It’s not easy being a cabinet secretary, let alone new to the US government. One must cement relationships with the president and the new White House team. One must take command of a department and its functions, responsibilities and personnel. That is particularly true for Treasury Secretary Scott Bessent, sitting only a few hundred yards from the Oval Office.
Roughly a month in, Bessent has faced a tumultuous start.
Bessent has a reputation as a fiscal hawk and America certainly needs to get its budgetary house in order. He is known for his 3-3-3 plan – 3% growth, 3% budget deficit, 3m per barrel increase in daily domestic oil production. That plan has been dismissed across-the-board as wildly unrealistic. While 3% growth may be feasible for a few quarters, economists put potential US gross domestic product growth around 2%.
The numbers simply don’t add up to reach a 3% deficit. The recent preliminary House budget reconciliation assumed 2.8% growth and at least $2.8tn in an increased deficit. The growth estimate was panned by economists and the Committee for a Responsible Federal Budget. The CRFB also estimated that deficits under the House budget would average 6.8% of GDP over the decade, compared with 5.8% under current law.
Musk and DOGE are running the show
The Treasury should be a leading player on fiscal policy and the government’s basic financial operations. Yet Elon Musk and the Department of Government Efficiency are seemingly everywhere across the Cabinet, running the show.
Barely sworn in, Bessent reportedly played a key role in the DOGE-related departure of David Lebryk, the Treasury’s highly respected senior civil servant who refused to turn over access to the Treasury’s sensitive payments system. Lebryk was a longtime apolitical official and a consummate technician who had for years successfully managed the government’s chequebook in accordance with US law. Bessent indicated that DOGE’s access to the Treasury’s payment system was narrowly restricted, but that assertion was then publicly questioned.
The Internal Revenue Service is overseen by the Treasury. Yet DOGE has been involved in major IRS layoffs, even though it has been consistently documented that beefing up IRS staff more than pays for itself in enhanced revenue collection. That is surely needed given America’s massive deficits and Bessent’s desire to slash the deficit. Further, Musk and DOGE are now proposing that 20% of any DOGE savings should be returned to the public in a dividend – again, hardly consistent with the deficit reduction that Bessent seeks.
Bessent’s international duties
The world is now rightly recoiling at President Donald Trump’s shameful refusal to condemn Russia for its brutal and barbaric war against Ukraine. Bessent was the first Cabinet figure to visit Kyiv, bringing a proposal to President Volodymyr Zelensky, reportedly for Ukraine to hand over 50% of its mineral wealth to the US without any indication as to security guarantees. David Ignatius, the highly respected Washington Post correspondent, characterised Bessent’s trip as an effort to ‘shake down’ Ukraine.
The secretary of the Treasury is America’s chief financial diplomat. Bessent has just decided not to attend what would have been his first G20 finance ministers meeting. Whatever the reasons, justifiable or not, the rest of the world will view Bessent’s no-show as a snub. Even if the G20 has lost its mojo and plenary sessions can be soporific, it is an excellent forum to meet one’s counterparts behind the scenes and build relationships – and their co-operation will be needed during Bessent’s tenure.
Trump has signed two executive orders impacting Bessent’s international duties – one on ‘America First Trade Policy’ and the other on reviewing US support to all international organisations.
The former assigns a lead role to the secretary of commerce in investigating the causes of America’s large and persistent annual trade deficits and the Treasury a secondary role. But the US current account deficit is predominantly macroeconomic, reflecting the gap between savings and investment. The Treasury secretary is supposed to be the administration’s chief economic spokesperson. Macroeconomics is not in the commerce department’s bailiwick. A widening US fiscal deficit will increase the savings/investment gap. Larger fiscal deficits that push up longer-term rates and tariff hikes that weaken foreign currencies could further exacerbate the current account deficit.
The review of US support for international organisations was assigned to the secretary of state. Yet the Treasury oversees US relations with the International Monetary Fund, World Bank and the multilateral development banks. On paper, the Treasury appears to have been cut out of the reviews of critical international financial institutions, where it has leadership and expertise.
More recently, Bessent – who criticised Janet Yellen’s Treasury debt management practices and called for longer-term issuance – indicated that terming out debt was a long way off. His ideas for gradual tariff hikes were quickly ignored in the White House.
The new Treasury secretary has a tough job, especially given the swirl of activity from the White House and DOGE. It’s always hard to know what is going on behind the scenes in administrations. Bessent’s rocky first month will shape his legacy.
Mark Sobel is US Chair of OMFIF.
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