Politics

Goodbye, Steve Mnuchin

Steve Mnuchin in a face mask.
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 from 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.

This is part of a series of goodbyes to Trumpworld figures. Read the rest here.