Must-Read: Larry Summers: Steven Mnuchin’s big claims show him in a poor light
Must-Read: On this one, I agree 100% with Larry. A U.S. Treasury Secretary needs to make it clear that he (or, I hope, someday she) knows that his (or her) ultimate, long-run principals are the voters of the United States and the people of the world. There will come a point where the Treasury Secretary will need to say: “You know that I work for you—you need to trust me on this.”
Yet Steve Mnuchin is rapidly blowing up that credibility:
Larry Summers: Steven Mnuchin’s big claims show him in a poor light: “Last week… I felt sorry for… Mnuchin… https://www.ft.com/content/e5ad91fa-9409-384e-aaa1-ea0e81bf62b4
…forced by circumstance and his president to say and do things that undermined his and Treasury’s credibility…. [But] the secretary’s comments on Monday… look from the outside like unforced errors…. He crowed to the bankers present that “you have me to thank for the increases in your stock prices”. I cannot conceive of any of the 11 other secretaries I have known making such a statement. Leave aside the question of whether whatever credit is to be claimed should be done so on behalf of the president. Since when is the stock price of banks the objective or the standard of success for economic policy? And when, as will inevitably occur, bank stock prices decline, will Mr Mnuchin accept the blame? It was quite a day.
The secretary also… predict[ed] that within years the economy will be regularly growing at above 3 per cent…. not the view of mainstream forecasters… slow growth in the adult population… reduced immigration… it would require a productivity growth miracle. He cited no evidence to support…. Mnuchin claimed that Donald Trump’s tax cuts would be the largest in history. Relative to any relevant denominator… Ronald Reagan’s were far larger…. Mnuchin has made the claim that Mr Trump has given more financial disclosure than anybody else. This is ludicrous….
There will likely come a time when the Treasury secretary will need to invoke his credibility to support confidence in the economy, to stabilise markets, or to mitigate an international crisis. Let’s hope that when that moment comes, Secretary Mnuchin will retain some credibility. This will require an end to days like Monday.