US will face ‘economic calamity’ for ‘middle and working class’ if Trump tax cuts expire: Treasury pick Scott Bessent

Americans will face an unparalleled “economic calamity” that might cost the dollar its status as the world’s reserve currency if Congress doesn’t renew President-elect Donald Trump’s 2017 tax cuts, Treasury Secretary-designate Scott Bessent declared during his Senate confirmation hearing Thursday.

Bessent warned lawmakers that the US risks a “crushing $4 trillion tax hike” — the largest in its history — if the 45th president’s marquee legislation is allowed to sunset at the end of this year.

“Today, I believe that President Trump has a generational opportunity to unleash a new economic golden age that will create more jobs, wealth and prosperity for all Americans,” the 62-year-old hedge fund manager told members of the Senate Finance Committee.

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“We must make permanent the 2017 Tax Cuts and Jobs Act and implement new pro-growth policies to reduce the tax burden on American manufacturers, service workers and seniors.”

President Biden and Democrats have derided the law as a tax cut for the rich — but Bessent countered that working- and middle-class Americans would bear the brunt of the economic disruption should the law not be renewed.

“This is the single most important economic issue of the day,” he told Senate Finance Committee Chairman Mike Crapo (R-Idaho). “If we do not renew and extend, then we will be facing an economic calamity and, as always with financial instability, that falls on the middle and working class people.”

The burden would come in the form of tax increases while common deductions, such as the child tax credit, will be cut in half, he added. 

Bessent also committed to using the tools of the Treasury to protect America’s national security, address the “affordability crisis” and a shortage of housing as well as crack down on “wasteful spending.”

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“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,” he went on. “And critically — critically — we must ensure that the US dollar remains the world’s reserve currency.”

Bessent highlighted how sanctions imposed by the first Trump administration diminished Iranian oil production to roughly 100,000 barrels per day.

The Biden administration relaxed those sanctions, causing that figure to rocket up to around 1.7 million barrels every day, he added.

“We do not have a revenue problem — we have a spending problem,” Bessent added, noting that the letter had outpaced the former year after year, leading to a roughly 3.5% budget deficit.

“What got me out from behind my desk and my quiet life is that spending is out of control,” he said. “We have never seen this before when it’s not a recession or a war.”

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Bessent further suggested a return to the trade policies of Trump’s first term, which could include heavy tariffs on China, “to realign the economic system to better serve the interest of working Americans.”

“I think that’s baloney,” Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) said, suggesting that new tariffs were “going to be paid for by workers and small businesses.”

“I would respectfully disagree, and the history of tariffs and optimal tariff theory does not support what you say,” Bessent replied. “If we were to, say, use [a] 10% [import tax], then traditionally the currency appreciates by 4% so the 10 percent is not passed through.”

“Consumer preferences may change,” he went on. “And, finally, foreign manufacturers, especially China, which is trying to export their way out of their current economic malaise, will continue cutting prices to maintain market share.”

Trump has threatened levies on Chinese exports to the US if Beijing doesn’t crack down on drug trafficking, especially materials used in making the deadly synthetic opioid fentanyl.

“China is in a severe recession,” Bessent reiterated, “and are attempting to export their way out of that instead of the needed rebalance.”

“We cannot allow them to flood our markets and the world.”

Elsewhere, the nominee took Wyden to task for claiming the US is in an “arms race on clean energy” with China.

“China will build 100 new coal plants this year,” Bessent responded. “There is not a clean energy race. There is an energy race. China will build 10 nuclear plants this year — that is not solar.”

The Treasury nominee also zinged Democratic socialist Sen. Bernie Sanders (I-Vt.), who is worth $2.5 million himself, for borrowing words used by President Biden in his farewell address to attack “oligarchs.”

“Are Elon Musk, Jeff Bezos, and Mark Zuckerberg too wealthy and powerful?” asked Sanders. “Do you agree with President Biden about an oligarchy?”

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“Those three billionaires all made their money themselves. Mr. Musk came to the country as an immigrant,” Bessent offered.

“Forget how they made their money,” Sanders shot back, before restating the question.

“Well, I would note that President Biden gave the Presidential Medal of Freedom to two people who I think would qualify as oligarchs,” Bessent said, referring to billionaires George Soros and private equity maven David Rubenstein.

“This is not a condemnation of any one individual,” Sanders sidestepped.

Not all Democrats tried to pull out the rug from under Bessent, with Sen. Elizabeth Warren (D-Mass.) even offered a commitment to working with the Treasury nom if Trump decides to suspend the federal debt limit.

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Bessent, who has never served in the federal government before, is likely to be confirmed by the full Senate later this month.

“When it comes to your qualifications to be the next secretary of the Treasury, there is no room for debate and you have shown that today in the hearing,” Crapo said at the conclusion of the hearing.

Bessent, a South Carolina native, was introduced to the committee by his home-state senator, Lindsey Graham, and talked about how his modest upbringing informs his economic outlook.

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“I was born and raised in the South Carolina Low Country,” he recounted. “My father fell into extreme financial difficulty when I was young. When I was 9 years old, I started working two summer jobs and I haven’t stopped working since.”

Bessent later said he slept “on a pull-out sofa” in his first Wall Street job because it was “rent-free.”

“My life has been the ‘only in America’ story that I am determined to preserve for future generations,” he declared.

“I firmly believe that, if confirmed, and with your counsel and support, we can usher in a new, more balanced era of prosperity that will lift up all Americans and rebuild communities and families across the country.”