When President-elect Joe Biden is inaugurated on January 20, he will inherit not only the worst health crisis in over 100 years, but also, the economic crisis it has unleashed on the United States. Unfortunately, a decision made by outgoing Treasury Secretary Steve Mnuchin, according to the New York Times, won't make it any easier for Biden to handle the economy — and columnist Paul Krugman is slamming Mnuchin for it on Twitter.
Journalists Jeanna Smialek and Alan Rappeport, in the Times, report that Mnuchin has "said he does not plan to extend several key emergency lending programs beyond the end of the year and asked the Federal Reserve to return the money supporting them — a decision that could hinder President-elect Joseph R. Biden, Jr.'s ability to use the central bank's vast powers to cushion the economic fallout from the virus."
Mnuchin, according to Smialek and Alan Rappeport, "said he would not continue Fed programs, including ones that support the markets for corporate bonds and municipal debt and one that extends loans to midsize businesses." And not renewing that funding, the Times reporters note, "could leave significant corners of the financial world vulnerable to the type of volatility that cascaded through the system as virus fears mounted in the spring."
In a letter, Mnuchin wrote, "I am requesting that the Federal Reserve return the unused funds to the Treasury."
Krugman's response to the Smialek/Rappeport article has been vehement. The liberal economist/Times columnist, in a Twitter thread, explains why he believes that Mnuchin is making a terrible decision.
According to Krugman, "Mnuchin is effectively trying to create a financial crisis, or at least make one more likely."
Krugman notes that "emergency lending programs can have a stabilizing effect even when they don't end up being used. And he slams Mnuchin's decision as "more sabotage by an administration on its way out."
The Biden camp, unsurprisingly, is likewise outraged at the move.
"The Treasury Department's attempt to prematurely end support that could be used for small businesses across the country when they are facing the prospect of new shutdowns is deeply irresponsible," Kate Bedingfield, a spokeswoman for Biden told the Washington Post. "At this fragile moment, as the COVID and economic crises are re-accelerating, we should be reinforcing the government's ability to respond and support the economy."
