Scott Bessent Confirmed as Treasury Secretary by Senate

Diccon Hyatt, a seasoned financial and economics journalist, has extensively covered the economy during the pandemic, producing numerous articles. He excels in simplifying intricate financial subjects, focusing on how economic trends affect personal finances and the market. Hyatt’s previous work includes contributions to U.S. 1, Community News Service, and the Middletown Transcript.

Key Points

President Donald Trump appointed Scott Bessent, a seasoned Wall Street professional, as Treasury Secretary after Senate confirmation.

Scott Bessent, a hedge fund manager, won Senate approval as Trump’s chief economic advisor by a vote of 68-29, taking over from Janet Yellen, the former Federal Reserve chair.

Bessent’s tenure as Treasury Secretary comes during a crucial period for the economy, where he may influence U.S. trade policies, address the expiration of Trump’s 2017 tax cuts, and manage the country’s debt ceiling breach in January.

Tariffs

Trump has set a deadline of February 1 to begin implementing the tariffs he promised during his campaign, starting with measures targeting Mexico and Canada.

In his confirmation hearing, Bessent faced scrutiny from senators over the potential negative impact of tariffs on consumer prices and the economy, a concern echoed by many economists. Bessent, however, defended Trump’s proposed tariffs, emphasizing their importance for national security and the protection of American manufacturing.

Financial markets are optimistic that Bessent will act as a stabilizing force in Trump’s trade policy, potentially steering the president towards using tariffs as leverage in negotiations rather than enforcing them.

Taxes and Debt Ceiling

Bessent is potentially going to represent the White House during discussions in Congress about how the U.S. will manage two significant upcoming deadlines.

By the end of the year, Trump’s 2017 tax cuts are set to expire. Trump is advocating for their extension and has proposed new tax cuts, such as eliminating income taxes on tips. However, extending these tax cuts may come at a high cost, based on some assessments suggesting that they could significantly increase the federal budget deficit over the next decade. To fund these extensions, lawmakers will need to either reduce spending or allow the national debt to grow.

Simultaneously, time is running out for Trump and Congress to address the debt ceiling issue. Currently, the U.S. has exceeded its congressionally mandated borrowing limit of $36 trillion. The Treasury Department is employing “extraordinary” accounting measures to stall, but later this year, it may be unable to meet its financial obligations without Congressional action, possibly triggering a severe financial crisis.