Economy’s Quarterback: Scott Bessent Nominated as US Treasury Secretary
President-elect Donald Trump has announced his nomination of prominent investor Scott Bessent as the next US Treasury Secretary, a key cabinet position with vast influence over economic, regulatory, and international affairs.
The Choice
Bessent, 62, is widely respected as one of the world’s foremost international investors and geopolitical and economic strategists. Trump praised him in a statement, saying, "I am most pleased to nominate Scott Bessent to serve as the 79th Secretary of the Treasury of the United States. Scott is widely respected as one of the world’s foremost international investors and geopolitical and economic strategists."
Background
Bessent has a long history in finance, working for notable firms such as Soros Fund Management and Key Square Group, a hedge fund he launched in 2015. He has also been a vocal advocate for tax reform and deregulation, particularly to spur more bank lending and energy production.
Economy’s Quarterback
As Treasury Secretary, Bessent will be responsible for maintaining the plumbing of the world’s largest economy, from collecting taxes and paying the nation’s bills to managing the $28.6-trillion Treasury debt market and overseeing financial regulation, including handling and preventing market crises.
Challenges Ahead
Bessent will face significant challenges, including safely managing federal deficits that are forecast to grow by nearly $8 trillion over a decade due to Trump’s plans to extend expiring tax cuts next year and add generous new breaks, including ending taxes on Social Security income. Without offsetting revenues, this new debt would add to an unsustainable fiscal trajectory already forecast to balloon US debt by $22 trillion through 2033.
Differing Views on Climate Change and Trade
Bessent will also inherit the role carved out by Yellen to lead the Group of Seven wealthy democracies in providing tens of billions of dollars in economic support for Ukraine in its fight against Russia’s invasion and tightening sanctions on Moscow. However, it is unclear whether he will pursue this, given Trump’s desire to end the war quickly and withdraw US financial support for Ukraine.
Additionally, Bessent will likely differ from Yellen in her focus on climate change, from her mandate that development banks expand lending for clean energy to incorporating climate risks into financial regulations and managing hundreds of billions of dollars in clean-energy tax credits. Trump, a climate-change skeptic, has vowed to increase production of US fossil fuel energy and end the clean-energy subsidies in President Joe Biden’s 2022 Inflation Reduction Act.
Fed Facing
As Treasury Secretary, Bessent will also be the administration’s closest point of contact with the Federal Reserve. Both Yellen under Biden and Mnuchin under Trump typically met weekly with Fed Chair Jerome Powell, often over breakfast or lunch. Bessent has floated the idea of creating a "shadow" Fed chair, but has since said he no longer thinks this idea is worth pursuing.
From Finance to DC
Bessent, primarily lives in Charleston, South Carolina, with his husband and two children. He grew up in the fishing village of Little River, South Carolina, where Bessent has said his father, a real estate investor, experienced booms and busts.
Conclusion
The nomination of Scott Bessent as US Treasury Secretary marks a significant shift in the administration’s economic agenda, with potential implications for global trade, financial regulation, and climate change. As the new Secretary of the Treasury, Bessent will face a range of challenges, from managing federal deficits to navigating the complexities of international trade and finance.
Frequently Asked Questions
Q: What is Scott Bessent’s background in finance?
A: Bessent has worked for notable firms such as Soros Fund Management and Key Square Group, a hedge fund he launched in 2015.
Q: What are Bessent’s views on tax reform and deregulation?
A: Bessent has been a vocal advocate for tax reform and deregulation, particularly to spur more bank lending and energy production.
Q: How will Bessent’s nomination impact global trade and finance?
A: As Treasury Secretary, Bessent will be responsible for managing the $28.6-trillion Treasury debt market and overseeing financial regulation, with potential implications for global trade and finance.
Q: What are the challenges Bessent will face in his new role?
A: Bessent will face significant challenges, including safely managing federal deficits and navigating the complexities of international trade and finance.