Big Fat Checks, Steve Mnuchin’s Idea And Alms For The ‘Poor’

Steve Mnuchin committed figurative harakiri on national television Sunday for the umpteenth time in the past three years.

Asked by CNN’s Jake Tapper to discuss the contention that, denials aside, the “bridge liquidity” (as Mnuchin described the cash handouts currently being disbursed to American households) is in some cases being delayed by the logistics of putting Donald Trump’s signature on the physical checks, the Treasury secretary claimed the president wasn’t behind the decision.

For all the well-deserved derision he receives, Mnuchin is what counts as “credible” in the administration. You might scoff, but remember, it’s all relative. Everyone else with even a loose claim on credibility hit the exits long ago. Say what you will about Mnuchin, but by comparison to, for example, Larry Kudlow, he’s credible. And by comparison to Peter Navarro or, say, Stephen Miller, Mnuchin is a bastion of sanity.

‘That was my idea’

Mnuchin’s relative credibility is what makes it both amusing and notable when he commits ritual suicide in the service of defending decisions he almost surely didn’t consider advisable let alone make himself.

“For the first time ever, the president’s name is going to appear on an IRS check”, Tapper said Sunday.

 

“It’s being put in the memo line because the president isn’t authorized to sign the checks”, Tapper continued, before asking if “the president personally suggested this idea”.

By at least some accounts, the answer is yes. That is: Yes, Trump most assuredly suggested it and may well have demanded it. Here’s The Washington Post, from a piece published a few days ago:

After privately suggesting to Treasury Secretary Steven Mnuchin that he be allowed to formally sign the checks, Trump settled for having his name printed in the memo section, according to administration officials, who spoke on the condition of anonymity to discuss internal deliberations.

The placement of Trump’s name on the stimulus checks was taken out of the hands of the IRS early in the process, according to two government officials. The plan has been closely held within the IRS, and Commissioner Charles Rettig has not discussed it on his daily calls with his top executives, senior agency officials said.

When the decision came down from the Treasury Department late Monday that the first batch of paper checks would include “Donald J. Trump” on the memo line, it was announced to just five senior IRS officials.

Responding to Tapper on Sunday, Mnuchin said “We did put the President’s name on the check. That was my idea”.

He explained that the only way the decision would have “slowed the process down” is if Trump actually signed the check as opposed to the government stamping his internationally-recognized Sharpie scribble on the payments.

“That was my idea”, Mnuchin reiterated. “He is the President, and I think it’s a terrific symbol to the American public”.

Alms for the ‘poor’

More importantly, Mnuchin said he and Democrats are close to a deal on topping up the Paycheck Protection Program, which ran out of money last week, much to the chagrin of small businesses across the country, which are relying on what amounts to hundreds of billions in grants (the loans are forgivable in many cases) to rehire employees or keep those they’ve retained on payroll.

Mnuchin asked Congress to top up the PPP by $250 billion earlier this month. Mitch McConnell agreed, but in addition to the extra money for small businesses, Democrats demanded $100 billion for hospitals and $150 billion for local governments. For his part, Trump maintains he’d rather allocate those funds later, as part of the next stimulus bill.

Mnuchin now says a bipartisan deal will probably include $75 billion of the $100 billion Nancy Pelosi and Chuck Schumer want for hospitals and an additional $25 billion for testing. More funding for state and local governments will apparently have to wait. The total amount added to the $349 billion PPP in the compromise would be $300 billion.

“We’re close. We have common ground”, Pelosi told ABC Sunday. “I think we’re very close to an agreement”.

The program has already been assailed for making payments to large businesses, including chain restaurants, perhaps at the expense of smaller companies who need the funding immediately.

For example, Ruth’s Hospitality Group (the parent of upscale Ruth’s Chris Steak Houses) got $20 million in loans.

The company has thousands of employees, and to the extent this keeps them from joining the tens of millions of Americans filing for unemployment benefits, that’s great news.

But it’s at least worth noting that Ruth’s Hospitality Group (which is publicly traded) reported nearly a half billion in revenue in its latest annual report. At one point, the stock was down more than 80% in 2020.

“As a franchised organization, it is our responsibility to our nearly 30 small business owners, team members, customers and shareholders, to do everything we can to ensure Ruth’s Hospitality Group is well positioned to emerge from this situation a strong and viable entity”, a Ruth’s spokesperson told BuzzFeed. “We will be following all guidelines set forth by the [Small Business Administration] in how the funds are being leveraged including payroll assurance for our team members in individual locations running our takeout and delivery business”.

Ruth’s is hardly alone. Potbelly got $10 million and so did Fiesta Restaurant Group, each of which has seen their shares fall at least 60% at one juncture this year. The following excerpts are from Potbelly’s 8K announcing the loan:

On April 10, 2020, Potbelly Sandwich Works, LLC (the “Borrower”), an indirect subsidiary of Potbelly Corporation (the “Company”), was granted a loan (the “Loan”) from JPMorgan Chase Bank, N.A. in the aggregate amount of $10,000,000, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

[…]

The Company appointed Steven W. Cirulis, age 49, as Senior Vice President, Chief Financial Officer and Chief Strategy Officer, effective as of April 6, 2020 (the “Effective Date”).

[…]

Pursuant to the terms of his employment agreement (the “Executive Employment Agreement”), made and entered into and effective as of April 6, 2020, Mr. Cirulis will be paid an annual base salary of $425,000, although as is the case with all senior management, his base salary has been temporarily reduced by 25%.

[…]

In connection with the commencement of his Executive Employment Agreement, Mr. Cirulis was granted a one-time cash sign on bonus of $100,000.

Hopefully you can discern why the optics around that are poor.

In the very same 8K announcing the $10 million PPP loan (which, again, is backed by the government), the company appointed a new CFO at nearly a half million in annual base salary.

Then, they immediately handed him $100,000 in cash as a signing bonus.

Money is fungible

Money is fungible, folks. The SBA is a government agency. Potbelly may pay the loan back, but PPP loans are forgivable under certain circumstances. It is conceivable (and just to cover myself, let me specify that by “conceivable” I mean it is not out of the realm of possibility depending on how things play out) that some of the money disbursed in these PPP loans to chain restaurants and other relatively large businesses, will not be paid back or, at the least, will not be required to be paid back.

This money is, in effect, taxpayer money. If Potbelly were, for whatever reason, not required to pay back the full amount of the loan (i.e., if Chase recognizes on the SBA guarantee), that $100,000 that went directly into Steven Cirulis’s bank account, is just a free handout from taxpayers to Cirulis, who, as of April 6, makes $425,000 per year.

None of the large companies receiving these loans would agree with my characterization, but what I would say is that nothing I have written above is really debatable when you start with the self-evident premise that money is fungible. It just is what it is.

As far as Donald Trump and the autographed checks go, the president claimed last week to know next to nothing about it.

“I don’t know too much… but I understand my name is there”, he remarked, on Wednesday.

“I don’t know where they’re going, how they’re going. I don’t imagine it’s a big deal”, he went on to say. “I’m sure people will be very happy to get a big, fat, beautiful check and my name is on it”.

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