I’m afraid that Wednesday will be typical of what the future holds during a Trump administration: more bad news per day than I can possibly cover in one article. I am choosing to concentrate on the nomination of Steven Mnuchin to be the Secretary of the Treasury. Let’s explore.
Mnuchin like Donald Trump is part of the problem and if anyone thinks they all suddenly got religion and will be part of the solution I’d like to drug test you! Mnuchin is a poster boy for greed and has absolutely no business morals. He has done harm to thousands of average Americans all in the pursuit of personal fortune.
Mnuchin is a former Goldman Sachs executive; so much for Trump’s crusade against Wall Street. If that were his only, or even most glaring, fault I’d give him a pass. I understand that in reality there are only two places to go for a Treasury Secretary: Wall Street and academia.
Trump is also rewarding loyalty with the nomination. Mnuchin became the Trump campaign’s Finance Chairman in May and was very successful at fundraising – so much for the self-financing myth. Again, if those were the only faults I could find with Mnuchin’s nomination I’d be writing about something else today.
After leaving Goldman Sachs Mnuchin started the private equity fund Dune Capital Management which means among other things he paid a lower tax rate than most of my readers because he was able to take advantage of the carried interest provision in the tax code. Generally private equity guys buy companies then slice and dice them to maximize return on investment and if the little guy gets hurt in the long run it is of no concern to them. Remember the movie Wall Street?
Over the next few years Mnuchin found ways to exploit the average guys and gals who expect Trump and crew to be their saviors. First he got involved in the sub-prime mortgage game that culminated in the housing bubble bursting. In the shuffle he bought OneWest Bank which foreclosed on thousands of California homeowners throwing good, hardworking Americans out on the street but Stevie made a few extra bucks in the process – quite a few! In fact in 2014 Mnuchin sold OneWest to the CIT Group and as his reward walked away with $100 million in stock and a seat on CIT’s Board of Directors.
Mnuchin will be one of the people charged with trying to get Trump’s tax package enacted. A feature of that package is taking the maximum corporate tax rate down to 15%. Effectively all corporate income will be treated as carried interest or capital gains because the rate will be that low. Note this only helps big corporations; your neighbor’s incorporated business is probably an S corporation with the operation’s income filtering through his or her personal income which they pay taxes on at the legal rate (possibly 39.6%). The tax plan helps those who are already doing very well while leaving behind the small business person and Joe Lunchbucket. For the true fiscal conservatives out there most groups figure that Trump’s plan will add $6 trillion (or about 32%) to the national debt over the next decade. Even the conservative Tax Project puts the tab at $3 trillion and they, like Trump, profess trickle-down economics.
If you are looking for Trump and crew to protect you from the big bad corporations (a/k/a the rigged system) taking advantage of you I suggest you think again. Mnuchin is on record opposing Dodd-Frank and its consumer protections. Mnuchin’s reasoning is that Dodd-Frank suppresses lending which in his thinking is the lifeblood of growing an economy. Just let the lenders run wild like we did in the run-up to the Great Recession; that worked out well for guys like Trump and Mnuchin; not so well for most Americans.
Remember that is only the worst news of a single day and Trump hasn’t even taken office yet!
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