Shortly before he was sworn in as treasury secretary, Steven Mnuchin spoke with his predecessor to get some advice.
.. Pay attention to the debt problems in Puerto Rico, Treasury Secretary Jack Lew warned Mnuchin, and remember that China’s currency issues are more complex than the incoming president, Donald Trump, had suggested during the campaign
.. And in pointed remarks, Lew told Mnuchin to take the debt ceiling seriously — or face a potential financial crisis.
.. His struggles are casting doubt on whether the political neophyte, who made his name on Wall Street, has the stature in Washington to press through a vote on a measure that former treasury secretaries of both parties have said is critical to preserving the nation’s reputation for financial stability... Treasury officials have designed plans to prioritize payments to government bondholders so that if the government runs short on cash it could, in at least a technical sense, avoid defaulting on U.S. debt.
Such a scenario would be very difficult to manage because some bills would either be delayed or not paid — but it could be necessary to prevent an actual default. Still, prioritizing payments this way could lead to a spike in interest rates and a stock market crash, analysts have said.
- .. Beyond the tax code and the debt limit, Mnuchin’s portfolio includes
- blocking terrorist financing,
- easing regulations and
- conveying Trump’s nationalist economic policy at home and abroad.
.. Mnuchin’s push on the debt ceiling was undermined from the start within the White House by Mick Mulvaney, the director of the Office of Management and Budget. Mulvaney is a former Republican congressman and founding member of the House Freedom Caucus
.. Mulvaney publicly questioned Mnuchin’s call for a clean vote, saying that he would prefer spending cuts or other budget changes as part of any proposal to increase the debt ceiling. Some White House and Treasury officials were incensed to see Mulvaney break ranks
.. And even though Trump told lawmakers that Mnuchin was his point person on the debt limit, the White House still has not publicly come out in favor of a no-strings-attached vote.
.. Lawmakers and congressional aides who have met with Mnuchin describe an earnestness that they viewed as refreshing but also easily outmaneuvered by experienced political hands.
“He’s certainly in the minority in the administration,” said Rep. Mark Meadows (R-N.C.), chairman of the House Freedom Caucus. “The problem is, yes, you could get a clean debt-ceiling, but it would be 180 Democrats in the House with 40 or 50 Republicans, and that’s not a good way to start.”
Meadows said that he recently attended a meeting of eight of the most conservative Senate and House lawmakers about how to handle the debt ceiling and that not once did they consider the idea of backing Mnuchin’s proposal for a clean debt-ceiling increase.
.. One of Mnuchin’s challenges is that he still lacks the Washington alliances many Treasury chiefs enjoy.
.. “He has an unassuming manner, but he should not be underestimated,” Hubbard said.
.. In a way, they share the same pedigree. Both were born into wealth (Mnuchin drove a Porsche in college) and generated even more during their careers.
Trump’s background was in real estate and Mnuchin’s was in banking, but both had a hankering for entertainment and celebrity that drew them close. Even while on Trump’s campaign, Mnuchin remained an active Hollywood producer.
.. Mnuchin has made clear that a tax overhaul is a focus of the president, tied to a broader goal of growing the economy at a rate of 3 percent a year, compared with 1.6 percent last year.
Economists say that is unlikely in any sustainable way — and roundly agree that, if the debt limit isn’t increased, the economy will begin contracting, not expanding.
My concern with Trump’s team of generals
My issue with having a foreign policy Cabinet consisting of general officers and Goldman Sachs alums
All of the public opinion data shows that as public trust in institutions has waned, trust in the military has remained high. And this, in turn, has led to the militarization of foreign policy.
.. because of the gap in trust, the Pentagon commands an ever-growing share of the foreign affairs budget. This means it exercises operational control over a large swath of activities that heretofore were probably not thought of as being under the purview of the Defense Department.
.. In the long term, it is dangerous to signal that the best way to become secretary of state is to have achieved the rank of a general officer. There are a lot of other dimensions of foreign policy that go beyond military statecraft. Maybe, just maybe, it’s not a coincidence that the best secretaries of state over the past 40 years — George P. Shultz and James A. Baker — were originally secretaries of the Treasury
.. A team of generals might be talented, but it’s also one-dimensional.
.. appointing general officers to Cabinet-level positions could be a way to restore faith in government. And maybe they will do a great job and, like Washington or Cincinnatus, ride off into the sunset. Or it could just convince the public and the politicians that the only route to a policy principal position is not just service, but a lifelong career in the military.
.. the most talented former general would be serving an unpredictable, dangerous gasbag of a president. Failure is likely. In which case, Trump will have proven to be a true egalitarian, and have eviscerated public faith in the last outsized institution in America.
Trump’s A-Team
By now, it should be obvious that the Trump operation exists in two parts. One half is the operation’s face, Donald Trump. The other half is the operation behind the face. Mr. Trump’s persona has often made it difficult to take the entire Trump phenomenon seriously. That, we learned, is a mistake.
.. This Trump transition operation is filled with specialists and veterans extending back to Ronald Reagan’s transition, such as Ed Meese. While New York conducts auditions for the cabinet’s speaking parts, the Washington policy shop is now recruiting the under-, deputy- and assistant secretaryships... I would have preferred seeing House Financial Services Committee Chairman Jeb Hensarling get Treasury, on the assumption that his ability to get tax reform and the overhaul of Dodd-Frank through Congress would have all but guaranteed a revived economy and a successful first Trump term. Mr. Mnuchin will benefit from having Chairman Hensarling as a lodestar in the House... If Mr. Trump’s foreign-policy goal is to “kill ISIS,” it would be hard to design a more effective partnership than Jim Mattis at Defense and David Petraeus at State... These are men who will not argue for committing ground troops unless the U.S. is going to win and then secure the durability of its dear investment there.
Steven Mnuchin’s Defining Moment: Seizing Opportunity From the Financial Crisis
Donald Trump’s nominee for Treasury secretary made millions buying failed IndyMac and has résumé at odds with president-elect’s campaign rhetoric
Like other Trump cabinet picks, Mr. Mnuchin has a résumé that is at odds with much of the president-elect’s populist rhetoric on the campaign trail.
.. Mr. Trump is building a cabinet that combines traditional Republican Party leanings with unconventional elements, including people who made their fortunes by taking big investment risks. IndyMac was the defining deal of Mr. Mnuchin’s career. He knew that the government needed to sell the failed bank—and he played hardball.
.. Mr. Mnuchin, 53 years old, has no experience in government or running a large organization, though he was a campaign loyalist and fundraiser for Mr. Trump.
.. In the interview, Mr. Mnuchin said the new administration’s goal would be to achieve annual economic growth of 3% to 4%. He said his top policy priorities would be to overhaul the federal tax code, roll back certain financial regulations, review trade agreements and invest in infrastructure.
.. He said Mr. Trump won’t hesitate to call up corporate chiefs to lean on them about jobs, factory closures and other matters.
Sen. Ron Wyden .. Mr. Mnuchin has a “history of profiting off the victims of predatory lending.”
.. Mr. Mnuchin, whose father spent his entire career at Goldman
.. He made partner in 1994 and oversaw Goldman’s mortgage-trading desk before becoming chief information officer.
.. Messrs. Mnuchin and Trump were soon in the same philanthropic and social circles, attending dinner parties at each other’s Manhattan homes and mingling at the U.S. Open tennis tournament and the Metropolitan Museum of Art Gala... he said he has been a registered Republican for “as long as I can remember,” yet he also gave a total of $7,400 since 2000 to Democrat Hillary Clinton’s campaigns... Mr. Mnuchin donated to the campaigns of Democrats Barack Obama,John Edwards,John Kerry and Al Gore. The only Republican presidential candidate Mr. Mnuchin gave money to was Mitt Romney in 2012... In 2002, Mr. Mnuchin left Goldman and wound up running an investment fund set up by billionaire investor George Soros... Mr. Mnuchin assembled an all-star cast drawn from his years on Wall Street, including Mr. Soros, hedge-fund manager John Paulson, billionaire Michael Dell’s investment firm and several former Goldman executives, including J. Christopher Flowers. They signed up on the basis that Mr. Mnuchin would personally run the bank.. The FDIC also agreed to protect the buyers from the most severe losses for years. That loss-sharing arrangement turned out to be a master stroke... Banks often go out of their way to avoid losses, even when borrowers are in violation of loan terms. The loss-sharing agreement took away some of the disincentives, since future losses would be borne partly by the government... CIT agreed to buy OneWest for $3.4 billion, a bounty of more than $3 billion, including dividends. Mr. Mnuchin’s take was several hundred million dollar.. After the sale, newly discovered accounting problems forced CIT to take a $230 million charge.It inherited another problem from nearly $40 million of loans.. Mr. Mnuchin left CIT amid a management shake-up announced last year, receiving a $10.9 million severance payment. His exit came just as Mr. Trump’s bid for the Republican nomination was gaining momentum. “The timing worked out well,”
.. Mr. Mnuchin helped write a tax-cutting plan and tried to rein in some of Mr. Trump’s populist rhetoric, including his vow to not “let Wall street get away with murder,” people familiar with the matter said.
.. Mr. Mnuchin, who divorced his second wife in 2014, brought his fiancée, Scottish actress Louise Linton, on the Trump campaign plane