のために言うが
• concede /kənˈsiːd/ 認める
• epitome /ɪˈpɪtəmi/ 典型・権化
• grumpy /ˈɡrʌmpi/ 不機嫌な
Paul Gigot: No, I think Kevin Costner is my guy. Look, so today you launched Operation Economic Fury, which is part of the economic pressure on Iran that the quarantine on its exports involves. Tell us what specifically you're going to do with this.
Scott Bessent: Well, so since last March, the President gave the order for a maximum pressure campaign. And we've started pressuring the Iranian assets around the world, cutting off their supply lines. Which in December culminated in one of their major banks going under the Central Bank had to print money, large inflation into the riots that we saw out on the street. And to increase our negotiating leverage and finally put an end to the cash that is flowing into the IRGC coffers and into the country. We are partnering with our Gulf allies who, having been fired upon for almost 40 days, are much more willing to share the bank accounts of members of the Iranian regime in their countries. We are reaching out to banks, including Chinese banks to remind them of any Iranian goods and the purchases thereof are forbidden and that the dollars would be sanctioned, and that we will press for secondary sanctions if there's a problem.
• culminate /ˈkʌlmɪneɪt/ 最終的に至る
• coffers /ˈkɔːfərz/ 資金（特に組織の）
• secondary sanctions /ˈsɛkəndɛri ˈsæŋkʃənz/ 二次制裁
Paul Gigot: So the Gulf countries, UAE and others are done trying to use Iranian assets and accept them?
Scott Bessent: I believe that there's been a real step function change in their willingness to tolerate their neighbor, which one understood. But now having been Qatar's had 14% of their GDP destroyed with just a few missiles, UAE, I think has taken over 1,200 hits and Saudi the same.
Paul Gigot: Interesting. So I want to ask you something I don't think I've heard you comment on, which is a lot of talk in the markets about how Iran has been insisting that when it flows through the Gulf, that the oil be paid for in renminbi, Chinese currency, or crypto, but not petrodollars. And that this is the Chinese and Iranian attempt to replace the dollar. What do you think of that effort and how ... Is that at all realistic?
• step function change /stɛp ˈfʌŋkʃən ʧeɪnʤ/ 段階的な大変化（質的変化）
• willingness /ˈwɪlɪŋnəs/ 意欲
• tolerate /ˈtɑːləˌreɪt/ 耐える・容認する
• renminbi /ˌrɛn mɪn ˈbiː/ 人民元
• petrodollar /ˈpɛtroʊ ˈdɑːlər/ 石油ドル体制
Scott Bessent: I think it probably imagines a coordination that doesn't exist. And I think that maybe the Chinese were paying the Iranians in RMB or CNY. And look, there's no doubt that the Chinese are trying to create a ... I don't know if they want to be the reserve currency, but they're trying to push the US out of it. Difficult to be a reserve currency when you're not fully convertible and their capital controls. And again, with the RMB, I traded currencies pretty well for 35 years and-
Paul Gigot: Made a little money on it too.
Scott Bessent: A little here and there. With the RMB, it's very difficult to tell what's the stable value, what's the equilibrium value, because it really exists in three equilibrium. On an academic model, it would be considered cheap. They've done a big internal devaluation. Real estate's down. Labor is down. On the other two equilibria, you have 1.4 billion people who want to get their money out of the country, and the government's stopping that. And then the third equilibrium would be what percent chance do you put that one day they won't give you your money? And when you try to calibrate all three of those, it's very difficult to know the price.
• RMB /ˌɑːr ɛm ˈbiː/ 人民元
• equilibrium /ˌiːkwɪˈlɪbriəm/ 均衡・バランス
• stable value /ˈsteɪbəl ˈvæljuː/ 安定価値
• academic model /ˌækəˈdɛmɪk ˈmɑːdl/ 学術モデル
• internal devaluation /ɪnˈtɜːrnəl ˌdiːvæljuˈeɪʃən/ 内部デフレ（賃金・価格調整）
• calibrate /ˈkæləˌbreɪt/ 調整・計算する
• probability /ˌprɑːbəˈbɪləti/ 可能性
Paul Gigot: All right. You said yesterday in an interview that you thought the economy would have grown 4% this year if we didn't have the war. What's your projection now? And what's your safety valve if somehow growth stumbles as this war carries on?
Scott Bessent: Look, I think the underlying economy remains strong. I think the classical economic theory would tell you that there will be catch up. I just can't plug in a day, a date certain when the war will end, how long it will take things to normalize. But what we can see is that core inflation continues to come down and headline is just influenced by energy prices and those will come down. But I do think that the growth could easily exceed three, three and a half this year still.
• plug in a date /plʌɡ ɪn ə deɪt/ 日程を当てはめる
Paul Gigot: Still? Okay. Wow. All right. Congress is considering Reconciliation 2.0, maybe 3.0, but let's assume that the economy is not as robust as you expect and it's bumping along. Do you want to see any pro growth provisions in that reconciliation bill, economic measures?
• bump along /bʌmp əˈlɔːŋ/ 低調に推移する
• pro-growth /proʊ ɡroʊθ/ 成長促進
• provision /prəˈvɪʒən/ 条項・政策項目
• reconciliation bill /ˌrɛkənˌsɪliˈeɪʃən bɪl/ 財政調整法案
Scott Bessent: I think there's nothing specifically that I have in mind that I want to see. I think that there are a lot of things that will be working on a lag, that if we think about the president's economic agenda, I always say it's a three-legged stool: trade, tax, and deregulation. So trade, we had a setback at the Supreme Court in terms of the tariff policy, but we will be implementing or conducting Section 301 studies so that the tariffs could be back in place at the previous level by beginning of July. But what we found, and it's counterintuitive, that a lot of corporates had held up some of their CapEx because of the AIPO lawsuit that eventually made its way to the Supreme Court. So now using Section 301, which has survived more than 5,000 legal challenges, they will be certain of what the tariff policy is. So I'm expecting we are already seeing a pickup in CapEx. I get a lot of questions on the Sunday morning shows from people who aren't as friendly as you, Paul. And they say, "Wow, where's this factory boom?" And I said, "Well, in my old days on Wall Street, you could push a button and $1 billion could move. With corporate CapEx, there's a planning cycle, a decision cycle, and now we are starting to see construction jobs are picking up, CapEx intentions are picking up." So I think we will really see that the CapEx and the construction kick in. And again, I said last night that I think the Fed has been wrong on inflation and the core inflation is coming down, but I understand if they want to wait until the data's clearer, but that will mean that interest rates should come down a lot more.
• lag /læɡ/ 遅れ・タイムラグ
• three-legged stool /θriː ˈlɛɡɪd stuːl/ 3本柱（比喩）
• deregulation /ˌdiːˌrɛɡjəˈleɪʃən/ 規制緩和
• setback /ˈsɛtbæk/ 後退・挫折
• conduct studies /kənˈdʌkt ˈstʌdiz/ 調査を行う
• counterintuitive /ˌkaʊntərɪnˈtuːɪtɪv/ 直感に反する
• CapEx (capital expenditure) /ˈkæpɛks/ 設備投資
• pickup /ˈpɪkʌp/ 回復・増加
Paul Gigot: There's still no manufacturing job increase, though. You haven't seen that?
Scott Bessent: It was last month.
Paul Gigot: A little bit, a couple of, but not if you look at the six-month trend or the three-month trend even.
Scott Bessent: Yeah. Paul, three or six months, it's not like you pushing a button on your word processor. I was just down in my hometown of Charleston, South Carolina, and Boeing, because of international orders, is going to expand their Dreamliner facility by 50%. It's 1,000 manufacturing jobs, but before that, it's 400 construction jobs.
Paul Gigot: All right. One thing a lot of folks, some folks in Congress float is the idea that in a reconciliation bill, they might want to index capital gains for inflation. After all, we've had a big inflation here, going back to the early Biden years. What do you think about that idea? Is that something you want?
Scott Bessent: Not now.
Paul Gigot: Not now?
Scott Bessent: Not now.
Paul Gigot: No. Any reason?
Scott Bessent: Well, why would we do it now? And-
Paul Gigot: Big boost for the stock market.
Scott Bessent: Stock market's doing fine. I know you're not called the Main Street Journal, but we're focused on Main Street for right now. And I think that group has done well. 38% of American households don't own stocks or have any participation in the equity market.
Paul Gigot: But that means 62% of the public does.
Scott Bessent: They do, and they've done really well. I'm just going to point out that the S&P is now higher today, it was effective yesterday morning, that is higher than when the bombing started on February 28th.
Paul Gigot: It's notable. We're going to take a break and we'll be back in a minute.
Welcome back. I'm Paul Gigot with Potomac Watch. So you mentioned the Fed. I want to ask you in particular, you've got a big transition coming up, but Kevin Warsch's hearing at the banking committee and the Senate next Tuesday now, I think it's been announced. But the timing on his confirmation is uncertain. Now, assuming for the sake of argument that Tom Tillis still holds out and says, "I'm not going to confirm him until the legal case is done with involving the Fed." And mid-May comes around, Kevin Warsch hasn't been confirmed, the current chair's term formally expires. Who do you think should run the Fed at that juncture?
Scott Bessent: I'm going to stay out of that.
Paul Gigot: Jay Powell says he should be running it.
Scott Bessent: Well, again, that's unclear I think in terms of being the chair pro Tim, he could be. Vice Chair Philip Jefferson could be. Chris Waller could be. A lot of people could be.
• for the sake of argument /fɔːr ðə seɪk əv ˈɑːrɡjəmənt/ 仮にそうだとして
• hold out /hoʊld aʊt/ 抵抗する・拒否し続ける
• at that juncture /æt ðæt ˈʤʌŋkʧər/ その時点で
• stay out of ~ /steɪ aʊt əv/ 関与しない
• pro tem /proʊ tɛm/ 暫定の
Paul Gigot: I think the President of the United States probably has a preference. Probably not Jay Powell.
Scott Bessent: I think the President of the United States does have a preference, but we'll see what happens. I'm confident that Kevin will be in situ by then.
Paul Gigot: Well, can you tell us about conversations about that legal case then? I mean, why should that happen? Because right now, Tillis is holding a very firm line and he says, "I'm not going to vote for confirmation unless this case goes away."
Scott Bessent: I think Senator Tillis believes that Kevin Warsch is an excellent candidate.
• in situ /ɪn ˈsɪtuː/ その場所に・その地位に
• holding a firm line /ˈhoʊldɪŋ ə fɜːrm laɪn/ 強硬姿勢を維持する
Paul Gigot: He has said that, but still no vote. Well, I want to ask you about something that Kevin Warsch has talked about a lot, and that is this idea of reducing the Fed's balance sheet of assets, and a new accord between the treasury and the Fed, where the Fed would basically get out of the business of fiscal policy, hand those assets to you in some fashion where you control them, you make the decisions about whether to hold MBSs mortgage-backed securities and whatnot, and they would just do monetary policy. Is that the kind of deal you could see yourself supporting?
Scott Bessent: I've talked a lot about the Fed's balance sheet. I've probably written 20,000 words on the Fed in the past 10 years. And look, the regime there in now of plentiful reserves, it is very difficult to get to a much smaller balance sheet from here. It's also the size of the balance sheet pre GFC. We all forget that there were very different banking regulations in. So I think we will have to see a change in the banking regulations to shrink the balance sheet. There will have to be the decision to go back to the ample reserves regime where the banks get their reserves from one another. So I think it will be a long process. I'm not against it. And I do think that we can think about more of a look through balance sheet in terms of duration and what does it look like? What are we doing with the QRA, our quarterly refunding announcement, and our quarterly, our cadence with that? What is the Fed doing? I have said that I think QE, that one of the things I admire about the Bank of England is their QE policy. They step in during a market dislocation, they stabilize the market, and then they move away. They've done that several times. And by the way, I don't have insight into their balance sheet, but I think they've probably made a lot of money on their bond trading, but the Fed was losing $100 billion a year because they purchased so much at such terrible prices.
• ample reserves /ˈæmpəl rɪˈzɜːrvz/ 十分な準備預金制度
• pre-GFC /priː ˌʤiː ɛf ˈsiː/ 金融危機前
• reserves /rɪˈzɜːrvz/ 準備預金
• duration /dʊˈreɪʃən/ デュレーション（債券期間リスク）
• QRA (Quarterly Refunding Announcement) /ˈkwɔːrtərli ˈriːfʌndɪŋ əˈnaʊnsmənt/ 国債発行計画
• cadence /ˈkeɪdəns/ 定期的なリズム・間隔
• QE (Quantitative Easing) /ˈkwɑːntɪˌteɪtɪv ˈiːzɪŋ/ 量的緩和
• market dislocation /ˈmɑːrkɪt ˌdɪsləˈkeɪʃən/ 市場の混乱
Paul Gigot: Those regulatory changes, are those something that the treasury can do through your own rulemaking or fed rulemaking, or do you have to go to Congress?
Scott Bessent: It could be done through the agencies.
Paul Gigot: Through the agencies? Okay. Well, that's interesting. All right. You've got a big trip to China coming up. What do you and the president want to see out of this summit when it comes to economics and trade from China? What's your ask?
Scott Bessent: Look, I don't think there's a big ask. I think we have great stability in the relationship now. Two leaders met in Busan, Korea, in October. That agreement is working well. I give it a B-plus, A-minus on the Chinese side. So if I go back to my professor days, good job, room for improvement. So I think we'll be perfecting that. I think that there are things that we can trade with each other, so we're going to be looking at that. Can we do some kind of a 30-by-30 or 40-by-40-billion agreement in terms of tariff-free goods?
Paul Gigot: Mutual purchases?
Scott Bessent: Mutual purchases. The president always asked for more ag purchases. And I would think that the Chinese would be much more interested in American oil and LNG after their experience with the choke point in the Gulf.
Paul Gigot: That word stability seems to be important when you're talking about what the president wants out of this Chinese relationship now. And I have to say, it's notably different than the first term where the president was often criticizing China, imposing new tariffs. Is there a change in the thinking about the US-China relationship that you just want to keep things on a more even keel, and China is not something that fundamentally we have to decouple from the economy, or change fundamentally the relationship with China?
• ag purchases /æɡ ˈpɜːrʧəsɪz/ 農産物輸入
• LNG /ˌɛl ɛn ˈʤiː/ 液化天然ガス
• choke point /ʧoʊk pɔɪnt/ 要衝・ボトルネック
• even keel /ˈiːvən kiːl/ 安定した状態
• decouple /diːˈkʌpəl/ 切り離す（経済分離）
Scott Bessent: Well, I think a lot to unpack there. I think the word decouple is wrong. I think de-risk is a better word. So we want to de risk in certain critical areas. A lot of that came to light during COVID. The Chinese were not reliable suppliers, they closed down their economy. But all the things you complained about us subsidizing, the semiconductors, shipbuilding, rare earths, those are strategic and we have to re-shore those. Medicines, the precursors for 80 or 90% of US medicines come from India and China, so we need to re-shore that. So we want to de-risk. We do believe that the Chinese imbalances are getting excessive, very tough for the world to have a China with $1 trillion trade surplus. We put up our tariff wall. The goods have gone to the rest of the world. So our trade deficit with China is down substantially.
• unpack /ʌnˈpæk/ 分解して説明する
• decouple /diːˈkʌpəl/ 経済的に切り離す
• de-risk /diːˈrɪsk/ リスク低減する
• come to light /kʌm tuː laɪt/ 明らかになる
Paul Gigot: But as you say, with the rest of the world, it hasn't gone down. It's gone up. I mean, when you talk to your counterparts on China, and you make this point about their big surpluses in manufacturing, what do they tell you? "We have a lot of people to employ. We have to do this?"
Scott Bessent: Look, I just think that it's very difficult. I went to Japan the first time in 1990, '91, I think I got there within a month of the peak of the stock market in the bubble economy. And I remember in 2002 thinking, "Well, it's been a decade. They've probably had enough of this." And then it wasn't until 2012 with Abe that they changed. So it took 20 years. So I've learned that the Asian mentality is a bit slower moving than ours. Chinese are probably even slower moving than the Japanese. I think in the harder parts, they know they have to do it, but they have a lot of constituencies. The state-owned enterprises, they're running a very large aggregate budget deficit, probably 10% of GDP.
Paul Gigot: We are going to take a break. We'll be back shortly. Don't forget, you can reach the latest episode of Potomac Watch anytime. Just ask your smart speaker, "Play The Opinion Potomac Watch podcast." That is, "Play The Opinion Potomac Watch podcast."
Speaker 1: From the opinion pages of the Wall Street Journal, this is Potomac Watch.
Paul Gigot: Welcome back. I'm Paul Gigot with Potomac Watch. All right. Let's talk a little bit about the current competition on artificial intelligence between the US and China. I'd really like to hear your view because we had another report out today by HAI, which does an annual report about AI. And they say that the United States lead is essentially over, that we're now at parity. Where do you think we are in terms of the competition with China?
• parity /ˈpærəti/ 同等・均衡
Scott Bessent: I strongly disagree with that. I think that it's moving quickly, but we are three to six months ahead. And a couple of factors there is the way the compounding of these models learning works. This Anthropic Mythos model was a step function change in abilities, learning capabilities. And if you think you go from, it's all algorithmic, you go from X to the 10th power to X to the 12th, and then it's very difficult to catch up. And also you can see the US compute share. So it's not only what do you have in the software, what's your ability to run it? What's your ability to generate tokens?
• compounding /kəmˈpaʊndɪŋ/ 複利的増加・累積成長
• step function change /stɛp ˈfʌŋkʃən ʧeɪndʒ/ 飛躍的変化（段階ジャンプ）
• exponent /ɪkˈspoʊnənt/ 指数（数学的）
• compute /kəmˈpjuːt/ 計算資源（AI用語）
• generate tokens /ˈʤɛnəˌreɪt ˈtoʊkənz/ トークン生成
Paul Gigot: Those are semiconductors, the advanced chips as well?
Scott Bessent: A lot of that. And that I've seen studies that say that in a few years, the US is going to have 70 or 80% of the global computing power. So we were in the 30s, now I think we're in the 50s and we're well on our way.
Paul Gigot: But that puts all the more focus on production fabs for semi-advanced chips in Taiwan. How much progress have we made in diversifying our production lines, bringing more back to the United States? It seems like we're still very dependent on TSMC?
Scott Bessent: Well, we're very dependent. 90% of the high value chips are still made on the island of Taiwan. The Biden CHIPS Act, no money went out the door, nothing was created.
Paul Gigot: A lot went out the door for New York State with Chuck Schumer, I think.
Scott Bessent: I think you'd be surprised to see where some of his family members work, but in former staffers That's
Paul Gigot: Interesting. We should pursue that.
Scott Bessent: Yep. But we are moving as quickly as we can, and I think that that will also be a step function change, big facilities being built in Arizona, but it's a big ecosystem. So the Taiwanese have the history, but they really have the ecosystem. They have this just surface of technicians with master's degrees in chip technology just because they've been there so long. So we have to not only build the fab, you have to surround it with all the suppliers and be able to train the workforce.
Paul Gigot: The other problem is workforce. Yeah, you talk to the CEOs of these companies and they tell you, "We just have a terrible time finding skilled workers for these positions." And that's why some of the investment has slowed. Do we really have to improve our legal immigration system to allow more talent to come in instead of putting more barriers up?
Scott Bessent: There are a lot of unfortunate aspects to the Biden, the open borders. But I think one of them is the backlash against all immigration, legal and otherwise. And look, there are a lot of aspects of the H1B system that are not robust. Some would call it a scam and those are not high-value jobs. But should we create a level or should we do something where the workers come for X number of years, train our workers, and then maybe go home? Sure.
• backlash /ˈbækˌlæʃ/ 反発・反動
Paul Gigot: But when you control the border, nobody's really coming in anymore. ICE is doing whatever it's doing. I think something like a million illegal migrants may be out of the country?
Scott Bessent: Two.
Paul Gigot: Two million? Okay. That's a big number. But we need talent. And is there any appetite in the White House? I mean, the President sometimes talks about it that he would like to see it. Is there any appetite to make this a priority? Or at least part of the legislative agenda, if not this year, maybe after the next Congress?
Scott Bessent: Well, we'll see. All I keep hearing about is the AI apocalypse for jobs. So I don't know if we should wait.
Paul Gigot: Not from us.
Scott Bessent: Well, not from you, but from others.
Paul Gigot: But do you believe that? You don't believe in AI apocalypse, do you?
• AI apocalypse /eɪ aɪ əˈpɑːkəˌlɪps/ AIによる破滅的未来
Scott Bessent: I don't believe that AI is going to take people's jobs. I think people who know how to use AI is going to take people's jobs.
Paul Gigot: Well, is it going to be a net negative for the labor force?
• net negative /nɛt ˈnɛɡətɪv/ 純損失
Scott Bessent: No. Look, in the history, I am mercifully not an economist. I'm an economic historian. So in the history of economies, innovation always leads to more jobs. I think we'd agree on that.
• mercifully /ˈmɜːrsɪfəli/ 幸いにも・ありがたいことに
• economist /ɪˈkɑːnəmɪst/ 経済学者
• economic historian /ˌiːkəˈnɑːmɪk hɪˈstɔːriən/ 経済史家
Paul Gigot: I would agree with that. And on that optimistic note, I want to thank you, Mr. Secretary, for being here. It's been enlightening and I sure appreciate it. Thank you. He's been generous with his time. Let's give him a big ...