Treasury Secretary Steven Mnuchin told Fox News anchor Chris Wallace on Sunday that he believes that the economy is going to bounce back quickly over the summer as states start to reopen.
“I think as we begin to reopen the economy in May and June, you’re going to see the economy really bounce back in July, August, September,” Mnuchin said. “And we are putting in a unprecedented amount of fiscal relief into the economy. You’re seeing trillions of dollars that’s making its way into the economy, and I think this is going to have a significant impact.”
When asked about models that show that the bounce-back will not happen as quickly as the administration is projecting, Mnuchin noted that the current crisis is unlike anything that has ever happened before, and so many of the models that are showing a slower bounce back may based on things that are not relevant to the current situation.
“This is not the Financial Crisis,” Mnuchin said. “This is a scenario where we’ve closed the economy and we’re going to open the economy. So, all these models are based upon health assumptions, how quickly we reopen, so we’ll see.”
“My own opinion is, again, we have unprecedented amount of liquidity in the system,” Mnuchin added. “We’re very sympathetic to all the people that are out of work. But there is enhanced unemployment, there’s the PPP, there’s direct deposits. This is going to put a lot of liquidity. And as businesses begin to open, you’re going to see demand side of the economy rebound.”
The Daily Wire, headed by bestselling author and popular podcast host Ben Shapiro, is a leading provider of conservative news, cutting through the mainstream media’s rhetoric to provide readers the most important, relevant, and engaging stories of the day. Get inside access to The Daily Wire by becoming a subscriber.
CHRIS WALLACE, FOX NEWS SUNDAY ANCHOR: And joining us now Treasury Secretary Steven Mnuchin, who’s a member of the president’s Coronavirus Task Force. Mr. Secretary welcome back to Fox News Sunday.
STEVEN MNUCHIN, UNITED STATES SECRETARY OF THE TREASURY: Thank you Chris. It’s good to be back with you.
WALLACE: President Trump says that once the country reopens that we’re going to see a sharp quick recovery. Here he is this week.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We’re going to rebuild it and we’re going to rebuild it better and it’s going to go faster than people think. I built it once, I’ll built it a second time.
WALLACE: How sharp a recovery do you see? And how soon sir?
MNUCHIN: Well Chris I think as we begin to reopen the economy in May and June you’re going to see the economy really bounce back in July, August, September. And we are putting in a unprecedented amount of fiscal relief into the economy. You’re seeing trillions of dollars that’s making its way into the economy and I think this is going to have a significant impact.
WALLACE: But that quick bounce back that you talk about goes against the forecast of most experts. Take a look at these numbers sir. The nonpartisan Congressional Budget Office now projects GDP will shrink by 5.6 percent total this year. Unemployment will end 2020, they project, close to 12 percent. And your former company, Goldman Sachs, says the global hit will be four times worse than the 2008 Great Recession.
Question, are all those independent experts wrong?
MNUCHIN: Well Chris we’ve never seen anything like this. This is not the Financial Crisis. This is a scenario where we’ve closed the economy and we’re going to open the economy. So all these models are based upon health assumptions, how quickly we reopen, so we’ll see. My own opinion is, again, we have unprecedented amount of liquidity in the system. We’re very sympathetic to all the people that are out of work. But there is enhanced unemployment, there’s the PPP, there’s direct deposits. This is going to put a lot of liquidity. And as businesses begin to open you’re going to see demand side of the economy rebound.
WALLACE: Let’s talk about the PPP. The president just signed a bill that Congress had passed, another $310 billion for the Paycheck Protection Program. But the first round, I think it was $250/$300 billion, the sign-up for that ran out in 13 days. How long do you think this next tranche of $310 billion is going to last? And can you guarantee that big corporations, for instance like Ruth’s Chris that got money the first time around, eventually pay it back, but did get money won’t even get money this time?
MNUCHIN: Chris I just want to put this in perspective — and I want to thank everybody at the SBA and the Treasury because we launched a brand new program and in an incredibly short period of time. And the fact that we ran out of money just goes to show the success of this.
Now let me put this in perspective, in the first round over a million companies had workers of 10 people or below. And there has been a lot of focus on these bigger companies, public companies. We came out with new guidelines. We made it clear they shouldn’t have applied. They’re paying back the money. So I think you’re going to see this move in the right direction and I think you’re going to also see in this round the average loan size go down significantly.
WALLACE: But to my other question which was that the money for the first program lasted less than two weeks. How long do you expect this money to last?
MNUCHIN: Chris to me it’s not a matter of how long it lasts, the — actually I think the sooner the money is dispersed the better. So the first round impacted about 30 million workers. I think this round will be about the same. That will be close to 50 percent of the private workforce. So I actually hope we run out of money quickly so we can get the money into the workers’ pockets. And, again, in this round we’re making it clear that small businesses have access. We’ve signed up a lot of CDFIs. We’re signing up more of them. So we’re going to make sure that this is distributed fairly.
WALLACE: Congress is already talking, with all the money that’s already been dispersed, it’s talking about yet another relief bill. And one of the big issues there is whether or not to give $500 billion in relief to state and local governments so that they can continue to pay first responders and other workers and to provide services.
This week Senate Majority Leader Mitch McConnell and New York Governor Andrew Cuomo split sharply about that. Take a look sir.
MITCH MCCONNELL, (R-KY), SENATE MAJORITY LEADER: I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities.
GOVERNOR ANDREW CUOMO, (D-NY): He says maybe the states should declare bankruptcy, OK? This is one of the really dumb ideas of all time.
WALLACE: Does the president support giving aid — hundreds of billion dollars to the states and what would the economic effect be if major states, like New York and Illinois, were to declare bankruptcy?
MNUCHIN: Chris I first want to just say, I really want to thank the Senate and the House for the unprecedented and bipartisan support. The bill first passed 96 to 0 and this one was unanimous consent in the Senate. So my comment on this is, this will be something that both the Senate and the House debate. It will be something that we discuss on a bipartisan basis.
The president has heard from governors. He wants to speak to governors. This is something we’ll consider. But our focus right now is really on execution and — that’s what we’re focused on and if we need more money — as I’ve said, this is a war. We’ll win this war, if we need to spend more money we will, and we’ll only do it with bipartisan support.
WALLACE: All right. Let me pick up on that last point because with all of the money that’s already gone out, the national debt will, by the end of this year, exceed the gross domestic product, the total output of the economy, it will be over 100 percent of GDP which has always been considered a kind of redline for stable economies. How much do you worry about a debt in excess of 100 percent of GDP?
MNUCHIN: Well Chris the good news is that interest rates are extremely low. So if you look at the portion of the budget that we’re actually allocating to interest it’s extremely low and we’re locking in long term rates to make sure this additional money we’ve locked up for a long period of time. Overtime that is something we’re going to need to look at and we’re going to need to look at overtime how we deal with that issue. But right now we’re in a war and we have to protect American workers and American business. And we’re going to do whatever we need to take to do that.
WALLACE: In the time we have left, I’d like to do a lightening round. I’ve done these with you before, quick questions, quick answers. We see states starting to reopen. If they reopen too quickly, if we see a spike in cases — a second spike, how damaging would that be to the economy?
MNUCHIN: I think we have to balance this in this time with the advent of testing — more testing, the advent of antibody testing, I think we’re going to be able to monitor this very, very carefully.
WALLACE: Will the administration bail out oil companies because, as you well know, there are some critics who say that yes there are problems that came from the coronavirus and the global drop but that a lot of problems of oil companies were of their own making before we ever got into this pandemic?
MNUCHIN: Chris let me be very clear, the president has said no bail outs to any companies, whether that was airlines or oil companies. We will consider, again, loans to companies in a proper scenario with strategic importance, but no bail outs. No shareholder bail outs.
WALLACE: And would you consider loans to oil companies?
MNUCHIN: That we would and we’re looking at it carefully. The Secretary of Energy and I are studying it and we’re looking at it very carefully.
WALLACE: Finally, some top Republicans are talking about going after China, to punish them for their failure to be much more transparent at the very start of this pandemic. And in fact the Attorney General of Missouri has already sued China. How do you balance on the one hand wanting to hold China accountable, to hold them responsible, but on the other hand we’re in the middle of a pandemic, we’re in the middle of a global economic crisis, wanting to protect global markets, especially global trade?
MNUCHIN: Well for the moment we need to work globally to conquer this virus. But the president’s made very clear, he wants to understand what China knew, when they knew it, and if they knew things that they didn’t turn over that could have stopped this he will hold them accountable.
WALLACE: So at this point can you see sanctions, strong economic action, against China?
MNUCHIN: Chris I think you know we never make comments on future sanctions options.
WALLACE: We’re going to leave it there. Secretary Mnuchin thank you. Thanks for your time this week and it’s always a pleasure to talk with you sir.
MNUCHIN: Thanks. Great to be back with you Chris.