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Mnuchin, Powell defend government’s efforts to revive economy as senators press for answers

The Washington Post logo The Washington Post 5/19/2020 Erica Werner, Jeff Stein
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Treasury Secretary Steven Mnuchin on Tuesday tried to defend the Trump administration’s economic response to the coronavirus pandemic, facing pointed questions from one Democratic senator who alleged workers’ lives were being put at risk.

During a Senate Banking Committee hearing, conducted by videoconference, Sen. Sherrod Brown (D-Ohio) pressed Mnuchin on the White House’s push to rapidly reopen parts of the economy even as health care advisers have urged more caution.

“How many workers should give their lives to increase our [gross domestic product] by half a percent?” Brown asked Mnuchin.

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“No workers should give their lives to do that, Mr. Senator, and I think your characterization is unfair,” Mnuchin responded.

President Trump has said in the past that it is possible the push to reopen parts of the economy quickly could lead to more deaths, but his advisers have said numerous precautions are being taken to prevent problems.

Federal Reserve Chair Jerome H. Powell also testified at the hearing. He and Mnuchin were asked numerous questions about whether the government was acting quickly enough to try to arrest the economic downturn. Powell also told lawmakers that more spending could help prevent the recession from deepening.

The hearing marked the first time two of the main architects of the government’s economic response testified together before a congressional panel, and it came as policymakers are increasingly divided about how to address the pandemic’s economic fallout. Powell has called for Congress to approve more programs to ensure economic growth, while Mnuchin said Tuesday he is still working to erect programs that were authorized two months ago.

Mnuchin also warned there could be severe economic trauma if policymakers do not act swiftly to reopen businesses, reflecting the urgency that has taken hold at the White House in recent weeks.

“There is the risk of permanent damage,” Mnuchin said at the hearing, while stressing the need for the economic reopening to be done safely. He also said the economy would continue to weaken, at least in the short term.

“I think the jobs numbers will be worse before they get better," Mnuchin said.

A number of Democrats at the hearing attacked the White House’s response. Sen. Jon Tester (D-Mont.) said Mnuchin should be more forthcoming about where all the stimulus money is being spent, telling him “We need more transparency.” Mnuchin responded by saying there had been “unprecedented transparency” so far, but Tester said that was not the case.

Brown repeatedly asked Mnuchin and Powell whether it was “fair” that essential workers are putting their lives on the line at work while being among the lowest-paid in the economy. Neither Mnuchin nor Powell would specifically say whether this was fair.

Jerome Powell, Mario Draghi, Steven Mnuchin are posing for a picture: FILE PHOTO: U.S. Treasury Secretary Steve Mnuchin (R) and Federal Reserve Chairman Jerome Powell pose for G-20 finance ministers and central banks governors family photo during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas/File Photo © Yuri Gripas/Reuters FILE PHOTO: U.S. Treasury Secretary Steve Mnuchin (R) and Federal Reserve Chairman Jerome Powell pose for G-20 finance ministers and central banks governors family photo during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas/File Photo The very terms of the hearing came under dispute as Mnuchin said he had been prepared to testify in person. Brown devoted part of his opening statement to railing against Senate Majority Leader Mitch McConnell (R-Ky.) for bringing the Senate back into session, which Brown said was putting Senate workers at risk.

The hearing was supposed to focus on the nearly $3 trillion Congress has approved to respond to the coronavirus crisis, including a $500 billion fund managed by the Treasury and the Fed. Lawmakers of both parties pressed Mnuchin and Powell to move faster on hundreds of billions in lending to businesses, cities and states and others.

“The Cares Act is the biggest rescue package in the history of Congress, and we need to make sure the dollars and program quickly find their mark," Senate Banking Committee Chairman Mike Crapo (R-Idaho) said at the outset of the hearing.

In his own opening statement, Mnuchin touted his work with Congress “to get relief into the hands of hard-working Americans and businesses as quickly as possible. While these are unprecedented and difficult times, these programs are making a positive impact on people.”

Powell discussed the Fed’s role in backstopping hundreds of billions of loans that are supposed to go to businesses large and small and shore up other parts of the economy. A report by a Congressional Oversight Commission on Monday found that only a small portion of a $500 billion Treasury fund created by the Cares Act has been committed.

Congress’s $2 trillion Cares Act, passed in late March, mandates quarterly testimony from Powell and Mnuchin to Capitol Hill.

Lawmakers of both parties have questioned why the Fed has yet to launch its Main Street Lending Facility, aimed at helping businesses that are too large to qualify for a separate small business program — and why the central bank recently altered the terms of that program to aid companies with up to 15,000 employees, a move some Democrats say mainly benefits struggling oil and gas firms.

Crapo questioned Mnuchin and Powell about a municipal lending fund and what types of cities could qualify for it. Congress allocated $150 billion for cities and states under the Cares Act, but governors and Democratic lawmakers have been pushing for more assistance. The Treasury and Fed set up a municipal lending facility within the $500 billion Treasury fund, but it has yet to send out any money.

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Powell said they were looking at ways to make it work.

The hearing took place amid debate about Congress’s next steps in responding to the virus outbreak. House Democrats last week passed a bill allocating another $3 trillion more, but Senate Republicans and the White House rejected it. Senate Republicans and administration officials say they want to pause and see how the money already approved is working before agreeing to any more. Some have even suggested that no more federal spending will be necessary at all, as the Trump administration makes bullish predictions about economic growth.

Democrats have pointed to comments last week from Powell suggesting that spending more money might be necessary but worth it.

Sen. Patrick J. Toomey (R-Pa.) said Powell’s comments had been “mischaracterized” as calling on Congress to pass a new spending bill, saying the Federal Reserve had been more nuanced and acknowledged the costs of new spending. Powell did not respond to that interpretation of his remarks.

“I think you could make a pretty strong case before we rush out and do another spending bill we let some of this stuff go to work,” Toomey said.

Ahead of the hearing, Mnuchin — who has been the Trump administration’s point person in negotiating relief bills — met with McConnell and House Minority Leader Kevin McCarthy (R-Calif.), along with Vice President Pence to discuss the economic situation and potential next steps. Trump himself plans to meet with Senate Republicans at their weekly policy lunch on Tuesday.

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