What Goldman CEO David Solomon is thinking

Politico

17 hours ago

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Quick Fix
Business leaders are feeling better about President Donald Trump's agenda than they were in the aftermath of the 'Liberation Day' tariff announcements.
But with major trade deals still outstanding — and key questions about future tax policy and the federal government's fiscal trajectory unresolved — CEOs are starting to plan for 2026 with an incomplete roadmap on how major economic policies will shake out, Goldman Sachs Chairman and CEO David Solomon tells POLITICO.
'At the moment, there's a sense that things are moving forward constructively,' Solomon said in an interview shortly after Trump touted a new agreement with China that represented a further de-escalation in trade tensions. 'People would like the level of certainty around the policy direction to continue to increase.'
As with all things in Trump 2.0, the direction of travel can change on a dime. Hours after the China framework was unveiled — and Treasury Secretary Scott Bessent told lawmakers that the administration would likely delay its July 8 deadline for trade negotiations— the president said he would unilaterally set tariff rates in the coming weeks. (The interview with Solomon took place before both events.)
Wall Street banks and the overall economy have fared well despite the uncertainty generated by abrupt changes to tariff rates and Congress's stop-and-start progress on the 'big, beautiful bill' that's at the center of Trump's domestic agenda. While many investment bankers have been dour about the current state of dealmaking, Solomon was bullish on Goldman's pipeline and said both the economy and deal activity have proven 'more resilient than I would have expected.'
Trump, along with top administration officials like Bessent, have pointed to the string of recent economic data as a sign that the administration's overall agenda is working — despite the bellyaching of most economists — and that growth should accelerate when the tax and spending bill is enacted.
Solomon shares the administration's perspective that current tax cuts should be extended. Nevertheless, with bond investors skittish about how the legislation could affect deficits, the banker said that the long-term outlook for future economic growth is hazy.
'We're in a place where we've increased our debt and deficit levels. And there doesn't seem to be a path — at the moment — to reducing them,' he said. 'That's something that I think we're going to have to wrestle with. And it's something that, over time, has the potential to crowd out investment and slow down growth.'
'Can we have a higher level of growth that can make it easier for us over time to absorb the spending levels and the deficit levels that we have?' he added. 'That's unclear at this point and time.'
You can read my full Q&A with Solomon in POLITICO Magazine.
IT'S FRIDAY — If anyone else reading this happens to run a major U.S. bank, I'd like to hear from you. Email me at [e-mail].
Driving the Day
University of Michigan's preliminary consumer sentiment reading for June is out at 10 a.m. …
Breaking overnight — Eric Bazail-Eimil: 'Israel said Thursday that it launched a 'preemptive strike' against Iran, raising the specter of a broader regional conflict between the long-time Middle East adversaries.'
Rates on the brain — Trump lashed out at Federal Reserve Chair Jerome Powell once again over interest rate policy on Thursday, labeling the central banker a 'numbskull' for not reducing borrowing costs. 'We're going to spend $600 billion a year, $600 billion because of one numbskull that sits here [and says] 'I don't see enough reason to cut the rates now,'' Trump said, per CNBC's Kevin Breuninger.
— 'Let's say there was inflation. In a year from now, raise your rates. I don't mind, raise your rates. I'm all for it. I'll be the one to be calling you,' Trump said, according to Bloomberg's Justin Sink. 'He'll be too late for that, too.'
On trade — Trump also raised expectations for when his administration will broker a comprehensive trade agreement with China, writes Doug Palmer.
Plouffe heads to Coinbase — David Plouffe, a top Democratic strategist and former adviser to President Barack Obama and Vice President Kamala Harris, is joining Coinbase's global advisory committee, Christine Mui and Chris Cadelago report.
On the Hill
Rescissions, rescissions — From Katherine Tully-McManus and Jennifer Scholtes: 'House Republicans have narrowly advanced a request from the White House to claw back $9.4 billion that lawmakers have already approved for public media and more than a dozen accounts across the State Department focused on foreign assistance.'
Cost of doing business — Low-income households stand to lose as much as $1,600 a year in federal resources due to cuts in the House version of Trump's 'big, beautiful bill, per Jennifer's write up of the latest analysis from the Congressional Budget Office. Annual resources to the highest-income households would climb by $12,000.
— The CBO and projections from the Penn Wharton Budget Model and Yale Budget Lab have consistently estimated that the legislation will add to the deficit over the next decade. Treasury Secretary Scott Bessent told Senate Finance lawmakers on Thursday that he expects the opposite to occur, per Bloomberg's Cam Kettles.
— From Yahoo Finance's Ben Werschkul and David Foster: 'The claims from 1600 Pennsylvania Avenue go as high as $8 trillion in black ink (an $11 trillion chasm with the experts) in claims that go beyond what even Capitol Hill Republicans are projecting … As for reconciling the two, some economists essentially throw up their hands.'
Mad-libbing SALT — Senate Republicans may leave out the House's higher state-and-local tax deduction from its version of the bill in order to allow negotiations to continue. Senate Finance Chair Mike 'Crapo and I had a long conversation about it,' said Sen. Markwayne Mullin (R-Okla.) per Benjamin Guggenheim and Jordain Carney. 'Maybe it'd be better to just carry communication rather than stake our flag right down.'
Not so fast — Senate Banking Chair Tim Scott (R-S.C.) threw cold water on Texas Republican Sen. Ted Cruz's effort to include language in the megabill that would bar the Fed from paying interest to banks, Jasper Goodman and Victoria Guida report.
Next step in stablecoins — Jasper also reports that the Senate's landmark stablecoin legislation moved one step closer to passage on Thursday, clearing a procedural vote 67-30.
At the regulators
New IRS chief — The Senate voted along party lines to confirm Billy Long to be the next head of the Internal Revenue Service. The former six-term Missouri congressman will enter the tax agency 'during a period of upheaval' due to workforce reductions and an overhaul of its technology systems, reports Bernie Becker.
Regulatory uncertainty — The pace and volume of regulatory shifts that have occurred so far this year are creating 'unanticipated business risks,' according to KPMG's mid-year report. 'Growing regulatory divergence and fragmentation add another layer of complexity to establishing a clear path from strategy and operations to effective risk and compliance,' Amy Matsuo, the consulting firm's U.S. regulatory insights leader, said in a statement. 'Will a deregulatory policy really equate to deregulation?'