The Treasury Department may once again be shepherded by a Wall Street financier. Donald Trump is expected to select Steven Mnuchin (pronounced mah-NEW-chin) as Treasury Secretary, promising predictability on key areas of economic policy.
Mr. Mnunchin, a former partner at Goldman Sachs who went on to found his own hedge fund, confirmed on CNBC’s “Squawk Box” that he had been tapped for the post. He said his priority is enacting a swath of tax cuts outlined in the president-elect’s tax plan – a plan Mnuchin helped draft after joining the Trump campaign earlier this year.
The selection of Mnuchin cuts against Trump’s repeated criticism of the financial industry, including Goldman Sachs, while on the campaign trail. But having a Wall Street veteran at the helm may be a welcome sign of economic certainty for some, and Mnuchin hopes the promise of tax cuts will resonate with middle-class families who voted for the president-elect.
“When we work with Congress and go through this, it will be very clear,” he said on CNBC. “This is a middle income tax cut. And the child care credit is a big aspect of this.”
Mnuchin joined the Trump campaign in April, coming on-board as national campaign finance chair at a time when the campaign’s financial apparatus was virtually nonexistent. He used the connections he had developed in nearly two decades at Goldman Sachs to garner donations for Trump, and even negotiated a joint fundraising agreement with the Republican National Committee that allowed big donors to give to the party and the candidate.
These connections – along with Mnuchin’s ties to Hollywood, where he financed movies like the “X-Men” franchise and “Avatar” – may be important if he moves into government.
Mnuchin is one of a number of Cabinet picks who supported Trump in the primary. But he’s not simply a loyalist: he has the Wall Street-to-Washington background of former Treasury heads, including one-time Goldman Sachs executives Hank Paulson and Bob Rubin.
It’s no surprise that Mnuchin plans to cut taxes, reducing the corporate tax rate to 15 percent in an effort to bring business back to the United States. He believes the economy can grow at a rate of 3 to 4 percent, he said on CNBC, and cutting corporate taxes is a big part of that.
But he warned that, while the upper class may see tax reductions in some areas, their overall tax burden will remain the same.
“There will be no absolute tax cut for the upper class,” he said.
Interest rates are also likely to stay low for a few years, he added.
For markets, these policies may be a sign of predictability and consistency, particularly with the architect of the Trump tax plan at the helm as Trump goes into office. And a Republican Congress that has historically supported cutting taxes is unlikely to oppose the measures.
Mnuchin will also be influential in other areas, including changing or ending international trade agreements and implementing the Trump team’s infrastructure spending plan. He could work to roll back relations with Iran and Cuba by re-imposing sanctions.
Trump is expected to announce the appointment as soon as Wednesday, and Mnuchin will then undergo a Senate confirmation hearing. The selection may face some opposition from Democrats concerned about sweeping tax cuts, as well as liberal groups who argue Mnuchin profited from the 2008 financial crash.