The stock market has experienced its worst performance in December since the early 1930s. Despite brisk holiday shopping, the usual Santa Claus rally was canceled, in part thanks to a grinch named Steve Mnuchin.
The treasury secretary’s inexplicable maneuver on Christmas Eve eve, announcing that he convened meetings — by phone, from Cabo — with the six largest banks and was reassured that America faced no liquidity problems, when nobody was particularly concerned that we did, sent markets into a volatile tailspin. It was as if the contractor you hired to fix a sticky door told you that your roof was probably in no immediate danger of collapse; that wasn’t your preoccupation before, but it is now.
The stock market is not the economy, as long as jobs and paychecks continue to be strong. This was an unforced error that temporarily snagged the 10 percent of America that own 84 percent of all stocks. But Mnuchin’s boneheaded actions reflected his dominant characteristics. He is a sycophant willing to debase himself, no matter how strongly, at the altar of Donald Trump. The president has convinced himself that the Federal Reserve is ruining his economy (and, like a stopped clock, he’s not totally wrong), and Mnuchin’s pronouncement of financial stability made no sense outside of a vain need to show his boss that everything was actually fine — or, at least, that Mnuchin was doing things.
But the sycophancy in this case mashed up with Mnuchin’s other main trait: He’s a rather dim gentleman. Anyone who doesn’t recognize the implications of springing on the public an announcement that banks most certainly have ample liquidity isn’t operating with a shed full of all the tools needed to do this job. And, sadly for the country, this is part of a pattern.
This is a man who tried to block the University of California, Los Angeles from releasing video of an embarrassing public event where he was heckled by students over shepherding through tax cuts for the rich. Of course, this had the opposite effect, ensuring that the otherwise low-profile incident remained in the news cycle for weeks. After several news organizations filed public records requests, the university posted the video nearly three weeks later, saying that it had received Mnuchin’s consent. The massive, unforced error seems to have been caused only by the treasury secretary’s vanity.
Another low point came during the debate over the tax bill, when Mnuchin recited with religious conviction the claim that the $1.5 trillion overhaul would pay for itself through increased economic growth. Asked to provide any evidence of this, he repeatedly claimed that more than 100 employees were “working around the clock on running scenarios for us.”
Time and again, reporters and policymakers asked for this Treasury Department analysis of the deficit impact of tax reform. In late November, as a vote on the bill approached, an anonymous economist at the Office of Tax Policy confirmed what most of us expected by that point: There was no such analysis. The details of what was actually going on, gleaned by the New York Times’s Alan Rappeport, would almost be funny if they hadn’t heralded utter disaster:
Those inside Treasury’s Office of Tax Policy, which Mr. Mnuchin has credited with running the models, say they have been largely shut out of the process and are not working on the type of detailed analysis that he has mentioned.
An economist at the Office of Tax Analysis, who spoke on the condition of anonymity so as not to jeopardize his job, said Treasury had not released a “dynamic” analysis showing that the tax plan would be paid for with economic growth because one did not exist.
Instead of conducting full analyses of tax proposals, staff members have been running numbers on individual provisions or policy ideas, like lowering the tax rate on so-called pass-through businesses and figuring out how many family farms would benefit from the repeal of the estate tax.
In fact, it’s already estimated that just 20 farms a year are subject to any inheritance tax at all — not exactly tough math. But even after it was exposed that Mnuchin’s corps of number-crunchers were basically just chilling and counting gold coins, he persisted with the fiction by releasing a one-page, 500-word document and passing it off as the thing we’d all been waiting for. The so-called analysis could have been simplified further by just writing, “Trust us.”
The document was “embarrassing to all of us,” an unnamed senior official told Politico.
Of course, it didn’t matter in the end: Republicans in Congress passed a tax bill and parroted Mnuchin’s shaky claim that the deficit impact would be nonexistent. But after collecting sharply lower tax revenues in 2018, the deficit — get this — went up. Worse things can certainly happen in this world, but Mnuchin’s hard-to-watch failure to “prove” that the tax cuts would pay for themselves slamming into reality further indicates the lack of gravitas behind the Coke-bottle glasses and Bond-villain smile.
It’s worth noting who actually did the intellectual heavy lifting on tax reform. In the weeks before the administration released its tax outline in April 2017, Mnuchin met with Apple CEO Tim Cook and the executives of a host of other tax-dodging corporations that are getting deep tax cuts and a reprieve in the form of a one-time, 15.5 percent tax on profits stashed overseas. The next month, when the Treasury released its recommendations for further tax regulatory changes, they were almost entirely copied from a U.S. Chamber of Commerce memo on the same subject. And when it came to figuring out withholdings under the new tax bill, Mnuchin announced that the IRS would set up an online calculator for workers to check that the right amount of money was being withheld from their paycheck, shifting responsibility from the government to taxpayers.
Even Mnuchin’s fellow political travelers frequently underscore that he is not the sharpest knife in the Cabinet. For example, in a March FOX News interview he urged Congress to give Trump the power to veto line items on future spending bills. The Supreme Court has previously ruled this unconstitutional, forcing the host to explain sheepishly to Mnuchin that Congress cannot just ignore the court’s ruling, because that’s not how the whole “checks and balances” thing that we learn about in eighth grade works. A Yahoo Business profile claims that Mnuchin’s former Goldman Sachs colleagues consider him “if not especially book smart, then street-savvy,” but let’s be honest: It’s exceptionally difficult to imagine him being either.
Luckily for Mnuchin, intelligence is no obstacle when you have massive, unearned privilege on your side. Mnuchin got his start out of college at Goldman Sachs. His father, Robert Mnuchin, was a legendary Goldman Sachs partner who headed up the firm’s trading division in the 1970s. His brother, Alan Mnuchin, was also a 12-year Goldman veteran, arriving at the firm a few years ahead of the younger Steven. Even going back another generation doesn’t do much to dial up the rags-to-riches factor: Mnuchin’s grandpa was an attorney who co-founded a yacht club in the Hamptons, New York.
While Mnuchin rose steadily through the ranks at Goldman, some of his colleagues suspected that this had little to do with his own merits. His promotion to partner in 1996 came at the expense of Kevin Ingram, a black trader from a working-class background who had gotten an engineering degree from the Massachusetts Institute of Technology before landing at Goldman. Ingram “was livid,” a former colleague tells author William D. Cohan in his 2011 book “Money and Power: How Goldman Sachs Came to Rule the World.” “He was much smarter than Steven, had accomplished a lot more, but his dad wasn’t Robert Mnuchin.”
Perhaps the peak Mnuchin moment to dominate the news cycle thus far involved a familiar activity for the uberrich Trump cabinet: using their lofty positions to feed at the public trough.
In August 2017, the secretary’s actress wife, Louise Linton, posted an Instagram photo of the couple deplaning from a government jet. The caption doubled as an advertisement for the designers she was wearing: “Great #daytrip to #Kentucky! #nicest #people #beautiful #countryside #rolandmouret pants #tomford sunnies, #hermesscarf #valentinorockstudheels #valentino #usa.”
The tacky factor jumped when Linton berated an Instagram user who criticized her in the comments. And the incident turned into a full-fledged scandal when it turned out that Mnuchin may have chartered a government plane simply to take his wife to see the solar eclipse. (It would end up being one of a series of allegations of Mnuchin’s taxpayer-funded jet-setting: He reportedly requested a $25,000-per-hour military escort for his honeymoon, and cost the government nearly $1 million on plane travel in 2017 alone.)
The treasury secretary responded to the eclipse dust-up in characteristically dickish fashion. “People in Kentucky took this stuff very seriously,” Mnuchin told the Washington Post. “Being a New Yorker, I don’t have any interest in watching the eclipse.”
A recently obtained photo of Mnuchin and Linton gazing up at the heavens says otherwise. ThinkProgress, which got it hands on this smoking gun through a public records request, learned that the U.S. Mint had even procured their eclipse glasses for them.
A request for comment from the Treasury Department on whether or not Steve Mnuchin is a dunce was not returned.
Correction: January 1, 2019
This article originally made reference to “the 16 percent of America that actually own stocks,” but it is more accurate to say that 10 percent of Americans own 84 percent of all stocks.