Mnuchin vs. Democrats: 5 things to watch
Treasury Secretary Steven Mnuchin will face House lawmakers in back-to-back hearings Tuesday, his first appearance since Democrats formally requested President Donald Trump’s tax returns.
Democratic lawmakers can be expected to grill Trump’s finance chief, who oversees the Internal Revenue Service, about whether he will comply with requests to hand over the commander in chief’s personal tax returns, as well as about Trump’s recent announcement of conservative commentator Stephen Moore and former Republican presidential candidate Herman Cain as picks for the Federal Reserve.
Here’s what to watch for when Mnuchin testifies before a House Appropriations subcommittee at 10 a.m. and the House Financial Services Committee at 2 p.m.:
Trump’s tax returns
With a Wednesday deadline for the Trump administration to respond to a request from House Ways and Means Chairman Richard Neal for Trump’s tax returns, Mnuchin will most certainly be asked about his position on the obscure law cited by the Massachusetts Democrat — or whether he plans to intervene and block their release.
Trump has already made clear that he has no plans to make this fight easy. On Friday, his lawyers sent a letter to the Department of Treasury’s general counsel dismissing the request as a politically motivated pursuit. “The idea that you can use the IRS as a political weapon is incorrect as a matter of statutory law and constitutionally,” Trump’s lawyer Jay Sekulow told ABC’s “This Week” on Sunday. “We should not be in a situation where individual private tax returns are used for political purpose.”
Last month, Mnuchin told House lawmakers he would obey the law if he received a written request from Congress to turn over Trump’s tax returns. He also sidestepped the issue by suggesting the decision would ultimately fall to the IRS commissioner, the country’s federal tax collector.
“I will consult with the legal department within Treasury, and I will comply with the law,” Mnuchin said then when asked if he would release the returns.
Last week, Mnuchin became the third Trump Cabinet official cited for failure to comply with ethics rules in their financial disclosures, according to a federal government ethics watchdog.
The Office of Government Ethics declined to certify the secretary’s 2018 filing for neglecting to disclose that ethics officials within the Treasury Department had advised him that selling his stake in a film production company to his now-wife, Louise Linton, would not create a conflict of interest.
The treasury secretary agreed to revise his federal ethics agreement and recuse himself from government matters that could impact the film production company, StormChaser Productions.
Mnuchin told the Senate Finance Committee at a hearing last month that department ethics officials had informed him he was allowed to sell his stake in StormChaser to Linton.
Mnuchin sold his film and real estate businesses in 2017 for at least $15 million as part of a string of divestments upon becoming Trump’s treasury chief.
The Federal Reserve
The treasury secretary may again be called upon to act as the President’s explainer-in-chief when it comes to his views on the Federal Reserve.
Trump’s plans to nominate Moore and Cain, both close political allies, have fed criticism that the President is trying to exert too much influence over the world’s most powerful central bank for his own political purposes.
In recent weeks, Trump has revived his barrage of criticism over the Fed’s interest rate policy, going so far as to urge the central bank to cut rates in order to skyrocket the economy.
“They really slowed us,” Trump told reporters Friday on his way to California to visit the US southern border with Mexico. “I personally think the Fed should drop rates.”
The President argued that if the Fed cut interest rates “you would see a rocket ship.” But even so “we’re doing very well.”
Trump’s top economic advisers, including the National Economic Council director, Larry Kudlow, have defended the President’s decision to express his views publicly.
“It’s our point of view,” said Kudlow, speaking at a breakfast roundtable last week hosted by the Christian Science Monitor. “The Fed is independent and we’re not trying to compromise that.”
The treasury secretary has previously backed the President’s prerogative to speak his mind on the Fed’s policies, while trying to avoid the appearance of interfering in the US central bank.
While a “granddaddy” trade deal with China has yet to take final shape, the President’s repeated threats to close the US border have introduced a new twist in a separate trade deal with the nation’s northern and southern neighbors, Canada and Mexico.
On Friday, Trump said he would be inclined to override his pending United States-Mexico-Canada Agreement by imposing a 25% tariff on cars made in Mexico if the country doesn’t help stem the flow of undocumented immigrants.
The comments have come as Trump’s economic advisers have been pushing Congress to ratify the trade deal they negotiated after the President decided he wanted to tear up the 1994 North American Free Trade Agreement.
Trump suggested that his tariff threat could “supersede USMCA,” potentially undermining the ratification of the trade deal, which he has lauded as replacing one of the worst deals he’s ever seen, referring to NAFTA.
Over the weekend, Kudlow suggested that the President wouldn’t necessarily make good on his threat, describing it as more as a “warning” that should be heeded.
Lawmakers could seek further explanation from Mnuchin, who has been leading trade negotiations with China alongside US Trade Representative Robert Lighthizer, on what the President may have in mind.
Mnuchin may be pressed on the Trump administration’s plans to overhaul the nation’s housing finance system, now that the President is calling on federal agencies to address the issue more a decade after the US government seized the mortgage giants Fannie Mae and Freddie Mac.
Last month, Trump directed the Treasury Department and the Department of Housing and Urban Development to develop legislative and regulatory plans to revamp the two companies, both still under the government’s control since the 2008 financial crisis.
The President’s directive, laid out in a memo, calls for ending the conservatorship of Fannie and Freddie and improving the federal government’s oversight of them. It remains unclear, however, what else will be included in a draft plan beyond preserving a 30-year fixed rate mortgage.
Details of those plans may still be in the works, but Mnuchin could offer some clues on what the Trump administration may have in mind, including widening participation of the private sector.