What does America’s next treasury secretary believe?
TO HEAR DONALD Trump’s transition team describe it, everyone wants to work for him. Howard Lutnick, the boss of Cantor Fitzgerald, an investment firm, and a co-head of the recruitment crew, has bragged that he is in touch with “the top 150 businesspeople across the United States of America”. A vast array of names has been bandied about for all kinds of roles, including treasury secretary—from Jamie Dimon, boss of JPMorgan Chase, a bank (who has repeatedly insisted he has no interest in the job), to Jay Clayton, who ran the Securities and Exchange Commission during Mr Trump’s first term (but who is apparently angling for other things), to Steven Mnuchin (who did the job last time but does not want it back).
From this milieu, however, a few clear frontrunners have emerged. With the caveat that the market is relatively thin—less than $500,000 has been wagered on the question on Polymarket, America’s largest prediction site—punters have given serious chances to three possible choices in recent days. Two are Wall-Street types who favour a broad mix of pro-business, protectionist policies. The third is a wild card focused on crushing inbound trade. Who among them—if any—gets picked will say much about Mr Trump’s second-term economic priorities.
Speculators give by far the best chance to Scott Bessent, who runs Key Square Capital, a hedge fund (see chart). He has been the odds-on favourite for days, ever since it was revealed that he was hobnobbing with Mr Trump at Mar-a-Lago over the weekend. Key advisers are backing him for the post; on November 10th he published an op-ed in the Wall Street Journal outlining why he thinks Mr Trump’s agenda will turbocharge the economy. (It had looked as though Mr Trump was choosing between Mr Bessent and John Paulson, a hedge-fund titan whom Mr Trump name-checked in January as a possible pick. But Mr Paulson announced on November 12th that he was no longer pursuing the job.) Then Mr Lutnick himself made a serious bid for the role. Betting markets give him a 30% chance of prevailing.
Mr Bessent and Mr Lutnick, at a glance, have much in common. Both have lived in New York City for most of their professional lives. Both became billionaires through success in high finance. And both have backed Mr Trump’s campaign heavily, either through hosting fundraising events or with donations of their own. In recent interviews or op-eds, both have called for deregulation, lower taxes and tariffs.
The wild-card choice would be Robert Lighthizer. He was the architect of Mr Trump’s tariffs during his first term and is a vociferous advocate of more intervention on trade. In an opinion piece for The Economist in March he argued that a blanket 10% tariff on imported goods would create “high-paying industrial jobs”. In the days after Mr Trump’s election Mr Lighthizer, a former Wall Street lawyer who was America’s trade representative in the first Trump administration, was thought to have a decent shot—but there have been mixed signals from Mr Trump’s inner circle about his prospects since. Choosing him would reveal that trade policy is Mr Trump’s main priority—and might cause investors to rethink their enthusiasm for Trumponomics.
At the time of writing, markets were favouring Mr Bessent as the pick. What agenda might the Treasury pursue under his stewardship? In interviews he projects the obsequious loyalty Mr Trump enjoys—he told CNBC “I’m going to do whatever Donald Trump asks”—and signals he favours policies Mr Trump fetishises, such as slashing taxes and red tape. But elsewhere he and the president-elect might differ. In particular, Mr Bessent appears to care deeply about containing government debt: he characterised the big deficits and state subsidies of the Biden era as a “return to central planning” in a speech in June. His plan to bring the deficit down would almost certainly include gutting the green subsidies in the Inflation Reduction Act, a law enacted in 2022 that he has described as a budgetary “doomsday machine”.
Mr Bessent has also characterised the maximalist tariffs Mr Trump promised on the campaign trail as more of a negotiating position than a real policy. And he seems less inclined to try to mess with the dollar than Mr Trump, who has often bemoaned the currency’s strength and appears keen to push its value down. On November 10th Mr Bessent wrote that the greenback’s bounce since the election is “a vote of confidence in US leadership”. That he believes in market exchange rates should not come as a surprise. It would be ironic if a former protégé of George Soros, the financier known for “breaking the Bank of England” with big short bets against the pound, could be persuaded that the state should be the one setting exchange rates.
This might have given the president-elect some pause; Mr Lutnick’s chances are rising. He has called tariffs a mere negotiation position, too. But he has defended them more forcefully in interviews, touting their benefits and disclaiming their potential economic fallout. He also seems more charismatic and at ease on air than does Mr Bessent.
Still, Mr Bessent may hope he has an ace up his sleeve. In the past, Mr Trump has described choosing Jerome Powell, the current chairman of the Federal Reserve, as the “worst mistake” of his presidency. But sacking him before his term ends in 2026 might be legally impossible, and trying to do so could be an embarrassing failure. As a result, Mr Bessent has laid out an alternative plan: appointing Mr Powell’s successor perhaps a year in advance of the end of his term, with the chair-in-waiting offering alternative forward guidance on policy. The scheme is unlikely to work. But it is just the type of gambit—craftily disdainful of norms and propriety—that might help him woo Mr Trump. ■
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