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Trump’s Treasury Pick Called the IRA ‘the Doomsday Machine for the Deficit’

Meet Scott Bessent.

Scott Bessent.
Heatmap Illustration/Getty Images

Donald Trump ended weeks of Billions-esque drama on Wall Street and Palm Beach by finally settling late Friday on a nominee for Secretary of the Treasury, hedge fund manager Scott Bessent.

In contrast to the quick and instinctive picks for major posts like secretary of defense, secretary of state, and attorney general (albeit, two picks for that job), Trump deliberated on the Treasury pick, according to reports, cycling through candidates including Bessent, long the frontrunner for the job, his transition chief Howard Lutnick, private equity titan Marc Rowan, and former Federal Reserve Governor Kevin Warsh.

Bessent will almost immediately face a challenge that the markets have been putting towards Trump since even before his election: can he deliver what investors crave (tax cuts. deregulation), while smoothing out volatility and possible inflation stemming from the tariffs and mass deportations that Trump has promised to implement? Investors already have slightly cooled on the Trump trade and expect that the interest rate cuts kicked off in September will slow.

Bessent has long advised Trump on the economy and is not unaware of these challenges, but his way around them is to embrace much of Trump’s existing agenda in what the Wall Street Journal has described as a “3-3-3” plan, where deficits are cut in half to 3% of gross domestic product, growth is kicked up to 3%, and oil production rises by three million barrels a day, a goal that Continental Resources chief executive and informal Trump advisor Harold Hamm has cast doubt on due to geologic constraints.

“Scott has long been a strong advocate of the America First Agenda,” Trump wrote on Truth Social announcing the pick. “Scott will support my Policies that will drive U.S. Competitiveness, and stop unfair Trade Imbalances, work to create an Economy that places Growth at the forefront, especially through our coming World Energy Dominance.”

While energy policy will seemingly be handled by the nominee for Secretary of the Interior Doug Burgum and the newly formed National Energy Council, fiscal policy and tariffs will likely play a major role in determining if Trump’s vision of a more productive and less constrained oil and gas sector can be realized, whether it’s by tariffs possibly leading to increases in the price of steel or possible retaliatory duties on American energy exports. Higher interest rates due to tariffs or an overheated economy could deter investment in energy, renewable or not.

One of the Treasury Department’s most important jobs is managing the nation’s debt profile by deciding what kind of debt to sell in order to meet the government’s immense borrowing needs. Bessent criticized the current Treasury Secretary Janet Yellen in a Wall Street Journal essay for having “distorted Treasury markets by borrowing more than $1 trillion in more-expensive shorter-term debt compared with historical norms.” He suggested that selling more longer-term debt “may increase longer-term interest rates and will need to be deftly handled.” Higher long-term rates are more likely to feed through to a higher cost of capital for investors, which will likely hurt renewable energy developers more than their fossil fuel competitors due to how much of the cost of renewables comes up front.

In another ominous signal for the nascent climate economy, Bessent also suggested to the Financial Times that the Inflation Reduction Act could be one area where cuts to the federal budget could be found, telling the newspaper that it was “the Doomsday machine for the deficit.”

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Sparks

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