Treasury Secretary Steven Mnuchin said Monday that lawmakers should not allow fears over the size of the federal deficit or the Federal Reserve’s balance sheet to delay additional Covid-19 relief.
Mnuchin, who with White House chief of staff Mark Meadows has led the administration’s Covid-19 relief negotiations, said that the economic crisis warrants extraordinary stimulus from both Congress and the Fed.
“Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet,” Mnuchin told CNBC’s “Squawk Box” from the White House. “There was a time when the Fed was shrinking the balance sheet and coming back to normal. The good news is that gave them a lot of room to increase the balance sheet, which they did.”
“And I think both the monetary policy working with fiscal policy and what we were able to get done in an unprecedented way with Congress is the reason the economy is doing better,” he added.
Mnuchin’s comments critiqued his fellow Republicans who argue that improving jobs data and strong housing figures relax the need for additional spending to combat the impact of the coronavirus. Republican Sen. Rand Paul of Kentucky, for example, voted against a GOP “skinny” stimulus plan last week and has repeatedly attacked his own party for what he views as prodigal spending.
“The majority of Republicans are now no different than socialist Democrats when it comes to debt,” Paul wrote on Twitter in July. “They simply don’t care about debt and are preparing to add at least another trillion dollars in debt this month, combined with the trillions from earlier this summer.”
The cumulative federal budget deficit for the first 11 months of fiscal year 2020 was $3.0 trillion, according to the Congressional Budget Office, a byproduct of intensified government spending to get the economy through the pandemic-associated shutdown.
Even Mnuchin, who argues more stimulus is needed to help the U.S. economy, noted Monday that “we are rebounding in a very, very significant way.”
Paul’s vote helped sink the Senate Majority Leader Mitch McConnell’s plan, which fell short of the 60 votes needed on a procedural step to move toward passage. All Democrats present and Paul voted against the bill in a 52-47 vote. That legislation would have reimposed enhanced federal unemployment insurance at a rate of $300 per week, half of the $600 weekly payment that expired at the end of July.
But Mnuchin struck a more compromising tone Monday and said he’s still willing to work with Pelosi on a new deal.
“I think there’s many areas of this where is an agreement between the Democrats and the Republicans, and some of the areas we do have differences on the amounts,” he said. “But I will continue to work on this: I’ve told the Speaker I’m available any time to negotiate.”
The Treasury Secretary said he expects the Problem Solvers Caucus to produce a stimulus proposal later Monday.