Graeme Sloan/Sipa USA via AP Images
One of the few unfilled cabinet appointments left for Donald Trump is the important position of Treasury secretary. That has turned into an all-out knife fight.
The early front-runners for the Treasury job, transition chief Howard Lutnick of Cantor Fitzgerald and Scott Bessent of Key Square Group, both Wall Street billionaires, kept bad-mouthing each other, to Trump’s annoyance. On Tuesday, Lutnick was awarded the consolation prize of commerce secretary, a much less powerful and prestigious post. Bessent, who once worked for George Soros, may end up with nothing.
Today, Trump will be interviewing former Federal Reserve governor Kevin Warsh and private equity billionaire Marc Rowan of Apollo Capital Management. A backup possibility is Robert Lighthizer, who was Trump’s top trade adviser in his first term and has been slated to be White House trade czar in Trump’s second.
Beneath the infighting and personality clashes, the delay in filling the Treasury post reveals deep ideological schisms in the Trump coalition. The Treasury job is actually complicated. Financial markets are easily spooked, and competence matters. In any international financial crisis, the secretary needs to be able to read markets, have conversations with foreign government counterparts, and enjoy the confidence of major players. And Treasury needs to work closely with the Fed.
Warsh, who was a very young Fed governor during the 2008 financial collapse, worked with then-chair Ben Bernanke on the Fed’s emergency response, and was actually less sympathetic to bank bailouts than Obama’s team. But Warsh is also very much a traditional internationalist. “The creep of trade protectionism is anathema to pro-growth policies,” he said in a talk he gave as Fed governor in 2010. And he is a fierce defender of Fed independence.
These views are of course anathema to Trump, who views himself as the protectionist-in-chief and wants to bend the Fed to his will. But they would be very reassuring to Wall Street. Rowan might be a less in-your-face version of Warsh, but also less seasoned in a crisis.
The larger problem for Trump is that he wants to have the confidence of Wall Street and subsequent rising stock prices while also carrying out his America-first across-the-board tariff policy. These two things are simply incompatible, hence the delay.
The best choice of all might be Lighthizer. He managed to keep the confidence of Trump for the entire four years of Trump’s first term, no mean feat, while working across the aisle with Democrats on a smart get-tough policy on China. He cares about the working class. On trade, he shares Trump’s general hard-line views and is supportive of increasing tariffs on China. But he could probably talk Trump out of the more screwball idea of raising tariffs across the board. Above all, Lighthizer is a knowledgeable professional, and would surround himself with competent subcabinet Treasury officials.
One idea is that Lighthizer could take the Treasury post and also still be Trump’s chief trade policy architect. A rough analogy is the dilemma that Elizabeth Warren faced on whether to keep pressing Obama to name her as permanent head of her creation, the Consumer Financial Protection Bureau, or to run for the Senate. By winning a Senate seat, Warren has been able to have her cake and eat it too. She has served as almost a surrogate chief of the CFPB, through her mastery of the issues and close alliance with CFPB senior officials, while tackling broader issues as a senator.
As Treasury secretary, Lighthizer could focus on big policy challenges while also devising an overall strategy on trade and leaving details to staff. Wall Street might still be nervous about his general stance as an economic nationalist, but that would be offset by appreciation of Lighthizer’s skills as a Trump-whisperer who can talk Trump off ledges, and confidence in Lighthizer as a serious and knowledgeable person in a critical senior post.
God knows, that can’t be said for most of the rest of Trump’s cabinet.
