President-Elect Trump decided on the “safe path” with his pick of his campaign finance chairman Steve Mnuchin, former Goldman Sachs banker and movie producer to head the Treasury Department. Numerous high-profile leaders in business and finance, including former BBT Bank and Cato Institute CEO John Allison were apparently interviewed for the job, but Mnuchin was long seen as the favorite to take over the helm of the sprawling, 86,049 employee, Treasury.
Mnuchin got his start as a Goldman Sachs banker but then branched out into movie producing with X-Men franchise (ruining) Brett Ratner and others. Mnuchin helped in the financing of James Cameron’s record-breaking remake of 1992’s Fern Gully, Avatar. He was also instrumental in the production of every conservative American’s favorite movie circa 2014: American Sniper, based on the heroic exploits of the, titular, American Navy S.E.A.L. sniper, Chris Kyle.
As we noted at the outset, Mnuchin’s pick is a safe one for Trump to make. Donald Trump, for all of his qualities that made him likeable to American voters has not been known for his finesse. The selection of a Treasury Secretary, especially given the instantaneous reaction of global markets to movements within the transition team, was of paramount importance for Trump to show calmness and a decision to maintain at least the semblance of the status quo. Picking the odds-on favorite was the right tactical move for Trump to make. Expect little volatility in the markets after the pick.
Certainly readers of this site will know that we are partial to more robust action with respect to both the fiscal and monetary decisions made by the US Government and by the Federal Reserve. While we do not go so far as to push for an instant and market-crippling return to a gold-standard and public input on all monetary decisions, the movement towards unsustainable debt and a Federal Reserve with more power than it was intended to have is a national problem that is not going away any time soon. It does not appear that Trump will be the Andrew Jackson some thought he could be with respect to pushing for reforms and audits of the Federal Reserve system.
Some may be expressing reservation about Trump putting a former Goldman Sachs executive in his Cabinet in such a prominent position after railing against the excesses of the financial industry in his Presidential campaign. This should not be such a large concern for individuals who have followed Trump’s finance chair since he was put in that position. Mnuchin has said that he agrees with many of Trump’s positions and will work to implement the reforms that Trump is pushing for in banking. There is some sense to the logic that a former insider is the best person to know how to get to the bottom of the problem. While “giving them the benefit of the doubt” has usually met with limited success in the financial regulatory sector, the fact that Mnuchin has never been in government before lends some weight to the credible assertion that he may approach the job differently than his predecessors.
Mnuchin has taken to the airwaves since his nomination was announced in order to defend the President-Elect’s ideas about how to boost the economy. Specifically, Mnuchin sees significant middle-income tax reduction, a simplification of the tax code, and a repeal of the onerous Dodd-Frank laws that curtailed lending from banks.
Mnuchin has already faced some headwind from ultra-left progressives like Elizabeth Warren and Bernie Sanders over the way in which Mnuchin succeeded in acquiring his wealth. However, despite the protestations of the left (they were going to protest anyone outside of the reanimated corpse of Karl Marx, anyhow), Mnuchin is set for a bumpy, but ultimately successful confirmation (barring any strange revelations).
In Mnuchin, Trump has found an ally since the early days of his general election push. The fact that Trump has been comfortable with Mnuchin, and the fact that he is not likely to spook the market, makes him a safe choice, if not one who could bring the immediate reforms that we will eventually need as a nation.