The Deer and the Horse
U.S. Treasury Secretary Scott Bessent as a case study in political mendacity.
Stephen Roach
Aug 07, 2025
Watching
US Treasury Secretary Scott Bessent on MSNBC this morning, I was
immediately struck by the ancient Chinese tale of Zhao Gao, perhaps the
most famous eunuch of the early Qin Dynasty (200 BC). Bessent was
spewing forth one fabrication after another — alluding to Biden era
biases of professionals at the Yale Budget Lab, conspiratorial claims
about BLS data revisions, and a “China shock” explanation of Trump’s
outsize tariffs on Brazil and India. The fine art of political mendacity
was on full display — just as it has been since the days of the Qin
dynasty.
The most famous idiom attributed to Zhao Gao speaks to
the ancient roots of factual misrepresentation. According to Chinese
legend, Zhao Gao, a trusted advisor to Qin Er Shi, the second emperor of
the Qin dynasty, presented the emperor with a deer at a meeting of his
court. But Zhao had the cunning audacity to refer to the deer as a great
horse. It was the ultimate in ancient Chinese loyalty tests. Not only
did the emperor blindly accept this misrepresentation from his
supposedly brilliant advisor, but much of the emperor’s court did the
same. Those who didn't were murdered on the spot.
There’s
more to the story, including a power grab by Zhao Gao that eventually
led to his own demise. But the message is clear — the loyalty test of
buying into factual distortions has long been endemic to the power plays
of corrupt governance. Just as Presidential Press Secretary Sean Spicer
boasted of record crowds at Trump’s first inauguration, Secretary
Bessent’s falsehoods are only the latest in a long string of Trumpian
alternative facts.
My fifteen-year Yale affiliation prompts me to
rise in defense of the nonpartisan professionalism of The Budget Lab.
This is a small research group that was started in 2024 to provide
model-based, empirically supported research on government policies —
especially the Federal budget and tariffs. It has become a go-to source
for many of us, including yours truly, looking for real time updates on
these critical issues using state-of-the-art economics tools. As a Yale
alum, Bessent conveyed the smug impression that he somehow had special
permission to cast aspersions on the integrity of his alma mater and the
Yale Budget Lab.
He also mistakenly referred to recent
employment revisions as a deliberate error by politically biased BLS
professionals. The Secretary obviously doesn't get the critical
distinction between errors and revisions. Revisions, as documented in
detail by the BLS in its Handbook of Methods, reflect the sequential
monthly expansion of the nonfarm establishment sample size. The first
cut in any given month reflects a relatively low response rate that
covers only about 25% to 30% of all nonfarm establishments, mainly large
corporations. Over subsequent months, medium- and smaller-size firms
increase their reporting and sample size coverage rises to around 60%,
and the numbers get adjusted accordingly. It is not uncommon for the
expanded sample to increase the job count during a cyclical upturn in
the economy and to lower the job count when the economy is weakening.
This is important new information — not political bias — that also
happens to be consistent with today’s report that continuing jobless
claims rose in the week ended July 26 to the highest level since late
2021.
As for using the “China shock” as a justification for
outsize US tariffs on Brazil, India, and Switzerland, Bessent stretches
any sense of credibility that one might normally associate with a
Secretary of the US Treasury. Allegations surrounding the China shock,
itself, are not without controversy. But for a disruption that was
alleged to have been concentrated in the early 2000s following China’s
accession to the World Trade Organization, there is a major time
inconsistency problem with Bessent’s broadside at current trading
practices of today’s highly tariffed countries. What does the China
shock have to do with Swiss pharmaceuticals?
Near the end of this
morning’s lengthy 22-minute interview on MSNBC, the Pulitzer-Prize
winning journalist, Eugene Robinson pressed Secretary Bessent on the
so-called tariff payments controversy. It is actually quite shocking to
think that this is even an issue of debate. Tariffs are paid by US
importers at the port of entry into the United States. Yet President
Trump has long boasted that he is forcing America’s abusive trading
partners to pick up the tab. Robinson asked him the simple question,
“Who writes the check?” Bessent attempted to toe the President’s line
but ended up conceding the key point that, “the check is written by the
person who receives the imports at the dock.”
Zhao Gao would not have been pleased with that response. Bessent turned out to be a deer after all.