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The one big constraint on Trump

Robert Reich Nov 25

Scott Bessent

Friends,

Will anything stop Trump?

He will have control over both chambers of Congress, a tractable Supreme Court, a political base of fiercely loyal MAGAs, a media ecosystem that amplifies his lies (now including Musk’s horrific X as well as Rupert Murdoch’s reliably mendacious Fox News), and a thin majority of voters in the 2024 election.

He doesn’t worry about another election because he won’t be eligible to run again (or he’ll ignore the Constitution and stay on).

Of course, there are the midterm elections of 2026. But even if Democrats take back both chambers, Trump and his incipient administration are aiming to wreak so much havoc on America in the meantime that Democrats can’t remedy it.

The Republican-controlled Senate starting January 3 won’t restrain Trump. Yes, Trump overreached with his pick of Matt Gaetz for attorney general. Apparently even Senate Republicans can’t abide sex trafficking girls for drug-infested orgies, but this is a very low bar.

So, as a practical matter, is anything stopping Trump?

Yes, and here’s a hint of what it is: On Friday, Trump picked Scott Bessent to serve as treasury secretary.

Bessent is the man Elon Musk derided only a week ago as the “business-as-usual choice” for treasury secretary, in contrast to Howard Lutnick, who Musk said would “actually enact change.”

Musk’s view of “change” is to blow a place up, which was what Musk did when he bought Twitter.

Over the last two weeks, Musk has convinced Trump to appoint bomb-throwers Robert F. Kennedy Jr. to Health and Human Services and Pete Hegseth to Defense, and to put Musk and Vivek Ramaswamy in charge of cutting $2 trillion from the federal budget.

But Bessent is the opposite of a bomb-thrower. He’s a billionaire hedge fund manager, founder of the investment firm Key Square Capital Management, and a protege of the MAGA arch-villain George Soros (he’s also gay, which the MAGA base may not like, either).

Why did Trump appoint the “business as usual” Bessent to be treasury secretary? Because the treasury secretary is the most important economic job in the U.S. government.

Trump has never understood much about economics, but he knows two things: High interest rates can throttle an economy (and bring down a president’s party), and high stock prices are good (at least for Trump and his investor class).

Trump doesn’t want to do anything that will cause bond traders to raise long-term interest rates out of fear of future inflation, and he wants stock traders to be so optimistic about corporate profits they raise share prices.

So he has appointed a treasury secretary who will reassure the bond and stock markets.

Stock and bond markets constitute the only real constraint on Trump — the only things whose power he’s afraid of.

But wait. What about Trump’s plan to raise tariffs? He’s floated a blanket tariff of 10 to 20 percent on nearly all imports, 25 percent on imports from Mexico, and 60 percent or more on Chinese goods.

Tariffs of this size would increase consumer prices and fuel inflation — driving interest rates upward. (The cost of tariffs are borne by American businesses and households, rather than foreign companies.)

Tariffs could also invite retaliation from foreign governments and thereby dry up export markets for American-based corporations — in which case the stock market would tank. (The last time America raised tariffs on all imports — Herbert Hoover’s and Congressmen Smoot and Hawley’s Tariff Act of 1930 — the Great Depression worsened.)

In short, tariffs will rattle stock and bond markets, doing the exact opposite of what Trump wants.

So Trump has appointed a treasury secretary who will soothe Wall Street’s nerves — not just because Bessent is a Wall Street billionaire who speaks the Street’s language but also because the Street doesn’t really believe Bessent wants higher tariffs.

Bessent has described Trump’s plan for blanket tariffs as a “maximalist” negotiating strategy — suggesting Trump’s whole tariff proposal is a strategic bluff. The Street apparently thinks tariffs won’t rise much when other countries respond to the bluff with what Trump sees as concessions.

Instead, the Street expects Bessent to be spending his energies seeking lower taxes, especially for big corporations and wealthy Americans, and helping Musk and Ramaswamy cut spending and roll back regulations.

It’s a sad commentary on the state of American democracy when the main constraint on the madman soon to occupy the Oval Office is Wall Street.

I suppose we should be grateful there’s any constraint at all.