How Mnuchin Became Washington’s Indispensable Crisis Manager

Treasury secretary’s ability to keep the president’s trust while working with those outside the administration is expected to be crucial

By Kate Davidson and Bob Davis
March 31, 2020 7:30 am ET

At a World Economic Forum dinner in Davos, Switzerland, Treasury Secretary Steven Mnuchin spoke up. It was 45 minutes into a conversation about climate change and trade, and no one had mentioned the most important issue facing the world, he said: The deadly new coronavirus spreading across China.

Mr. Mnuchin told dinner guests he worried the health crisis could undermine global growth. Earlier that day, Jan. 23, Chinese officials said they were cutting transport in and out of Wuhan, the epicenter of the public health crisis.

Today, the U.S. is a pandemic hot zone, and Mr. Mnuchin has become Washington’s indispensable deal-maker in trying to keep the crisis from throwing the world’s largest economy into the deepest downturn since the Great Depression.

Over the past month, Mr. Mnuchin has shepherded a pair of coronavirus rescue bills through Congress, including last week’s roughly $2 trillion relief package. He has tapped emergency funds so that the Federal Reserve can keep credit flowing to hemorrhaging markets.

Now, he’s in charge of executing an unprecedented government spending surge in the coming weeks, delivering grants and loans to businesses, sending checks to millions of American households and expanding unemployment benefits amid soaring layoffs.

To get things done in partisan Washington, Mr. Mnuchin has relied on an ability to keep President Trump’s trust while working with Democrats and others Mr. Trump distrusts, particularly House Speaker Nancy Pelosi and Federal Reserve Chairman Jerome Powell. Those skills, people who work with him say, will be all the more needed in the weeks ahead as the pandemic is expected to worsen and as Congress, Mr. Mnuchin and the White House negotiate new rescue measures for the economy.

“The next six months may be as challenging a time to be Treasury secretary as any since the Second World War,” says former Clinton administration Treasury Secretary Lawrence Summers, who has been sharply critical of Mr. Mnuchin for his unswerving backing of the president.

Mr. Mnuchin declined to be interviewed. “My full-time objective right now is to make sure this administration does everything we can to get this money into the economy quickly,” he said in an interview with Fox News Sunday.

The economic rescue is likely to prove critical to the re-election prospects for Mr. Trump, whose ad hoc management style hampered the government’s initial response.

Mr. Trump and Mr. Mnuchin have known each other for more than 15 years. Their long-term relationship is key to Mr. Mnuchin’s ability to outlast many in the cabinet despite occasionally harsh criticism from the president, say the Treasury secretary’s allies. Mr. Mnuchin said in an earlier interview that he talks with the president “at least once every day.”

Mr. Mnuchin avoids contradicting or upstaging Mr. Trump in public, which also helps his standing with the president though it prompts criticism from outside the administration. Mr. Summers called Mr. Mnuchin a sycophant in a tweet for supporting Mr. Trump’s attacks on National Football League players kneeling during the national anthem.

Mr. Trump and Mr. Mnuchin at times disagree. The president, for instance, repeatedly overruled Mr. Mnuchin’s efforts to find an early resolution to the China trade war.

Mr. Trump also has leveled harsh criticism at Mr. Powell, whom Mr. Mnuchin endorsed for the Fed job, accusing him of not doing enough to support economic growth. Mr. Mnuchin tries to handle the president’s outbursts against Mr. Powell by explaining to Mr. Trump the way the Fed looks at the economy, say people who have witnessed the exchanges.

“Steven’s view is, don’t take it personally,” says a Trump official who has witnessed the presidential outbursts. “It’s a squall. We know it and we see it. It doesn’t interfere with their relationship.”

Regardless of the criticisms, Mr. Mnuchin and Mr. Powell coordinate closely, according to people who know both men. They have a regularly scheduled weekly breakfast—usually Thursdays at 8 a.m. This past month, the Fed and Treasury have worked in tandem to make credit available to markets and businesses. “There’s not a day that goes by now that he and I don’t speak,” Mr. Mnuchin said last week on CNBC. “Sometimes it’s five times, sometimes it’s 30 times.”

Before becoming Treasury secretary, Mr. Mnuchin had little Washington experience, having spent most of his career in finance. Still, despite some early missteps, including the use of government-run planes that drew criticism from ethics officials, he’s credited by people who have dealt with him as straightforward and a quick learner in Washington’s ways.

Mr. Mnuchin regularly consults with a number of business figures, according to his public calendar, none more frequently than Henry Paulson, the former Treasury secretary and Mr. Mnuchin’s mentor at investment bank Goldman Sachs.

“Steven has three attributes which are prerequisites to success—the confidence of the president, the confidence of congressional leaders on both sides of the aisle, and the right mix of experience and skills,” says Mr. Paulson, who led the George W. Bush administration’s response to the last financial crisis. He declined to say what advice he is giving his protégé.

As relations between Trump administration officials and Democrats in Congress have soured, the two sides have increasingly looked to Mr. Mnuchin to be the intermediary.

Last summer, as the government neared a deadline to raise its debt limit and a showdown with Congress loomed, Mrs. Pelosi said she was only interested in negotiating with Mr. Mnuchin. In the fall, they teamed up again on a deal to fund the government for the remainder of the fiscal year, averting a shutdown.

On March 3, as the coronavirus’s spread outside China tanked global markets, Mr. Mnuchin testified on Capitol Hill about the administration’s plans to expand testing and aid workers and people affected. After his testimony, Mrs. Pelosi invited Mr. Mnuchin for an impromptu meeting to begin work on a deal to provide targeted aid to businesses and workers affected by the virus.

They spoke dozens of times over the next two weeks to craft the roughly $100 billion paid-leave bill Congress passed earlier this month.

“We kind of speak shorthand to each other so we don’t waste time on niceties or anything like that,” Mrs. Pelosi later told reporters.

A senior Treasury official said Mr. Mnuchin “views the speaker as a shrewd professional, with whom he continues to have a constructive and cordial working relationship and a good personal rapport.”

To get the Senate to pass the mammoth rescue package, Mr. Mnuchin set up camp in the Capitol, working in a temporary office in the historic Lyndon Baines Johnson room. He shuttled back and forth between Senate Minority Leader Chuck Schumer (D., N.Y.) and Senate Majority Leader Mitch McConnell (R., Ky.).

Democrats felt the Republican bill was too favorable to big business and wanted a broader expansion of unemployment insurance for workers and greater oversight of a $500 billion lending program for big corporations. Some Republicans were concerned Mr. Mnuchin was too willing to give in to Democratic demands.

“Mnuchin played the middleman, and he must have been in my office 20 times in three days,” said Mr. Schumer. He said Democrats felt they could trust Mr. Mnuchin to keep his word—and bring Republicans on board.

Several times as they tried to zero in on a deal, Mr. Mnuchin called Mr. Trump and put him on speaker.

Last Wednesday during the daily coronavirus media briefing, Mr. Trump stood at the lectern and thanked Mr. Mnuchin for what he said was a great job working “day and night” on the deal. “He, sort of, lived over in that beautiful building.”

Mr. Mnuchin is now working under tight timelines. He has said the government will begin distributing one-time cash payments to millions of Americans within the next few weeks and promised an easy application process for small businesses to apply for government loans, a program that starts Friday.

The $500 billion of loans and loan guarantees for large U.S. companies that Mr. Mnuchin will administer is likely to face intense scrutiny from Democrats who derided it as a corporate slush fund.

Mr. Mnuchin has acknowledged the $2 trillion relief package will only see the economy through the next eight to 12 weeks. Economists generally agree that won’t be enough time or money to return the U.S. economy to full health.

“We’re going to have a rough quarter,” Mr. Mnuchin said Monday in an interview with Fox Business Network. He said the administration is prepared to go back to Congress for more help if necessary. “When we reopen, we’ll be ready and the economy will surge back,” he said.
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—Lindsay Wise, Nick Timiraos and Andrew Duehren contributed to this article.

https://www.wsj.com/articles/steven-mnuchin-is-trying-to-rescue-the-economy-from-the-coronavirus-11585654202