Treasury Secretary (and human-turtle hybrid) Steve Mnuchin is a guy who wants his Yale classmates to know that he doesn’t work for a Nazi sympathizer.
He’s also a man who is going to weaponize the stock market in order to brow-beat Congress into passing a tax plan that benefits people like him.
Here’s what he told Politico in the first episode of what, in retrospect, will almost surely be seen as an ill-conceived series of podcasts called “Politico Money“:
There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done. To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done you’re going to see a reversal of a significant amount of these gains.
Ok, so first of all, that’s probably true. The original “Trump bump” and its short-lived sequel (which both included notable rotations within equities, a run up in yields, and a dollar rally) were at least partially attributable to optimism on tax reform.
But the problem with Mnuchin’s comment is that he’s effectively piggybacking off Trump’s tweets about the stock market. All Trump has left in terms of things he can point to for evidence of “success” are record stock prices and his tweets have made working class people i) care about stock prices, and ii) believe that the rally is attributable to him.
So what Steve is doing is telling those same working class people that if tax reform doesn’t get done and stocks crash, they have Congress to blame. That move is a rather transparent attempt to blackmail lawmakers. Now, they’re in a position where if their constituents’ 401ks take a hit on tax reform failure, they’ll be blamed. Of course those would be the same constituents who, for the most part, will not benefit from the administration’s tax plan.
And the ultimate middle finger to the middle class here is that the people who benefit the most from higher prices for financial assets like stocks are the people in whose hands those assets are concentrated – people like Steve Mnuchin and of course his trophy wife. Those would be the same people who also benefit from the tax plan.
How fun is that, right?
Maybe Steve is just trying to make sure we can get the national debt down.