Accounting
Bessent says US barreling to crisis if tax cuts not extended
Treasury Secretary nominee Scott Bessent warned that the U.S. faces an economic crisis that will hammer middle- and working-class people if the 2017 Republican tax cuts aren’t extended when a swath of them expire at the end of this year.
“This is the single most important economic issue of the day — this is pass/fail,” Bessent said in answering questions at his Senate Finance Committee confirmation hearing Thursday.
In a wide-ranging series of questions during the hours-long session, Bessent, 62, also said that the federal government “is not going to default” on its debt under his watch and that he respected the Federal Reserve’s independence over monetary policy. Further, he
With his comments on taxes, Bessent drew an immediate contrast with outgoing Treasury Secretary Janet Yellen, who said on Wednesday that policies including a full extension of the 2017 cuts enacted under Donald Trump “could undermine our country’s strength, from the resilience of the Treasury market to the value of the dollar, even provoking a
Trump’s pick for the Treasury, a veteran hedge fund investor, said that “if we do not fix these tax cuts, if we do not renew and extend, we will be facing an economic calamity. And as always with financial instability, that falls on the middle-class people.”
Spending cuts
In his prepared remarks, Bessent also emphasized the importance of addressing the budget deficit, saying the U.S. “must work to get our fiscal house in order” by adjusting domestic discretionary spending. He said that discretionary spending — outlays aside from entitlements including Social Security and Medicare — had soared by an “astonishing 40% over the past four years.”
Bessent underscored that the popular entitlement programs for older Americans aren’t going to end up on the chopping board. “I want to emphasize that President Trump has said that Social Security and Medicare will not be touched,” he said.
“One of the tragedies of this blowout in the budget deficit is that we have to get our short-term house in order,” Bessent added.
But Bessent didn’t specify what areas of spending he’d support cutting, and refused to be nailed down on particular programs. Asked, for example, if he would recommend cutting Medicaid — a federal health program for lower-income households — he said that “it’s the business of Congress to do the budget. And I am in favor of empowering states and I believe that for some states that will be an increase, for some states that will be a decrease.”
Bessent also declined specifically to endorse Democratic Senator Elizabeth Warren’s call to eliminate the federal debt limit. He said that if Trump wanted to get rid of it, he would then work with the president and Warren on that idea. Meantime, he committed that “the United States is not going to default on its debt if I am confirmed.”
The debt ceiling kicked back in on Jan. 2, and the Treasury is expected to begin taking special accounting measures to avoid breaching it within the coming days.
Bessent said he wanted to conduct a survey of market participants on debt, in a potential hint that he would canvass with them on any change in the Treasury Department’s issuance strategy. Its next quarterly update on deciding what types of securities to sell in what amount comes Feb. 5.
When asked about the possible inflationary impact of Trump’s economic policy plans, Bessent said he believed the incoming administration’s policies will increase real wages and bring inflation closer to the Fed’s 2% target. He said he couldn’t think of any Trump policy that would push up inflation — despite some economists’ estimates that tariff hikes would generate at least a one-off step up in the inflation rate.
Bessent also sought to dispel notions that he or the president-elect would seek to tamper with the Fed’s independence. Trump last fall suggested he wanted to have a “say” on monetary policy.
“I think, on monetary policy decisions, the FOMC should be independent,” Bessent said, referring to the Fed’s rate-setting Federal Open Market Committee.
If confirmed as Treasury secretary, as is widely expected, Bessent will oversee U.S. policy on areas ranging from financial sanctions and currency policy to the U.S. fiscal outlook and management of the $28 trillion Treasury market. He will also be a key U.S. envoy abroad.
In his remarks, Bessent stressed that maintaining the dollar as the world’s reserve currency is critical to U.S. economic health and the nation’s future.
He also during the hearing painted the budget deficit as a national security issue, arguing that in the past, the Treasury has been called upon to use its borrowing capacity to help save the U.S. and the world in times of crisis like the Great Depression, World War II or COVID.
“What we currently have now, we would be hard pressed to do the same,” he said.
President Donald Trump’s drive to enact trillions of dollars in tax cuts and raise the federal debt is on track after he and congressional leaders successfully corralled House Republican lawmakers to approve a
The 216-214 vote Thursday on the budget — which outlines the parameters for the tax cut and
The president worked the holdouts by phone and in a White House meeting. House Speaker Mike Johnson held a press conference to declare himself “committed” to coming up with at least $1.5 trillion in spending cuts. And Senate Republican leader John Thune joined the speaker to announce “a lot of” Republican senators shared the goal, though he stopped short of a commitment.
It was enough.
With the budget approved, the way is open for a follow-on package to cut taxes by up to $5.3 trillion over a decade and raise the debt ceiling by $5 trillion, in exchange for $4 billion in spending cuts. Republicans can now pass Trump’s tax-cut agenda solely on GOP votes, bypassing the need for negotiations with Democrats.
Trump offered congressional Republicans “Congratulations” in a social media post minutes after the vote.
The vote came a day after Trump announced a 90-day pause on some of his sweeping tariff plans that have roiled markets and sparked predictions of a looming recession. Financial markets — often a barometer of success for the president — initially soared on the news, though U.S. stocks
Republicans are planning to renew Trump’s first-term tax cuts for households and the owners of privately held businesses, and enact a fresh round of reductions, including expanding the state and local tax deduction and eliminating levies on tipped wages.
Conservative hardliners in the House say they want a final package to trim $2 trillion in spending over the next decade, a significant increase over the $4 billion the Senate is directed to cut in the budget passed Saturday. To make those reductions they’ll likely need to curb Medicaid, food stamps and other social programs with tens of millions of beneficiaries.
A group of moderate Republicans sought — and gained — assurances from Johnson during the vote that the final bill would not cut benefits for qualified Medicaid individuals and institutions, said New Jersey Republican Jeff Van Drew.
“We voted late to make the point,” Van Drew said.
The group, however, is open to eligibility reviews and work requirements for Medicaid recipients, he said.
The budget outline punts many of the hard decisions for lawmakers to hammer out later in the tax-cut negotiations. That could lead to a standoff with the Senate at the end of the process, where several members are resistant to large cuts in safety-net programs.
Democrats assailed the plan as cutting benefits for the poor in order to pay for a tax cut skewed toward the wealthy.
“Republicans do nothing to lower the high cost of living,” Democratic Leader Hakeem Jeffries said on the House floor. “In fact, you’re making the affordability crisis in America worse, not better, when you target earned benefits and things that are important to the American people, like Medicaid.”
Senator John Barrasso, the No. 2 Senate Republican, said GOP lawmakers in both chambers are committed to “very serious savings for the American taxpayer.”
Trump hosted Republican holdouts at the White House on Tuesday to urge their backing. He echoed his pleas while speaking later that day at a donor event in Washington, imploring members who were hesitant to vote for the budget to “just get the damn thing done and stop showboating.”
“It is IMPERATIVE that Republicans in the House pass the Tax Cut Bill, NOW! Our Country Will Boom!!!” Trump posted on Truth Social Wednesday.
Johnson has set a target of the end of May to enact the tax bill, while Senate Republicans have talked of being able to complete the process by August. The 2017 tax cuts don’t expire until the end of the year.
Those self-imposed deadlines could be overrun by a fiscal deadline: the debt ceiling.
The nonpartisan Congressional Budget Office estimates that the Treasury will be unable to pay all of its bills in August or September, but that date could come as soon as late May if tax receipts are low.
Baker Tilly, a Top 25 Firm based in Chicago, reportedly is close to a megamerger with Moss Adams, another Top 25 Firm based in Seattle, creating a firm with $3 billion in annual revenue.
The deal, reported Wednesday by
Baker TIlly declined to confirm the deal, but acknowledged it’s always searching for merger candidates.
“We can’t comment on speculation or confidential discussions,” said Baker Tilly spokesperson Nicole Berkeland in an email to Accounting Today. “What we can say is that we’ve been transparent about our strategy to grow through strategic mergers. We are continually exploring opportunities with respected firms that align with our vision and will strengthen our ability to serve the middle market.”
Moss Adams also declined to comment. “It’s our policy not to comment on market speculation,” said Moss Adams spokesperson Greg Kunkel.
Koltin Consulting Group CEO Allan D. Koltin, who has previously advised Baker Tilly and Moss Adams on strategy and M&A, sees major ramifications from the deal. “Just when we thought nothing could get any bigger in CPA firm M&A than Forvis (formerly BKD and Dixon Hughes), and CBIZ (formerly CBIZ and Marcum), here comes Baker Tilly and Moss Adams (potentially) combining to create the sixth largest CPA firm in the country (only behind the Big Four and RSM),” Koltin said in an email. “After the combination, Baker Tilly will become the largest (non-Big Four) CPA firm in the Western region and Moss Adams will become part of a Top 10 Global Network. Additionally, both firms will bring over their unique areas of industry specialization and service line expertise which should provide robust organic growth opportunities to the combined firm. As a 44-year veteran and advisor to the accounting profession, I daresay there has been more change and transformation in the accounting profession in the past 4 years than the 40 prior years combined!”
Another merger expert also sees benefits in the combination. “The primary reason for this reported merger is to expand both firms’ scale and market position,” said Brad Haller, a senior partner in West Monroe’s mergers and acquisitions practice. This move would significantly boost Moss Adams’ scale and provide Baker Tilly with access to Moss Adams’ extensive client base. Together, they would become the sixth largest firm, leapfrogging over Grant Thornton and others. Additionally, this merger would allow Moss Adams to tap into Baker Tilly’s global networks, enabling them to expand their wallet share with clients. While there will be modest synergies in the long term as they combine redundant support services, the immediate benefits of this merger would be substantial.”
Baker Tilly is part of the Baker Tilly International network, based in London, which reported $5.6 billion in worldwide revenue in 2024. Baker Tilly has done several acquisitions since receiving
Last May, it merged in
Moss Adams does not do M&A deals as often, but last December, it entered the Salesforce.com consulting market by acquiring
States are looking beyond the 150-hour requirement for CPA licensure and adding alternative pathways amid the profession’s pervasive ongoing talent shortage.
See below for where things stand in those states that are moving forward on the issue, and read
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