In an interview, U.S. Treasury Secretary Steven Mnuchin predicted that the economy would be improving “as we go into the summer and we reopen the economy.”
Speaking for the Trump administration, Mnuchin said that “we’re very sympathetic to all the workers who this is impacting, and if the numbers are worse next month, well, we understand that.” He told CNBC that the current situation “has nothing to do with normal economic factors. It has to do with a closing of the economy and an opening of the economy.” As such, it is largely uncharted territory.
Mnuchin stressed that, with the crash of the economy, “Congress worked very very quickly with the administration, and the president, on an unprecedented $3 trillion package. And we’re just now getting that money into the economy. We’re having the second round of the PPP (Payroll Protection Act) actually being disbursed. We had $140 million Americans getting (IRS) payments, either direct deposits or checks.”
“I think this is going to have a big impact on the economy,” he added, also noting that the actions of the Federal Reserve Bank would have a huge effect.
Now, he is calling for caution, “before we go spending another $1 trillion of taxpayer money.”
Looking ahead, Mnuchin would not say what the Feds would do when it came to plugging the holes in state and local governments’ budgets created by the COVID-19 crisis. “I’ve heard very clearly from the president and the Republicans that we are not bailing out state pensions and other things,” he said.
Meanwhile, controversy is also playing out over the PPP, part of the original CARES Act package. With its additional round of funding, the PPP has turned into a $660 billion program.
The Trump administration has sought to avoid the criticism sparked by the first infusion of federal funds, after some loans went to large companies, such as Shake Shack.
In the second round of PPP funds, as reported by PYMNTS, the Trump administration has placed vague and confusing guidance onto the already unclear regulations. According to FactSquared, publicly traded companies have already returned 48 loans worth more than $350 million.
Also, the Trump administration’s latest “guidance” has caused consternation among potential small and medium-sized businesses, perhaps deterring applicants. The PPP’s low-interest, forgivable loans of up to $10 million were meant to keep the economy going as the pandemic hit.