Billionaire hedge fund manager Scott Bessent prepares to testify before the Senate Finance Committee during his confirmation hearing for Treasury secretary in the Dirksen Senate Office Building on Capitol Hill on Thursday in Washington, D.C. ( Chip Somodevilla/Getty Images)
WASHINGTON — President-elect Donald Trump’s choice for Treasury secretary appeared on track for Senate confirmation after a wide-ranging hearing Thursday that included substantial debate on tax policy and how tariffs would affect everyday Americans.
Scott Bessent, a hedge fund manager whom Trump announced as his pick in November, repeatedly deferred to the incoming president’s policies during the Finance Committee hearing, though he did delve into his background and beliefs as well.
GOP senators appeared far more supportive than Democrats, though Bessent hasn’t elicited the type of concerns some of his fellow nominees have from left-leaning senators.
“When it comes to your qualifications to be the next secretary of the Treasury, there is no room for debate,” Chairman Mike Crapo, R-Idaho, said at the end of the hearing. “And you have shown that today here in the hearing — your background, your training, everything is tailor-made for this role. And your character and demeanor are self-evident.”
Oregon Democratic Sen. Ron Wyden, ranking member on the panel, argued at the outset of the hearing that Bessent didn’t meet his requirements for Treasury secretary.
“Many people, myself included, hoped that the president-elect would pick a steady hand for Treasury secretary; someone who would be a moderating force, who’d work with all sides, and especially for the interests of all Americans for a tax code that gives everybody in America a chance to get ahead, not just the people at the top,” Wyden said. “I wish I had read something that would indicate that this nominee would be the kind of Treasury secretary I described.”
Republican Sen. Lindsey Graham, who introduced his fellow South Carolinian at the beginning of the three-hour hearing, said he was very qualified to hold the role.
“I’m here today to tell you, if you use qualifications as your test, this is the easiest vote you’ll ever take,” Graham said. “If your goal is to play like the election didn’t happen, then I guess you’ll vote no.”
2017 tax cut law
Republican and Democratic senators on the committee repeatedly asked Bessent about the 2017 Republican lax law that’s often referred to as the Tax Cuts and Jobs Act.
Trump and GOP members of Congress are planning to extend the various tax policies in that law, many of which are set to expire this year.
Republicans are planning to pass their new bill through the complicated budget reconciliation process, which has strict rules, but means they won’t need to negotiate with Democrats.
Bessent said during his hearing that extending the tax policy in the 2017 law past the sunset date is “the single most important economic issue of the day.”
“If we do not renew and extend, then we will be facing an economic calamity,” Bessent said. “And as always, with financial instability, that falls on the middle- and working-class people.”
Bessent testified he favors Congress extending the 2017 law for Americans at all income levels, including those making more than $400,000, $1 million, $10 million, or even $1 billion, in response to a series of questions from Georgia Democratic Sen. Raphael Warnock.
“There is no income level that I don’t think we should continue the TCJA as it was,” Bessent said.
Allowing previous, higher tax rates to go back into place for people making between $400,000 and $1 million would likely “capture an inordinate amount of small business people,” he said.
Bessent gave a similar answer for people making more than $1 million, saying he believed higher taxes on that segment of the country would negatively affect “small business pass-through owners.”
He said the federal government should want to “put in incentives for them to invest” when asked about people making more than $10 million a year. And that people making more than $1 billion annually shouldn’t have their tax rates increased since they are “job creators.”
‘A spending problem’
While much of Bessent’s testimony focused on tax rates, which contribute most of the revenue the federal government has to spend on programs, he also spoke about the spending side of the federal ledger.
Bessent said he believes the country’s annual deficit is not the result of the government bringing in too little revenue from taxes and fees, but because Congress has approved too much spending.
“We do not have a revenue problem in the United States of America; we have a spending problem,” Bessent said. “And to be clear, this is one of the things that got me out from behind my desk and my quiet life in this campaign — was the thought that this spending is out of control.”
The federal government spent $6.1 trillion and brought in $4.4 trillion in revenue during fiscal year 2023, according to data from the nonpartisan Congressional Budget Office. The Treasury Department had to borrow the rest to pay all of the country’s bills.
The bulk of that spending went to so-called mandatory programs, including Social Security, Medicare and Medicaid, which accounted for $3.8 trillion.
The remainder of federal spending went to what’s referred to as discretionary programs, with $805 billion for defense and $917 billion going to the domestic side of the ledger.
Bessent said during his opening statement that in order to get the country’s “fiscal house in order” he would propose that Congress “adjust federal domestic discretionary spending.”
Congress cutting all domestic discretionary spending — which goes toward hundreds of programs, including agriculture, border security, public lands and transportation — might balance the budget, though likely with significant economic consequences.
Most economists argue that to reduce or eliminate the country’s annual deficit, Congress must increase revenue and decrease spending.
IRS direct tax filing
Bessent, if confirmed by the Senate, would have some influence over whether the IRS continues a program launched just last year that allows Americans to file their taxes for free.
When asked about preserving the Direct File program by Wyden, he only committed to doing so for this calendar year.
“I will commit that for this tax season that direct file will be operative and the American taxpayers who choose to use it, will,” he said. “And if confirmed, I will consult and study the program, and understand it better, and make sure that it works to serve the IRS’s three goals of collections, customer service and privacy.”
Tariffs eyed
Bessent didn’t go into detail during the hearing about when and how exactly Trump plans to implement tariffs once in office, though he did encourage lawmakers to watch for three specific areas.
“One will be for remedying unfair trade practices, either by industry or country — the Chinese tariffs, the steel,” Bessent said. “Two, may be for a more generalized tariff as a revenue raiser for the federal budget.”
The third type of tariff, he said, would likely focus on encouraging countries to negotiate with the United States on issues Trump views as important.
“He believes that we’ve probably gotten over our skis … on sanctions. And that sanctions may be driving countries out of the use of the U.S. dollar so the tariffs can be used for negotiations,” Bessent said, specifically mentioning Mexico blocking fentanyl from entering the country.
Bessent maintained he doesn’t believe the tariffs will raise prices on goods for Americans, a position with which several Democrats on the panel and numerous economists outside Congress disagree.
Washington state Democratic Sen. Maria Cantwell said she hoped the Trump administration would reconsider some of its proposed tariffs.
“I do think we’re going to see retaliatory tariffs,” Cantwell said, adding that previous tariffs negatively affected her home state and agriculture.
Minimum wage
Bessent said he would likely advise Trump and Republicans against raising the federal minimum wage above $7.25 per hour, in response to a question from Vermont independent Sen. Bernie Sanders.
“I believe that the minimum wage is more of a statewide and regional issue,” he said.
Russian sanctions
Bessent said he would fully support efforts to raise sanctions on Russia in trying to end the war in Ukraine, calling when and where the Biden administration implemented tariffs “not fulsome enough.”
“If any officials in the Russian Federation are watching this confirmation hearing, they should know that if I’m confirmed, and if President Trump requests as part of his strategy to end the Ukraine war, that I will be 100% on board for taking sanctions up; especially on the Russian oil majors to levels that would bring Russian Federation to the table.”