Mnuchin mum as Dems press for answers on tax reform, Dodd-Frank

Mnuchin mum as Dems press for answers on tax reform, Dodd-Frank
© Greg Nash

Treasury Secretary Steven Mnuchin was mum Thursday about features of the Trump administration’s plans to cuts taxes and rollback financial regulations.

Mnuchin appeared before the Senate Banking Committee, his first congressional testimony as Treasury secretary, to update lawmakers on domestic and international policy. He stressed that the department needed time to craft tax policies and review the Dodd-Frank financial reform law before issuing any specific recommendations.

Lawmakers across the aisle peppered him with questions about whether tax reform would increase the debt, which parts of Dodd-Frank the administration would target and various questions about the process through which Trump’s economic team would pursue its goals.

“We have been working hard at the Treasury to develop and implement policy that will allow the economy to grow,” Mnuchin said. “This will make the dream of prosperity once again a reality for all Americans.”

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The questions focused on tax reform and revamping Dodd-Frank: two major GOP goals. Mnuchin revealed little news about the administration’s plans, insisting Trump would be OK with tax reform that adds to deficits if it substantially increases economic growth.

Democrats have insisted that any tax cuts be revenue-neutral, and several laughed off Mnuchin’s insistence that the cuts would pay for themselves.

Mnuchin said that border adjustment — taxing imports while exempting exports — as proposed in the House plan “won’t work,” and that Treasury would release its own economic analysis of tax reform legislation while working with the Congressional Budget Office and Joint Tax Committee on other scores.

Mnuchin also stressed that the administration hadn’t made a hard and fast decision about reforming Dodd-Frank. Much of Thursday’s discussion focused on orderly liquidation authority (OLA), the process through which the federal government can take over and dismantle a failing bank.

Republicans have long criticized this process, arguing that a separate chapter of the bankruptcy code would be more appropriate.

Mnuchin said he hasn’t decided whether to recommend scrapping OLA and said he’d reveal more details on the administration’s financial regulatory policy in reports he’s mandated to release by executive order.

Trump signed several executive orders in April ordering Mnuchin to review Dodd-Frank for potential changes. Neither the administration nor campaign has released a formal financial regulatory agenda, though Trump has ruled out pursuing a full repeal of Dodd-Frank.

Republicans were patient with Mnuchin, a former banker, and repeatedly thanked him for being accessible and open. Sen. Richard Shelby (R-Ala.) called him “a breath of fresh air,” while Sen. David Perdue (R-Ga.), a former CEO, said “it’s nice to have a private-sector guy” running Treasury.

Democrats said his answers were evasive and feared the administration prized benefits for wealthy elites over middle-class families.

Banking Committee ranking Democrat Sen. Sherrod BrownSherrod BrownOvernight Regulation: Labor groups fear rollback of Obama worker protection rule | Trump regs czar advances in Senate | New FCC enforcement chief Dems urge Sessions to reject AT&T-Time Warner merger Calif. senator wins bet on NBA finals against Ohio colleague MORE (Ohio) called Mnuchin’s communication with the minority party “insufficient.”

“Questions posed to the secretary by me and other senators have gone either unanswered, or answered by non sequiturs,” Brown said. “I hope today will give us an opportunity for more forthright conversations.”

But Democrats weren’t happy with many of Mnuchin’s answers. They repeatedly pressed him on several promises Trump made on the campaign trail that the president has flipped on or abandoned.

Sen. Joe DonnellyJoe DonnellyLawmakers sport LSU gear at baseball game in honor of Scalise Senate votes to continue arming Saudis As Yemenis suffer the consequences Overnight Defense: Mattis defends Trump budget | Senate rejects effort to block Saudi deal | Boeing to cut 50 executive jobs MORE (D-Ind.) asked Mnuchin why the administration hadn’t labeled China a currency manipulator though Trump promised to do so. Donnelly, up for reelection in 2018, said Indiana’s manufacturing economy had been wrecked by cheap imports from China with artificially lowered prices.

Mnuchin told him that the currency determination was only “for a very specific period of time” and they’d continue to watch China for future signs of manipulation.

Sen. Elizabeth WarrenElizabeth WarrenLive coverage: Senate GOP unveils its ObamaCare repeal bill Overnight Regulation: Labor groups fear rollback of Obama worker protection rule | Trump regs czar advances in Senate | New FCC enforcement chief Budowsky: Dems madder than hell MORE (D-Mass.) asked Mnuchin to clarify his support for a “21st-century” version of the Glass-Steagall Act, a Depression-era law repealed in 1999 separating consumer and investment banking.

The Republican Party platform explicitly included a pledge to break up banks through a new Glass-Steagall and Trump, Mnuchin and White House chief economic adviser Gary Cohn all expressed support for a modern version of the law.

Trump himself said earlier this month that he supported separating big banks.

“I’m looking at that right now,” Trump told Bloomberg News. “There’s some people that want to go back to the old system, right? So we’re going to look at that."

But Mnuchin said Thursday a modern Glass-Steagall wouldn’t include breaking up banks.

“If we supported a full Glass-Steagall, we would have said it at the time,” Mnuchin said,  “I never said we’re in favor of breaking up the banks.”

“What do you think Glass-Steagall was?” Warren shot back. “This is like something straight out of George Orwell.”