Treasury Sec. Bessent: Dem Shutdown to Cut Trump's GDP Growth

The Democrats' government shutdown could reduce gross domestic product (GDP) growth that has emerged under President Donald Trump, Treasury Secretary Scott Bessent said Thursday.

During an interview on CNBC's "Squawk Box," Bessent said U.S. economic growth could be hurt by the government shutdown.

"We were left with a mess [by the Biden administration]. It was the largest deficit when we weren't in a recession, weren't at war, and [now] we are fixing the deficit," Bessent said. "There could be a discussion, but this isn't the way to have a discussion — shutting down the government and lowering the GDP."

"We could see a hit to the GDP, a hit to growth, and a hit to working America."

Late last month, the Commerce Department's Bureau of Economic Analysis (BEA) announced the U.S. economy grew faster than previously thought in the second quarter, pumped up by an ebb in imports and a pickup in consumer spending.

GDP increased at an upwardly revised 3.8% annualized rate in the second quarter, according to the BEA. The economy initially had been expected to grow at a 3.3% pace in the quarter.

Bessent was asked whether a GDP reduction would ultimately force Republicans to agree to extending Obamacare COVID-19-era subsidies, which Democrats are demanding.

"I can guarantee you there's not going to be an agreement to get the [continuing resolution]," Bessent said. "There may be an agreement to have talks. This is going to be a clean CR."

Bessent spoke on the second day of the federal shutdown, which began after enough senators refused to support a CR to temporarily fund the government that would buy time for Congress to agree on appropriations.

Trump said he's meeting with Office of Management and Budget Director Russ Vought to discuss eliminating what he called Democrats' "scam" agencies and weighing whether the cuts should be temporary or permanent.

Bessent was asked whether such a move was more of a bargaining chip to force Democrats to agree to the CR.

"Sen. [Chuck] Schumer[, D-N.Y.], Rep. [Hakeem] Jeffries[, D-N.Y.], you know, they're weak, they're discombobulated," Bessent said of the congressional Democrat leaders. "They don't represent the American people, and you know they're making up excuses."

Reuters contributed to this report.