The Hill’s Bob Cusack interviews Treasury Secretary Steven Mnuchin.
Read excerpts from the interview below.
Cusack: Several Senate Republicans said yesterday they want to see some action now on the next relief package. Is another package necessary? And if so, when?
{mosads}Mnuchin: I’m very sympathetic to the people who are not working at no fault of their own because we’ve closed down the economy. And as we slowly reopen the economy in a safe way, we’ll get people back to work. And in the current CARES package, there is several parts of it that are designed to help those American workers. One is obviously the PPP — and getting people back to work through that process. The other is the economic impact payments, which are the direct payments. And then, finally, the enhanced unemployment insurance, which we do need to fix the quirk that in certain cases were actually paying people more than they made. So we need to fix that. We’re going to carefully review the next few weeks. I think there is a strong likelihood we will need another bill but we just have $3 trillion. We’re pumping into the economy, and we’re going to step back for a few weeks and think very clearly how we need to spend more money. And if we need to do that.
Cusack: When is the last time you’ve communicated with the Speaker about a possible next package?
Mnuchin: Well, I spoke to the Speaker last week. Our conversation was really more about the execution of the current CARES Act and was not focused on the next steps. What I would say is, I’m very pleased that the last two bills that were passed were 96-0 and 100-0 in the Senate. They had overwhelming bipartisan support. I mean, this is really extraordinary times. The whole Senate came together and I would hope that the next bill we do has overwhelming bipartisan support and the Speaker’s bill obviously is a partisan bill, so that’s not something we’re focusing on at the moment.
Cusack: A lot of Americans are angry, and they’re angry at China. Is China going to be held accountable in any way?
Mnuchin: Well, I understand why Americans are angry, and I think they have the right to be angry. And it’s not just Americans, it’s the rest of the world. And I would start with people, want information. People want to know what went on with the virus. And I think that China should be held accountable first by at least giving information and understanding what went on and how to combat this.
Cusack: President Trump has talked about a transportation bill, the possibility of it being a stimulus down the road. Mitch McConnell, the Senate majority leader, is not a big fan of that approach. Should Congress, at some point this year, for another stimulus, pass some type of transportation bill?
Mnuchin: Well, I think as you know, the president’s been very focused on infrastructure, going back to the campaign, and that was part of the president’s platform: to rebuild our roads, our bridges, our dams and the nation’s infrastructure, as well as cutting-edge infrastructure such as rural broadband. So, I think that’s something that Congress is going to need to look at. I’d say whether we do it is part of the coronavirus bill or whether we do it separately. That’s something that is on the president’s agenda.
Cusack: How many jobs has the PPP program saved to this date?
Mnuchin: I think it’s about 50 million jobs, and I think by the time we get through this it will be 60 million jobs and it’s, you know, it wasn’t perfect getting up and running. But what was important was we developed a program from scratch. We knew that if it took four months to get up and running, it wasn’t going to help it all. It was unprecedented. We got this up in a few weeks, we got money out the door and this is a major part of the U.S. economy — is small and medium sized businesses. And we wanted to protect the workers and, just as important, we wanted to keep those workers attached to the business so that when the businesses could safely open, they had the workers attached to them.
Cusack: As you know, Congress has replenished the PPP. When will the PPP need to be replenished again? How much time do we have?
Mnuchin: Well, right now we have over $100 billion left in it. One of the things we are working with Congress on — and there is bipartisan support — is lengthening the eight-week period. One of the things that companies are having an issue with is because they have been closed and they’re rehiring workers. I know there’s bipartisan support to extend that to 10 or 12 weeks. I know the restaurants had asked for 24 weeks, but that’s something we definitely want to fix. Doesn’t cost us any more money. And there is bipartisan support.
Cusack: As far as that eight-week provision, as you mentioned Congress is talking about that. There are some that say that you could do that administratively. Can you do that administratively as well as a 75-25 provision or does that have to be done by Congress — both of them?
Mnuchin: Well, the eight weeks I wish I could do administratively, if I could, we’d already do it. Now let me just comment on the 75-25, because I think there’s been a little bit of confusion on this issue. So, when the program was designed and again, let me just remind people it’s called the Paycheck Protection Program, it’s not called the overhead protection program. It was designed that you got eight weeks of payroll plus 25 percent for overhead, which we thought was a reasonable amount. But the real purpose here was to get people back to work. When we came up with the 75 percent test, it was just a belt and suspender test — as we thought is how the program was designed, which again, was the eight weeks plus the 25 percent. We did not think the intent to the program was to have 50 percent spent on workers and 50 percent spent on overhead, and obviously we’re somewhat concerned. I mean, we realized people do have more overhead. They can go out and take an idle loan, which is a 30-year SBA loan, to pay back. But we want most of this money to go to workers and we believe that the 75 percent was exactly consistent with the way the program was designed.
Cusack: There are roughly around 30 companies — public companies — that say they won’t return the money that they received in this loan-grant program. They say that the goal posts have been changed. Will you go after these companies? And why, if it is saving jobs after all?
Mnuchin: Well, let me just comment that there was a certification that was in the application, that the funds were necessary. And, as I’ve said before, there were a few companies that kind of became the poster child for the public being upset. I’ve said this before. I’m a big fan of the Los Angeles Lakers. They’re one of my favorite teams. We did not envision this was a program for the Los Angeles Lakers. They obviously have the financial means to pay their players and pay their support staff. Also, as you look at Shake Shack, which was a large public company. Again, they have the financial means. Whether they want to pay their people or not is completely up to them. But I don’t think those were the types of companies that we thought could make the certification. So, I came out early in defending the program, and again it was a small number of companies in, you know, what’s over 4 1/2 million loans. This is a small number of companies that jeopardize the program, and we did say that we would review and hold accountable anybody who has a loan over $2 million. Now, I think some legitimate companies got very concerned about the liability, so we toned that down and we said, “OK, well, if you go through your review and you pay back the money, the SBA will not refer you to any other further enforcement actions.” But yes, the bigger loans will be reviewed — they’ll be reviewed on a case-by-case basis. Companies can make their arguments, no different than you go through any review.
Cusack: There’s a lawsuit pending about the nonpublic companies. Media organizations have said they deserve the right to see who is getting this taxpayer money. Do you agree with that? That the public deserves to know who’s getting the money, whether they’re public or not public?
Mnuchin: Well, let me just comment. I very much support oversight and transparency. And when we negotiate this bipartisan bill, we added in unprecedented oversight and transparency. We created a new inspector general or various parts of this. We created an oversight committee that is bipartisan. And in the Fed programs, we specifically agreed within fourteen days to release the names of companies. And that was something there was interest in. I think in the PPP, it does not require disclosure. And I think the concern was that there is proprietary information because it’s tied off of payroll, that that should not be in the public domain. But again, that’s something that will be discussed.
Cusack: The House has set up a special panel that congressional Republicans oppose. They say it’s not necessary to oversee this specific committee because there’s a lot of other oversight built into the law. If you were asked to testify before this House panel, would you?
Mnuchin: I can’t comment on that. I haven’t really reviewed it one way or another with my internal legal team and others. What I would say is I testified this week at the Senate Banking Committee with [Federal Reserve] Chairman Jay Powell that is required on a quarterly basis. We absolutely plan on doing that. And again, I would just emphasize there’s a specific oversight committee that was set up that consists of Republicans and Democrats. I’m not exactly sure why the House needs to set up another committee. And again, there are other committees that that the House does have jurisdiction that Chair Powell and I will testify before.
Cusack: CBO recently has predicted that unemployment will be 10 percent-plus this year into next. Do you agree with that prediction?
Mnuchin: Well, let me just comment, and this is nothing against CBO, and this is nothing against the rest of the economic models. We’re in an unprecedented situation. This unemployment was not a result of bad economic issues. This is result of medical issues. So, I think it’s very hard to predict. A lot of it depends on the reopening of the economy. A lot of it depends on as we make advances in virals, vaccines and testing, and people feel comfortable. So I think the economic models, quite frankly, follow the medical models, and I think it’s too premature to predict those things. What I do think is the second quarter is obviously going to be a dreadful quarter because literally, it’s like we took the water faucet and we turned it off, so nothing came through. And now we’re slowly reopening the economy. So I think we will bottom out in the second quarter. I think the third and fourth quarter will be better. And as the president has said and I have said, with the great advancement in medical progress in killing this virus, we expect our economy will be great again next year.
Cusack: You said this spring that the fourth quarter would be gigantic. Are you tempering expectations?
Mnuchin: Again, I’m not tempering. What I’m saying is, when you come off of a low number of closing down the economy, you’re going to have very, very big increases. So, yes, I think you’re going to see a very large — call it a gigantic increase — in the fourth quarter.
Cusack: Regarding production, some have called the administration to use more of the Defense Production Act, which the administration has employed, but does the administration plan to do more of that as far as manufacturing?
Mnuchin: Well, it’s a very important tool. It should be used carefully. I know the president is very much willing to use it if we need to use it. I got an update on vaccines yesterday in the investments that BARDA is making, which I think is really terrific. And in many cases, they have commitments to take over large amounts of the vaccines. But the Defense Protection Act is a very important tool to protect the American workers, and if the president needs to use it, he will.
Cusack: The president has said the Postal Service should charge more for carriers like Amazon and others. Do you think that should be looked at? And maybe the Postal Service should charge Amazon more?
Mnuchin: Well, we’ve already looked at this, so let me just give you the history here. I chaired the federal financing bank. The post office is the largest creditor of the federal financing bank. So last year, I asked my team to give me a financial update. I was shocked at how bad it was. I updated the president on that. As a result of that, he asked me to chair a task force, and we’ve put together a complete plan to fix the post office. Let me also just say, when we came into office, there were no governors. Again, this is just outrageous. This is kind of corporate 101. There was no oversight on the post office. So the postal board of governors didn’t have anybody. We now have a fully functioning governance board. People appointed by Congress, both sides of the aisle. I think that’s extremely important. They ran a search. They’ve just hired a new postmaster general, someone with terrific business experience. And during the last bill, people thought the post office was going to run out of money, so they wanted to throw the post office $10 billion. I said, “that’s not fair. Let’s give them a loan if they need more money.” The good news is, as of now, the package deliveries are up over 50 percent to offset the mail. As of now, they don’t need to use the loan. So, I absolutely think the president is right. We want transparency on these agreements. … Right now, the post office is doing amazing job delivering things to people as they’re at home. An amazing job. We just want to make sure that the post office is paid fairly and isn’t subsidizing that business. The first-class mail business is a business that should be subsidized. The package business, and again, what I’m talking about is the overnight package business. I’m not talking about if you take your package to the post office and send it cross-country, what I’m talking about is overnight business that services Amazon, eBay and others — that shouldn’t be subsidized by taxpayers.
Cusack: An unusual program has come out of the State Department. It’s been reported — it’s called the Eagle Plan, where Social Security recipients could get a $5,000 or $10,000 payment in exchange for reducing their retirement benefits down the road. It’s very odd this is coming out of the State Department. Is this something that’s going to come out from the administration?
Mnuchin: No, it’s not something that we’re considering at this point. It did come out of the economics group. And we look at lots of things. I think, as you know, Social Security is very important to the president, and, we’ll look at other options if people need money.
Cusack: The president and vice president have been tested regularly. Have you been tested, and will you continue to be tested in the weeks ahead?
Mnuchin: I am also tested on a regular basis because I am in pretty much daily contact with the president, the vice president and others. The White House has thought it prudent. And [with] these Abbott machines, it’s a very easy process. I hope we can get more and more of these Abbott machines into the workforce. I think in many places, if people could go into work and could get tested, they’d be much more confident in going to work. But yes, just as a precaution. Because I’m around the president on a regular basis, I do get tested. I’m happy to report I don’t have it.