Scott Bessent’s Confirmation Hearing Raises Economic Concerns
During his confirmation hearing last Thursday, hedge fund manager and nominee for U.S. Treasury Secretary, Scott Bessent, addressed the Senate Finance Committee with promises of initiating an “economic golden age” under his leadership at the Treasury Department.
However, a detailed analysis by policy experts indicates that Bessent’s ambitious “3-3-3” economic strategy would necessitate severe reductions in programs crucial for the country’s most vulnerable populations. This approach would primarily benefit the affluent and corporations, who are set to receive significant tax cuts under the proposed plans by the Trump administration.
Policy directors from the Center for American Progress, Brendan Duke and Bobby Kogan, have crunched the numbers to assess what would be required to realize Bessent’s 3-3-3 plan, which aims to reduce the federal budget deficit to 3% of the GDP. The plan also aims for a 3% real GDP growth and the production of 3 million barrels of oil by the year 2028.
While Duke and Kogan acknowledge the merit in attempting to lower the budget deficit while safeguarding essential services for American families, they argue that Bessent’s plan to extend the expiring 2017 tax cuts without increasing taxes on the wealthy indicates a reliance on imposing new taxes on imported goods and making extensive cuts to anti-poverty initiatives.
According to projections by the Congressional Budget Office, the budget deficit is expected to reach 5.8% of GDP by 2028.
“The incoming president is clearly organizing his cabinet with one objective: to secure further tax reductions for his circle of billionaire friends and large corporations.”
Bessent’s proposal includes continuing the 2017 tax cuts, which are anticipated to enlarge the budget deficit by roughly $4 trillion over the next decade, as well as cutting investments from the Inflation Reduction Act related to energy, and freezing increases in nondefense discretionary spending. Duke and Kogan argue that these measures would actually increase the projected 2028 budget deficit from 5.8% to 6.0% of GDP, which is $1 trillion over the 3% target.
To meet Bessent’s deficit target without reducing Medicare, Social Security (which Trump has pledged to protect from cuts), or defense spending, the analysts say the plan would necessitate both:
- A 20% tax on all imported goods and a 60% increase in taxes on imports from China, which would cost the average family between $2,200 and $3,900 annually, and
- A nearly $500 billion cut in the federal budget for the year 2028 alone, which would be impossible without a 31% reduction in expenditures on Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and veterans’ benefits, in addition to Bessent’s proposed 6% cut in nondefense discretionary spending.
The analysts noted, “The combination of policies necessary to achieve the deficit reduction outlined in Bessent’s 3-3-3 economic plan would result in higher taxes on low- and middle-income families and severe cuts to healthcare, nutrition assistance, and veterans’ programs, while still facilitating tax cuts for the wealthy. This plan would increase families’ expenses both through higher general prices due to broad tariffs and because Americans would face higher costs for healthcare and food due to reductions in federal programs that help reduce living costs.”
Under Bessent’s plan, American families would face harsh reductions in health and nutrition services and higher grocery prices, yet the wealthiest households would still enjoy net tax reductions.
Columnist Catherine Rampell from The Washington Post expressed shock at the extent of cuts needed for Bessent’s financial plans to work, stating, “The sum of all the tax-cut promises made during Trump’s campaign would balloon the budget deficit to almost $10 trillion. To balance this, government programs would need to be slashed by two-thirds or taxes on the middle class would need to be raised. Choose your poison.”
On social media, the watchdog group Accountable.US criticized Bessent’s defense of Trump’s tax cuts, which disproportionately benefited the top 1% compared to families in the bottom 60%, and his support for proposed tariffs which economists predict could reignite inflation.
“Scott Bessent’s nomination isn’t about assisting American families,” the group stated. “It’s about enriching the ultra-wealthy and doubling down on policies that harm the middle class.”
Amid these criticisms, new reports from Politico emerged on Thursday revealing that Senate Democrats have accused Bessent of avoiding $910,182 in Medicare taxes on income earned through his hedge fund between 2021 and 2023. According to a memo circulated by the Democrats, Bessent claimed that as a “limited partner” in his fund, he was not responsible for taxes on certain types of income.
Senator Ron Wyden (D-Ore.) addressed these allegations during the hearing, noting, “Like many Wall Street fund managers, Mr. Bessent employs a legal loophole to avoid paying into Medicare.”
Lindsay Owens, executive director of Groundwork Collaborative, remarked on the situation, saying, “The billionaire hedge fund manager chosen by Trump to oversee a massive tax giveaway for the ultra-rich doesn’t pay his own taxes. It’s almost too perfect. The president-elect is clearly organizing his cabinet with one goal: to secure further tax reductions for his circle of billionaire friends and large corporations.”
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An economic reporter, Dax Everly breaks down financial trends and their impact on Americans’ daily lives.