Bessent is out saying:
- Believes the debt to GDP ratio will drop next year.
The key word is “believes”.
The Trump administration has been focused on cutting costs and reducing the government deficits. DOGE efforts which were at first targeting $2T of cuts has been slashed to $1T and lower.
As of May 2025, the DOGE, led by Elon Musk under the Trump administration, reports achieving approximately $160 billion in federal spending cuts. These reductions stem from various measures, including workforce downsizing, contract terminations, and program eliminations. However, it is still unsure how much the government has saved given other costs from the cuts including severance costs and other intangible costs.
Pres. Trump sees tariffs as a way to add more to the Treasury as well and reduce debt.
When there is a revolution, there are a lot of uncertainties. The comment that the Treasury Secretary “believes”, inserts an element of uncertainty from the revolutionary changes that are ongoing.
Bessent adds ahead of the Fed decision:
- The Fed should focus on both price and employment goals. Inflation and employment are in inexorably linked.
Other comments:
- Tariffs for items that parents need to care for their children are under consideration.
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