Fed Chair Scott Bessent isn’t a good idea.
Why? Simple: Because he’s already beholden to Donald Trump, and he won’t be any less so if you move him to an ostensibly apolitical role.
That’s obvious to everyone, including and especially Trump, for whom the most important qualification for any job is loyalty. Or was loyalty. During his first term. During his second term, Trump demands outright fealty, and on most accounts, Bessent’s obliged as Treasury Secretary.
To be sure, anyone Trump nominates to replace Jerome Powell will be a sycophant, which is why I’ve always questioned the assumption that Kevin Warsh is a shoo-in. I don’t take Warsh for an eager flunky, but even if he is, Warsh harbors at least some hawkish inclinations, and that’s not going to work for Trump.
The other issue with Warsh is that he’s a serious person, nominally anyway. Trump needs unserious people, and the more unserious the better. Besides Marco Rubio, there isn’t a serious person in Trump’s second-term orbit, nor anywhere in the vicinity. Why would Trump squander an opportunity to install a dupe à la Pam Bondi and Pete Hegseth at the helm of the Fed in favor of someone like Warsh? Hell, I wouldn’t if I were Trump.
But here’s the thing: As much of a lost cause as the GOP most assuredly is, getting someone like, say, Judy Shelton confirmed by the Senate for the Fed Chair role would be an uphill battle, to put it mildly. We’ve already seen that movie once, and it didn’t end well. Getting someone like, say, Stephen Moore through would be even harder, which is to say all but impossible.
Given that, it probably makes the most sense to just go with Bessent if you’re Trump. Senate Republicans would rubber stamp Scott’s nomination — you’re not going to confirm him as Treasury Secretary and then not confirm him as Fed Chair — and although Bessent wouldn’t be as cartoonishly servile in the role as a Larry Kudlow, he’d be obsequious enough to suit all but Trump’s most outlandish purposes.
Trump could easily bridge any gaps between what he wants and what Bessent would deliver by simply calibrating his public rhetoric. If Trump wants a 50bps rate cut from Fed Chair Bessent, he could just demand 100bps on TruthSocial, and then Bessent could claim that in “only” cutting by half that, he’s not bowing to the pressure.
Of course, as Fed Chair, Bessent would be able to do all sorts of other things (i.e., things besides rate cuts) to help Trump assuming he could convince the rest of the Committee to go along with it. Things like capping US borrowing costs via some manner of yield-curve control implemented at Trump’s behind-the-scenes urging, and so on.
I bring this up because on Tuesday, Bloomberg suggested Bessent might indeed by in line for the Fed job. The linked article cites IIF chief Tim Adams, who said Bessent has a lot “trust and confidence” among “the global financial community.”
Frankly, I don’t think that’s necessarily true, or if it is, it overstates the case and underplays how much credibility Bessent might’ve lost already simply by being a part of Trump’s traveling circus.
Circling quickly back, no one’s going to believe that Bessent’s any less beholden to Trump as Fed Chair than he is as Treasury Secretary. Who’s gullible enough to buy that? Nobody, I hope.
So while Bessent’s a good idea for Trump in lieu of Maria Bartiromo, putting him in charge of the Fed would be to surrender monetary policy to this White House, which is to say it’s a bad idea for everyone else. Anyone who says different is gullible or lying to you.
Bessent has Steve Bannon’s backing, if that you tells you anything. Scott’s “not just the star of the cabinet, but a safe pair of hands for global capital markets,” Bloomberg quoted Bannon as saying.
I’m not sure I’m listening to Steve when it comes to choosing the safest hands, although to his credit, he did warn Trump not to trust Elon Musk.
I’ve been amazed that so many people assumed that Warsh was a shoo-in.
During the “drama” surrounding Mr. Trump’s deliberation over his treasury secretary choice. quite a few sources indicated that Musk was pushing Howard Lutnick. Apparently Lutnick annoyed Trump by lobbying too aggressively for the job.
The Theil faction, led by Vance and Don Jr, were pushing for Bessent who was less of a “household name” than even Lutnick. Chatter was that Bessent hesitated because he wanted Powell’s job, not Yellen’s. “People said” that Bessent was promised Powell’s role, after proving himself in the Treasury secretary role.
And, happily for America, Howard Lutnick was told to bide his time as Commerce Secretary until Bessent was elevated to the Fed chairmanship when he could step into Bessent’s current role.
Lil Marco a serious person? That ship sailed a long time ago.
Waller
Yeah, that’s the obvious, sane choice, particularly given how hard Waller’s been lobbying for the job by insisting tariff-related inflation won’t be a big obstacle to rate cuts, but I can’t see Trump going that route. It’s too conventional. And Waller’s not going to be a stooge. He’d cut rates, sure, but he takes the economics profession very seriously.
H-Man, make no mistake, he will only appoint someone who jumps when he says “cut”. He doesn’t care if they have any qualifications as long as they follow orders. Bessent could be a Musk redux which means he doesn’t make the cut..
Rubio “fake tripped” up the stairs to Air Force 1 to soften the look of trumps trip. Serious is a strong word.
The Fed chair has to convince the FOMC. Once appointed, he is beyond Trump’s control. His term will outlast Trump’s. So the Fed Chair will be able to deny Trump’s wishes, if he wishes to.
Between Bessent and Warsh, who is more likely to want to (deny Trump)? Maybe Warsh, but Bessent while probably more dovish is not totally unserious.
Another question is, how quickly can Trump turn over the rest of the FOMC?
Equity investors would probably like a “serious-but-dove” Chair.
Bessent is very weak in every sense of the word and blows with the wind, He might look socialy capable but it would be like having an empty shirt at the head of the Fed. For that reason Trump will pick him. It would be a bad day for the dollar, the economy, and the U.S.
A thought question: Who was the Fed Chair before Volcker? It does matter!
G. William Miller. Had to look it up- I was only 13 at the time. Why does it matter?
I guess what John is trying to imply that there will be a need for another Volcker to clean up after whoever Trump nominates as vehicle to execute his desire for rate-cutting. So might be interesting to compare the personality of the pre-Volcker guy to whoever comes after Powell. However, I’m not sure the historical comparison will yield much of an insight as we live in the era of “unprecendented”
I don’t like to be snarky, but why does Bessent always look like he’s ingested a few schrooms or just had a nice BM? You never saw Paul V looking that way.
Sorry to be unresponsive but work called. G. William Miller was head of a conglomerate and had a good business reputation, but he wasn’t an economist or lawyer, was a meeting organizer but sober enough to be easily approved. Don’t know why Carter picked him, but he did not like Arhter Burns, Nixon’s man. Carter pushed Burns out and the selection was really Carter’s alone. Miller did not want to raise rates as Carter, Bryzinski and Schulze were all for gwowth. But, the governors ignored him and the economy came out too fast with inflation arond 7%. In 1979, Carter made Miller into Secretary of Treasury and Volcker Fed Chair. Again all Carter’s decision. Volcker had rates all over, it was a zoo. It could be the same – especially with Bessent, a real light-weight.