The Journal: Inside Trump's Pick for Treasury Secretary

Podcast Information:

• Title: The Journal
• Host/Author: The Wall Street Journal & Gimlet
• Description: The most important stories about money, business and power. Hosted by Kate Linebaugh and Ryan Knutson, with Jessica Mendoza. The Journal is a co-production of Spotify and The Wall Street Journal.
• Episode: Inside Trump's Pick for Treasury Secretary
• Release Date: November 26, 2024

Introduction: Trump's Economic Priorities

The episode delves into President-elect Donald Trump's economic agenda, which stood as a cornerstone of his campaign. Emphasizing his commitment to revitalizing the economy, Trump critiqued his opponents' handling of economic policies. As he boldly stated at [00:12]:

Donald Trump: "Kamala Harris and Crooked Joe have driven our economy off a cliff. The Harris price hikes have cost the typical household $28,000. Congratulations. Hope everyone's happy. I'm going to make America affordable again. In addition to making it great again, we're going to make it affordable again."

Trump's promises included levying tariffs, cutting taxes, and deregulating various sectors of the economy, signaling a dramatic shift from previous administrations.

Scott Besant: Background and Selection

A significant focus of the episode is Trump’s nomination of Scott Besant for the Treasury Secretary position. Besant, a 62-year-old hedge fund manager from South Carolina, brings a wealth of Wall Street experience to the table. As described by Jessica Mendoza at [01:09]:

Jessica Mendoza: "Scott Besant, he's a 62-year-old hedge fund manager from South Carolina. And unlike some of Trump's other Cabinet nominations, this one took some time."

Besant's career includes a notable stint at Soros Fund Management, where he worked with billionaire George Soros, and co-founding Key Square Capital Management. His Wall Street acumen aligns with Trump's business-oriented approach, making him a fitting choice to implement the administration's economic policies.

The Treasury Secretary Role: Responsibilities and Importance

Understanding the gravity of the Treasury Secretary position is crucial. At [03:46], Andrew Rastuccia explains:

Andrew Rastuccia: "The Treasury Secretary does a lot of things. They are essentially the core economic policymaking engine of the federal government. They implement tax policy, manage the nation's debt, lead financial regulations, oversee sanctions, and conduct economic diplomacy abroad. It's a huge mandate, a massive department, and a really crucial job."

Given Trump's emphasis on the economy, the Treasury Secretary will play a pivotal role in actualizing his economic promises.

The Selection Process: Competition and Contention

Besant’s nomination was not without competition. Howard Lutnick, CEO of Cantor Fitzgerald and a close Trump ally, was a prominent contender. The selection process, highlighted at [07:39], saw intense lobbying and public endorsements from influential figures like Elon Musk and Robert Kennedy Jr. Lutnick’s advocacy for a more aggressive tariff strategy contrasted with Besant's traditionally measured Wall Street stance.

Andrew Rastuccia: "Lutnick was a more true believer MAGA type guy."

This rivalry led to a heated "knife fight" within Trump's transition team, necessitating Trump to broaden his search before ultimately choosing Besant.

Besant's Plans for the Treasury: Tax Cuts and the 333 Initiative

If confirmed, Besant aims to advance several key initiatives:

1. Permanent Tax Cuts: Besant intends to make the 2017 tax cuts permanent, a complex process requiring extensive negotiations with lawmakers ([11:45]).

2. Eliminating Specific Taxes: Plans include removing taxes on tips, Social Security benefits, and overtime pay.

3. Deregulation: Aligning with Trump’s campaign promises, Besant seeks to roll back various regulations to stimulate economic growth.

Additionally, Besant introduced the 333 Plan, inspired by Japan’s economic strategies under Shinzo Abe, encompassing:

• Reducing the budget deficit to 3% of GDP by 2028.
• Stimulating GDP growth to 3% through deregulation.
• Increasing oil production by 3 million barrels per day.

Andrew Rastuccia: "He [Besant] gave the idea a catchy name, 333... it's a powerful selling point for him behind the scenes."

Tariffs: Diverging Views and Potential Conflicts

Tariffs remain a contentious issue. Trump has advocated for substantial tariffs on imports from Mexico, Canada, and China, aiming to protect American industries and renegotiate trade deals. However, Besant’s previous stance views tariffs primarily as negotiation tools rather than broad protective measures.

Donald Trump: "Beautiful word in the dictionary is tariff. And it's my favorite word."

Besant’s letter to investors emphasized a strategic use of tariffs, contrasting with Trump’s more aggressive rhetoric. Despite initial reservations, Besant has publicly endorsed tariffs, attempting to reconcile his position with Trump's expectations.

Andrew Rastuccia: "He published an op-ed... saying that reflexive opposition to tariffs represents political ideology and advocacy, not economic thought."

This alignment suggests Besant may adopt a more robust tariff strategy, though the exact implementation remains uncertain.

Confirmation Process: Challenges and Prospects

Besant’s confirmation by the Senate is anticipated to proceed smoothly, given the Republican control of the chamber. However, scrutiny may center on his investment history and past affiliations, particularly his work with George Soros, a figure often criticized by Trump's allies.

Andrew Rastuccia: "Republicans, I'm sure, will be curious about his longtime affiliation with George Soros. But as of now, we're not seeing any red flags."

His lack of extensive relationships on Capitol Hill means Besant will need to actively engage with senators to secure support, though no significant obstacles are currently expected.

Implications for Trump's Second Term and Administration

Trump’s selection of Besant signals a desire for stability and market reassurance, contrasting with the volatility observed in his first term's Cabinet appointments. By choosing a seasoned Wall Street professional, Trump aims to bolster investor confidence and ensure the smooth execution of his economic agenda.

Andrew Rastuccia: "Trump wanted a relatively steadying force at the Treasury... He really didn't want to see the market's downturn as a result of whoever he chose."

This move reflects Trump’s strategic prioritization of economic stability, essential for maintaining his political standing and fulfilling campaign promises.

Conclusion

Scott Besant’s nomination as Treasury Secretary encapsulates Trump’s commitment to a business-centric, deregulated economic model aimed at revitalizing the U.S. economy. While the confirmation process holds some uncertainties, Besant’s Wall Street expertise and alignment with Trump’s economic vision position him as a key figure in the administration’s pursuit of making America both great and affordable again.

Notable Quotes:

• Donald Trump [00:12]: "Kamala Harris and Crooked Joe have driven our economy off a cliff..."
• Andrew Rastuccia [03:49]: "The Treasury Secretary does a lot of things..."
• Andrew Rastuccia [07:39]: "Lutnick was a more true believer MAGA type guy."
• Andrew Rastuccia [16:25]: "As of now, we're not seeing any red flags."

Selected Timestamps:

• 00:05 – 07:52: Introduction to Trump’s economic priorities and Scott Besant’s nomination.
• 08:00 – 10:51: Discussion on Howard Lutnick and the competitive selection process.
• 11:45 – 15:37: Overview of Besant’s economic plans and the tariff debate.
• 16:25 – 17:06: Insights into the confirmation process and implications for the administration.

Additional Reporting: Ben Schwartz, Nick Timoros, Alex Leary, Peter Rudiger, and Gregory Zuckerman.

Listen to the full episode here.