WASHINGTON – After a wide-ranging hearing Thursday that included extensive debate on tax policy and the impact of tariffs on average Americans, President-elect Donald Trump’s pick for treasury secretary appeared to be on track for Senate confirmation .
Scott Bessent, a hedge fund manager who Trump was announced as his choice In November, during the Finance Committee hearing, he repeatedly reiterated the up-to-date president’s policies, but also addressed his background and beliefs.
Republican senators appeared far more supportive than Democrats, although Bessent has not raised the kind of concerns among left-leaning senators that some of his fellow candidates have.
“When it comes to your qualifications to be the next Treasury secretary, there is no room for debate,” Chairman Mike Crapo, R-Idaho, said at the end of the hearing. “And that’s what you showed here in the hearing today – your background, your training, everything is tailor-made for this role. And your character and demeanor are self-evident.”
Oregon Democratic Sen. Ron Wyden, the panel’s ranking member, argued at the start of the hearing that Bessent had failed to fulfill his requirements as Treasury secretary.
“Many people, myself included, hoped that the president-elect would have a steady hand for the position of Treasury Secretary; “Someone who would be a moderating force, who would work with all sides and especially in the interests of all Americans for a tax code that gives everyone in America a chance to get ahead, not just the people at the top,” Wyden said. “I wish I had read something that suggested this candidate would be the type of Treasury secretary I described.”
Republican Senator Lindsey Graham, who introduced his fellow South Carolinian earlier this year three-hour hearingsaid he was very qualified to fill the role.
“I’m here today to tell you: If you use qualifications as a test, this is the easiest vote you’ll ever do,” Graham said. “If your goal is to act as if the election didn’t happen, then I think you’ll vote no.”
Tax Cut Act 2017
Republican and Democratic senators on the committee repeatedly asked Bessent about Republicans’ lax 2017 law, often referred to as the Tax Cuts and Jobs Act.
Trump and Republican congressmen plan to extend that law’s various tax policies, many of which are set to expire this year.
Republicans plan to pass their up-to-date bill through the complicated budget reconciliation process, which has strict rules but means they won’t have to negotiate with Democrats.
Bessent said during his hearing that extending tax policy in the 2017 law past its expiration date was “the most important economic issue of the day.”
“If we don’t renew and extend, we face an economic catastrophe,” said Bessent. “And as always, financial instability hits the middle and working classes.”
In response to a series of questions from Georgia Democratic Sen. Raphael Warnock, Bessent testified that he supported Congress expanding the 2017 law to Americans of all income levels, including those making more than $400,000, 1 Earn $1 million, $10 million, or even $1 billion.
“There is no income level at which we should not continue the TCJA as it was,” Bessent said.
Reinstating previous higher tax rates for people earning between $400,000 and $1 million would likely “capture an excessive number of small business owners,” he said.
Bessent gave a similar answer for people making more than $1 million, saying he believes higher taxes in this part of the country would negatively impact “pass-through small business owners.”
Asked about people earning more than $10 million a year, he said the federal government should “incentivize investment.” And that tax rates should not be increased for people making more than $1 billion a year because they “create jobs.”
“A spending problem”
While much of Bessent’s testimony focused on tax rates, which make up the bulk of the revenue the federal government must 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 because the government collects too little revenue from taxes and fees, but because Congress has authorized too much spending.
“We don’t have a revenue problem in the United States of America; We have a spending problem,” Bessent said. “And to be clear, that’s one of the things that got me out from behind my desk and my quiet life in this campaign – the idea that this spending is getting out of control.”
Accordingly, the federal government spent $6.1 trillion in fiscal year 2023 and generated revenue of $4.4 trillion Data from the nonpartisan Congressional Budget Office. The Ministry of Finance had to borrow the rest in order to be able 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 rest of federal spending went into so-called discretionary programs, with $805 billion going to defense and $917 billion to the domestic side of the ledger.
Bessent said in his opening statement that he would propose that Congress “adjust federal domestic discretionary spending” to “put the nation’s fiscal house in order.”
Congress’ cuts to all domestic discretionary spending — which goes to hundreds of programs including agriculture, border security, public lands and transportation — could balance the budget, although likely with significant economic consequences.
Most economists argue that Congress must escalate revenues and reduce spending to reduce or eliminate the country’s annual deficit.
Filing direct taxes with the IRS
If confirmed by the Senate, Bessent 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 the preservation of the Direct File program According to Wyden, he committed to doing so only for this calendar year.
“I promise that this direct file will be effective this tax season and that American taxpayers who choose to use it will do so,” he said. “And if it is confirmed, I will consult and study the program, understand it better and ensure that it serves the IRS’s three goals: debt collection, customer service and privacy.”
Tariffs in mind
Bessent did not elaborate during the hearing on when and how exactly Trump plans to impose tariffs after his term, but encouraged lawmakers to pay attention to three specific areas.
“One of them will be to eliminate unfair trade practices of either the industry or the country – the Chinese tariffs, the steel,” Bessent said. “Secondly, it could be a more general tariff as a source of income for the federal budget.”
The third type of tariffs, he said, would likely focus on encouraging countries to negotiate with the United States on issues Trump considers essential.
“He believes we have probably moved past the sanctions. And that the sanctions may discourage countries from using the US dollar so that the tariffs can be used for negotiations,” Bessent said, specifically mentioning that Mexico is blocking the import of fentanyl into the country.
Bessent maintained that he did not believe the tariffs would escalate the price of 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 hopes the Trump administration will reconsider some of its proposed tariffs.
“I do believe there will be retaliatory tariffs,” Cantwell said, adding that previous tariffs have negatively impacted her home state and agriculture.
Minimum wage
In response to a question from independent Vermont Sen. Bernie Sanders, Bessent said he would likely advise Trump and Republicans against raising the federal minimum wage above $7.25 an hour.
“I think the minimum wage is more of a statewide and regional issue,” he said.
Russian sanctions
Bessent said he would fully support efforts to escalate sanctions against Russia to end the war in Ukraine, calling the timing and place of the Biden administration’s imposition of tariffs “not impactful enough.” .
“As officials in the Russian Federation watch this confirmation hearing, they should know that if I am confirmed and President Trump calls for it as part of his strategy to end the war in Ukraine, I am 100% comfortable with accepting it.” Sanctions rise; particularly to the major Russian oil companies, and to a level that the Russian Federation would bring to the table.”
Last updated at 5:02 p.m., January 16, 2025
