U.S. President-elect Donald Trump’s nominee for Treasury secretary mentioned on Thursday that the greenback ought to proceed to be the world’s reserve foreign money, whereas emphasizing the significance of Federal Reserve (Fed) independence and expressing readiness to implement stricter sanctions on Russia’s oil sector.
Scott Bessent, testifying at a Senate Finance Committee affirmation listening to, underscored an pressing want to increase Trump’s 2017 tax cuts, as a result of expire on the finish of this 12 months, to keep away from a $4 trillion tax hike that would crush the U.S. economic system.
“If we do not renew and extend, then we will be facing an economic calamity,” Bessent mentioned. “We will see a gigantic middle-class tax increase.”
Bessent, a hedge fund supervisor and founding father of Key Square Capital Management, voiced help for Trump’s plans to impose steep tariffs, saying they’d fight unfair commerce practices, increase revenues and improve U.S. negotiating leverage, together with on non-trade points.
Bessent mentioned that U.S. sanctions in opposition to Russia’s oil sector have been too weak, partly as a result of the Biden administration was too involved about rising costs on the similar time it was constraining U.S. oil output. Increased U.S. oil manufacturing would permit for harder sanctions on Russian oil majors, he mentioned.
“I think if any officials in the Russian Federation are watching this confirmation hearing, they should know that if I’m confirmed, and if President Trump requests as part of his strategy to end the Ukraine war, that I will be 100% on board with taking sanctions up – especially on the Russian oil majors – to levels that would bring the Russian Federation to the table,” Bessent mentioned.
Bessent coolly fielded questions starting from U.S. competitors with China, to youngster tax credit, and didn’t stray from solutions per earlier Republican Treasury nominees.
Fed independence
Some analysts had mentioned markets could be scrutinizing Bessent’s feedback retaining the Federal Reserve unbiased given Trump’s frequent disagreements over the U.S. central financial institution’s rate of interest choices and his personal feedback a few “shadow” Fed chair.
But he got here down firmly on the facet of Fed financial coverage independence, including that Trump would nonetheless make his views recognized.
“I think on monetary policy decisions, the FOMC should be independent,” Bessent mentioned, referring to the Fed’s rate-setting panel, the Federal Open Market Committee.
Despite Trump’s longstanding complaints a few sturdy greenback, Bessent mentioned: “Critically – critically – we must ensure that the dollar remains the world’s reserve currency.”
Bessent additionally rejected the concept of a central financial institution digital foreign money for the Fed, saying that the greenback’s broad use and safety made this pointless.
He mentioned he was open to the concept of making a U.S. sovereign wealth fund, however mentioned the U.S. wanted to get management over short-term deficit development first.
The excessive degree of U.S. deficits means that there’s much less capability to borrow closely to fight a disaster, he mentioned, citing examples of the Nineteen Thirties Great Depression, World War II and the current COVID-19 pandemic.
“Treasury – along with the whole of government and Congress – has used its borrowing capacity to save the union, save the world, and save the American people,” Bessent mentioned. “What we currently have now, we would be hard-pressed to do the same.”
In ready remarks launched on Wednesday evening, Bessent laid out a imaginative and prescient for “a new economic golden age” that included prioritizing strategic investments that develop the U.S. economic system and making everlasting Trump’s 2017 particular person and small business tax cuts which are as a result of expire on Dec. 31, 2025.
“We must secure supply chains that are vulnerable to strategic competitors, and we must carefully deploy sanctions as part of a whole-of-government approach to address our national security requirements,” Bessent additionally mentioned within the remarks.
Source: www.dailysabah.com