Washington (AP) Before deciding on billionaire investor Scott Bessent as his nominee for Treasury Secretary, President-elect Donald Trump made a number other choices for his Cabinet.
The Republican sought an official who could carry out his economic program and appear like a cast member while doing it, in addition to someone who would agree with him. Bessent will have to do a delicate balancing act given his background and Yale University education, having traded for Soros Fund Management before starting his own funds.
Trump anticipates that he will help restore the international trade order, make trillions of dollars in tax cuts possible, control inflation, handle the nation’s soaring debt, and maintain the confidence of the financial markets.
According to a statement released by Trump, Scott will back my policies that will boost American competitiveness, eliminate unjust trade imbalances, and strive to build an economy that prioritizes growth, particularly through our upcoming global energy dominance.
Despite his assurance, Trump was cautious in selecting the 62-year-old, indicating that he was aware of the risks following his victory in a presidential race that was significantly influenced by inflation reaching a four-decade high in 2022. He was at ease making selections more quickly regarding Robert F. Kennedy Jr. for health and human services secretary, Florida Sen. Marco Rubio for secretary of state, and Fox News anchor Pete Hegseth for defense secretary.
FILE – Howard Lutnick speaks at a campaign rally, Oct. 27, 2024, in New York. (AP Photo/Evan Vucci, File)
Image: Evan Vucci/Associated Press
FILE – Sen. Bill Hagerty, R-Tenn., talks during a press conference, Jan. 25, 2024, at the Capitol in Washington. (AP Photo/Mariam Zuhaib, File)
Image courtesy of Mariam Zuhaib/Associated Press
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Elon Musk, a billionaire who co-leads Trump’s advisory team called the Department of Government Efficiency program, disagreed with his selection of Bessent. Prior to Trump’s nomination, the CEO of SpaceX and Tesla wrote on his social media platform X that Bessent would be a routine appointment.
The choice also revealed the internal conflicts of a candidate who relied on an administration staffed by people who, like Trump, live extremely wealthy lives but won by appealing to blue-collar voters.
Bessent did not impress Ron Wyden, a Democrat from Oregon who chairs the Senate Finance Committee.
Wyden stated in a statement released just after the announcement Friday night that although Donald Trump poses as an economic populist, the Trump Treasury Department wouldn’t function without a wealthy political contributor in charge. Trump’s government is of, by, and for the ultra-wealthy when it comes to the economy.
Bessent’s proposals for 3% growth, a budget deficit reduction equivalent to 3% of GDP, and 3 million more barrels of oil per day attracted Trump’s attention during the campaign. Trump received backing from TV presenter and former White House National Economic Council director Larry Kudlow. However, detractors close to Trump said that Bessent was indifferent to tariffs.
Howard Lutnick, the millionaire CEO of the financial firm Cantor Fitzgerald and another former candidate, was more pro-tariff but less comforting to other business executives. He was chosen by Trump to lead trade issues and run the Commerce Department.
Trump also considered other possibilities, such as Sen. Bill Hagerty, R-Tenn; Marc Rowan, CEO of Apollo Global Management; and former Federal Reserve Governor Kevin Warsh.
The majority of Republican voters’ primary reasons for bringing Trump back to the White House—the status of the American economy and the pressure from rising prices—are partially responsible for Trump’s choice of Treasury secretary.
In an early November survey of over 120,000 voters nationwide, AP VoteCast found that roughly three out of ten respondents supported a complete overhaul of the way the nation is managed. In remarks at the conservative Manhattan Institute, Bessent expressed his deep disapproval of President Joe Biden’s economic policies, stating that he was concerned about the magnitude of government spending and deficits and that Biden had adopted a central planning philosophy that he believed should be relegated to the dustbin of history.
As his government successfully advocated for $1.9 trillion in pandemic relief in 2021, Biden relied on the legitimacy of former Federal Reserve chair Janet Yellen as his treasury secretary. However, as the US recovered from pandemic shutdowns, supply chain issues, international turmoil, and, in the view of Biden administration opponents, an overabundance of pandemic aid caused inflation to soar.
Economists and government officials are unsure of Trump’s priorities. Raising tariffs on China and other trading partners was a campaign promise of the Republican. However, many close to him privately maintain that he is interested in fair conditions that prevent nations like China from undermining the US economy by stifling wages, manipulating currencies, and subsidizing sectors.
Many of the tax cuts from 2017 that the president-elect wants to expand and extend are scheduled to expire after 2025. Additionally, he has suggested a number of tax cuts that could result in a rise in the deficit, including eliminating taxes on gratuities, overtime compensation, and Social Security payments.
Given the uncertainty surrounding Trump’s economic policies, the independent fiscal watchdog Committee for a Responsible Federal Budget predicted that he may potentially increase projected deficits by $1.7 trillion to $15.6 trillion over a ten-year period.
The inconsistencies of Trumponomics were outlined this week by economist Olivier Blanchard, a senior scholar at the Peterson Institute for International Economics. Trump won the election in November largely due to public dissatisfaction with inflation, despite the fact that deficit-funded tax cuts and tariff increases may produce inflation. Although it’s unclear what Trump will do once in office, he has also promised to deport undocumented immigrants, which could reduce employment.
Blanchard stated on a webcast that, independent of Trump, the United States ought to consider cutting the deficit. It’s likely to get worse under Trump.
Since the Fed would probably try to slow growth to prevent inflation from overheating due to the inflationary pressures described by Blanchard, Trump’s treasury secretary may eventually have to shoulder the added duty of trying to persuade Fed Chair Jerome Powell to do as Trump desires, which would probably annoy Trump.
Blanchard stated in a webcast that there is a very high chance of a confrontation between the Trump administration and the Fed.
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