Goodbye,
Steve Mnuchin
NOV 07, 20207:15 PM
In fact, we owe this amoral plutocrat a debt
of gratitude. Nicholas
Kamm - Pool/Getty Images
If you had asked me back in 2017 to guess who would turn out
to be the most important force for good within the Trump administration, there
was no way I’d have answered Steve Mnuchin. The best thing you could say about
the treasury secretary was that he didn’t appear to be a lunatic, just a
slightly more-heartless-than-average Wall Street type who’d been born rich and
didn’t seem to have especially strong political views.
Certainly, nothing in Mnuchin’s résumé suggested the
potential for greatness, or that he was even particularly qualified for the
job. Over the course of his peripatetic, pre-Trump career, Mnuchin had been a
Goldman Sachs partner (like his father) and hedge funder. He and a group of
investors struck gold during the financial crisis when they bought the failed
remains of IndyMac, resurrecting it as OneWest Bank; consumer groups accused him of turning the lender into a “foreclosure machine” that mercilessly and
aggressively booted elderly reverse mortgage borrowers form their homes, before
unloading them for a mint. He got into movie producing, backing pictures like Mad Max: Fury
Road and The Lego Movie. Despite having essentially no
experience in politics, he ended up Trump’s national finance
chairman after attending the candidate’s New York primary victory party (the
two knew each other from some real estate deals in the past). The move seemed
to baffle everyone who knew him. But his reward turned out to be one of the
most important posts in the Cabinet.
Mnuchin did not have an especially auspicious start in
Washington, either. He was stiff and awkward in public. His wife, the C-list
actress Louise Linton, went “full Marie Antoinette,“ as Vanity Fair put it,
posting on Instagram about how she wore a #hermesscarf and
#valentinorockstudheels during an official government trip to Kentucky, before
going off on a critical commenter (“your life looks cute,” she sneered).
The two turned themselves into a meme by posing with a giant sheet of
printed dollars during a trip to the Bureau of Printing and Engraving, forever
sealing their images as cartoon plutocrats. At the time, coincidentally,
Mnuchin was working to help pass the president’s tax cut, an unpopular effort
that was set to largely benefit the wealthy and corporate shareholders. The
whole push temporarily made a hash of his credibility, as he insisted repeatedly and against all evidence
that the bill would pay for itself with economic growth, while lying to
reporters that his department was running a detailed analysis that would back
up those claims (they were not).
Mnuchin also did not always seem like the kind of guy you could
rely on in a crisis, like the time he randomly freaked out the markets by issuing a weird,
out-of-the-blue statement about bank liquidity.
And yet, in the end, the charmless foreclosure king with the
trophy wife may have been the closest thing to a hero in Trump’s Cabinet—or an
antihero, at least. Not the generals and nat-sec guys who were supposed to be
the adults in the room, but the Lego Movie guy, who played key
roles in the two best things to come out of this Godforsaken administration.
First, Mnuchin convinced the president to pick
Jerome Powell as chair of the Federal Reserve. This did not seem like a
particularly remarkable decision at the time. Powell seemed like a safe choice
who would mostly follow his predecessor Janet Yellen’s formula on monetary
policy, while being a little more conservative on banking regulation. But over
time, Powell has turned into a historically deft and transformative Fed chair,
who steadied the economy through choppy waters in late 2019 as Trump bumbled
through his trade war, acted decisively to keep calm in the financial markets as
the coronavirus crisis exploded, and led a fundamental rethink of the central
bank’s monetary policy approach. As a result, its leaders are promising to put
less emphasis on squashing inflation than in the past, and more on helping the
economy reach full employment—a shift that could pay dividends for years or
even decades to come.
Second, Mnuchin played a central role in the birth of the CARES Act, Washington’s
historic response to the coronavirus. By the time the coronavirus crisis rolled
around, Mnuchin was essentially the only member of the Trump administration
left who was on speaking terms with Democrats in Congress, who widely viewed
him as the only island of sanity and relative competence in the White House.
(They’d established a decent working relationship with him during budget
negotiations.) He and Nancy Pelosi worked the original, $200 billion Phase One
relief bill. Then, as the extent of the calamity became clearer, he became the
White House’s point man on the larger package, often acting as the intermediary
between Democrats and Republicans. Crucially, he reportedly convinced
spending-averse GOP members that a big package was necessary, and that without
one, unemployment could reach 20 percent. He also waved away conservative
efforts to cut back on the enhanced unemployment benefits—the $600 a week—that
Democrats wanted in the bill.
The CARES Act had many flaws, and Mnuchin’s implementation
of parts of it left much to be desired (don’t get me started on the Paycheck
Protection Program). But while imperfect, the legislation did immense amounts
of good for ordinary Americans by putting money directly in their pockets as
the economy collapsed around them. It was a bazooka of cash so powerful that
researchers believe it actually knocked down the
poverty rate, even as unemployment skyrocketed. Insofar as we’ve
avoided the worst-case scenario many economists feared, it’s largely thanks to
that bill.
The reason Mnuchin got the Powell pick and the CARES Act
basically right is simple: Unlike almost all the other nutters populating the
Trump administration, he just isn’t that conservative, but he still, mostly,
managed to keep Trump’s trust. (In fact, a lot of Republicans are convinced
he’s a secret Democrat.) Like a lot of Wall Streeters, he likes his taxes low,
but he isn’t a weirdo hard-money fanatic and isn’t opposed to government
spending on principle. If a more doctrinaire Republican had been whispering in
Trump’s ear as treasury secretary, it’s easy to imagine that the Fed and the
economic response to the coronavirus could have turned out differently.
Ironically, Mnuchin’s two biggest accomplishments may have
earned him the most grief. Powell spent a couple years raising interest rates
before reversing course, which infuriated Trump, who tweeted constantly about
the Fed chair and supposedly contemplated trying to fire him; Trump was
reportedly furious with Mnuchin for convincing him to pick the guy. And when
Republicans and Fox News turned on the CARES Act, mostly because of its jobless
benefits, Trump ended up with buyer’s remorse and dressed the secretary down
during a meeting. “I never should have signed it,” he said to Mnuchin,
according to the New York Times. “You’re to blame.” For that,
the rest of us owe this amoral plutocrat a debt of gratitude.
