The Deer and the Horse

U.S. Treasury Secretary Scott Bessent as a case study in political mendacity.

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.