Steve Mnuchin On Deficit, National Debt: ‘We’re At War, Chris’

“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”.


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6 thoughts on “Steve Mnuchin On Deficit, National Debt: ‘We’re At War, Chris’

  1. “…you’re going to see the economy really bounce back in July, August and September.”

    Again, based on the GIANT assumption that we can leave our homes and actually go places without fearing for our health and our family’s health.

    Granted, not in Steve’s area of responsibility, but looking at the ongoing 25K to 35K daily case count increases (…with lockdown measures in place!), I’d say we’re not going anywhere for a while.

  2. The same element in the Senate (Toomey and Co.) that capped SALT in the 2017 tax bill is trying to draw the line with aid to those “high tax Blue States.” Given that the Fed has, rightly in my view, given a backseat to moral hazard, adverse selection and free riding problems (While the house is burning down is not the best time to debate whether the house was poorly designed and how much those design flaws created a fire hazard), forcing states to lay off thousands of workers and slash essential services because the Turtle’s Minions want to make an emphatic point about fiscal rectitude and profligacy among the states does not seem particularly helpful at this juncture.

  3. Spending like we are in a war (we are) is the right thing to do. However, the problem is that almost none of the money that was allocated to go to individuals (other than UI) has actually been spent yet. The Coronavirus Relief Fund has spent only $104B so far….two months after the start of the crisis. It could now be too little, too late.

  4. I’m still not entirely clear what it is we are attempting to stimulate. The service economy will be a shell of what it was in February for probably ever. Manufacturing will continue to suffer. The entirety of the GDP will be funded by the government. And that is just us. Global economies are in most cases worse off than the U.S. The big difference between the Covid war and armed conflicts is there were things to build following past wars. What are we going to “build” with all stimulus that is magically being created? There is no way this all ends well. We may win the war on Covid but cannot even begin to imagine how we ever battle growing budget deficits without doing what most would consider unthinkable – significantly raising taxes.

  5. This is NOT stimulus. It is simply an attempt at maintenance. In order to maintain the base of the economic pyramid, they would need to spend $7-$8T on individuals and small businesses. It has taken them two months to start spending just $104B, so I doubt there will be anything left to maintain a couple of months from know.

    However, corporations have been given access to $2T PLUS trillions more of bank-created money. All that, while most individuals (without UI or even healthcare) become economically extinct. Like always, the rich get to the life boats first.

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