Friday Essay: America at 250 – and the Man Trying to Rebuild It.

Scott Bessent is the most intellectually serious Treasury secretary in a generation. Whether his ideas can survive contact with reality is a different question.

There is a particular kind of confidence that comes from having been right when almost everyone else was wrong. Scott Bessent has it. As a macro trader who helped execute the 1992 assault on the British pound’s exchange-rate peg – one of the most celebrated trades in financial history – he learned early that systems which ignore economic reality eventually break. Markets are not polite about it. They simply force the reckoning.

That conviction runs through everything Bessent has done since becoming Treasury secretary in January 2025. He arrived with a doctrine – the so-called “3-3-3 plan,” targeting 3 percent GDP growth, a deficit reduced to 3 percent of GDP, and three million additional barrels of daily domestic energy production – and has pursued it with a methodical intensity that stands out even in an administration that prizes boldness. Whether the doctrine will work, and what it will cost in the trying, is among the most consequential questions in global economics as the United States prepares to mark its 250th anniversary this July 4th.

That milestone itself is worth pausing on. A nation at 250 is old enough to have accumulated real wisdom, real scar tissue, and a great deal of mythology about itself. The question the anniversary raises – not just in the celebratory sense, but in the hard-headed policy sense – is what America actually is at this moment, and where the logic of the current economic experiment leads.

The Diagnosis

Start with what Bessent gets right, because he gets some important things genuinely right.

The critique of the post-1990 globalisation consensus is not a nativist talking point. It is a serious observation with serious intellectual backing across the political spectrum. For three decades, the operating assumption of Western economic policy was that integrating China and other low-cost producers into the global trading system would generate mutual prosperity, that efficiency gains from specialisation would lift all boats, and that displaced workers in manufacturing heartlands would retrain, relocate, and find equivalently compensated work in the new service economy.

The record of that experiment is, at best, mixed. Real wages for non-college workers in the United States stagnated across much of that period. The manufacturing share of employment collapsed from around 17 percent in 1990 to under 9 percent today. The communities built around those industries did not, in general, find equivalent replacement. And the strategic vulnerabilities exposed by the pandemic – when the world’s largest economy discovered it could not reliably source basic medical equipment, semiconductors, or pharmaceutical ingredients – were real and serious.

Bessent, to his credit, does not pretend this wasn’t a problem. He did not pretend it when he was teaching at Yale, and he is not pretending it now. His framing of the challenge – that the US allowed “efficiency over resilience” to govern its economic choices for too long – is an accurate summary of a genuine policy failure.

He is also right about energy. Whether one takes the view that cheap domestic energy is primarily a geopolitical tool, an inflation buffer, or a competitive precondition for AI infrastructure, the analysis that energy abundance matters strategically is hard to dispute. The countries that will dominate the next phase of the AI economy are likely to be those that can power large-scale computer infrastructure cheaply and reliably. That observation is ideologically neutral; it is just physics and economics.

On the sanctions front, the Treasury’s maximum-pressure campaign against Iran has been real and documented. Since early 2025, the Office of Foreign Assets Control has sanctioned over a thousand Iran-related entities, targeting shadow banking networks, oil trading fronts, and cryptocurrency laundering operations with notable precision. The Iranian economy has deteriorated severely – though, as we shall see, the reasons for that are more complex than any single policy deserves credit or blame for.

The Inheritance

To properly evaluate what Bessent is attempting, it helps to understand what he inherited – not the political inheritance, which is well-covered elsewhere, but the structural one.

The United States enters its 250th year carrying a federal debt of roughly 124 percent of GDP, a current account deficit of nearly 4 percent of GDP, and a manufacturing sector that, despite years of “reshoring” rhetoric, has proved stubbornly difficult to rebuild quickly. Kearney’s 2025 Reshoring Index – a closely-watched annual measure – fell by 311 points, reversing two years of modest progress, as imports from Asian low-cost manufacturers grew ten times faster than US domestic manufacturing output. The gap between intention and fact, as the consultancy delicately put it, remains large.

The fiscal picture is both better and worse than the headline numbers suggest. The 2025 calendar-year deficit came in at $1.67 trillion — down around $350 billion from 2024, a meaningful improvement and the sharpest non-pandemic reduction since 2013. Some of this reflects genuine policy discipline; some of it reflects the mechanical effect of rising tax receipts from a strong economy. But at 5.4 percent of GDP, the deficit remains well above the level consistent with stable long-term debt dynamics. The Congressional Budget Office projects cumulative deficits of $23 trillion over the next decade — $1.4 trillion more than projected before the current administration’s tax legislation. The 3-3-3 plan requires growth to do much of the fiscal heavy lifting. What happens if growth disappoints is a question the framework does not fully answer.

The Experiment

The core bet of the Bessent-Trump economic strategy is essentially this: that sufficiently aggressive supply-side intervention – tariffs to redirect investment toward domestic production, deregulation to lower the cost of building things, tax cuts to raise after-tax returns, and cheap energy to reduce input costs – can generate a sustained productivity boom that makes the fiscal numbers work over time.

It is not an absurd bet. Supply-side economics, properly understood, is not simply code for cutting taxes for the rich; it is a serious intellectual tradition focused on the conditions under which productive investment flourishes. And there are real feedback loops that could, in principle, make the strategy self-reinforcing. Higher domestic investment means more capital stock, which means higher productivity, which means higher wages, which means higher tax revenues and lower social transfers – the virtuous cycle the administration is targeting.

But the evidence so far is more complicated than either the strategy’s proponents or its critics want to acknowledge.

GDP growth reached 2 percent in 2025, according to the IMF’s April 2026 assessment – respectable given the scale of the policy disruption and a government shutdown in the fourth quarter. Inflation moved roughly sideways, as tariff-driven goods price increases offset continued easing in services inflation. The fiscal deficit narrowed. Employment stayed broadly resilient.

Less comfortable is what happened underneath. GDP growth slowed sharply to 0.5 percent in the final quarter of 2025, and came in at just 1.6 percent in the first quarter of 2026 – well below the 3 percent target. EY’s assessment characterises the current backdrop as “stagflationary,” with supply-side headwinds from tariffs and reduced immigration pushing up costs while weakening real activity. Core PCE inflation accelerated to 3.3 percent year-on-year in early 2026, still well above the Federal Reserve’s 2 percent target.

The tariff picture is particularly thorny. Yale’s Budget Lab estimates that the cumulative 2025 tariffs, if maintained, would leave the US economy permanently around 0.6 percent smaller – the equivalent of $160 billion in annual output – while raising exports-reducing trade barriers that hit domestic producers as well as foreign competitors. Stanford economists note that roughly half of US imports are inputs into domestic production: sweeping tariffs therefore raise costs for American manufacturers trying to compete globally, which partially undermines the very reshoring agenda they are meant to serve. Manufacturing employment fell by 68,000 jobs in 2025.

None of this is necessarily fatal to the strategy. Investment cycles take years to play out; supply chains do not restructure overnight. PIMCO estimates that AI and related investment added roughly half a percentage point to 2025 GDP growth, and that effect is likely to grow. Goldman Sachs projects above-consensus growth of 2.4 percent in 2026, with tariff inflation fading and tax-cut stimulus kicking in. The question is whether the transitional costs – in real income, in consumer prices, in manufacturing job losses during the restructuring – are being distributed fairly, and whether the political system has the patience to wait for payoffs that may take a decade to materialise.

The Hamilton Question

Much has been made – including in frankly sycophantic commentary – of the parallel between Bessent and Alexander Hamilton. It is worth taking the comparison seriously, because it reveals both the genuine intellectual ambition of the current project and its significant limitations.

Hamilton’s achievement in the 1790s was genuinely remarkable. He created a federal fiscal architecture almost from scratch, establishing Treasury debt as credible, building the instruments of a national financial system, and deploying protective tariffs to nurture infant industries against British competition. Hamilton believed that the state had a legitimate and necessary role in shaping the productive capacity of the nation, rather than simply providing a neutral framework within which private actors compete.

Bessent believes this too. The American System – Hamilton’s legacy, developed further by Henry Clay and later Lincoln – was always about using state power to build productive capacity, not just market power to allocate existing resources.

But Hamilton was building institutions. He was not reforming existing ones, managing entrenched interests, or reversing decades of embedded global supply chains in a world where capital moves at the speed of an algorithm. The tasks are not comparable in complexity. Hamilton also operated without the constraint of a $36 trillion debt pile, without a Federal Reserve whose independence is regularly questioned, and without the peculiar political economy of a polarised democracy in which policy reversals are always one election away.

That last point matters enormously. The great weakness of the current strategy – the thing that no amount of intellectual coherence can solve – is its dependence on continuity. Industrial policy works when it is sustained; when businesses can plan over five- and ten-year horizons knowing the incentive structure will still be there. In the current political environment, with policy uncertainty measured at historically high levels by the Federal Reserve Bank of St Louis’s index throughout 2025, the question of whether firms will make the decade-long capital commitments the strategy requires is genuinely open.

Iran, Sanctions, and the Limits of Precision

Some commentary has applauded Bessent’s covert, precision disruption of Iran’s banking system in late 2025. The reality is, as with much of the broader story, more complicated.

Iranian banking did suffer a spectacular collapse in late 2025. Ayandeh Bank – a regime-connected institution with nearly $5 billion in bad loans, operating in a manner a senior central bank official described as “a Ponzi scheme” – failed in October 2025, setting off a financial crisis that saw the rial lose 84 percent of its value over the course of the year, food inflation reach 72 percent, and protests in Tehran’s Grand Bazaar for the first time in memory.

But the collapse was not primarily Bessent’s doing. It was, rather, the culmination of decades of mismanagement, corruption, and the systematic looting of the Iranian financial system by Revolutionary Guard-linked entities. The sanctions contributed – they always do, by limiting access to dollars and international markets – but the structural rot was internal. Attributing it to Treasury’s precision statecraft overstates the US role and, more importantly, misidentifies what actually happened: a regime that chose guns and proxies over financial governance, and eventually paid the price.

What Treasury did do, concretely and with genuine effect, was execute an aggressive and well-coordinated campaign of targeted designations — over a thousand entities in fourteen months — that constrained Iran’s ability to generate, move, and spend hard currency. That is real and consequential. It is just not the same as having engineered the collapse.

America at 250: The Mood and the Moment

A Pew Research survey earlier this year found that 59 percent of Americans believe the country’s best years are behind it. Only 40 percent believe the best is yet to come. That is a remarkable number for a nation preparing to celebrate a 250th birthday.

It reflects something real. The material standard of living for the median American has improved, haltingly, over the past generation – but the sense of shared national project, the idea that the rising tide lifts all boats, has frayed. The communities that lost manufacturing in the 1990s and 2000s did not recover as economists’ models predicted. The college wage premium that was supposed to replace factory work has itself been challenged by the rising cost of college and the uneven distribution of knowledge-economy gains.

The administration’s economic nationalism, at its best, is a response to that failure – an attempt to reroute investment back toward the places and people that were left behind by the last globalisation wave. The instinct is not wrong. The question is whether the instruments being used are equal to the task.

Tariffs alone cannot rebuild a manufacturing ecosystem that took decades to hollow out. They can change price signals at the border; they cannot, by themselves, create the workforce training infrastructure, the domestic supply chains, the intermediate goods producers, and the logistics networks that constitute a genuine industrial base. Building those requires sustained, patient capital – both public and private – of the kind that is harder to command in a quarterly-earnings world and an election-cycle political system.

What to Watch

There are several ways to evaluate whether the strategy is actually working, as distinct from whether its architects say it is working.

The most honest test is real wage growth for workers without college degrees – the constituency the economic nationalism most explicitly claims to serve. If, over the next three to five years, wages in manufacturing communities and non-metropolitan areas rise meaningfully in real terms, that would constitute genuine evidence that the strategy is delivering. If they do not, the argument that this is a supply-side boom for working Americans — rather than, primarily, a tax-cut cycle that benefits capital owners – becomes harder to sustain.

A second test is the trade deficit. If the tariff and industrial policy strategy is genuinely reshoring production, the US current account deficit should narrow over time. It remains at 3.7 percent of GDP — elevated, though not at its historic extremes. The trajectory over the next several years will tell us something real.

A third test is debt. The 3-3-3 plan requires growth to shrink the deficit relative to GDP. The CBO projects the opposite – that the combination of tax cuts and existing spending commitments will widen the fiscal gap over the next decade. If growth exceeds those projections substantially, the optimists are right. If it does not, the debt problem will be larger and harder when it eventually forces itself onto the agenda.

The Verdict

Scott Bessent is not, as his admirers claim, Alexander Hamilton reborn. He is something more modest and, in some respects, more interesting: a sophisticated macro thinker operating within the real constraints of a complex, entrenched, and politically fractured economy, executing a strategy that has a genuine intellectual core but faces enormous practical obstacles.

He is right that the globalisation consensus was too complacent about resilience. He is right that energy matters strategically. He is right that the American financial system accumulated too much complexity and leverage at the expense of productive investment. These are not trivial insights.

He is, however, operating with instruments – primarily tariffs and deregulation – that are cruder than the challenges require. Rebuilding industrial capacity is a long-cycle project that needs policy continuity, workforce development, patient capital, and honest accounting of transitional costs. None of those are guaranteed by the current approach.

At 250 years old, the United States has survived wars, depressions, constitutional crises, and moments of profound self-doubt. It has also, periodically, managed to reinvent itself – the postwar industrial boom, the technology revolution of the 1990s, the shale energy transformation of the 2010s. Whether the current economic experiment joins that list of genuine reinventions, or becomes a cautionary tale about the gap between doctrine and delivery, will depend less on the quality of the thinking in Washington than on whether the real economy – the businesses, the workers, the supply chains, the trading partners – responds as the models hope.

The reckoning that Bessent learned about in 1992 was simple: reality eventually wins. His challenge now, and America’s challenge at 250, is to make reality work in their favour. The jury is not yet in.