Trump Picks Scott Bessent, Financier Who Embraced MAGA, for Treasury

November 23, 2024

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by Jeff Stein (Washington Post) Bessent, who prevailed after an intense lobbying effort by his allies, has emerged over the past year as a trusted Trump adviser -- President-elect Donald Trump on Friday selected hedge fund executive Scott Bessent to be the next treasury secretary, elevating a financier who embraced populist economics to the crucial economic position.

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The announcement followed an unusually contentious deliberation process, with multiple aides and Wall Street executives jockeying in a battle that spilled out into public view from Trump’s compound in Mar-a-Lago. But Bessent, 62, prevailed after an intense lobbying effort by his allies, who argued that no other candidate better combined Trump’s aggressive trade instincts with expertise in high finance.

As the president’s most important economic official, Bessent is expected to play a crucial role overseeing a broad portfolio that will span international trade, taxes, financial regulation and U.S. sanctions, if he’s confirmed.

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A South Carolina native, Bessent attended Yale before joining Soros Fund Management in 1991. Bessent rose to run the London office for Soros’s firm at 29, joining the team that famously made a fortune through shorting the British pound in 1992, contributing to the collapse of the currency. In 2016, he launched the Key Square Group with $4.5 billion in capital.

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A voracious reader who has returned to Yale to teach economic history, Bessent would, if confirmed by the Senate, become the first openly gay treasury secretary in U.S. history. Bessent and his husband have two children.

“He seems to get along with George Soros and Donald Trump. What else do you need to know?” said billionaire Stanley Druckenmiller, who has known Bessent since the early 1990s and worked with him closely at Soros’s investment firm. “He’s good with people and he’s got a big brain, but he’s able to articulate it in layman’s language.”

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But Trump has also called for more than $7 trillion in tax cuts, adding significantly to the nation’s fiscal imbalance. Trump has also promised tariffs as high as 20 percent on every U.S. trading partner, which could reignite inflation and lead to a contraction in the stock market.

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Bessent and Soros have not spoken since 2016. READ MORE

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Excerpt from Washington Post: Trump followed that move on Friday by naming hedge fund executive Scott Bessent as his choice for treasury secretary following days of hand-wringing over the position that is fifth in the line of succession and of keen interest to global investors. READ MORE

Excerpt from E&E News Energywire: As Treasury secretary, Bessent would be able to rewrite or reverse some of the law’s valuable tax provisions, which were designed to boost renewable energy and other emerging technologies like hydrogen, carbon capture and electric vehicles.

Cutting those tax credits could offer a political win to conservatives who say the Biden administration is skewing prices in the energy market. It could also offset some of the cost of extending the multitrillion-dollar tax cuts Trump implemented in 2017 — and which are set to expire next year.

The question, however, is how much capital the Treasury Department wants to spend on the IRA’s credits, which have bipartisan support.

“I expect that they’re going to be pretty hostile, but I don’t expect that the IRA is going to be repealed,” said David Victor, a professor of innovation and public policy at the University of California, San Diego. “There are a lot of tweaks to be done at the margin, but doing a wholesale repeal of a lot of the tax credits could be difficult.”

If confirmed, Bessent could influence how the government steers money to industries like “clean” hydrogen, which is awaiting final guidance on how companies can apply for lucrative IRA tax credits. That guidance could determine whether the nascent industry spikes emissions or supports fossil fuels. Bessent could also play a major role in executing Trump’s plans to raise tariffs, which could have major effects on industries ranging from solar to steel.

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The roughly $527 billion in tax incentives for low-carbon energy were designed to help large-scale wind and solar projects get built and to boost emerging sectors like hydrogen fuel and sustainable aviation fuel.

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The long list of tax credits and policy goals embedded in the IRA left much of the implementation work up to the Treasury Department, which has been steadily rolling out guidance and rules.

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Even those that are finalized, however, could be reopened by the Trump administration to put them more in line with its agenda. The hydrogen production tax credit, for instance, could be rewritten to reward projects that use fossil fuels, rather than renewable energy production.

Finalized rules would require a new rulemaking process to unwind.

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“Investors want certainty, they want to know whether their projects will qualify for tax breaks or not,” said Aaron Bergman, a fellow at Resources for the Future and a former Department of Energy official. “Rewriting the tax guidance could create a lot of uncertainty for what is a significant revenue stream.”

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A group of 18 Republican House members urged Speaker Mike Johnson (R-La.) this summer to maintain the IRA tax credits to ensure “business and market certainty.”

“Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing,” they wrote in an August letter. “A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.” READ MORE

Excerpt from New York Times: Mr. Trump regularly attacked Mr. Biden’s policies on climate and electric cars on the campaign trail, and his transition team is exploring steps he could take to repeal or limit the credits. A complete repeal would require Congress to act. But Mr. Trump could also direct the Treasury to change tax rules in ways that limit how many cars qualify for credits.

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Opponents of credits say electric vehicles should compete with gasoline models without the help of the federal government. They note that many battery-powered cars are luxury models bought or leased by people who can afford the vehicles without tax breaks.

“I’ve driven them, and they are incredible,” Mr. Trump said about electric vehicles at a July campaign rally in Michigan, “but they’re not for everybody.” READ MORE