I’m not sure what kind of game Steven Mnuchin is playing, but it’s pretty clear that it’s a game. Gross domestic product fell by nearly 10 percent in the second quarter, as all of us were forced to cut back on account of the novel coronavirus pandemic. The drop, according to the Times, was the equivalent of a 32.5 percent annual rate of decline, “the most devastating three-month collapse on record,” which wiped out five years of growth. All of this would have been worse without government stimulus.
If the president and the US Congress don’t want to see a depression that dwarfs the “Great” one that struck over 90 years ago, here’s what they must do next, according to economists interviewed recently by Businessweek: “a new round of direct payments, especially for those with low income; some extension of extra unemployment benefits; and a sizable chunk of aid to state and local governments,” which was missing from the last round of legislation. (The CARES Act appropriated some $150 billion for municipalities and states to fight Covid-19, but not to replace lost revenues.)
Yet here’s Steven Mnuchin, the secretary of the United States Treasury, appearing on ABC’s “This Week” sounding as if the future of his boss, Donald Trump, is less certain than the future of the Republican Party—as if the president’s reelection were already lost and the time had come to re-lay ideological grounds anticipating a President Joe Biden. “There’s obviously a need to support workers and support the economy,” Mnuchin said. “On the other hand, we have to be careful about not piling on enormous amount of debts for future generations. … In certain cases where we’re paying people more to stay home than to work, that’s created issues in the entire economy.”
His remarks set off familiar ideological flare-ups. Mnuchin is the son of a Goldman Sachs banker, a millionaire hundreds of times over. For a man of the idle rich to suggest it’s bad for people to get a buck more than they’d normally earn, even as they stand in line at food kitchens, is a slap in the face. But while ideological flare-ups are today getting the attention, something important is getting lost. Mnuchin is making this out to be a conventional inter-party fight between the Democrats and the Republicans. It’s not, though. It’s really an intra-party fight. And Trump is losing.
Think about it. If you were a president who let a pandemic get out of control, because you thought it would hurt enemies more than friends, you’d want your team, in this case the Senate Republicans, to dump as much cash as possible onto the economy in the hope that saving it would bring victory. Knowing that’s your best shot (aside from cheating in various and sundry ways), you tell your team to stop bickering and vote for the Heroes Act, the $3.5 trillion aid package already passed by the House. But while your team was on board last time, pushing $2.2 trillion into the economy, almost certainly preventing a drop in GDP from being worse than nearly 10 percent, this time is different. This time, your team is worried about debt. It’s worried about people being “overpaid.” It’s worried about things getting in the way of your being reelected.
Something happened between last time and this time. That something is obvious: poll after poll showing the incumbent behind the challenger by double digits in swing states (or ahead of the challenger within the margin of error in normally safe states). The Republicans, especially in the Senate, seemed to be losing faith in this president and now are looking toward a day when they will need to stand on conservative ideology to oppose a Democratic agenda. The president, meanwhile, can’t see what’s happening, not even when his own Cabinet member goes on TV and uses the same talking points cosplay fiscal hawks use to justify why they won’t support any measure to batten the economy. (Maybe the president didn’t notice, because he was golfing!) Trump can’t quite see he’s being snookered into believing the House Democrats are threatening his reelection by holding things up. They are not. The Republicans are.
When the president suggested postponing the election last week, it was widely interpreted as a sign of weakness, especially after the Senate Republicans said no can do. The so-called reawakening of fiscal hawks is a more potent sign of Trump’s impotence, though. You can’t use ideology to justify postponing an election, but you can to position yourself in case he loses to Biden while also defending yourself against GOP interest groups who would scream if they knew you had lost faith. Either way, the Republicans win the game, which is likely the same one Steven Mnuchin is playing.