Lessons unlearned? If that isn't the Trump administration, what is?
Threatening the Market
Mnuchin may have little grasp of what constitutes real risk, but he can still make threats about it. In an October interview with Politico Money, he credited the stock market's postelection rally to positive expectations that Congress would pass a major tax "reform" bill. If that bill doesn't go through, he warned, the markets will suffer big time -- and so will everyone else.
Coming from a Goldman Sachs alum, that should have rung a few bells. After all, in the fall of 2008, with the stock market tanking and banks imploding, then-Treasury Secretary and former Goldman Sachs CEO Hank Paulson took a similar position with House Speaker Nancy Pelosi. Following that chamber's initial rejection of a $700 billion bank bailout bill that sent the markets into a tailspin, he warned that, if she didn't get it through, the big banks would stop providing money to the American public. Sure enough, Congress complied. With 91 Republicans joining 172 Democrats, the bill passed by a vote of 263 to 171.
Nine years and a plethora of big bank subsidies later, Mnuchin conflated market levels with legislation in a similarly threatening manner. As he told Politico, "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." He then added, "To the extent we get the tax deal done, the stock market will go up higher." But with that, of course, went a warning: "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."
And speaking of reversals, the "Mnuchin Rule," as it was dubbed in January, 2017, underscored the then-prevailing Trump administration position that the wealthy should not be afforded tax cuts. By October, however, Mnuchin had changed his rule. "When you're cutting taxes across the board," he explained to Politico, "it's very hard not to give tax cuts to the wealthy with tax cuts to the middle class. The math, given how much you are collecting, is just hard to do."
Actually, the math isn't hard to do at all. My eight-year-old niece could do it. If you make more than a certain amount, your tax rates shouldn't get cut. That's the only math that makes sense. But in the land of tax subterfuge, even if you leave a top tax bracket rate as it is, you can still ensure that the wealthy get all the breaks in other ways.
On November 2nd, the Republicans finally released their "Tax Cuts and Job Act," which contained new blows to middle-class wellbeing, including the elimination of deductions for medical expenses, student loan interest, and state and local taxes. For corporations, already flush with cash, the plan calls for a significant, not to say staggering, tax break. Their tax rate would be slashed from 35% to 20%.
And don't forget repealing the estate tax, that other classic benefit for "the masses." Count on one thing: there will be no reversals from Mnuchin or Trump on that because the math couldn't be clearer. Only the hyper-wealthy have estates big enough to reap rewards from such a change. At an Institute for International Finance conference, even Mnuchin had to agree that this was a benefit of the rich, by the rich, and for the rich: "Obviously, the estate tax, I will concede, disproportionately helps rich people." Indeed, the heirs to the estates of fewer than 1 in 500 Americans who die each year would benefit in any way from such a repeal, though the children or other relatives of 13 of the 24 members of Donald Trump's cabinet and the president himself would bag a collective estate tax break of about $1.5 billion.
Still, don't think that everything's coming up roses for our latest secretary of the Treasury. Wall Street may now be king in Washington, but Mnuchin is not (though he is clearly a prince to the one man who truly matters right now, Donald Trump). In his efforts to promote the Trump vision (whatever that might be), the Treasury secretary seems to be coming up distinctly short, even with Republicans in Congress who have described his approach to lawmaking in terms ranging from "uncomfortable" to "intellectually insulting."
Donald Trump, of course, campaigned as an anti-establishment candidate who would offer a hand to regular people, drain the Washington swamp, and have our backs. Then he promptly began filling his administration, especially when it came to the economy, with the richest of the rich, figures guaranteed to promote the dismantling of whatever tepid regulations remained to protect citizens from economic disaster while enriching the usual .01%.
Mnuchin has yet to even do something as simple and seemingly straightforward as posting a full-scale explanation of the tax plan he's plugging so hard at the Treasury Department's web page. Even though until November 2nd it remained a chimera, that hasn't stopped him from rushing to its defense -- the defense that is, of giving the extremely wealthy yet more of their money back. Welcome to the twenty-first-century American politics of the .01%.
Meanwhile, Mnuchin has noted that he's a big fan of biographies, though his schedule doesn't allow much time for "pleasure reading." When asked about Alexander Hamilton, he said, "I have a beautiful painting of him in my office. He stares at me every day and I look at him for great advice."
But Hamilton understood that, without adequate taxation, you couldn't run a country, or pay its debts, a stance that informed how he implemented federal taxes in the new nation. As he said in 1801, "As to taxes, they are evidently inseparable from government. It is impossible without them to pay the debts of the nation, to protect it from foreign danger, or to secure individuals from lawless violence and rapine." He also believed that those with more money should pay more taxes. His excise tax plan, for example, required the taxation of luxury items, bastions of the rich.
This government has, in fact, received more than $2.96 trillion in total tax revenues so far in the first 11 months of fiscal year 2017. That figure comes with a budget deficit of $673.7 billion, which means that if the rich or corporations were to cease to pay various taxes (at least at present rates), money would still have to come from somewhere. To begin to make up for the shortfall, the less wealthy will simply have to pay more in some fashion, as will states and cities, and cuts in social spending will undoubtedly follow as night does day.
The High-Flying Treasury Secretary Covers Trump's Back
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