Bessent hearing previews fight over Trump agenda

Jan 15, 2025

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QUICK FIX

Scott Bessent heads into his Treasury secretary nomination hearing on Thursday on a glide path to confirmation to the top economic post in President-elect Donald Trump’s Cabinet.

The longtime hedge fund manager has strong support among the Republicans who control the Senate, and Democrats don’t have the votes to stop him.

But his hearing will be a chance for senators from both parties to pin down Bessent, a newcomer to Washington politics, on policy issues. And it’ll give Democrats a first crack at taking on Trump’s economic agenda.

“I expect the hearing to be a low-drama job interview and for people to come away impressed and feeling pretty good about the man who will have Trump’s ear on the issues that will matter most to voters this year,” said Brian McGuire, who was a top adviser to former Treasury Secretary Steven Mnuchin and onetime chief of staff to Sen. Mitch McConnell.

Both Republicans and Democrats on the Senate Finance Committee, which will be charged with writing a sweeping tax bill this year, say they expect tax policy will be a major focus of Bessent’s hearing.

Sen. Steve Daines (R-Mont.), a member of the Finance Committee, said he expects Bessent to focus on “the importance of making the Trump tax policy permanent this year.”

If confirmed, Bessent will also play a major role in shaping Trump’s trade agenda — one area where there are tensions with some Senate Republicans over how far to enact massive tariffs.

Bessent has reportedly been part of a group of Trump economic advisers pushing for a more phased-in or exacting approach to the president-elect’s calls for universal tariffs. Bessent, who some on Wall Street view as a potential moderating influence on trade, has previously called tariffs an important “negotiating tool.”

Sen. Thom Tillis (R-N.C.) said he plans to ask Bessent about banking policies but expected Trump’s trade agenda would come up as well.

“We’ve got to just address the elephant in the room,” Tillis said of Trump’s tariffs. “There’s a right way to do it.” Trump is right to focus on “some patently unfair trade relationships,” Tillis said. “But at the end of the day, we’ve got to be smart about implementation.”

Tillis said he wants to see a “very targeted” approach to tariffs. “I think mass tariffs would cause mass problems,” he said.

Sen. Chuck Grassley (R-Iowa) said he planned to focus on oversight and making sure that Bessent agrees to answer congressional letters, though he too said he expected tariffs would be a focus of the hearing. “I’m a free trader,” he said.

Democrats, for their part, have signaled they’re going to use the hearing to bash Republicans’ plans to extend their 2017 tax law as a massive giveaway to the wealthy.

Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee who also serves on the Finance Committee, this week dropped a more than 180-page questionnaire for Bessent. It asked, among a wide range of issues, the extent to which Bessent will personally benefit from the tax bill.

And Sen. Ron Wyden, who leads Democrats on the Finance Committee said last week that he wanted to talk with Bessent about his tax plans. “Supercharging the 2017 tax bill to give more to the people at the top, it seems to me, to be stuff that it's important to stop,” Wyden said.

But some Democratic votes for Bessent appear to be up for grabs. For all their deep economic policy fissures with Trump, some Democrats view Bessent as qualified to lead the agency. Treasury Secretary Janet Yellen last week praised Bessent’s financial market experience.

Sen. Mark Warner (D-Va.) said Bessent was “in terms of technical qualifications, one of the better-qualified nominees” and that he was “open” to voting for his nomination. “I had a productive first meeting with him,” Warner said. Warner said he’d like to hear from Bessent at the hearing on access to capital issues, the national debt and the budget deficit.

Sen. Maria Cantwell, another senior Democrat on the Finance Committee, said. “I’m not sure he is seen as one of the more controversial people.”

It’s WEDNESDAY — What do you want to know? What should lawmakers be asking? If you have thoughts, reach Sam at ssutton@politico.com.

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Driving The Day

A farewell address: Yellen will deliver the final speech of her tenure at noon today at the New York Association for Business Economics.

She will tout the Biden administration’s economic record and discuss her four years at the helm of Treasury. “The U.S. economy has done remarkably well in the aftermath of the pandemic,” Yellen plans to say, according to prepared remarks. “This fact becomes even more apparent when the recovery is placed in the proper context, namely by comparing U.S. economic outcomes to those in other advanced economies, to performance in past recessions, and to what economists forecasted.”

Treasury

First in MM: Treasury curbs improper payments to dead people — The Treasury Department is announcing this morning that it has prevented $31 million in improper or fraudulent federal payments through a new pilot program that checks to make sure the recipients aren’t dead.

Congress in 2020, amid concerns that Covid stimulus checks were going to deceased individuals, passed legislation requiring the Social Security Administration to temporarily provide Treasury with access to its massive death database for a three-year period starting December 2023.

Treasury projects that the enhanced fraud-detection capabilities will net savings of $215 million through December 2026. And the agency is now calling on Congress to make the death file data-sharing program permanent.

“These results are just the tip of the iceberg,” said Fiscal Assistant Secretary David Lebryk. “Congress granting permanent access to the Full Death Master File will significantly reduce fraud, improve program integrity, and better safeguard taxpayer dollars.”

On the Hill

Scott’s to-do list: Senate Banking Chair Tim Scott (R-S.C.) today is circulating his wide-ranging plans for the committee this year, Eleanor Mueller reports. On the agenda: a pair of proposals on housing and investing that Scott unveiled last year — as well as a new proposal on financial opportunity, which Scott's team began work on last fall. The final version would aim to boost financial literacy, roll back Biden-era regulations, require agencies to conduct cost-benefit analyses of their rules, and provide clarity to financial technology firms.

Other legislative priorities include overhauling cryptocurrency regulation, strengthening sanctions, reducing federal oversight of state insurance markets, and reauthorizing the National Flood Insurance Program.

Scott also wants to wield the Congressional Review Act to overturn Biden-era financial rules — a move that is expected to initially target the CFPB's policies on medical debt and overdraft fees, as Eleanor also scooped on Tuesday.

Meanwhile, the House Financial Services Chair French Hill rolled out his Republican subcommittee leaders on Tuesday. Jasper Goodman reports on the full list here. Of note: The committee is also creating a task force on monetary policy, Treasury market resilience and economic prosperity. The group, as Eleanor previewed Tuesday, will be led by Rep. Frank Lucas (R-Okla.).

Howard Lutnick’s confirmation speed bump: Paperwork delays are holding up a Senate hearing for Trump’s pick to lead the Commerce Department. “It will be soon,” Sen. Ted Cruz (R-Texas), the chair of the Senate commerce committee, told our Ben Leonard. “We’re waiting for the paperwork to be completed.”

A message from U.S. Bank:

Regulatory Corner

Gruenberg’s farewell address: Outgoing FDIC chief Martin Gruenberg warned in a lengthy final speech Tuesday that innovation in the nation’s financial system needs to be “tempered by careful and prudent management and appropriate regulation and supervision” to avoid repeating mistakes that led to past financial crises.

Gruenberg had a more succinct warning about the Trump administration’s looming deregulatory plans, in an interview with The Financial Times: “Be careful, don’t get carried away,” he said. “Because the price could be high.”

SEC v. Musk: The Securities and Exchange Commission took a parting shot at Elon Musk on Tuesday, filing a lawsuit over the billionaire’s alleged failure to properly disclose his purchases of Twitter stock in 2022, Declan Harty reports.

The lawsuit accuses Musk, the world’s richest man and top Trump backer and adviser, of failing to properly disclose that he had acquired a major stake in Twitter. Regulators said Musk benefited from "artificially low prices" as he snatched up shares in the company, which he eventually purchased for $44 billion and renamed X.

The lawsuit lands just days before SEC Chair Gary Gensler is due to depart the agency as President Joe Biden's administration draws to a close. It marks the latest salvo in a years-old feud between the SEC and Musk, who has become one of the regulator's highest-profile critics.

Alex Spiro, an attorney for Musk, fired back at the agency, calling the SEC’s case a “single-count ticky tak complaint” that “even if proven, carries a nominal penalty.” He added that the “action is an admission by the SEC that [they] cannot bring an actual case - because Mr. Musk has done nothing wrong and Everyone sees this sham for what it is.”

CFTC seeks sports betting halt: Wall Street regulators are calling on cryptocurrency exchange Crypto.com to halt trading in two recently launched financial products that offer traders a new means to wager on football games like the Super Bowl, pending further review, Declan reports.

The CFTC plans to conduct a 90-day review of the Crypto.com products and has asked the company to suspend its listing and trading in the meantime, the agency said Tuesday. In a letter to the company, the CFTC wrote that the products may involve an activity that is barred under its rules.

DOJ swings at KKR: The Justice Department on Tuesday filed suit against private-equity giant KKR, accusing the company of improper premerger filings. As The Wall Street Journal reports, the alleged violations could carry more than $650 million in penalties.

ODDS AND ENDS

New friends — In a new report, the trade group American Investment Council is spotlighting the private equity industry’s investments in the states and districts represented by newly elected members.

Jobs report

First in MM — Senate Minority Leader Chuck Schumer’s banking counsel Jen Brown will join BGR Group later this month. Brown, who also worked for House Small Business Committee ranking member Nydia Velázquez (D-N.Y.), will focus on digital assets, the financial sector, and tax policy.

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