One of President Donald Trump’s officials has proven he’s willing to “sell his soul” to “gaslight” Americans about the economy, but his failure to do so has both harmed the U.S. and destroyed his credibility. This is according to Nobel Prize-winning economist Paul Krugman, who on Friday detailed how Treasury Secretary Scott Bessent’s “Dear Leader” approach flopped.
As Krugman explains, when Bessent was initially appointed, experts were relieved that Trump had chosen a “credible Treasury secretary who has a real understanding of the global economy.” Since then, however, Bessent has proven himself to be a “consummate Trump sycophant.” Krugman points to what the secretary declared when announcing Trump’s signature would appear on money – a first for a sitting president. Said Bessent, “Under President Trump’s leadership, we are on a path toward unprecedented economic growth, lasting dollar dominance, and fiscal strength and stability. There is no more powerful way to recognize the historic achievements of our great country and President Donald J. Trump than U.S dollar bills bearing his name.”
Bessent made this assertion in March, when the economy already had warning signals flashing and was just beginning to be hit by Trump’s disastrous decision to launch war with Iran. According to Krugman, this sort of “love-struck” talk “carries the potential for enormous financial and economic costs for the country.”
Since then, says Krugman, Bessent has routinely made “assertions about the state of the economy that are manifestly, glaringly untrue – as if he can gaslight the professionals who closely track economic data. A couple of weeks ago, for example, Bessent rejected the widespread view that we have a ‘K-shaped economy’ in which a few people are doing well but many are falling behind,” saying, “I get sick of hearing about this K-shaped economy, I can say here definitively, the K-shaped economy is over.”
According to Krugman, “Bessent tried to back up his claim by pointing to data on wages, which showed that those in the top 25 percent had slightly lower wage gains than those in the bottom 25 percent. But nobody familiar with the data was fooled. High-income Americans receive much of their income from capital, not labor, while many lower-income Americans rely on food stamps and other programs that are facing savage cuts under Trump.”
Here Krugman notes a graph showing the real after-tax income of American adults over the course of Trump’s second term, distinguishing the earnings of the top 1 percent from the bottom 50. It shows that income for the rich has marched up steadily, while the bottom 50 percent saw stagnant income then a steep decline starting in December. Based on this alone, says Krugman, “It’s clear that Bessent’s pronouncements are geared to an audience of one: Donald Trump. He doesn’t mind sounding like a fool and a liar to the financial markets and to the American public as long as it pleases Dear Leader.”
What’s more, Bessent’s efforts haven’t just fallen flat with economists, but within his own agency. As Krugman writes, “According to the Partnership for Public Service, a nonpartisan watchdog, 7 out of 16 Trump Treasury appointees confirmed by the Senate — that is, the very top Treasury officials — have left since the start of Trump II.” As NOTUS reports, several left after “disagreements with the White House over demands to stretch, if not violate, tax law.” As Mark Mazur, a former senior Treasury official, explained, “A lot of these people expect to have a career after this administration, and being disbarred would be a bad thing for them.”
Then this week, Bessent attempted to reverse the recent spike in U.S. long-term interest rates by buying back 30-year Treasury bonds. According to Krugman, “This is just a swap of longer-term government debt for shorter-term, riskier government debt. It does nothing to resolve the underlying U.S. fiscal problems that caused the spike in the 30-year debt. Some analysts call Bessent’s strategy ‘rearranging the deck chairs on the Titanic.’”
Krugman writes that the reasoning for Bessent’s moves is “clearly political: High long-term interest rates are an embarrassment for the Trump administration, and Bessent is trying to make the picture look prettier.” But “the maneuver is failing: 30-year yields fell briefly on Wednesday, when the policy was announced, but bounced back on Thursday and were higher as I write this than they were a week ago — clear proof that you can’t gaslight the bond market.”
With all this in mind, Krugman arrives at a troubling conclusion, writing, “Bessent, a former bond trader himself, has squandered all of his credibility with his sycophancy, his apparent demands that top officials engage in unethical and probably illegal conduct, and his abuse of the Treasury’s financial power for clearly political goals. And his ruined reputation will be a real problem if and when, like many of his predecessors, he encounters a crisis in which we really need a credible Treasury secretary with competent subordinates.”