Next U.S. Treasury Secretary Will Be a Huge Stock Fan with More Influence Than Ever. Here's What He Said
2min read The incoming U.S. Treasury Secretary has now undoubtedly become the most prominent official in the cabinet, with every word and deed highly noticed by the market. What makes investors excited is the next candidate may give the market a solid boost because of his deep investing background and support for deregulation.
President-elect Donald Trump on Friday nominated billionaire Scott Bessent for the position of Treasury Secretary. Bessent once served as the chief investment officer of Soros Fund Management. He provided advice on economic policies to Trump during the 2024 presidential campaign.
After being nominated, Bessent rarely showed up in an interview and revealed his policy focus would be to fulfill Trump's various tax-cut promises, including making the tax-cut policies of the first term permanent and eliminating taxes on tips, social security benefits, and overtime pay.
He also mentioned that he would focus on promoting tariff policies and cutting expenditures while maintaining the U.S. dollar's position as the global reserve currency. So what are the specific policies? Simply put, it is 3 - 3 - 3.
The 3 - 3 - 3 Strategy
Bessent's 3 - 3 - 3 policy advocates reducing the budget deficit to 3% of GDP by 2028, achieving 3% GDP growth through deregulation, and increasing daily oil production or equivalent energy production by 3 million barrels.
In terms of economic growth, Bessent advocates achieving the 3% real economic growth target through deregulation, expanding U.S. energy production, and controlling inflation.
Bessent believed that the goal is to let the private sector take over, replacing the currently inflated government spending. He dismissed the idea that the policy orientation of the Biden administration has suppressed the private investment will.
Regarding deficit control, Bessent said that he would urge Trump to publicly state the hope of reducing the deficit to 3% of GDP before the end of his term. Trump didn't let the deficit reach 6% or 7% of GDP. During his first term, the federal budget deficit averaged 4% of GDP, so (in this term) it should be reduced to 3%, he added.
In terms of energy policy, he regards increasing crude oil production as a crucial means to suppress inflation expectations and advocates a daily increase of 3 million barrels of oil or equivalent energy production.
Bessent also tries to downplay Trump's trade threats. Facing Wall Street's concerns that comprehensive tariffs might trigger a trade war and ultimately lead to higher prices for U.S. consumers, Bessent responded that Trump's tariff threats are a negotiation strategy aimed at getting concessions from other countries:
Tariffs are the starting point for negotiations with trading partners... Fundamentally, he is a free - trader.
Some analysts believe that Bessent will open the Mnuchin 2.0 era. Mnuchin couldn't stop all tariff policies, but he knew where the red line was and ensured the stable operation of the U.S. bond market. The market expects that the new government's fiscal policy will be implemented in a step - by - step manner, implementing tariff policies in phases rather than as aggressively as Trump promised during the campaign.
Bessent Has Become Trump's Favorite
The Treasury Secretary is regarded as one of the four most important positions in the U.S. cabinet besides the vice - president, responsible for providing advice to the president on economic and fiscal affairs and ensuring the stability of the government bond market. The media said that Trump's policy proposals such as tax cuts and a strong dollar all need to be implemented through the Treasury Department. After the announcement of the Treasury Secretary candidate, CNN said that this position has become the trophy of Wall Street tycoons.
And now Bessent has emerged victorious and become a key member in Trump's core circle. He provides more insights into Trump's economic proposals and defends Trump's more aggressive trade policies.
Trump once said that among all the Treasury Secretary candidates, he trusted Bessent more, believing that he was more capable of implementing the new government policies. He highly praised Bessent on Friday, saying that Bessent is respected by everyone and is one of the most important investors in the global market and a geopolitical-economic strategist... He will help lead the United States into a new golden age.