Treasury Secretary Steven Mnuchin became concerned about the novel coronavirus toward the end of January, while attending the annual World Economic Forum, in Davos, Switzerland. COVID-19 was spreading rapidly in China, and authorities had closed off Wuhan, the city where the outbreak started. The theme at Davos was sustainability, but Mnuchin was surprised that no one was talking about the eleven million people under lockdown. “I was at a C.E.O. dinner, and I actually brought it up,” he recalled recently. “But, at the time I raised this as a risk, I did not see it travelling around the world.”
On January 31st, the Trump Administration announced that it would limit flights from China but did not implement either widespread contact tracing or testing for the coronavirus. (Many early cases of COVID-19 were later shown to have come into the U.S. from Europe.) In the following weeks, as Iran and Italy were overwhelmed by outbreaks, President Donald Trump continued to hold campaign rallies and accused Democrats of “politicizing the coronavirus,” which he said could disappear “like a miracle.” In press briefings, he and Administration officials insisted that they were “totally prepared,” and assured the public that the risk of infection was low. Government health experts, led by Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, tried to persuade Trump to focus on COVID-19. At the end of February, when Nancy Messonnier, of the Centers for Disease Control and Prevention, warned the public of its seriousness, Trump sidelined her.
I spoke with Mnuchin several times, by phone from Washington, starting in late May. In early June, he told me that, before the coronavirus outbreak, the possibility of a global pandemic “was not a risk that was on my radar screen.” He did not criticize Trump’s handling of the crisis, and was quick to deflect any blame. “I don’t think it’s fair to say in any way that the Administration should have been better prepared. I mean, if anything, this issue is no different now than it was four years ago, or eight years ago, or twelve years ago,” he said. “This goes back to prior Administrations—I think the country should have had better stockpiles of critical items.”
Previous Treasury Secretaries, such as Timothy Geithner and Henry Paulson, had deep experience and public profiles before moving to Washington. Mnuchin came to the role, in 2017, with different credentials. A Wall Street financier with a background in bond trading and bank management, he has known Trump for seventeen years, and was an investor in two of his real-estate developments, in the mid-two-thousands. Mnuchin has business relationships with some of the wealthiest people in the country—likely part of the reason that Trump asked him to join his Presidential campaign as its fund-raising chief.
Mnuchin, who is fifty-seven, is one of the few original Cabinet members remaining in the Administration. He has developed a reputation for unflinching loyalty. In August, 2017, after Trump suggested that there were “fine people” among the crowds of neo-Nazis and other hate groups at a rally in Charlottesville, Mnuchin declared that, in fact, Trump “in no way, shape, or form” had defended white supremacists. That September, he supported Trump’s attack on the N.F.L. players who knelt during the national anthem to protest racial oppression, saying, “They can do free speech on their own time.” Mnuchin has fended off congressional Democrats seeking Trump’s tax returns, and, in June, he denounced the former national-security adviser John Bolton for his scathing memoir about the President, saying that Bolton had put “self-promotion ahead of the truth and of the interests of the country.” In the book, Bolton claims that, under Mnuchin, the Treasury Department had resisted or weakened sanctions on foreign adversaries, including Iran, Russia, and Venezuela. Mnuchin told me that the Treasury Department had “done more sanctions in the last three years than any of the previous Administrations combined.”
Mnuchin’s fealty serves as a kind of job insurance. “He’s almost part of the family,” a former Administration official told me. “It gives Mnuchin a lot more face time and an inside track. I think it’s fair to say that the President is closer personally and socially to Mnuchin than to anyone else in the Cabinet.” Mnuchin does not like to go into detail about his relationship with Trump, but he told me that he and the President were almost completely aligned. “Of course, on any specific policy there may be times where I give the President my views—and, again, I respect that he’s the President,” he said. “But, in terms of his fundamental positions, I have a great appreciation of them.”
Straight-backed and inscrutable, with a pale complexion and ink-black hair, Mnuchin speaks with a breezy, imperious tone while managing to appear ill at ease in almost any situation. He is often described by those who have worked with him as a pragmatist whose interest lies in searching out opportunities, brokering deals, and reaping the rewards. “He is not an ideological warrior,” another former Administration official told me. “Some of that comes from working with people in the investment community—they generally don’t get overly wedded to certain situations. They’re in it to make the transaction, and then they move on.” Many fiscal conservatives and libertarians point to Ayn Rand and her philosophy of objectivism as an ideological grounding. When I asked Mnuchin about Rand’s famous novel “The Fountainhead,” which he said he’d recently reread, there was a pause. “I liked the book—I think it’s interesting,” he said. “You shouldn’t necessarily think that’s my ideology.” He went on, “I think the government has a role, but I believe free-market economies have turned out to be the best way of lifting economic prosperity for everyone.” He felt strongly that planned economies and “huge” government interventions were generally harmful, but he allowed that, “at times like now, where we shut down the economy, of course you should have government intervention.”
In late February, a few days before Messonnier warned the public about the pandemic, Mnuchin travelled to Riyadh, Saudi Arabia, to attend the G-20 meeting of finance ministers and central-bank governors, and then spent three days in the United Arab Emirates and Qatar, where he had nine more meetings scheduled. After he returned, on March 9th, the Italian government ordered a nationwide lockdown, which caused panic in world markets. The U.S. stock market dropped almost eight per cent, its worst decline since the 2008 financial crisis. Trump, who watches the market obsessively, was finally forced to acknowledge the severity of the pandemic, and announced that he would encourage Congress to pursue a payroll-tax cut and draw up legislation to help workers who were losing their jobs. During the next two and a half weeks, Mnuchin and members of the House and the Senate furiously negotiated the two-trillion-dollar CARES Act, one of the most ambitious financial-rescue operations in American history.
Mnuchin, as a senior official who can work productively with Democrats in Congress, is an anomaly in the Administration. Beginning on March 10th, he raced back and forth among the White House, the Treasury Department, and Congress. He spoke dozens of times with Charles Schumer, the Democratic senator from New York, and with the House Speaker, Nancy Pelosi, as they tried to come to an agreement on the contours of the legislation, which was signed into law on March 27th. Mnuchin struck Pelosi as respectful and businesslike, and certainly much more rational than Trump, who routinely berates her in person and on Twitter.
Congress and Mnuchin were initially praised in the press for the swift passage of CARES, although Representative Alexandria Ocasio-Cortez, whose congressional district in New York suffered some of the highest rates of COVID-related death and who was one of the few members of Congress to come out against the legislation, described it as “shameful,” saying that it would increase economic inequality. “Hospital workers do not have protective equipment,” she said. “What did the Senate majority fight for? One of the largest corporate bailouts, with as few strings as possible, in American history.”
There were also problems with the bill’s implementation, including the fact that many large companies and chains received funding that had been intended for small businesses. Some of the problems appear to have been easily preventable, and were seen as connected to Mnuchin’s management of the Treasury Department. A vast bureaucratic machine with nearly ninety thousand employees and an annual operating budget of around thirteen billion dollars, the department prints money, through the Bureau of Engraving and Printing; collects federal taxes, through the Internal Revenue Service; and issues and manages government debt, through Treasury securities. Sarah Bloom Raskin, the Deputy Treasury Secretary from 2014 to 2017, compared the Treasury to an orchestra. “Each part of it has its own set of deep talents that get nurtured to create this whole,” she said. “Even pre-pandemic, the reports and results coming out of the Treasury were indicating that this kind of nurturing of talent and expertise wasn’t happening.”
Four months after the initial panic, the stock market has largely recovered, but unemployment remains at levels that approach those seen during the Great Depression. Since mid-March, Americans have filed more than fifty million claims for unemployment benefits. Industries such as tourism and hospitality, which employ millions of people, have been forced to halt or reduce their activity; some of them may never bounce back. The Administration has fostered chaos, with Trump suggesting that mask-wearing is a partisan act and leaving state authorities to impose their own rules on lockdowns. Americans are grappling with existential fears about the future, both economic and health-related. The U.S. now has more known cases of COVID-19 than any other country does, and the worst record among wealthy nations of controlling its spread. Since the Administration pushed governors to reopen their economies in order to get people back to work, infections have spiked in two dozen states, including Texas, Florida, Arizona, and Oklahoma.
To date, Black and Latino people, nursing-home residents, and low-income workers have suffered the highest rates of death and hospitalization. The Administration has been accused of indifference toward those vulnerable populations. On May 19th, when Mnuchin testified about the pandemic before the Senate Banking Committee, Sherrod Brown, Democrat of Ohio, declared, “Secretary Mnuchin, you said there’s considerable risk of not reopening, that keeping some businesses closed could cause permanent economic damage. How many workers will die if we send people back to work without the protections they need?”
Mnuchin answered in the way he habitually does to such questions, confidently repeating his message and refusing to acknowledge evidence that contradicts it. “We don’t intend to send anybody back to work without the protections,” he said, adding that he had worn a mask earlier that day. “I assure you, both myself and everybody on the task force, the Vice-President and others, are following the best medical advice. I couldn’t be more proud of the medical advice that we’re getting, and the way the economy is opening up in a safe way.”
At a time when even Republican voters are beginning to question Trump’s competence, Mnuchin acts as his optimism ambassador, presenting a relentlessly sunny view of America’s economic future. On June 23rd, at an event sponsored by Bloomberg, Mnuchin said that he expected a “spectacular rebound” later in the year, around the time of the election. Members of the Trump Administration have been counting on a “V-shaped” recovery as businesses reopen. But many experts believe that the economic downturn could broaden in the coming months, as the virus proliferates, individuals and companies fail to pay their bills, and people feel too fearful and too financially insecure to resume work patterns and spending habits. “Probably the best way of putting it in context is to say, ‘This is as serious as it gets,’ ” Barry Eichengreen, an economics professor at Berkeley who studies financial crises, told me. “Now, suddenly, there are larger issues than who wins the next Presidential election: Can we function as a country? Is there any social solidarity? Is there any hope for dealing with this virus? I think the stakes are cosmic at this point.”
All this makes Mnuchin one of the most consequential policymakers in the world. To some degree, he has the power to determine which industries and which companies will survive the crisis, which groups of Americans will get through it with relatively little long-term economic damage, and how equitable the recovery will be. In recent weeks, outbreaks have caused several parts of the country to pause their reopenings, and New York and other states that had got the virus under control began to require that some visitors quarantine. When I asked Mnuchin what he planned to do in response to the recent surge in cases, he gave only the vaguest answers, although he was clear that he would under no circumstances recommend shutting down the entire economy again. “This is not like a typical recession, which is economically induced,” he told me. “This was medically induced. What’s going to drive the economic models is going to be an advancement on the medical front. If we have a vaccine in December or January, I think we’re going to have a much faster economic recovery. I don’t really want to speculate on where we are next year.”
Mnuchin grew up in a wealthy and well-connected family in New York City. His paternal great-grandfather, a Russian-born Jewish diamond dealer, immigrated to the United States in 1916. His grandfather Leon was a successful corporate lawyer and businessman, an art collector, and a founder of the East Hampton Yacht Club.
Mnuchin’s father, Robert, a lifelong Democrat, attended Yale University and then spent two years in the Army before joining Goldman Sachs, in 1957. Robert has described his first job there as “just a little bit short of sweeping the floors,” at a starting salary of forty-eight dollars a week. In the sixties and seventies, he helped pioneer a practice called block trading, in which a bank buys large lots of stock acquired from a big investor, such as a mutual fund, that wants to get rid of it, and quickly resells it at a higher price, without disrupting the market. At the time, Goldman was still a private partnership, and block trading was considered a high-risk activity. It could also be enormously lucrative. Robert excelled at it and made his fortune. “He was playing nine-dimensional chess there,” a former Goldman executive told me. “You had to think, If the butterfly beats its wings in Tokyo, what’s the weather going to be like in Singapore?” Robert had a big personality and earned the nickname Coach. Another former executive told me, “Mnuch loved his block traders. He had an affection for the floor and the floor had an affection for him. He’d come out of his glass office, and take out his megaphone, and he’d say, ‘Fifty thousand shares of whatever, we’ve got to work it in the next five minutes!’ ” In 1980, Robert joined the firm’s management committee, where he served with Robert Rubin, who became the Treasury Secretary under President Bill Clinton.
In 1990, at the age of fifty-seven, Robert retired from Goldman Sachs. He devoted himself to refurbishing and running the historic Mayflower Inn in Washington, Connecticut, with his wife, and became an art dealer and a gallery owner, with a focus on modern American painters from Willem de Kooning to Jean-Michel Basquiat. He currently owns the Mnuchin Gallery, which is situated in a five-story town house on Manhattan’s Upper East Side. In May, 2019, while bidding on behalf of a client, Robert broke the record for the most money ever paid at auction for a work by a living artist: $91.1 million, including fees, for a Jeff Koons silver bunny sculpture.
Steven Mnuchin is the second-youngest of Robert’s five children, including stepchildren. His mother, Elaine Terner Cooper, was a patron of the arts. He attended Riverdale Country School, a private school in New York City, where his best subjects were math and science, and he was the captain of the tennis team. Mnuchin was known among his classmates for driving to school in a red Porsche, but during his Senate confirmation testimony, in 2017, he presented a more modest image of himself, telling the Finance Committee that his first job was in one of his maternal grandfather’s glass-manufacturing plants. “It was there that I first learned the importance of humility, hard work, and commitment,” he said. At Yale, he majored in economics, was “tapped” for the secret society Skull and Bones, and lived off campus with Edward Lampert, who went on to found the multibillion-dollar hedge fund ESL Investments. Mnuchin was also the publisher of the Yale Daily News, where, according to a 2017 account in the Yale publication The New Journal, he was part of a “sleek crew in Lacoste shirts who would glide in and out of the News building.” An ad that Mnuchin ran in the News in 1982 seeking applicants to join the publishing side of the operation read, “Interested in Business? Money? Call Steve Mnuchin.”
For three summers, he interned at the investment firm Salomon Brothers, where he worked with the bond traders Lewis Ranieri and Michael Mortara, who, in the early eighties, had helped create the market for mortgage-backed securities—bundles of home loans that are pooled together and can be traded on the secondary market. Selling these securities allowed banks to transfer the risk of loans they had made to other investors. Then, using the proceeds of these sales, they were able to make many more, often low-quality, mortgage loans. This system made it easier for homeowners to get mortgages. It also helped create the conditions that led to the 2008 financial crisis. Mnuchin has said that Ranieri and Mortara taught him “the importance of this market in providing ample and sound financing of housing for American families.”
In 1985, after graduating from Yale, Mnuchin started working under Mortara, who had joined Goldman Sachs. Mortara was famous for commuting to Manhattan from Litchfield County, Connecticut, by helicopter. Within the firm, Mnuchin was often referred to as “Bob’s son,” although, according to former bankers, he did not inspire the same admiration and loyalty as his father did. At the time, investment banks were expanding into mortgage-backed securities guaranteed by the U.S. government, including by Fannie Mae and Freddie Mac, federal entities created to make it easier for Americans to buy homes. Mnuchin began seeking out portfolios of distressed residential and commercial mortgages; he would modify or restructure the loans before selling them, months or years later, at a profit. “He was good at sniffing out value,” a former colleague told me. “One thing Steve would have learned from Goldman Sachs is how to cut a deal and how to compromise.” After nine years, Mnuchin became a partner. Lloyd Blankfein, a former C.E.O. of Goldman, told me that, when he was co-managing the bond-trading division at the firm, he had “five or six direct reports,” including Mnuchin and Gary Cohn, who later became Goldman’s president and then a top economic adviser in the Trump Administration. Mnuchin, Blankfein said, “was regarded as a very institutional guy who was going to be important to the future of Goldman Sachs.”
Mnuchin married his first wife in 1992; they divorced in 1999. In May of that year, Goldman Sachs held an initial public offering, which conferred immense wealth upon the firm’s partners. Five months later, Mnuchin married Heather deForest Crosby, a socialite, a yoga-apparel entrepreneur, and a public-relations executive. They moved into a sixty-five-hundred-square-foot duplex apartment at 740 Park Avenue, one of the most expensive buildings in the world. Mnuchin remained at Goldman for two more years, as the chief information officer, working under Henry Paulson, who was then the C.E.O. Mnuchin left the firm in 2002, reportedly with forty-six million dollars in Goldman Sachs stock. (Mnuchin and Crosby had three children and divorced in 2014.)
For a year, he worked with Lampert, his former Yale roommate, at ESL Investments. Lampert specialized in buying into companies that he felt were undervalued, including AutoZone and Honeywell. Around the time Mnuchin arrived, Lampert acquired a majority stake in the retailer Kmart, and he put Mnuchin on the board of directors. ESL then pursued a private-equity model that has been widely criticized as extractive. In 2005, Lampert merged Kmart with Sears, and proceeded to close hundreds of stores and lay off hundreds of thousands of workers. He liquidated the retailers’ real estate and many of their other assets, earning enormous profits for ESL while sending the merged company, Sears Holdings Corporation, into bankruptcy. (Mnuchin remained on the company’s board until he joined the Trump Administration. In 2019, a group of Sears debtholders sued Lampert, Mnuchin, and other board members, alleging that they had stripped more than two billion dollars’ worth of assets from the company; ESL vehemently denied the claim.)
Mnuchin kept moving on. In 2003, he joined SFM Capital Management, a fund started by George Soros to invest in companies that had declared bankruptcy or were close to doing so. Soon afterward, he launched his own hedge fund, Dune Capital, with two Goldman alumni and a seed investment from Soros. Mnuchin said that he and Trump met in 2003, through mutual friends. Later, Dune invested in two Trump projects: the Trump International Hotel Waikiki and the Trump International Hotel & Tower in Chicago. (In November, 2008, a day before a payment was due on the Chicago-tower construction loan, Trump sued his lenders, including Dune, demanding an extension.) In 2006, Dune and Soros were part of an investment group that bought DreamWorks studio’s film library, in a transaction valued at nine hundred million dollars. “I understood technology very well, and I understood what was going to happen with bandwidth to the home, so the idea was to build up a content library,” Mnuchin told me. Dune also invested in movies at Fox and Warner Bros., including “Avatar,” one of the all-time highest-grossing films at the international box office.
Early in 2008, as panic spread through the financial markets, Bank of America announced plans to buy the mortgage lender Countrywide Financial, which was on the brink of collapse. JPMorgan Chase, with government backing, executed an emergency takeover of Bear Stearns, which held billions of dollars of declining mortgage bonds. People waited anxiously for the next bank to fail. Throughout the housing boom, the Los Angeles-based bank IndyMac had been an aggressive lender. In 2006, the company had originated ninety billion dollars’ worth of mortgages, a high proportion of which had been made without proper verification of the borrowers’ incomes. Senator Schumer wrote a letter to banking regulators, which was publicized, expressing concern that IndyMac posed “significant risks to both taxpayers and borrowers.” In July, 2008, the Federal Deposit Insurance Corporation, which insures the nation’s bank deposits, seized the bank and briefly closed its doors. People rushed to IndyMac branches to try to withdraw their money, only to be greeted by signs that said the F.D.I.C. was “taking possession of the bank.” Aaron Glantz, the author of “Homewreckers,” a 2019 book about several financiers, including Mnuchin, who made money from the 2008 crisis, described the scene to me: “There are lines of consumers around the block pushing and shoving, people are passing out in ninety-degree heat, and it’s the beginning of what’s obviously a much, much bigger catastrophe. It’s reminding people of the Depression.”
The savings-and-loan crisis of the nineteen-eighties and nineties, when hundreds of banks collapsed after being deregulated, had shown that fortunes could be made in moments of desperation. Now federal regulators, eager to find private entities to take over failing banks, offered extremely favorable terms and minimal risk. Mnuchin contacted executives at Lehman Brothers, the investment bank working with IndyMac, to express his interest in potentially taking it over. The Lehman bankers asked him, Have you ever bought a bank? He hadn’t. Do you have a license to buy a bank? He did not. Many people were skeptical of Mnuchin’s endeavor until he recruited Warren Buffett to join him. Soon afterward, Mnuchin formed a consortium of five investors, including Michael Dell, the founder of Dell; John Paulson, who ran a hedge fund that had made fifteen billion dollars in 2007 by betting that the housing market would fall; and Soros. Buffett did not end up participating, but the group won the bid.
The F.D.I.C. imposed some conditions on IndyMac’s new owners—they had to modify, rather than foreclose on, as many mortgages as possible—but Mnuchin and his colleagues were free to keep any profits they made, and the F.D.I.C. agreed to cover most losses on deteriorating mortgage loans that they had inherited. They renamed the company OneWest, and, just a year later, reported a profit of $1.57 billion. OneWest showed profits from that point on, while the F.D.I.C. paid the company back for losses it incurred. In the course of five years, the F.D.I.C. paid out more than a billion dollars. In defending what seems like an absurdly bad deal for the F.D.I.C., Sheila Bair, a former head of the organization and a George W. Bush appointee, has pointed out that Mnuchin’s group was the only one willing to buy IndyMac in its entirety, and that, without Mnuchin’s initiative, the government would have lost even more money.
Mnuchin, who had reportedly invested at least ten million dollars in the deal, became the OneWest chairman and C.E.O. He moved to Bel Air and bought a twenty-thousand-square-foot house. He described OneWest as a “community bank,” but in the next five years it foreclosed on thirty-six thousand homes in California, many of them in low-income neighborhoods. Local activists began to call Mnuchin “the foreclosure king.” In October, 2011, about a hundred protesters gathered outside Mnuchin’s mansion, demanding that OneWest allow a state employee named Rose Gudiel and her parents to remain in their home, in La Puente, in the San Gabriel Valley. OneWest had started foreclosure proceedings after the Gudiels were late with a payment in 2009—Rose Gudiel later said that she’d tried for two years to secure a mortgage modification—and the family received an eviction notice. “Instead of working with people to modify loans, OneWest was running a foreclosure machine,” Paulina Gonzalez, the executive director of the California Reinvestment Coalition, a local group that advocates for fair housing for immigrants and minority homeowners, told me. Approximately seventy per cent of OneWest’s foreclosures were in neighborhoods where most of the residents were people of color, according to the C.R.C.’s data. Such trends were playing out nationwide, but, according to the C.R.C. and to Aaron Glantz, OneWest was one of the worst offenders.
In spite of the controversy, OneWest expanded throughout Southern California, and in 2015 Mnuchin sold the company to CIT Group, a large national lender, for $3.4 billion. (Mnuchin reportedly came away with several hundred million dollars.) To gain regulatory approval for the sale, he had to prove that OneWest was in compliance with the Community Reinvestment Act, a 1977 anti-redlining law encouraging banks to serve low- and moderate-income neighborhoods. OneWest had done almost no lending to Black and Latino families who wanted to buy homes as the economy recovered. (In 2019, the Department of Housing and Urban Development approved a settlement between OneWest and groups that alleged it had engaged in discriminatory lending practices.) Nevertheless, the company pledged to invest more in minority and low-income neighborhoods, and the sale to CIT received regulatory approval. (In 2017, President Trump appointed Joseph Otting, who had worked with Mnuchin at OneWest, to lead the Office of the Comptroller of the Currency. Otting spent much of his time at the O.C.C. revising the Community Reinvestment Act to make it weaker. He left the agency in May.)
When I asked Mnuchin about the controversy surrounding IndyMac and OneWest, he said, “I think this whole thing about me and mortgage foreclosures isn’t fair.” Many of the souring home loans that IndyMac was servicing couldn’t be modified, he said, leaving the bank with no choice but to foreclose on owners who stopped paying. (Gonzalez said that IndyMac had also foreclosed on many owners with mortgages that could be modified.) “I never wanted to foreclose on those people,” Mnuchin said. “Having someone’s home foreclosed upon is a terrible experience.”
On April 19, 2016, Mnuchin was invited to a party at Trump Tower, on Fifth Avenue, hosted by the Trump campaign, which was celebrating its victory in the New York Republican primary. Mnuchin and Trump greeted each other on the escalator and started talking, and Trump invited Mnuchin to join him onstage. Mnuchin stood behind him, grinning, during the victory speech. The next morning, Trump asked Mnuchin to be his national finance chairman. Glantz said that, for Mnuchin and certain other Wall Street figures, such as Wilbur Ross, an investor who became the U.S. Commerce Secretary, Trump presented an opportunity. “These are people who have made their careers placing bets on unlikely winners,” he said. In the case of Trump, Glantz went on, Mnuchin “got in on the ground floor. He bet big after the bust, flipped the bank, and made money off of that, and now he’s looking for a new project—and his new project is Donald Trump, getting him elected President.”
On Saturday, February 11, 2017, Mnuchin attended the seventieth-birthday party of Stephen Schwarzman, the co-founder of the seventy-billion-dollar private-equity firm the Blackstone Group, at Schwarzman’s home in Palm Beach. Schwarzman and his wife are known for hosting extravagant events, and this one featured acrobats, camels, fireworks over the Intracoastal Waterway, and a performance by Gwen Stefani, who sang “Happy Birthday” at midnight. Jared Kushner, Ivanka Trump, and the incoming Trump Administration Cabinet members Wilbur Ross and Elaine Chao were among the guests. Two days later, Mnuchin was confirmed by the Senate, in a party-line vote of fifty-three to forty-seven. Shortly afterward, he walked into the Oval Office to be sworn in. He was accompanied by his fiancée, Louise Linton, a Scottish-born actress in her late thirties, and he listened politely as Trump faced a bank of news cameras. “Steven, I want to congratulate you,” Trump said, turning toward Mnuchin, who smiled nervously. “A lot of people wanted that position, Steven! A lot of people. A lot of very successful people. But I’ve known you for a long time, and I know how smart you are, and how great you will be for our country.” That summer, Mnuchin and Linton were married, in the Andrew W. Mellon Auditorium, in D.C., in a service officiated by Vice-President Mike Pence. Town & Country published a portfolio of the diamond jewelry that Linton wore at the wedding.
Andrew Mellon, the former Treasury Secretary, founded the National Gallery of Art, and the museum has a tradition of lending art works to senior Administration officials for their offices; Mnuchin chose five paintings by Mark Rothko for his. Some Obama-era Treasury staffers were understandably wary of the new regime, but when Mnuchin arrived they were relieved to discover that he was polite and professional. Mnuchin opened his first staff meeting by telling everyone that he was honored to be there. Then he said, “I am a micromanager, and I wear that term with pride.” Did his comment reflect a wariness of former Obama staffers, his new team wondered? It turned out to be an accurate description of how he worked. Mnuchin wanted to be involved in decisions from filling junior positions to picking fonts for the covers of reports. His chief of staff, a former Trump-campaign officer named Eli Miller, tried to manage his schedule, but Mnuchin preferred not to delegate, often popping into staffers’ offices to ask a question or calling them over to see him. Some colleagues had the impression that Mnuchin was trying to run the Treasury Department as if it were a small business. A former Treasury staffer referred to him as “minutiae Mnuchin.”
Under pressure from Congress, the Treasury had endured staffing and budget cuts for years, particularly to the I.R.S. According to some estimates, these cuts led to billions in lost tax revenue annually. Soon after Mnuchin’s arrival, the Office of Management and Budget, led by Mick Mulvaney, requested a ten-per-cent cut at the Treasury, which necessitated a hiring freeze and a reduction in personnel. Morale was low. Some of the most talented members of the department left for jobs in the private sector, where demand for their skills was high, and it was difficult to replace them. Former department officials say that this gradually resulted in a staffing shortage, the severity of which didn’t become fully evident until the coronavirus crisis hit.
Trump had won the election, in part, on promises to cut taxes and to repeal the Affordable Care Act, also known as Obamacare, and replace it with “much better health care” that would cost less. On the day of his Inauguration, he signed an executive order that was intended to facilitate the new health-care legislation, but the bill, which did not specify an alternative provision, quickly got stuck in Congress. The press portrayed this as a humiliating loss for the new Administration, and Mnuchin went to work on assembling the most significant change to the tax system since the Reagan years.
Top department officials and tax-policy experts met daily to discuss the tax bill, but, a former Treasury adviser said, “the Administration didn’t really have a proactive agenda. During the Obama Administration, there was this relentless focus on the mission and things they could use government to do. And there was nothing like that. We got ‘tax reform,’ but there was nothing else. The whole building felt it. That and ‘Go pull out regulations for no reason.’ ”
In the end, the new legislation was based on two long-standing Republican blueprints, one from the former House Ways and Means Committee chairman David Camp, and the other from the House Speaker at the time, Paul Ryan. Mnuchin and others claimed that the new Trump tax bill would “pay for itself” by sparking growth in jobs, wages, and corporate profits, which would lead to greater tax revenues flowing back to the government. According to the former Treasury adviser, Mnuchin, hoping to find evidence to support this, relied on the analysts in his department “to run models that would somehow prove that out.” But it was clear to most tax experts that the bill was far from “revenue neutral” and would add significantly to the deficit. Democrats doubted that the cuts would lead to the promised wage increases for middle-income workers. Treasury Department analysts were also “skeptical, to say the least,” the former adviser said, although almost no one challenged Mnuchin. Eventually, analysts were able to model the answers he wanted. “They said, ‘If you put in these ridiculous growth numbers, you could spit out a result that says it arguably increases the baseline,’ ” the former adviser told me. “I never understood any of the models to show it paying for itself.” Justin Muzinich, a former Morgan Stanley banker and hedge-fund manager who was serving as a senior counsellor to Mnuchin, tried to assuage the analysts’ concerns, and told them that the department was simply testing out a wide range of different growth assumptions.
In the midst of the debate over the new tax plan, Mnuchin and his wife became the subject of tabloid scandals. In August, 2017, Linton posted a photograph on Instagram of her and Mnuchin disembarking from a government plane at Fort Knox, in Kentucky; she included hashtags naming the brands she was wearing—Hermès, Tom Ford, Roland Mouret, and Valentino. After a woman from Oregon left a comment criticizing the apparent use of taxpayer money for Linton’s travel, Linton responded, “Aw!!! Did you think this was a personal trip?! . . . Lololol. Have you given more to the economy than me and my husband?” She added, “Thanks for the passive aggressive nasty comment.” A series of unflattering news articles followed, portraying Linton as a plutocrat’s out-of-touch trophy wife. Three months later, Mnuchin and Linton posed for photographers at the Bureau of Engraving and Printing, in Washington, D.C., clutching a freshly printed sheet of dollar bills bearing Mnuchin’s signature. For the occasion, Linton wore a black leather Michael Kors outfit and opera gloves; an article in Vogue called her Cruella de Vil. Eventually, Linton admitted that she had been a “bozo” to reply so rudely to the woman in Oregon, and refocussed her Instagram on animal-rights activism. (She and Mnuchin have spent their lockdown in D.C. with five rescue dogs.)
The legislation that was finally proposed, in November of 2017, the Tax Cuts and Jobs Act, included a permanent corporate tax cut, from thirty-five to twenty-one per cent, and modest reductions in individual tax rates, which would expire in 2025. The Treasury Department promised to put forth a detailed analysis of the legislation, but in December released only a one-page summary of it. The bill contained a controversial loophole, pertaining to tax on carried interest, that Trump had promised to eliminate. The loophole, which has existed for decades, permits hedge-fund and private-equity-fund partners to tax their earnings at a much lower rate than most other workers. Shortly before the Senate was set to vote on the bill, the former Administration official said, a group of advisers met with the President in the Oval Office, arguing that, in allowing the loophole to remain, they would be providing ammunition to Democrats. Mnuchin, determined to secure the vote in the Republican Senate, encouraged Trump to leave the loophole in. No one in the group was willing to take a stand against it, and the bill passed. “In part, it was because everyone wanted a win, and you didn’t want to be the guy standing between Trump and a win,” the former Administration official said. Mnuchin and other top Administration officials seemed triumphant. The former Treasury staffer recalled that he’d seen Mnuchin and his deputies savoring the victory the following morning. “All that was missing was top hats and cigars,” the staffer told me. “It reminded me of Monopoly men sitting around the table.” It was at that moment, the staffer said, that he decided to leave the government.
In April, 2018, the Congressional Budget Office released its analysis of the bill, which showed that it was likely to create only 0.7 per cent of additional economic growth—a fraction of what Republicans had predicted—and projected that it would lead to a $1.9-trillion increase in the deficit by 2028. An analysis by the liberal-leaning Brookings Institution called the law “the wrong thing at the wrong time,” adding, “It will take resources from future generations and from today’s lower- and middle-income households to enrich today’s well-to-do.”
Senator Sherrod Brown told me that the bill “accomplished what they wanted. It didn’t accomplish what they said it would accomplish”—namely, as Trump told Congress, “massive tax relief for the middle class.” Brown continued, “What they wanted was major tax cuts to corporations and wealthy people.” These corporations did not generally invest the money they saved in their workers or in extra resources but instead engaged in “big stock buybacks”—an activity that benefitted executives and stockholders but few others. In the months since the coronavirus outbreak, Brown went on, many of these same companies have found themselves without a cushion. “Now they’re coming to the government for help,” he said.
By early March, 2020, Bernie Sanders, once the Democratic front-runner, and a self-described democratic socialist, had lost South Carolina and several other critical Presidential primaries to Joe Biden. At the same time, the novel coronavirus was infiltrating the United States. According to a financier with ties to G.O.P. politics, the Trump Administration had no choice but to be aggressive in its response: “It’s not just one piece of the economy that froze. The government has said to the economy and all the participants in it, Stop, just get in your homes. And that just basically turned the economy off. And that is unprecedented. If you don’t want revolution, you’ve just got to get money into people’s pockets.” Mnuchin quickly embraced the idea of sending cash payments directly to Americans.
One of the sticking points in the proposed bill was about paid sick leave, which Democrats were pushing to make mandatory, including for contractors and gig workers, and to leave in place even once COVID-19 had passed. On the evening of March 13th, after four days of intense negotiations, Mnuchin and Pelosi announced that they had reached a compromise, which included two weeks of paid sick leave during the pandemic and up to three months of paid leave for workers caring for children home from school.
Katie Porter, a House Democrat from California, told me that, though she and Mnuchin have distinctly different ideas about how to best help working people, she appreciates that he is willing to engage on the issues, and that he rarely takes public stances on non-Treasury topics. With Mnuchin, she said, “there’s an opportunity here to collaborate and to be successful.”
“He’s one of the few competent people in the Trump Administration, and he had his hands in everything,” a congressional aide close to the talks said. The aide noted that Mnuchin’s attention to detail came with disadvantages: “If he’s focussing on the airlines one day, then no one is thinking about the small-business program while he’s doing that. He can’t be everywhere.”
On March 17th, Mnuchin tried to prepare Republican senators by warning that unemployment could reach twenty per cent; he didn’t need to point out that this would have implications for their reëlection prospects. Later that day, at a press briefing with Trump, he said, “Americans need cash now, and the President wants to get cash now. And I mean now.” Trump added, “We’re going big.”
Companies quickly lobbied for their own rescue packages. Boeing, America’s largest aerospace company, requested sixty billion dollars in loans and other aid; a trade group representing the restaurant industry, which employs more than fifteen million people, asked for four hundred and fifty-five billion dollars. Democrats and Republicans disagreed on two critical issues. The first concerned extending taxpayer money to corporations. Should companies be required to retain all their workers as a condition of receiving a loan, or would they be allowed to implement layoffs? Could they allocate bonuses to C.E.O.s? Should they grant ownership rights to the government? Should they be forced to commit to changes that addressed climate change? Left-leaning members of Congress such as Elizabeth Warren argued that this was a rare moment when the government had tremendous leverage to compel companies to improve their behavior.
The other issue had to do with oversight. Given the Administration’s record of granting favorable treatment to Trump’s friends and allies, Democrats argued for robust oversight. At a press briefing on March 23rd, Trump responded to a question about this subject by saying, “I’ll be the oversight. We are going to make good deals.” Warren began referring to the money as a “slush fund.” Sherrod Brown told me, “They resisted every rule, every kind of transparency and accountability that we were able to negotiate. That doesn’t mean we didn’t have some success—we did.” On March 25th, after some provisions were added, the Senate unanimously passed the CARES Act. The two-trillion-dollar economic rescue package provided one-time twelve-hundred-dollar cash payments to people earning less than seventy-five thousand dollars a year, an extra six hundred dollars of unemployment-insurance benefits a week, and the extension of benefits to self-employed workers. It also created a three-hundred-and-fifty-billion-dollar lending program for businesses with fewer than five hundred employees, called the Paycheck Protection Program (P.P.P.), designed to allow them to keep workers on their payrolls. Forty-six billion dollars was assigned to bail out the aviation and national-security industries.
There was enormous pressure to issue the twelve-hundred-dollar economic-hardship checks immediately, but the Treasury Department instructed the I.R.S. to print Trump’s name on them, a decision that may have delayed the release. (The I.R.S. said the payments were “on schedule.”) It also emerged that, without the small codes known as “flags” attached to the electronic payments, the money could be garnished by private debt collectors. There were issues, too, with the P.P.P. The program was intended to give companies enough money to avoid layoffs; if a business used at least seventy-five per cent of its loan to pay workers, then the loan would be forgiven, effectively making it a grant. (The figure was later changed to sixty per cent.) The Treasury Department could have chosen to administer the loans and wire the money to recipients itself, but the task was initially outsourced to large banks, which were repaid by the Small Business Administration, earning hundreds of millions of dollars in fees in the process. The banks had more incentive to lend money to bigger companies.
During the first few weeks of the program, many of the small companies that it was intended to help had trouble navigating its cumbersome application system. Meanwhile, there was a problematic loophole in the language of the P.P.P., which stated that “any business concern that employs not more than 500 employees per physical location” in the hospitality sector would be eligible for the taxpayer-backed forgivable loan. Large businesses, including Ruth’s Chris Steak House, Shake Shack, and the Los Angeles Lakers, received multimillion-dollar grants. After a public outcry, these companies and many others returned the money voluntarily, and the Treasury Department scrambled to amend the rules.
Mnuchin initially resisted calls to release names of any of the loan recipients, but in July, after a backlash from lawmakers, the Treasury Department agreed to disclose six hundred and fifty thousand companies that had received more than a hundred and fifty thousand dollars. Among them were investment firms, major chains that had private-equity investors, and the Riviera Country Club, a Los Angeles golf club of which Mnuchin is a member. ProPublica revealed that at least six companies owned by the West Virginia governor, Jim Justice, received as much as twenty-four million dollars. Larry Kudlow, the director of the National Economic Council, and one of Trump’s top economic advisers, said that he was not embarrassed by these revelations: “If you have five hundred or fewer employees, and you were able to meet the condition that seventy-five per cent of the money goes to payroll, then Kanye West gets his money, and so does Nightingale-Bamford, in New York. That’s the deal. And, if there are glitches in that, then they were bipartisan glitches.”
Michelle Holder, an economist at John Jay College, in New York, who specializes in race and the labor market, told me that, in spite of its flaws, the Cares Act saved many people and businesses from financial ruin: “The Paycheck Protection Program—the rollout of that has been incredibly bumpy, incredibly inequitable, but it was good to talk about small businesses maintaining their staffing levels.”
Another, somewhat opaque, part of the CARES Act bailout consisted of an allocation of four hundred and fifty-four billion dollars to aid large corporations and state and local governments, through a variety of lending programs administered by the Federal Reserve in conjunction with the Treasury Department. This has pushed the Fed, normally a conservative institution, to participate aggressively in the financial markets. Using the funds it received from Congress as a kind of collateral, the Fed potentially has at its disposal a staggering four trillion dollars, which it can lend directly to companies or governments, or indirectly, by buying bonds in the open market—whether municipal bonds or risky junk debt. In many cases, the Fed is not required to impose conditions on the companies whose bonds it is purchasing, even as its actions provide valuable financial support. As soon as the CARES Act was announced, the stock market began to rise in anticipation of the Fed’s actions, even as tens of millions of Americans filed for unemployment insurance, millions lost their employer-provided health care, and one in three reported being unable to afford monthly rent.
This was seen as evidence that, though the bailout had succeeded in rescuing the financial markets, the prospects of regular people remained precarious. According to Gary Gensler, the former head of the Commodity Futures Trading Commission, the stock market is not an accurate measure of public welfare. “Most Americans aren’t directly invested in the stock market, and, even if they are, it’s a small amount, and it’s their retirement savings,” he said. “The stock market’s ups and downs are not going to put food on your table.”
I suggested to Mnuchin that there was a striking disconnect between the performance of the stock market and the health of the real economy, but he shrugged it off. Most of the CARES Act money was directed at the P.P.P., individual checks, and unemployment-insurance payments, he said, which helped individuals and smaller companies, which are part of the real economy: “By doing those three things, we created a lot of liquidity for people, which was I think the right thing to do.” He added that the Fed lending program had also “created liquidity” for companies to get through the crisis. “The purpose of the Treasury and the Fed facilities is to provide normal market access, when markets don’t function,” he said. “The markets have come back and functioned.”
Sam Long, a small-business investor who writes about the economy, said that the Fed program has enabled three wealth transfers: from the middle and working classes to the affluent, who own most of the stocks and bonds whose prices have been propped up by the Fed; from the cautious to the reckless, who have seen the risk in their dubious business decisions eliminated; and from the young people of today, who will end up paying back all the borrowed money, to the older people, who are now benefitting from it.
It seems natural to compare the current moment to the 2008 financial crisis—the most severe economic downturn in recent memory—but that crisis was centered on one sector: the housing market. A more appropriate comparison may be to the Great Depression. In 1933, when Franklin D. Roosevelt took office, the country had been mired in depression for three years, and the unemployment rate was well over twenty per cent. F.D.R.’s predecessor, Herbert Hoover, had resisted arguments that the federal government should assist struggling individuals directly by creating jobs and providing financial support. But, under Roosevelt, the government hired millions of unemployed Americans and launched a series of public-works projects, building dams, bridges, highways, schools, and parks. Electricity and more efficient farming methods were introduced in the rural South and the Midwest. Roosevelt and many of his advisers, including his Treasury Secretary Henry Morgenthau, Jr., came from élite, wealthy families and had backgrounds in law and business. They used their expertise to develop ambitious social programs, such as Social Security and unemployment insurance, and financial reforms, such as the F.D.I.C., that helped prevent bank runs. In a radio address in 1932, F.D.R. explained why he thought it wasn’t sufficient simply to return to the pre-Depression economy. “There are two theories of prosperity and to well-being. First, the theory that if we make the rich richer, somehow they will let a part of their prosperity trickle through to the rest of us,” he said. “But very, very early in the history of mankind, there was that second theory that if we make the average of mankind comfortable and make them secure in their existence, then their prosperity will rise upward through the ranks.”
Economic historians told me that the state of the country in 1932 was more dire than it is now. Barry Eichengreen, of Berkeley, said, “I think what’s missing compared to those earlier crises is fully institutional, innovative thinking about how the structure of the economy—of the financial system and of the public sector in particular—needs to change in light of events. I have this strong sense that we now need to turn from keeping restaurants and businesses afloat and keeping people on the payroll to thinking about how the economy after the coronavirus is going to look different than it looked before. The crisis is a reminder that the private sector, left to its own devices, doesn’t always manage those challenges optimally. That kind of strategic planning, thinking about what happens next, isn’t happening. And it needs to.” When I asked Mnuchin whether he had thought about initiating bigger structural changes, he paused for a long time, as if struggling with what to say. “I like to study economic history, and I love biographies,” he said eventually. “I think you learn certain lessons from the past. But, again, no situation is ever the same.”
By the end of May, the situation had changed again. The legislation that Mnuchin had ushered through to address the pandemic seemed to have largely worked in the short term to rescue parts of the economy. Then public attention shifted to the nationwide demonstrations against police violence and racism which followed the killing of George Floyd, in Minneapolis. Increasingly, American political debate became focussed on reforming police departments across the country, on racial injustice, and on extreme income inequality, including the racial wealth gap: the median household wealth of Black families has barely changed since 1968, and a typical Black family’s net worth is a tenth that of a typical white family.
In early June, Michelle Holder, of John Jay College, told me that, in Harlem, where she lives, “you can literally cut the mood with a knife. People in my neighborhood are scared, they’re angry, they’re hurt, they’re depressed. . . . It may be difficult for someone like the Treasury Secretary to relate to what is happening with the everyday Joe and Joanna, whether they be Black or white or brown. I don’t know if someone like him can really understand it at a deep level.”
When I spoke to Mnuchin that week, he insisted that the civil unrest had nothing to do with inequality or with policy failures that might have led to economic frustration. He pointed out that the Administration had been generous with emergency aid, giving people an extra six hundred dollars a week on top of their regular unemployment benefits. For some people, these funds added up to more money than they had been making before the pandemic. Floyd’s killing was “very concerning,” Mnuchin went on. “My thoughts go out to his family.” But, like many Republicans, Mnuchin was more concerned with the destruction and the thefts that had occurred during the largely peaceful protests than with the actual meaning of the movement. “This is no longer about peaceful demonstrations,” he said. “Obviously, the looting and the situation that’s gotten out of control is very, very concerning for lots of reasons.” He went on, “The thing that’s really sad about this is the wealthy businesses that are being hit and the big companies that are being affected are going to be fine. But these small businesses that are being devastated by these crowds were just starting to reopen, and they may never recover.”
Eichengreen disagreed that the protests had little to do with economic inequality. He noted the vast numbers of young people of all races who were participating, and pointed out that, in addition to anger and frustration about systemic racial inequities, they were likely despairing over their diminishing prospects and the possibility that they would never achieve the living standards of their parents. “People take to the streets in part when they can’t take to the office,” he said. “We know from previous crises, such as 2008 and 2009, that these economic events cast a very long-lived economic scar—that, if you don’t get that internship in the summer between junior and senior year, you’re never going to get on the ladder of employment in that industry. Kids know that. We were already worried about all these things before. People have been reminded of the fragility of their economic prospects and the fragility of their hopes.”
I spoke with Mnuchin again at the end of June, when the governors of Florida and Texas were confronting an explosion in the number of COVID cases. Trump had expected to campaign for reëlection by heralding low unemployment and an ascendant stock market. I asked Mnuchin how he thought Trump should try to appeal to voters now. “I think the pitch has been, and will be, that he has a great economic team that has worked with him on building the economy, and that will rebuild the economy,” Mnuchin said. “We’ve worked in an unprecedented way, in a bipartisan way, to channel relief to hardworking Americans and businesses, unlike anybody’s ever done before.”
Then he said he wanted to clarify what he’d said about race and inequality in one of our earlier discussions. “You asked me if there was a connection around the economic conditions of COVID and what was going on, and I think I said I did not,” he said. “But I think we always need to do a better job of making sure that the people who have been left behind have the right economic advantages.” He went on, “Whether that’s because minorities don’t have the same access to education, or what I saw travelling the country with the President during the campaign, when people said average Americans’ wages have not gone up in eight years by any significant amount.” He noted that, before the pandemic, the U.S. had the lowest Black unemployment rate in history: “We all need to do a much better job on these issues. It’s less in my view about income inequality, and it’s more about income opportunities.”
Mnuchin was reluctant to acknowledge that even modest reforms were necessary. Raising minimum wages was a “complicated” matter best left to the states. He was similarly against the idea, endorsed by Elizabeth Warren and other Democrats, of raising the tax rate on investment income so that it is no longer lower than the tax rate on labor income, insisting that lower rates on capital gains spur economic development. When I asked about the U.S. having the highest income inequality among the G-7 nations, he said that the numbers were skewed by Jeff Bezos, the founder of Amazon and the wealthiest person in the world, and by people like him. This struck me as bizarre; even without taking into account the fortunes of such outliers, inequality in the U.S. is greater than it has been since the nineteen-twenties. Still, Mnuchin went on, Bezos had created an enormously successful company and deserved his wealth, which is estimated at around a hundred and eighty billion dollars.
“I don’t believe the redistribution of wealth is the right solution,” he said. “I believe the right solution is to create equality of opportunity, and a big part of that is around education. And job training. And mentoring.” The Trump Administration doesn’t appear to have made investments in education or job training a priority. I asked him whether everyone in America has an equal shot at succeeding. “It’s a complicated question,” he said. A few seconds passed. “I think that we’ve unfortunately seen that not everyone has an equal shot.” ♦