“We’re in a war”, Steve Mnuchin said Sunday, asked by Fox’s Chris Wallace about the deficit and whether the administration is concerned about projections that round after round of virus relief spending will speed America down what budget hawks have long claimed is a road to financial oblivion.
Wallace reminded Mnuchin that a debt-to-GDP ratio of 100% “has always been a red line for stable economies”, a somewhat dubious assertion that I’ll forgive because cable news (let alone Fox News) isn’t the place of that kind of debate.
Mnuchin didn’t miss a beat. “Well, Chris, the good news is that if you look at the portion of the budget that we’re actually allocating to interest, it’s extremely low”, he remarked.
That is correct. Below is the breakdown from the (uber)hawkish CRFB, who I lampooned (mercilessly) on Wednesday in “Who’s Afraid Of Red Ink?”
You can’t even make out the slivers dedicated to debt service costs, although to be fair, that’s partially due to the sheer size of the other outlays.
“Over time”, it will be important for the Trump administration (or another administration, perhaps) to “look at” fiscal dynamics, Mnuchin went on to say. But currently, that’s simply not a priority.
“Right now we’re in a war and we have to protect American workers and American business”, Steve boldly proclaimed. “And we’re gonna do whatever we need to do”.
On Sunday, Mnuchin was mocked by some on some social media for his comments about a supposed economic rebound. Specifically, he said the following during the same interview:
I think as we begin to reopen the economy in May and June, you’re going to see the economy really bounce back in July, August, September. And we are putting in an unprecedented amount of fiscal relief into the economy. You’re seeing trillions of dollars that’s making its way into the economy and I think this is going to have a significant impact.
Optimistic? Well, sure. Wholly unrealistic? Maybe.
The more important takeaway from the interview, though, was Mnuchin’s explicit rebuke of even the idea that the deficit and/or debt dynamics matter right now.
As I’ve put it on too many occasions to count, “Steve Mnuchin gets it” is only a statement that makes sense in the context of the Trump administration, and even then, he sometimes misses the mark, especially when it comes to striking an appropriately pedestrian tone while speaking to everyday people (see the “bridge liquidity” gaffe, for example).
But laugh as you invariably will, Mnuchin has been decisive during this crisis. It is entirely fair to suggest that without Mnuchin, the White House and Congress may not have acted as swiftly as they did to enact a multi-trillion dollar spending program to bolster the economy.
While not being privy to backdoor negotiations, I’d be willing to venture there have been instances over the past several weeks when Mnuchin has been compelled to explain to Republicans that while he totally understands the absolute necessity of perpetuating the deficit myth in normal times, the reality of the current situation is that either Congress spends trillions right now, or everything (all of it) burns to the ground by June.
Meanwhile, Kevin Hassett (who returned to the White House to advise on the crisis), didn’t mince words when speaking to ABC’s George Stephanopoulos.
“Make no mistake. This is a really grave situation, George”, the normally chipper Kevin said. “This is the biggest negative shock that our economy has ever seen. We’re going to be looking at an unemployment rate that approaches rates we saw during the Great Depression”.