Scott Bessent and the Treasury: Trump's Fixer or Just Another Guy?
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Generated Title: Trump's "Fire Your Ass" Threat: Just Noise, or a Real Fed Power Play?
Theatrics and Interest Rates
Donald Trump, never one for subtlety, publicly threatened Treasury Secretary Scott Bessent (a former Soros Fund Management CIO, mind you) during a U.S.-Saudi Investment Forum. The ultimatum? Get the Federal Reserve to lower interest rates, or face termination. "I’m going to fire your ass," Trump reportedly said, with a smile, in front of business leaders and Saudi Crown Prince Mohammed bin Salman. It’s quite a scene, and it's easy to get lost in the spectacle. But what does the data actually say?
Trump's very public dressing down of Bessent comes amidst ongoing frustration with the Fed's interest rate policy. Even after two consecutive quarter-point cuts, bringing the benchmark rate to a target range of 3.75% to 4%, Trump wants more. He's been consistently calling for aggressive reductions to ease borrowing costs. The problem, as always, is that the real world is far more complex than a sound bite.
The Fed, theoretically independent since 1951, is facing internal divisions. The minutes from their October meeting show some officials opposed the last quarter-point cut, with one even suggesting a half-point reduction and another wanting no change at all. They're walking a tightrope, balancing inflation (still above the 2% target) with signs of a weakening labor market.
Bessent's Tightrope Walk
And this is where Bessent comes in. Trump disclosed that Bessent has been advocating for keeping Jerome Powell in his position as Fed Chair until his term expires in May 2026. Bessent, according to Trump, is pleading: "Sir, please, don’t fire him. He’s got three months to go.” The Treasury secretary’s actual influence on the Federal Reserve is limited, as the central bank has maintained independence from direct political control since the Treasury-Fed Accord of 1951.
The question is, can Bessent actually do anything? The Treasury Secretary’s actual authority to directly influence Federal Reserve policy is, shall we say, constrained. The Fed is meant to be independent. Bessent himself has acknowledged this, stating the Fed “should be independent” while also arguing they’ve “made a lot of mistakes.” (I've looked at the historical record, and that tension—between perceived independence and political pressure—has been a constant).
Trump’s animosity towards Powell isn’t new. He’s previously called him “late,” “a real dummy,” and even “a total moron.” He claims he wants to replace Powell "right now" but is being held back. Legal experts suggest that firing Powell simply for policy disagreements would face significant legal challenges.
This whole situation is less about genuine policy influence and more about political theater. Trump is using Bessent as a proxy, a way to publicly pressure the Fed without directly (and possibly illegally) interfering.
The irony is thick enough to cut with a knife. Trump berates Powell for budget overruns on Fed headquarters renovations, claiming a $4 billion price tag. Estimates, however, put the project closer to $2.5 billion. It's a discrepancy of, let's see... $1.5 billion.
What's Bessent's play here? He's walking a tightrope. He has to appear responsive to Trump's demands while simultaneously respecting the Fed's independence (or at least, the appearance of it). It's a delicate balancing act. And Bessent, who has earned respect on Wall Street and has been mentioned as a potential candidate to succeed Powell next year, knows it.
The Dog and Pony Show
The U.S.-Saudi Investment Forum, where all this transpired, adds another layer of complexity. It was an event celebrating Saudi investments in the U.S., with Trump and Crown Prince Mohammed bin Salman announcing commitments totaling hundreds of billions of dollars. Elon Musk and Nvidia cofounder Jensen Huang were also in attendance. The focus was clearly on artificial intelligence and technology partnerships.
Is Bessent's job truly on the line? Probably not. Trump's threat seems largely performative. But the underlying message is clear: the White House is not happy with the Fed's current course, and they're willing to use public pressure to try and change it. Whether that pressure will actually work is another question entirely. (And this is the part of the analysis that I find genuinely puzzling: does anyone really believe this kind of public berating is effective?) According to a Fortune article, Trump tells Scott Bessent to fix the Fed’s high interest rates or ‘I’m going to fire your ass’, the exchange happened during the U.S.-Saudi Investment Forum.
Just a Lot of Hot Air
Trump's "fire your ass" threat is more about optics than actual policy. It's a way to signal displeasure and exert pressure, but the Fed's independence remains (somewhat) intact. Bessent's caught in the middle, navigating a politically charged situation with limited direct influence. The real question is whether this public pressure campaign will actually sway the Fed's decisions, or if it's just another example of Trump's bombastic style. The data suggests it's the latter.