Scott Bessent Says Robert Reich 'Packaging Falsehoods as Fact' — Clinton-Era Labor Secretary Fires Back Over America's 'Two-Tier Economy'
Treasury Secretary Scott Bessent on Wednesday accused economist Robert Reich of “packaging falsehoods as fact,” amidst an escalating public feud over whether America’s economy remains “K-shaped.”
Bessent Calls Reich’s Argument ‘Economic Prestidigitation’
The latest exchange came after Reich published an open letter on Substack arguing that the divide between rich and poor Americans is still very much alive, prompting a sharp response from Bessent.
The Treasury Secretary said Reich’s post was “an impressive display of economic prestidigitation,” accusing him of conceding that wages are growing faster for low-income workers, only to bury that fact under “nearly 2,000 words.”
Bessent cited Bank of America data showing lower-income and middle-income spending has “converged toward levels at the top,” and took a shot at Reich over a past controversy involving “invented dialogue” in his memoir.
“This will be the last response to his four-decade pattern of packaging falsehoods as fact,” Bessent added.
Bessent Has Long Argued the Divide Is Closing
The exchange follows Bessent’s claim on CNBC’s “Squawk Box” earlier this month that the K-shaped economy is “over,” replaced by a “C-economy” in which lower-income workers are “finally clawing it back.”
He had cited Bureau of Labor Statistics data showing weekly earnings for workers at the 25th percentile rose 5.5% year-over-year, versus 1.5% for those at the 75th percentile.
Reich Points to McDonald’s and Rising Debt as Evidence
Reich, who served as U.S. Secretary of Labor under former President Bill Clinton and is now a professor at UC Berkeley, pushed back and called Bessent’s analysis deeply flawed.
He cited McDonald’s Corp (NYSE:MCD) comments about a double-digit drop in visits from lower- and middle-income customers as evidence of a “two-tier economy.”
He also backed his claim, citing Moody’s Analytics data showing that the top 10% of earners drive a record 49.7% of consumer spending, while Federal Reserve figures show the richest 1% hold 29.2% of national wealth.
Rising credit card debt has also become part of the divide, with New York Fed researchers linking $1.26 trillion in balances directly to the “K-shaped economy.”
Wall Street Has Its Own Take on Who’s Right
Navellier & Associates founder Louis Navellier said he broadly trusts Bessent’s outlook but acknowledged the divide “persists,” noting that the top 50% of households hold all stock market wealth, effectively advising lower-income Americans to “bet on a billionaire” rather than resenting one.
B2BROKER’s John Murillo was more skeptical, saying convergence is unlikely without structural policy change, since the top 1% hold roughly $55 trillion, about as much as the bottom 90% combined.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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