(Bloomberg) — Confirmation hearings for US Treasury secretaries often set key markers for the nominee’s priorities and principles once in office, heightening focus on Thursday’s Senate Finance Committee hearing with President-elect Donald Trump’s pick to fill the post: Scott Bessent.
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The likely multi-hour hearing kicks off at 10:30 a.m. in Washington, with senators set to quiz Bessent, a 62-year-old veteran hedge-fund investor and manager who hasn’t previously held a federal office, on topics ranging from financial sanctions and currency policy to the US fiscal outlook and management of the $28 trillion Treasuries market.
Bessent is widely expected to win confirmation in the Republican-controlled Senate. Here are among the top things to watch for in the session:
Taxes & Fiscal Outlook
Lawmakers will likely press Bessent to spell out how he aims to shrink the federal budget deficit by 2028 to 3% of gross domestic product, as he’s proposed, from more than 6% now, while extending Trump’s 2017 tax cuts. Outgoing Treasury Secretary Janet Yellen on Wednesday warned that a full extension of the reductions risked roiling financial markets, offering Democrats on the committee a talking point for the hearing.
Excerpts of Bessent’s prepared remarks to the Senate committee showed he plans to press for extending the 2017 reductions to avert “the largest tax increase in history, a crushing $4 trillion tax hike.”
More broadly, Bessent will face questions on the sustainability of public finances in the face of the escalating cost of Social Security and Medicare programs, along with a massive bill for debt interest costs that now exceeds US defense spending.
Debt Management
The Treasury secretary is in charge of decisions that determine how much the US borrows in what kind of debt. Bessent has been very critical of the financing strategy under Yellen, arguing she tried to juice the economy ahead of the election by holding down longer-term debt issuance in favor of bills — a charge she rejected. Lawmakers may question Bessent on whether he plans to embrace a different strategy, and how quickly he’s prepared to move, in the context of the Treasury’s longstanding mantra about being “regular and predictable” in its approach to issuance. The Treasury’s next scheduled update of its debt-sale plans comes Feb. 5.
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Bessent would also be taking the helm at a time when the federal debt limit is binding. He may be asked how he intends to handle that, and what his view is on the statutory ceiling.
International Engagement
As Treasury secretary, Bessent will be a key US envoy abroad, representing the nation in forums like the Group of Seven and Group of Twenty and having a key role in the work of the International Monetary Fund and World Bank. He’ll also inherit a complicated relationship with China that — under Yellen — has included regular dialogue, meetings and working groups with counterparts in Beijing on economic and financial issues. Lawmakers may question Bessent on his plans to engage with allies and adversaries abroad, his view on the importance of maintaining communication channels with China and the role of the US in international financial assistance programs. He’ll also likely be probed about his stance on continuing financial support for Ukraine, a key tenet of the outgoing administration’s policy.
The Dollar
Bessent will oversee US currency policy if confirmed, and may be tasked with finding a way to reconcile Trump’s ideas regarding the greenback. The president-elect likes the dollar’s role as the world’s main reserve asset, and the accompanying economic and geopolitical power. But he also wants a weak enough foreign-exchange rate to buoy the US manufacturing sector. Bessent has in the past described a stronger US dollar as a vote of confidence in US leadership internationally. Lawmakers could probe him over the merits of a strong dollar, and whether he agrees with Trump’s plans for a 100% tariff on countries that abandon the dollar.
“Critically, we must ensure that the US dollar remains the world’s reserve currency,” Bessent said in excerpts of his prepared remarks to the Senate panel.
The IRA and IRS
One of President Joe Biden’s signature achievements was the 2022 Inflation Reduction Act, which devoted hundreds of billions of dollars to climate and clean-energy initiatives that Republicans opposed. While a wholesale repeal of the IRA may be challenging for the GOP in Congress, the incoming administration could rewrite Treasury Department guidelines to make it harder to claim tax credits under the act. Bessent may be queried on his readiness to overhaul the rules.
Some of the funding for the IRA came from an $80 billion increase in funding for the Internal Revenue Service — part of the Treasury — over a decade. It was aimed in part at beefing up the enforcement of taxes owed by companies and rich Americans. Republicans have already forced a rollback of a slice of that funding through appropriations legislation last year. Meantime, Bessent could be quizzed by Republicans on his readiness to ease off of IRS enforcement.
Foreign Sanctions
Expect Bessent to be pressed for his views on sanctions, with the Treasury overseeing the majority of US measures against foreign entities. Biden levied more than 8,000 of them on a variety of targets during his four years in office, especially Russia following its 2022 full-scale invasion of Ukraine. The outgoing administration’s final targets included the Russian oil industry, sending the price of the commodity soaring globally, so look for senators to ask Bessent whether he would keep those measures in place.
“We must carefully deploy sanctions as part of a whole-of-government approach to address our national security requirements,” Bessent plans to tell the committee, according to excerpts of his prepared remarks.
Import Tariffs
Bessent is bound to be pressed to spell out what specific tariff measures he will argue for in the new administration. Tariffs can raise “significant revenue,” Bessent wrote in an opinion piece for Fox News after the election. They can also be used to revitalize manufacturing and reduce US dependence on important foreign goods, he wrote. Bloomberg reported this week that Trump’s team, including Bessent, was working on a plan for slowly ramping up tariffs month by month.
“Trump was the first president in modern times to recognize the need to change our trade policy and stand up for American workers,” Bessent said in the excerpts of his remarks to the committee.
The Fed
The Treasury secretary can offer critical input to the president on key economic and financial personnel decisions — most notably the chair of the Federal Reserve. That means any views Bessent expresses on monetary policy, on the independence of the Fed and on the policy decisions under Jerome Powell’s chairmanship could offer important clues on which direction he may lean when Powell’s term comes to an end in May 2026. He’s also likely to be pressed by Democrats on the appointment of the Fed’s vice chair for financial supervision, a key post in the oversight of the banking system that’s now open.
–With assistance from Daniel Flatley, Saleha Mohsin and John Harney.
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