The Middletown Press (Middletown, CT)
A finance system mission for Mnuchin
The Treasury Department has a new secretary, now that the Senate, voting along partisan lines, has confirmed Steve Mnuchin, albeit 18 days later than it voted yes on Timothy Geithner in 2009 — the last time a first-term president’s choice was under consid
Mnuchin’s relatively tardy installation reflects Democratic resistance to all of President Donald Trump’s choices, but in this case that resistance cannot be dismissed as pure partisanship.
There were genuine concerns surrounding Mnuchin’s nomination, including his lack of public-sector experience and his belated disclosure to senators of some $100 million in personal wealth. Democrats were not wrong to ask whether Treasury is the best fit for a career financier who made a fortune engineering a controversial federally backed bailout of the failed IndyMac bank during the height of the foreclosure crisis.
To be sure, Mnuchin’s testimony at his confirmation hearing revealed him to be not only an expert on finance, but also well-versed in the federal policy issues, especially those involving housing, over which he will share responsibility.
His challenge nevertheless will be to show that he can put that expertise and knowledge to work on behalf of the not-so-rich Americans whose interests Trump promised to protect. With respect to tax reform, likely a major focus of Mnuchin’s tenure, we’re skeptical.
After the election, he said any tax reductions for the rich would be offset by “less deductions,” while there would “be a big tax cut for the middle class.” At his hearing, Mnuchin added that tax reform won’t add to the deficit. How all of those conditions are to be fulfilled simultaneously in practice, he has never said.
That’s a problem, especially because the tax plan Trump laid out during the campaign bestowed huge cuts on the wealthy and corporate America, charged to the national credit card.
We’re somewhat more hopeful that Mnuchin might be able to work with Congress on a permanent fix to the housing finance system, still dominated by the unsustainably semi-nationalized giants Fannie Mae and Freddie Mac.
The good news is that both houses of Congress and the Treasury Department under Geithner thoroughly reviewed the plausible options for a new system that — unlike the old one — does not encourage excessive private-sector risktaking, with taxpayers on the hook for losses. There is thus no need for Mnuchin to reinvent the wheel; rather, what’s called for is the orchestration of consensus on the Hill, and between the executive and legislative branches, possibly along the same bipartisan lines that almost produced a bill in 2014.
Undoubtedly, the political environment is even more toxic now, but if there’s any issue on which the parties should be able to put their differences aside, rebooting this vital sector — there’s real estate in every congressional district! — would seem to be it.
Being a part of the solution would be a worthy top priority for the Mnuchin Treasury Department. Indeed, we can’t think of a better way for the new secretary to prove he’s serious about putting his financial smarts to work in the public interest.