(Bloomberg Opinion) — Before he became President Donald Trump’s Treasury secretary, Scott Bessent openly criticized his predecessor Janet Yellen for issuing more short-dated debt — a move he characterized as fiscally imprudent and at odds with the inflation-fighting goals of the Federal Reserve. Now that he’s in charge, Bessent has continued Yellen’s policies and said that any move to boost the share of longer-term Treasury securities is “a long way off.” He delivered his clearest explanation for the apparent double standard in an interview with Bloomberg Television on Thursday. As he put it, the Treasury still plans to increase the share of longer-dated securities eventually, but it’s going to depend on the market and economic environment. Here’s Bessent (emphasis mine): Over the medium term it’s going to play out as it becomes clear that everything that President Trump’s administration is doing will be disinflationary. We’re going to bring down energy costs. We’re going to bring down regulation. What DOGE is doing in terms of cost cutting. And I think once the Tax Cuts and Jobs Act is made permanent, then we can have a revenue increase, cost decrease. Pressed for a specific timeline, the former hedge-fund manager hedged: It’s going to be path dependent. We’re still seeing sort of the residual Bidenflation that’s still coming through, and I think as… the market starts to realize what we’re doing and inflation starts to drop, then we will see. So, it’s going to be path dependent. That’s the eventual goal, but I’m not going to signal it now. In a nutshell, Bessent has an optimistic forecast for disinflation and bond-market performance under the Trump presidency, so he’s happy to kick the can. The maturity schedule of US debt issuance may seem technocratic, but it’s ultimately one of the most powerful tools at the disposal of the new Treasury secretary. Issue too many bonds and already jittery investors could demand higher yields that push up mortgage rates and a large number of other household and business borrowing costs. At a time when the government’s interest expense is greater than military spending, that could also cause debt and deficit concerns to spiral. Meanwhile, the Fed has been allowing maturing Treasury securities it owns to roll off its balance sheet through so-called quantitative tightening, effectively making Bessent’s job even harder. Of course, all this is ultimately similar to the situation in which Yellen found herself, and Bessent offered little sympathy at the time. Yellen clearly thought it was imprudent to flood the market with longer-term bonds and lock in borrowing costs when they were already high. Bessent’s attempts to explain his position only reinforces the hypocrisy. What’s more, it’s particularly hard to justify from a government that is pursuing a reckless tariff policy that could boost prices and is threatening to expand the national debt by maki
Bessent is taking a playbook that he actually didn’t find appealing.
