'Scott Bessent's Endgame': Interpreting His Intentions
The Treasury secretary is perceived as a stabilizing force for President Trump. However, he is also determined to shake up government as it currently operates.
TroibNews 
In recent weeks, amid the impact of President Donald Trump’s trade war on stocks and business confidence, Treasury Secretary Scott Bessent has repeatedly stated that the U.S. economy requires a “detox.”
At first glance, the term might seem to refer to the current turbulent economic climate. The market’s fluctuations could indeed be likened to a physical malady, and Trump himself has drawn parallels between tariffs and medicinal treatment.
However, Bessent’s notion of “detox” is fundamentally about cutting government spending, not trade issues. Despite the ongoing noise surrounding Elon Musk’s DOGE, this initiative is still in its early stages.
With a substantial portion of Trump’s new tariff strategy on hold for 90 days and Congress engaged in discussions over its upcoming budget, the topic of spending reduction is poised to gain more attention. Bessent is expected to be at the forefront of this conversation.
In the realm of trade, Bessent is seen as a moderating force against Trump’s more extreme trade strategies. Yet, when it comes to fiscal matters, his stance could be described as more hardline. He is a fervent proponent of spending cuts and has built a team at Treasury to advocate for this agenda.
“We are spending hundreds of billions of dollars per year in excess of what’s explained by inflation and population growth,” Deputy Treasury Secretary Michael Faulkender noted in a recent interview. “So the government’s gotten larger. They have gotten more involved in people's lives, and there was already bloat to begin with, honestly.”
Bessent’s recurring emphasis on detoxification has piqued my interest due to its unique metaphorical representation of public finances, likening it to a harmful addiction.
His rhetoric sometimes resembles that of proponents of the Austrian school of economics, who assert that the economy occasionally requires purging of excesses. “The market and the economy have just become hooked, and we’ve become addicted to this government spending,” he told CNBC last month.
Conversations with individuals familiar with Bessent—nearly a dozen Wall Street insiders—reveal that controlling federal debt is a core issue for the former hedge fund manager.
“A lot of people say it and don’t really mean it, and I think he means it,” said Sassan Ghahramani, CEO of SGH Macro Advisers, who has known Bessent for many years.
“The primary motivation for Scott to want this job is I think he wants to have a legacy of having improved the debt dynamics of the United States,” stated Jens Nordvig, founder of research firm Exante Data.
Bessent has himself mentioned that it was government overspending that “got [him] out from behind his desk” to enter public service.
However, Bessent's ambitious goals include reducing deficits while Congress is contemplating extending tax cuts likely to diminish government revenues and fostering higher growth amid some level of austerity.
This is all happening in light of increasing tariffs, which are already unsettling markets and raising concerns about a potential recession.
Bessent's strategy seems to be this: reduce spending through Congress in a substantial way that cools inflation yet does so gradually to avoid hindering growth; use tax cuts and deregulation to mitigate economic drag; and implement tariffs to increase revenue while creating more private sector jobs for those leaving government roles.
Achieving this plan would require a series of favorable outcomes.
Jim Rogers, a co-founder of a hedge fund with billionaire George Soros in the 1970s and Bessent’s earliest mentor, expressed his doubts regarding the Trump administration's capacity to curtail government spending.
He pointed out that prior administrations have made similar promises. “I know what they say, but I have seen this before,” Rogers remarked. “Every time we’ve had a new government in the U.S., they talk about how they’re going to deal with the debt problem.”
The challenge is that austerity often comes with significant public discomfort. “People start to say, ‘Oh, this is too much pain. Let’s go back,’” he explained. “We always relent.”
Rogers's concerns resonate with Bessent, who interned with him in 1984 and has expressed warnings about excessive money printing and high debt levels, suggesting that the U.S. is “overdue” for economic challenges.
For his part, Bessent maintains that the government’s increased involvement in the economy has made it appear healthy, but “brittle underneath.” He contends that the private sector is in recession, advocating for a “detox” aimed at finding a more sustainable growth model.
While many economists agree that the U.S. faces an unsustainable debt trajectory, fewer support Bessent’s assertion that federal spending is the primary driver of the economy.
“Government spending certainly occupies an important part of the economy,” noted Alan Auerbach, a professor at the University of California at Berkeley. “I wouldn’t say it’s driving the economy.”
James Pethokoukis, a senior fellow at the conservative American Enterprise Institute, highlighted the momentum in productivity growth as an indicator of a robust private sector, adding that market responses would reflect the viability of Bessent’s proposals.
“If his theory of the case was true, which is we’ve had this sort of weird unsustainable economy, driven by debt, not by anything good happening in the private sector... you would expect reaction from markets to be really positive,” he remarked.
Top administration officials, including Bessent, have pointed out that a significant number of jobs added in 2024 stem from government and related sectors, encompassing private health care and education.
This characterization holds true, provided one accepts the association of health care with government influence. Dario Perkins, a macro strategist, summarized it succinctly: “This whole thing comes down to a very specific claim—that the health care sector is crowding out private job growth.”
Contrary evidence exists as well: measures of the federal share of GDP suggest that the government’s impact on economic growth is at its lowest in over 75 years.
Nonetheless, this does not imply that the U.S. should not address its debt levels—overburdened bond markets would likely welcome a shift—or that Bessent is misguided in advocating for reduced government involvement. Federal spending post-pandemic has contributed to the high inflation seen during President Joe Biden’s tenure while also supporting market boosts and growth.
In this context, Faulkender indicates that the “detox” process has already commenced.
State and local governments still possess unspent funds from the American Rescue Plan, and “there’s still hundreds of billions of dollars in COVID money that is still processing its way through the system,” he explained.
“Those things are coming to an end, right?” he questioned.
Next, the administration aims to reduce spending significantly.
Bessent has endorsed a gradual approach, communicating to Republican legislators advocating for swift cuts that $300 billion represents roughly one percent of GDP. This perspective notably contrasts with the aggressive cuts proposed by some factions within the government.
“I’m not sure what a deficit hawk is, but I think I would qualify as one,” he remarked in a recent podcast interview. “And a lot of the Republicans, I actually have to coax them: you can’t do this all at once.”
The impending question is whether these strategies will be realized.
Emily Johnson for TROIB News
At first glance, the term might seem to refer to the current turbulent economic climate. The market’s fluctuations could indeed be likened to a physical malady, and Trump himself has drawn parallels between tariffs and medicinal treatment.
However, Bessent’s notion of “detox” is fundamentally about cutting government spending, not trade issues. Despite the ongoing noise surrounding Elon Musk’s DOGE, this initiative is still in its early stages.
With a substantial portion of Trump’s new tariff strategy on hold for 90 days and Congress engaged in discussions over its upcoming budget, the topic of spending reduction is poised to gain more attention. Bessent is expected to be at the forefront of this conversation.
In the realm of trade, Bessent is seen as a moderating force against Trump’s more extreme trade strategies. Yet, when it comes to fiscal matters, his stance could be described as more hardline. He is a fervent proponent of spending cuts and has built a team at Treasury to advocate for this agenda.
“We are spending hundreds of billions of dollars per year in excess of what’s explained by inflation and population growth,” Deputy Treasury Secretary Michael Faulkender noted in a recent interview. “So the government’s gotten larger. They have gotten more involved in people's lives, and there was already bloat to begin with, honestly.”
Bessent’s recurring emphasis on detoxification has piqued my interest due to its unique metaphorical representation of public finances, likening it to a harmful addiction.
His rhetoric sometimes resembles that of proponents of the Austrian school of economics, who assert that the economy occasionally requires purging of excesses. “The market and the economy have just become hooked, and we’ve become addicted to this government spending,” he told CNBC last month.
Conversations with individuals familiar with Bessent—nearly a dozen Wall Street insiders—reveal that controlling federal debt is a core issue for the former hedge fund manager.
“A lot of people say it and don’t really mean it, and I think he means it,” said Sassan Ghahramani, CEO of SGH Macro Advisers, who has known Bessent for many years.
“The primary motivation for Scott to want this job is I think he wants to have a legacy of having improved the debt dynamics of the United States,” stated Jens Nordvig, founder of research firm Exante Data.
Bessent has himself mentioned that it was government overspending that “got [him] out from behind his desk” to enter public service.
However, Bessent's ambitious goals include reducing deficits while Congress is contemplating extending tax cuts likely to diminish government revenues and fostering higher growth amid some level of austerity.
This is all happening in light of increasing tariffs, which are already unsettling markets and raising concerns about a potential recession.
Bessent's strategy seems to be this: reduce spending through Congress in a substantial way that cools inflation yet does so gradually to avoid hindering growth; use tax cuts and deregulation to mitigate economic drag; and implement tariffs to increase revenue while creating more private sector jobs for those leaving government roles.
Achieving this plan would require a series of favorable outcomes.
Jim Rogers, a co-founder of a hedge fund with billionaire George Soros in the 1970s and Bessent’s earliest mentor, expressed his doubts regarding the Trump administration's capacity to curtail government spending.
He pointed out that prior administrations have made similar promises. “I know what they say, but I have seen this before,” Rogers remarked. “Every time we’ve had a new government in the U.S., they talk about how they’re going to deal with the debt problem.”
The challenge is that austerity often comes with significant public discomfort. “People start to say, ‘Oh, this is too much pain. Let’s go back,’” he explained. “We always relent.”
Rogers's concerns resonate with Bessent, who interned with him in 1984 and has expressed warnings about excessive money printing and high debt levels, suggesting that the U.S. is “overdue” for economic challenges.
For his part, Bessent maintains that the government’s increased involvement in the economy has made it appear healthy, but “brittle underneath.” He contends that the private sector is in recession, advocating for a “detox” aimed at finding a more sustainable growth model.
While many economists agree that the U.S. faces an unsustainable debt trajectory, fewer support Bessent’s assertion that federal spending is the primary driver of the economy.
“Government spending certainly occupies an important part of the economy,” noted Alan Auerbach, a professor at the University of California at Berkeley. “I wouldn’t say it’s driving the economy.”
James Pethokoukis, a senior fellow at the conservative American Enterprise Institute, highlighted the momentum in productivity growth as an indicator of a robust private sector, adding that market responses would reflect the viability of Bessent’s proposals.
“If his theory of the case was true, which is we’ve had this sort of weird unsustainable economy, driven by debt, not by anything good happening in the private sector... you would expect reaction from markets to be really positive,” he remarked.
Top administration officials, including Bessent, have pointed out that a significant number of jobs added in 2024 stem from government and related sectors, encompassing private health care and education.
This characterization holds true, provided one accepts the association of health care with government influence. Dario Perkins, a macro strategist, summarized it succinctly: “This whole thing comes down to a very specific claim—that the health care sector is crowding out private job growth.”
Contrary evidence exists as well: measures of the federal share of GDP suggest that the government’s impact on economic growth is at its lowest in over 75 years.
Nonetheless, this does not imply that the U.S. should not address its debt levels—overburdened bond markets would likely welcome a shift—or that Bessent is misguided in advocating for reduced government involvement. Federal spending post-pandemic has contributed to the high inflation seen during President Joe Biden’s tenure while also supporting market boosts and growth.
In this context, Faulkender indicates that the “detox” process has already commenced.
State and local governments still possess unspent funds from the American Rescue Plan, and “there’s still hundreds of billions of dollars in COVID money that is still processing its way through the system,” he explained.
“Those things are coming to an end, right?” he questioned.
Next, the administration aims to reduce spending significantly.
Bessent has endorsed a gradual approach, communicating to Republican legislators advocating for swift cuts that $300 billion represents roughly one percent of GDP. This perspective notably contrasts with the aggressive cuts proposed by some factions within the government.
“I’m not sure what a deficit hawk is, but I think I would qualify as one,” he remarked in a recent podcast interview. “And a lot of the Republicans, I actually have to coax them: you can’t do this all at once.”
The impending question is whether these strategies will be realized.
Emily Johnson for TROIB News
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