The billionaire hedge fund manager will play a key role in determining the new administration's policy goals regarding tax cuts and spending, as well as managing economic ties with both allies and enemies, after the U.S. Senate confirmed Scott Bessent as President Donald Trump's Treasury secretary on Monday.


Bessent will have significant control over fiscal policy, financial regulations, international sanctions, and foreign investments in addition to overseeing the country's $28 trillion Treasury debt market and tax collections as the 79th Treasury secretary.

With 16 Democrats in favour of the nominee, the result was 68-29.

Bessent, 62, is already establishing himself as a strong supporter of Trump's economic policies, which include tax cuts and high tariffs that Democrats and some analysts believe could reverse some of the Fed's gains in controlling inflation.

During his confirmation hearing, Bessent argued that tariffs would help fight unfair trade practices, boost revenues, and strengthen U.S. leverage in international negotiations. He also warned that failing to renew $4 trillion in tax cuts that expire at the end of this year would be a "calamity" for middle-class Americans.

Additionally, he disputed the notion that Trump's policies would cause inflation, arguing that the administration's initiatives to boost oil output would actually contribute to price reductions.

Managing federal cash flows will be the most pressing issue for Bessent, Trump's top economic officer, after the US reached its statutory debt limit on his second day in office. The Treasury Department was taking "extraordinary measures" to prevent breaking the cap and causing a disastrous default even before he took office. During his confirmation hearing, Bessent assured senators that he would not allow a default.

If tax cut extensions and other promised tax breaks cannot be offset by revenue increases or spending cuts, Bessent will also have to cope with the possibility of growing budget deficits and additional government debt, which is anticipated to reach the trillions of dollars. He will be a key player collaborating with Congress on the scope and manner of any tax revisions, if history is any indication.



Under his leadership, over 60% of the government debt is expected to mature, and that's before accounting for the issuance increase that has been exceeding $2 trillion year since the COVID-19 pandemic.


"OUT OF CONTROL"

In recent weeks, investors' demands for greater compensation for risk have caused long-term bond rates to rise in response to concerns about growing budget deficits and more persistent inflation. As a result, the average rate on 30-year fixed-rate mortgages has increased to almost 7%, which is particularly problematic for Americans who are trying to purchase a home.

Bessent made a strong statement on deficits at his confirmation hearing, saying that government spending is "out of control," though it's unclear how much he could do to limit it. He supported Trump's commitment to keep interest expenditure, which is set by market rates that are outside the Treasury's control, and the Social Security retirement program and Medicare insurance coverage for seniors, two of the largest line items in the federal budget, unaffected.

Bessent, who was raised in South Carolina, claims to still tune in to farm radio. Having graduated from Yale University with a bachelor's degree in political science, he has worked in finance all of his life, first for investors Jim Chanos and George Soros and then at his own company, Key Square. Bessent is the highest ranked openly gay federal official in history and is fifth in line for the presidency. He has two kids and is married.