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President-elect Donald Trump launched a flurry of picks for his cabinet, but he took his time before picking billionaire investor Scott Bessent as his nominee for Treasury secretary.
The Republican not only wanted someone who would get along with him, but also an official who could implement his economic vision while looking straight out of the middle of the pack.
With his Yale University education and pedigree trading for Soros Fund Management before starting his own funds, Bessent will be charged with a delicate balancing act.
Trump expects him to help reset the global trade order, deliver trillions of dollars in tax cuts, ensure inflation remains under control, manage the rising national debt and still maintain confidence in financial markets.
“Scott will support my policies that will boost US competitiveness and end unfair trade imbalances, work to create an economy that puts growth first, especially through our emerging global energy dominance,” Trump said in a statement.
But despite his confidence, Trump was cautious in selecting the 62-year-old, a sign that he understood the stakes after winning a presidential election largely shaped by inflation, which will hit a four-decade high in 2022.
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He felt comfortable making snap decisions on Fox News anchor Pete Hegseth for defense secretary, Florida Sen. Marco Rubio for secretary of state and Robert F. Kennedy Jr. for the Minister of Health and Human Services.
His selection of Bessent was at odds with billionaire Elon Musk, who co-chairs Trump’s advisory committee known as the “Department of Government Efficiency” initiative. The Tesla and SpaceX chief announced on his social network X before Trump’s selection that Bessent would be the “usual choice.”
The selection also showed the internal tensions of a candidate who won by appealing to blue-collar voters but who depends on an administration staffed by those who, like Trump, enjoy a life of extreme wealth.
Senate Finance Committee Chairman Ron Wyden, D-Ore., was not impressed with Bessent.
“Donald Trump pretends to be an economic populist, but it wouldn’t be Trump’s Treasury Department without a wealthy political donor running the show,” Wyden said in a statement released immediately after Friday night’s announcement.
“When it comes to the economy, government under Trump is of, by and for the ultra-rich.”
Bessent caught Trump’s attention during the campaign with his ideas of three percent growth, a reduced budget deficit equal to three percent of gross domestic product and three million additional barrels per day of oil production.
Larry Kudlow, a television host and director of the White House National Economic Council during Trump’s first term, endorsed him. But critics in Trump’s orbit said Bessent was weak on tariffs.
Another former candidate, Howard Lutnick, the billionaire chief executive of investment firm Cantor Fitzgerald, was more in favor of tariffs, but less appeasing to some business leaders. Trump has chosen him to head the Department of Commerce and is taking the lead on trade issues.
Trump also looked at other candidates, including former Federal Reserve Gov. Kevin Warsh, Apollo Global Management CEO Marc Rowan, and Sen. Bill Hagerty, R-Tenn.
Trump’s decision on his Treasury chief is partly tied to the biggest motive for most Republican voters to return him to the White House: the state of the U.S. economy and pressure from high prices.
According to AP VoteCast, a survey of about 120,000 voters nationwide in early November, about three in 10 voters said they want a complete turnaround in the way the country is run.
Bessent was deeply critical of President Joe Biden’s economic policies, saying in remarks at the conservative Manhattan Institute that he was “disturbed” by the scale of government spending and deficits and that Biden had embraced a “central planning” mindset that he thought belonged in the “dustbin of history.”
Biden, for his part, selected Janet Yellen, the former chair of the Federal Reserve, as his Treasury secretary, relying on her credibility as an economist as his administration successfully pushed for $1.9 trillion in 2021 pandemic relief.
But inflation jumped as the United States recovered from a pandemic shutdown fueled by supply chain challenges, global conflicts and — according to critics of the Biden administration — an excessive amount of pandemic aid.
Government officials and economists are not sure what Trump would prioritize.
The Republican campaigned to raise tariffs against China and other trading partners.
But people in his economic orbit privately insist that what he cares about is fair terms where other countries like China don’t disadvantage the United States by subsidizing industries, manipulating currencies and suppressing their own workers’ wages.
The president-elect wants to extend and expand his 2017 tax cuts, many of which are set to expire after 2025.
He also proposed a series of tax cuts, such as eliminating taxes on tips or overtime or Social Security benefits, which would create possible increases in the deficit.
The Committee for a Responsible Federal Budget, an independent fiscal watchdog, estimated that Trump could add between $1.7 trillion and $15.6 trillion to projected deficits over 10 years, a sign of uncertainty about his economic plans.
Economist Olivier Blanchard, a senior fellow at the Peterson Institute for International Economics, outlined the contradictions of “Trumponomics” this week.
Deficit-financed tax cuts and tariff hikes might be inflationary, but Trump still won the November election in large part because of voter frustration with inflation.
There’s also his promise to deport undocumented immigrants, which could reduce employment, though it’s unclear what Trump will do once he takes office.
“The U.S. should be thinking about deficit reduction, completely separate from Trump,” Blanchard said in a webcast.
“Trump will probably make it worse.”
Trump’s Treasury secretary may ultimately face the added responsibility of trying to pressure Fed Chairman Jerome Powell to do as Trump wants, since the inflationary pressures described by Blanchard likely mean the Fed will try to slow growth to prevent inflation from overheating, which is likely to upset Trump.
“The risk of conflict between the Trump administration and the Fed is very high,” Blanchard said in a webcast.
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