Moneybeat: Toward energy independence

MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and adviser David Bahnsen. David heads up the wealth management firm The Bahnsen Group. He is here now. Good morning to you, David.

DAVID BAHNSEN: Good morning, Nick, good to be with you.

EICHER: Let’s begin with energy policy. We still have to wait to see about key economic policy posts … Treasury Secretary, Commerce, Labor, national economic council, those sorts of jobs … but we do have an Energy Secretary from industry … and North Dakota Governor Doug Burgum at Interior … and the president-elect placing Burgum at the head of a new energy council … making good on what Trump sees as a real key driver of the economy and that’s as he likes to say “the liquid gold.” What do you take from what we know at this point.

BAHNSEN: Well, I think the Energy Council is very interesting because on one hand, I'm not generally a big fan of the executive branch creating new councils that don't really have congressional approval or budget or whatnot. But the fact that he's named a wonderful secretary of energy, and then the governor of North Dakota, Doug Burgum, running as secretary of interior. You know, they're serious people, and I think that they're very qualified to address some of the energy and energy infrastructure needs of the country.

Appointing a council that he's asked Gov. Burgum to run indicates to me he's looking for more integration across departments, that they want to actually put some teeth into what we're going to need for export terminals for liquefied natural gas.

You know, there's certain things have to be done by Congress. The Senate approves permitting on federal land for pipelines and for drilling. With this Republican majority Senate, they will approve those things. But as I mentioned before, we're not right now really struggling with a lack of production. You know, that's going fine.

But you need the Energy Council to maybe navigate how you set this up generationally, how you kind of foolproof it so that future administrations can't get in the way of energy independence.

This is something, this is a really important thing for, I think, for listeners to understand, something I become very convinced of from my talks with people in the administration: President Trump has to talk about a lot of things because a lot of issues matter to American people. But you know, he has, like any of us, the things that matter most to him. And most presidents have two or three things that are their big things, and then they have a whole lot of other things they have to deal with. Energy is in his top three.

And so I think him appointing Energy Council to really pursue cohesive and intelligent technique around the integration of energy policy is very encouraging to me.

EICHER: So I also noticed … and this seems deeply connected to energy … that the president-elect wants to clear away the priorities of the environmental left that may well jeopardize his goal of American energy independence.

BAHNSEN: Well, the fact that he named former New York Congressman Lee Zeldin, who ran for governor a couple years ago, as his new director of the EPA, the Environmental Protection Agency, this one of my favorite things that an executive, a chief executive, in the case of the president, can do. He did it with Betsy DeVos at education. He did it with David Malpass at the World Bank. Putting people in charge of agencies and organizations that they don't believe should exist is a wonderful way to diminish the administrative state and decentralized power out of Washington.

So Lee Zeldin at EPA is no environmental extremist. He's an anti environmental extremist and a very competent, intelligent individual. And so I think when you talk about some of the environmental policies, the EPA has the authority and the budget to wreak havoc on people, and you want good stewardship, and you want solid environmental protections, but you don't want them in a way that interferes with economic growth without a respect for tradeoffs. And that's where I think he's headed.

I don't really know how much in the weeds President Trump gets around those things. He's more of a high level guy here, as I think a lot of people know, but he's he at least in this category, he's bringing in some competent people, and I think that Zeldin was a great pick for EPA.

EICHER:Do you feel the news media reporting of a chaotic first round of filling in the cabinet posts is accurate? It seems more to me he’s moving with some real dispatch … much faster than 2016 … but do you think the chaos narrative has some credibility?

BAHNSEN: I do, and I don't think he views that as a negative. I think it's something that he leans into as part of his own style.

As far as the speed of which they're moving, keep in mind, no matter what anyone tells you, he did not believe he was going to win in 2016. They weren't prepared to win. And then he had named Gov. Chris Christie, formerly governor of New Jersey, as his transition chair, and Jared Kushner and Steve Bannon fired him two weeks into transition. So they had thousands of positions to fill and a clean slate, and they were really behind the eight ball. Plus, he was a first term president at that point, where now he is pulling a Grover Cleveland, there's a second term with four years in between, right? So they are ahead of the game with the vetting of certain people.

But then when you talk about chaos, there's just no question that a couple of the appointments this week he named, without talking to anyone else, that he was going to name him, and no one was expecting it. So those things are kind of chaotic. It's not generally what you expect.

You know right now, I realize it's Monday morning, but he named his communications director late day Friday: Steven Cheung, who had been in the communications through the campaign. That means he went the first almost two weeks without a communications director. So all these appointments were only getting out because somebody would tweet it and then Elon Musk would retweet it. You know what I mean? There wasn't a communication strategy up and running around some of this either. So I think chaos sometimes can sound overly negative. It's not my style, but it is chaotic, certainly, but it's also chaotic on purpose.

EICHER: So speaking of Elon Musk … the Department of Government Efficiency has been made official … as much as something like that can be made official!

BAHNSEN: The departments in the United States of America are made official by Congress. They're disbanded by Congress. They're given budgets by Congress, apportionment, appropriation of funds. So it was named small-o official, you know, small-d department by President Trump. It's sort of an advisory committee with no budget and no binding authority, but nevertheless, some very gifted people that are at the helm to try to go do some things.

EICHER: Yeah, so how seriously do you take the stated ambition of the DOGE cutting $2 trillion from the cost of government … that’s a third!

BAHNSEN: It's 100,000% ridiculous that they could cut $2 trillion. And they don't need to, okay? If they were to come up with a few $100 billion, then we should be praising them. That's why I'm very frustrated, because I think they can do some really good things, and I'm optimistic they will.

But I really believe you have to be in the business here with the public and with government of under-promising and over-delivering, not the opposite. You're not cutting 33%. Seventy percent of the United States budget is mandatory—entitlement payments. You cannot cut a third. And fraud, waste, corruption. If we knew what the number was, then we wouldn't have that high of a number. It may be 500 billion. I don't think it's going to be that high. But I think if it's $200 to $300 billion, that should be a big success story.

That should be a big victory if they can address some of that. So I definitely think they're going to find inefficiency, and I think they're going to find stories that will be embarrassing to people in government. And then Vivek Ramaswamy is a very gifted, articulate communicator. I think that he'll be able to really message out there, and then from there, Congress has to act, or agencies have to act.

But the $2 trillion number should get out of people's heads. There's just nowhere near $2 trillion to cut. And one of the things they said in their memo this week is we want to reduce the interest on the debt. Well, how do you reduce the interest on the debt? You reduce the debt. So it's kind of a circular reasoning here. You have to go find the things that you're going to cut, and they don't have any authority to cut spending. Congress has to cut the spending. So I'm excited that guys of their acumen are there, but I personally wish they'd gone the other way, instead of starting with a big number, start with a small number and then and then over-achieved it.

EICHER: David Bahnsen, founder, managing partner, and chief investment officer of The Bahnsen Group. If you’re not subscribing to David’s regular market writing, you can find out more at dividendcafe.com. It’s free, and you can receive it in your inbox.

Well, David, thanks! Have a great week!

BAHNSEN: Thanks so much, Nick. Good to be with you.

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