In “Money and Power: How Goldman Sachs Came to Rule the World,” William Cohan argues that Goldman Sachs is the world’s most powerful organization (bank, sect, friends, power, whatever). Curious that, since Bill Clinton was president, almost all Treasury secretaries over 25 years, come from Goldman Sachs. The present, too: Steve Mnuchin.
Steve Mnuchin is a typical candidate for the post of Treasury Secretary. Like two of his last seven predecessors he climbed the ranks at Goldman Sachs. In the 2000s he worked briefly for George Soros. (On the eve of the election, Soros appeared with Goldman CEO Lloyd Blankfein as the target of a Donald Trump attack on the “global power structure.”) When news of Mr. Mnuchin’s nomination became public, Spoke soberly at CNBC, of the need to reform the tax code.
However, Mnuchin is a rather unconventional candidate. In recent years he has exchanged funds for films. His entertainment company, in collaboration first with Fox and later with Warner Bros., has produced blockbusters such as “Avatar” and “Gravity.” In his last attempt, a romantic drama about Hollywood of the 50s, Mnuchin even makes an appearance in a cameo.
Mnuchin has dedicated time to finance the west coast. In 2009 he and other investors bought IndyMac, a failed bank in California. Renowned OneWest, the bank was awarded to mortgage borrowers breaching the law, according to its critics, resulting in several lawsuits.
If the Senate confirms his appointment, Mnuchin will face three major challenges in his role. The first will be to get Trump’s tax policy right. During the campaign, Trump proposed tax cuts that, according to the Tax Foundation, a right-wing think tank, would give the first 1% of wage earners a tax cut of an average of 12-20% of their income. But Mnuchin told CNBC that there would be no net tax cut for higher incomes. Before the election, Trump criticized his opponent’s plan for an infrastructure bank “controlled by politicians and bureaucrats” and proposed using tax credits to stimulate private investment. However, Mnuchin suggested in mid-November that the incoming administration is looking to start an infrastructure bank … after all.
The second challenge will be to fulfill Trump’s trade pledges. Mnuchin is believed to share his boss’s protectionist instincts. He will determine trade policy together with Wilbur Ross, Trump’s candidate for trade secretary. Ross, a billionaire investor in bankruptcy, is a critic of recent trade deals. In the trade department, he will oversee the implementation of the new trade policy, such as the imposition of tariffs. In the Treasury, Mnuchin will have responsibilities such as declaring China a currency manipulator.
The ultimate and overall challenge will be to defend the Trump growth agenda. In announcing the nominations, the transition team reiterated its promise to create more than 25 million jobs over the next decade, 18 million more than anticipated today. Arithmetic suggests that this promise is an illusion: even if participation in the workforce of young people aged 25 to 54 returns to record highs, only 4.3 million new workers will be introduced by 2024. To consistently achieve their goal of Economic growth of 3.5-4%, Trump’s new team must wait, in return for an unprecedented increase in productivity, driven, perhaps, by deregulation. The most sober voices say that growth will be 2.5%, or, for the most part, 3%. Far from Trump’s promises …
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