Friday, November 20, 2020

Mnuchin Goes Scorched Earth Over $455 Billion in COVID-19 Bailout Money

Those paying close attention may notice that the Trump administration, with the election in dispute, are applying scorched earth tactics in a number of areas to dismantle parts of activist government. 

The Treasury Department is among those using the tactic

Yesterday, Treasury Secretary Steven Mnuchin announced that he has pulled the plug on COVID-19 related emergency Federal Reserve lending programs.

It is about time. The programs should have never been launched.

In a letter sent Thursday to Federal Reserve Board Chairman Jerome Powell, Mnuchin asked the central bank to return some $455 billion in unused funding for programs set to expire December 31.

The decision would force several programs to end.

The money was part of the CARES Act, a $2 trillion bailout package, that was signed into law in March.

There should have never been such a package, it did much to keep the economy in lockdown as those out of work received checks to stay at home. Without those checks, the protests to open up the country would have been something to see.

It could be argued that the bailout was Trump's greatest error during his administration. 

The $455 billion remaining is a small portion of the full package but the scorched earth tactic is finally a move in the right direction.

However, like most of Trump administration actions, it appears to be based on politics rather than principle. Rabobank points out that Republicans had earlier indicated they were worried that the Federal Reserve could use the money for its Municipal Lending Facility and the Main Street Lending Program that could be used by the Democrats to bypass Congress if Republicans were to block additional federal government support to local governments and small and mid-sized businesses. So, as the bank concludes, "Mnuchin’s action is clearly related to politics."

Politics, or not, it is a welcome move.


No comments:

Post a Comment