April 19, 2024

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Mnuchin and Pelosi Are Most Pivotal Duo in Virus-Hit Capital

(Bloomberg) —

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have forged the most important relationship in Washington, as the nation’s lawmakers frantically work to stop an economic collapse precipitated by the coronavirus outbreak.

While the pair hashed out legislation last Friday to provide Americans with free testing for the virus and paid sick leave, they joked that they had managed two phone calls between them in the same time it took President Donald Trump to hold a news conference in the White House Rose Garden. Mnuchin quipped to Pelosi that he can’t control how long his boss spends in front of a microphone.

The occasional laugh aside, Pelosi isn’t negotiating the U.S. response to the outbreak with Mnuchin because they’re friends. The Treasury secretary has become the House speaker’s primary connection to the administration because he’s earned her trust, according to people familiar with the matter — and also because the president doesn’t want to talk to her.

Trump’s relationship was broken beyond repair after the Democratic majority in the House impeached him on Dec. 18. He believes she betrayed assurances he wouldn’t be impeached, according to two people familiar with the matter.

The partnership between Pelosi and Mnuchin will be tested in the coming days, after Democrats immediately objected to an economic stimulus plan Senate Majority Leader Mitch McConnell unveiled on Thursday.

‘No One Else’

Pelosi, 79, brings more than three decades of experience in Washington. She became the first woman speaker of the House during George W. Bush’s administration. By contrast, Mnuchin, 57, is a one-time Hollywood financier and community banker who early in his career worked at Goldman Sachs Group in New York. He entered public service in 2017.

Mnuchin regards Pelosi as a “shrewd professional,” according to one senior Treasury department official who asked not to be identified discussing their private interactions.

So despite deeply held suspicions on both sides, Mnuchin and Pelosi have emerged as partners in the battle to protect Americans from the economic destruction wrought by the virus outbreak.

“Right now there is no one else,” said Representative Denver Riggleman of Virginia, a Republican on the House Financial Services Committee. He says of Mnuchin: “I’ve been very impressed with how he sticks to the facts and stays on topic.”

Democrats feel similarly. They regard Mnuchin as honest and non-ideological, according to one senior Democratic aide, and say that other figures in Trump’s administration — notably former acting White House Chief of Staff Mick Mulvaney — would publicly mischaracterize their private discussions.

“It seems to be the one functional relationship we have with the administration,” Representative Gerald Connolly, a Virginia Democrat, said of Pelosi and Mnuchin.

Sometimes, Pelosi and Mnuchin refer to each other as simply “Nancy” and “Steve.” During the negotiations, a Pelosi aide tweeted out a running log of calls between the two leaders, a court that reached about a dozen over two days.

The foundation of their relationship was built in three previous negotiations over important but less dire topics: Spending deals and debt-limit increases. Last week, Pelosi and Mnuchin worked out a second coronavirus bill providing Americans free testing for the disease and paid time off if they get sick. Trump signed the measure into law on Wednesday.

“There is no greater greater testament to Secretary Mnuchin’s effectiveness than his ability to represent President Trump with his full confidence,” said Monica Crowley, a Treasury spokeswoman. “They both recognize the need to achieve real results” which they have executed “despite often difficult political headwinds.”

Representatives of Pelosi did not respond to a request for comment.

Mnuchin’s Warning

Now the pair face an even bigger challenge, figuring out a massive, trillion-dollar-plus stimulus plan that can quickly get cash into Americans’ hands. Mnuchin says the legislation is necessary to prevent soaring unemployment and a cratering economy, and he’s already endorsed ideas that were once the domain of liberals, including direct government payments to households.

He warned Senate Republicans on Tuesday that unemployment could hit 20% without congressional action.

Led by McConnell, the Republicans answered on Thursday with a plan that includes tax rebates of $1,200 for middle-income individuals, $208 billion worth of loans for companies suffering because of the pandemic and another $300 billion aimed at helping smaller businesses.

Mnuchin met with senior Senate Republicans Thursday evening to plot out next steps. He said he’s also spoken with Pelosi and Senate Democratic leader Chuck Schumer.

Riggleman doesn’t fully agree with all of Mnuchin’s ideas, including direct cash payments, but he applauded the Treasury secretary’s ability to bridge the divide between the two parties.

“He gets that you may need to do something, and it may not be perfect, but we have to keep moving forward,” Riggleman said.

Mnuchin said Wednesday in an interview on Fox Business Network that he’d spoken often to both Pelosi and Schumer in the past week. “Everybody realizes there’s going to be massive support for this economy on both sides of the aisle,” he said.

Schumer said Wednesday that Mnuchin had an open mind to Democrats’ views. “Our motto on this is: workers first,” Schumer said in an MSNBC interview.

Powell Coordination

The Federal Reserve has practically exhausted monetary policy in an attempt to keep the economy afloat, slashing interest rates close to zero and vowing to leave them there until the outbreak subsides. That raises pressure on Mnuchin and Congress to respond with fiscal policy — debt management, tax cuts and spending.

The Treasury secretary’s efforts to use every tool at his disposal were on display Tuesday. He stood next to the president in the White House briefing room to announce the plan to make direct cash payments to Americans, saying Trump wanted it done within two weeks.

Bolting from the room before the news conference ended, Mnuchin went to Capitol Hill to meet with Senate Republicans to pitch a trillion-dollar stimulus package.

Then, in conjunction with Federal Reserve Chairman Jerome Powell, Mnuchin announced his support for reviving two financial crisis-era lending facilities to bolster liquidity in markets. Going forward, Mnuchin will be critical to whatever targeted financing the Fed conducts, most of which will require the Treasury secretary’s specific authorization.

By the end of the day, he had also spoken with counterparts in Australia and Japan about the global economic impact of the virus.“He is very engaged, he understands the problem,” said Tony Fratto, a former Treasury official from the Bush administration who worked at the White House at the beginning of the global financial crisis.

“It’s clear that Democrats see him as someone trustworthy to negotiate with, and that’s proven by the results of the fairly quick deal” Mnuchin and Pelosi brokered on the second coronavirus bill, said Fratto, who signed a “never Trump” letter in 2016.

Learning On the Job

Mnuchin has an inherent understanding of what Trump will agree to and also doesn’t seek the spotlight for himself, according to people familiar with the matter — an important attribute in this presidency.

Some Republicans appreciated that in the coronavirus deal he struck with Pelosi, Mnuchin was able to remove a provision that would have permanently entitled U.S. workers to paid sick leave. The legislation includes enhanced jobless benefits, increased food aid, and higher funding for Medicaid benefits.

It’s a change from Mnuchin’s first year in the job, when he struggled in communicating with lawmakers. In September 2017, conservative House Republicans hissed and groaned as he implored them to vote for a hurricane relief bill that included a short-term extension of the federal debt limit.

They were infuriated when Mnuchin privately asked lawmakers to “vote for the debt ceiling for me.” One lawmaker called it “intellectually insulting.” Others laughed at him.Mnuchin was a foreigner to Washington at the time, but current and former aides say that since then, he has worked on outreach to lawmakers, meeting them for breakfasts and coffees to build relationships.

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