Scott Bessent, President-elect Donald J. Trump’s pick for Treasury secretary, will face questions from lawmakers on Thursday about how he would manage a department at the center of the Trump administration’s tax, trade and sanctions policies, along with handling the nation’s debt load.
Mr. Bessent, a billionaire hedge fund manager with deep experience in financial markets, has been meeting with Senate Republicans and Democrats in recent weeks and is expected to have a relatively smooth confirmation process. A former top investor for the liberal philanthropist George Soros, Mr. Bessent has given large sums to Democrats and Republicans over the years.
“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,” Mr. Bessent will say, according to a copy of his prepared remarks that was reviewed by The New York Times.
But several of the lawmakers he will appear before on Thursday during his confirmation hearing disagree with him on economic policy. Democrats on the Senate Finance Committee are expected to press Mr. Bessent on Mr. Trump’s plans to enact universal tariffs, potentially ease sanctions on Russia, establish a strategic Bitcoin reserve and cut taxes for the rich.
“Bessent has spent his life helping the rich get richer,” Senator Elizabeth Warren, a Massachusetts Democrat who met with him recently, said in an interview. Ms. Warren, who sits on the Finance Committee, also described him as “smart and thoughtful.”
Here’s what to watch at the hearing.
Trump’s Tax Cuts
The Treasury Department will be crucial to Mr. Trump’s plans to rewrite the tax code and extend the 2017 tax cuts that Republicans passed and Mr. Trump signed into law.
Mr. Bessent will warn in his remarks that failing to extend the tax cuts would represent “the largest tax increase in history.”
Extending that law is expected to cost $4 trillion over a decade. Mr. Trump has proposed other tax cuts — including eliminating taxes on tips, overtime pay and Social Security benefits — that are likely to be paid for with borrowed money. As the person in charge of the department that issues and sells government debt to investors, Mr. Bessent would have to figure out how to ensure investors will buy more Treasury securities when the national debt already exceeds $36 trillion.
In the fiscal year 2024, the federal budget deficit was $1.8 trillion, or 6.4 percent of gross domestic product. Mr. Bessent has said that he wants to get that down to 3 percent of G.D.P. by 2028, but it is unclear how the new administration would make that happen.
At an event last year hosted by the Manhattan Institute, a right-leaning think tank, Mr. Bessent said that the cost of extending the 2017 tax cuts should be covered by other budget cuts, such as gutting provisions of the Inflation Reduction Act. He also suggested freezing nondefense “discretionary” spending and shifting some Medicaid spending to states.
A Tariff Test
When Mr. Trump was looking for a Treasury secretary, it was important for him to find someone who would defend tariffs.
The president-elect wants to impose blanket tariffs on imports and enact stiff import duties on goods from China. As Treasury secretary, Mr. Bessent would wield the prospect of tariffs in economic talks with his Chinese counterparts while trying to calm markets and mitigate the impact of a trade war that could slow the global economy.
While Democrats also support tariffs as a way to protect American jobs and industries, Mr. Trump’s plans go far beyond that. The president has said he will use tariffs to exact concessions such as reducing illegal border crossings from Mexico and acquiring Greenland.
Mr. Bessent has said that it would be prudent if any tariffs were phased in so that any associated “price adjustment” could be absorbed gradually by the economy.
A Boon for Bitcoin
One of the biggest changes that the Trump administration could herald is full embrace of cryptocurrencies. While Mr. Trump was a skeptic of cryptocurrencies in his first term, he became a proponent of digital assets such as Bitcoin during his presidential campaign as the technology became a major source of donations.
Cryptocurrency lobbyists are pushing the new Trump administration to ease regulations on the industry, and Mr. Trump has been considering creating a “strategic reserve” of Bitcoin similar to federal stockpiles of gold and oil.
As Treasury secretary, Mr. Bessent would be responsible for ensuring that cryptocurrencies did not become more of a magnet for scams, money laundering and sanctions evasion.
Mr. Bessent’s recently released financial disclosure revealed that had as much as $500,000 in a Bitcoin investment fund. If confirmed, Mr. Bessent said that he would divest that investment.
Questions About Russia Sanctions
Most incoming Treasury secretaries have little experience in national security and, as stewards of the nation’s sanctions program, must quickly get up to speed.
That goes for Mr. Bessent, who will be overseeing a sanctions program that has rapidly expanded in recent years as the United States has increasingly relied on financial warfare rather than direct military conflict.
Mr. Bessent will say in his remarks that the nation must “carefully deploy sanctions as part of a whole-of-government approach.”
Mr. Trump said last year that he had concerns that an overuse of sanctions could lead to the demise of the dollar as the world’s reserve currency. The excessive use of sanctions, he believes, could cause other countries to turn to other currencies such as China’s renminbi so that they can make transactions that are beyond the reach of the United States.
Mr. Bessent will likely face questions from Democrats and Republicans about the raft of sanctions that the Biden administration has imposed on Russia as punishment for its invasion of Ukraine. President Biden has expanded those sanctions in recent days as his administration tries to create a bulwark against Mr. Trump, who has a more amicable relationship with President Vladimir V. Putin of Russia.
Mr. Trump has suggested that he prefers tariffs over sanctions, and lawmakers will likely press Mr. Bessent about whether he would encourage the president-elect to keep existing sanctions in place.
Bessent’s Business Background
Democrats are also set to question Mr. Bessent’s own tax practices. Democratic staff members of the Finance Committee reviewed three years of Mr. Bessent’s tax returns as part of the vetting process.
In a memo viewed by The Times, the staff members wrote that Mr. Bessent had collected earnings from his hedge fund in a way that allowed him to avoid paying more than $900,000 in payroll taxes.
The I.R.S., an agency in the Treasury Department, has in recent years sought to clamp down on the ability of hedge fund managers to avoid payroll taxes the way Mr. Bessent did. The Democratic staff members wrote in the memo that “Mr. Bessent’s position is counter to the position of the department he hopes to lead.”
The memo, a preview of some of the questions Mr. Bessent will face from Democrats, also highlights other ways he reduced his tax bill, including by writing off losses from a publisher he co-owned.
A spokeswoman for Mr. Bessent did not immediately respond to a request for comment.
Andrew Duehren contributed reporting.
