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Mnuchin To Cut Off $455 Billion In Stimulus Money and Move It Out of the Biden Administration’s Reach

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3 years ago

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  • Treasury Secretary Steven Mnuchin has asked the Federal Reserve to return $455 billion in stimulus funding for key emergency lending programs when they expire at the end of the year. 
  • Previously, the Treasury Department was expected to extend those programs as the pandemic is still raging. Because it’s now pursuing the opposite, the Fed has rebuked Mnuchin’s decision, a rare move to see from the agency.
  • Other critics have called Mnuchin’s move political, saying it appears to be a blatant attempt to hamper Biden’s transition into the White House in January.
  • Still, the Fed has agreed to return the funding, and it’s now being reported that the money will be placed into an account that Mnuchin’s likely successor, Janet Yellen, will need Congressional approval to access.

Mnuchin To End Emergency Funding Without Extension

Treasury Secretary Steven Mnuchin said Thursday that he doesn’t plan to extend $455 billion in key emergency lending programs past the end of the year. Instead, he’s planning on stashing that money in a fund that his successor can’t reach without Congressional approval.

Mnuchin has asked Federal Reserve Chairman Jerome Powell to return the $455 billion in unused funding. Notably, that money is meant to fund programs stemming from the $2 trillion CARES Act — the only stimulus package Congress has agreed upon thus far. Those programs are meant to prop up the economy by providing financial assistance and loans for struggling businesses and local governments.

In his letter to Powell, Mnuchin said the Fed programs “have clearly achieved their objective” because “Markets responded positively, spreads tightened, and banks continued lending.”

While he also said that Congress will later be able to use that $455 billion for other purposes, such as PPP and grants, his decision has been so controversial that even the Fed criticized it. That’s highly unusual because the Fed isn’t usually keen on inserting itself within sensitive political issues.

The Fed has said that the programs are necessary while the pandemic rages on. In fact, it even noted the “important role” of these programs “as a backstop for our still-strained and vulnerable economy.”

The Treasury Department cannot simply reallocate that money on its own. Instead, it needs agreement from the Fed. Despite the Fed’s criticism, it ultimately gave that agreement on Friday.

Critics Blast Mnuchin’s Plan as an Attack on Biden

Top Republicans like Senate Majority Leader Mitch McConnell and Senator Patrick Toomey have backed Mnuchin’s decision. Last week, McConnell described it as “fully aligned with the letter of the law and the intent of the Congress.”

Among some Republicans, there is a concern that leaving the programs operational for too long could distort markets.

On top of that, only about $20 billion of that $455 billion has actually been used, likely because the program’s loan terms for small- and medium-sized businesses are very restrictive. Still, that’s not to say this money hasn’t been useful. As The New York Times pointed out, “Some programs calmed market conditions merely by reassuring investors.”

Connected to that and similar to the Fed’s arguments, economists are concerned that Mnuchin is pulling the plug on these programs too soon, arguing that they should not be ended before the markets have fully recovered.

The U.S. Chamber of Commerce — the largest lobbying group in the country — said that Mnuchin’s decision to end these programs “closes the door on important liquidity options for businesses at a time when they need them most.” 

The chamber also added that it “unnecessarily ties the hands of the incoming administration.”

“This appears to be a political move by Team Trump to limit what President-elect Joe Biden can do next year to boost the economy, especially if Congress fails to pass a big stimulus,” Jaret Seiberg, an analyst at Cowen Inc., added.

“It’s not just closing the store down for Biden,” policy economist Ernie Tedeschi said. “It’s burning the store down.” 

Mnuchin has said that this decision isn’t political. He also argued that in the “unlikely event” that these programs need to be re-established, the Fed can still request approval from other emergency funds.

Yellen Would Need Congressional Approval to Access Funds

Still, as The New York Times noted last week, this move could prevent President-elect Joe Biden’s incoming Treasury secretary from quickly restarting the efforts at scale in 2021.

That incoming secretary is expected to be Janet Yellen, who Biden chose for the role on Monday. Notably, if confirmed by the Senate, she would be the first female Treasury secretary. 

On Tuesday, it was reported that Mnuchin is planning on moving that $455 billion into the Treasury’s General Fund, which means that Yellen would need Congressional approval to access any of that money.

That would then leave Yellen with only $80 billion at her discretion. While that might sound like a lot of money for the average person, it’s much less than the nearly half a trillion dollars currently set to be removed from play. 

It also comes at a time where coronavirus cases are spiking, local and state governments are once again employing more restrictive lockdowns, and millions of people are set to lose their unemployment benefits at the end of the year.

Bharat Ramamurti, a Democratic member of the congressional watchdog panel overseeing the $455 billion, said on Twitter that Mnuchin’s move is illegal and that it can be reversed next year.

A spokesperson for the Treasury has asserted that Mnuchin’s move is legal under the CARES Act. 

In the summer, Mnuchin initially extended the fund’s expiration date, which is why it now expires at the end of the year.

See what others are saying: (Business Insider) (Axios) (Bloomberg)

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Texas State Senate Sets Date for AG Ken Paxton’s Impeachment Trial

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1 day ago

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May 30, 2023

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The House impeached Paxton on 20 articles, including bribery, abuse of public trust, and dereliction of duty.

Paxton Impeached

The Texas State Senate on Monday adopted a resolution outlining how the impeachment trial of Attorney General Ken Paxton (R) will play out in the upper chamber.

The proceedings, which will be over seen by the Lieutenant Governor, will start no later than Aug. 28. The move comes after the House voted to impeach Paxton on Saturday 121 to 23, with a majority of Republicans voting in favor. The historic vote marks just the third time a public official has been impeached in Texas’ nearly 200-year history. The most recent impeachment was nearly five decades ago.

The decision follows a tumultuous week for Texas Republicans and further highlights the growing rifts within the party.

The divisions first came to a head last Tuesday when Paxton called for Speaker of the House Dade Phelan (R) to step down after he presided over the floor while seemingly intoxicated. Mere hours later, the Republican-led General Investigating Committee announced that it had been investigating Paxton for months.

On Thursday, the committee unanimously recommended that Paxton be impeached and removed from office, prompting a full floor vote over the weekend.

Articles of Impeachment

In total, 20 articles of impeachment were brought against Paxton, including bribery, abuse of public trust, dereliction of duty, and more.

While there is a wide range of allegations, many first surfaced in Oct. 2020, when seven of Paxton’s top aides published a letter they had sent to the Attorney General’s director of human resources.

The letter accused Paxton of committing several crimes and asked the FBI to launch an investigation, which it did.

The staffers claimed that Paxton had abused his office to benefit Nate Paul, an Austin real estate developer and friend of Paxton’s who donated $25,000 to his 2018 campaign. Many of the impeachment articles concern Paxton’s alleged efforts to try and protect Paul from an FBI investigation he was facing in 2020.

Specifically, Paxton is accused of attempting to interfere in foreclosure lawsuits and issuing legal opinions that benefitted Paul, improperly obtaining undisclosed information to give him, and violating agency policies by appointing an outside attorney to investigate baseless claims and issue subpoenas to help the developer and his businesses.

In exchange, Paul allegedly helped Paxton by hiring a woman the Attorney General was having an affair with and paying for expensive renovations to Paxton’s home. According to the articles, that swap amounted to bribery.

Beyond Paxton’s relationship with Paul, many impeachment articles also concern how the top lawyer handled the 2020 letter. 

In particular, Paxton is accused of violating Texas’ whistleblower law by firing four of the staffers who reported him in retaliation, misusing public funds to launch a sham investigation into the whistleblowers, and making false official statements in his response to the allegations.

The Attorney General also allegedly tried to conceal his wrongdoing by entering into a $3.3 million settlement with the fired staffers. The settlement is especially notable as House leaders have explicitly said they launched their probe into Paxton because he had asked the state legislature to approve taxpayer money to pay for that settlement. 

Additionally, the impeachment articles outline several charges relating to a securities fraud case that Paxton was indicted for in 2015 but has not been charged in. The charges there include lying to state investigators and obstructing justice.

Paxton, for his part, has denied the allegations. On Saturday, the Attorney General issued a statement seeking to politicize the matter, claiming his impeachment was “illegal” and a “politically motivated scam.”

See what others are saying: (The Washington Post) (The Associated Press) (The New York Times)

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Trump Lawyer Notes Indicate Former President May Have Obstructed Justice in Mar-a-Lago Documents Probe

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1 week ago

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May 23, 2023

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The notes add to a series of recent reports that seem to paint a picture of possible obstruction.

Corcoran’s Notes on Mar-a-Lago

Prosecutors have 50 pages of notes from Donald Trump’s lawyer Evan Corcoran that show the former president was explicitly told he could not keep any more classified documents after he was subpoenaed for their return, according to a new report by The Guardian.

The notes, which were disclosed by three people familiar with the matter, present new evidence that indicates Trump obstructed justice in the investigation into classified documents he improperly kept at his Mar-a-Lago estate.

In June, Corcoran found around 40 classified documents in a storage room at Mar-a-Lago while complying with the initial subpoena. The attorney told the Justice Department that no additional documents were on the property.

In August, however, the FBI raided Mar-a-Lago and discovered about 100 more.

The Guardian’s report is significant because it adds a piece to the puzzle prosecutors are trying to put together: whether Trump obstructed justice when he failed to comply with the subpoena by refusing to return all the documents he had or even trying to hide them intentionally.

As the outlet noted, prosecutors have been “fixated” on Trump’s valet, Walt Nauta, since he told them that the former president directed him to move boxes out of the storage room before and after the subpoena. His actions were also captured on surveillance footage.

The sources familiar with Corcoran’s notes said the pages revealed that both Trump and the Nauta “had unusually detailed knowledge of the botched subpoena response, including where Corcoran intended to search and not search for classified documents at Mar-a-Lago, as well as when Corcoran was actually doing his search.”

At one point, Corcoran allegedly noted how he had told the Nauta about the subpoena prior to his search for the documents because the lawyer needed him to unlock the storage room, showing how closely involved the valet was from the get-go. 

Corcoran further stated that Nauta had even offered to help go through the boxes, but the attorney declined. Beyond that, the report also asserted that the notes “suggested to prosecutors that there were times when the storage room might have been left unattended while the search for classified documents was ongoing.”

Adding to the Evidence

If real, Corcoran’s notes are very damning, especially considering other recent reports concerning Trump’s possible efforts to obstruct the documents probe. 

A few weeks ago, The New York Times reported that Corcoran had testified before a grand jury that multiple Trump employees told him the Mar-a-Lago storage room was the only place the documents were kept.

“Although Mr. Corcoran testified that Mr. Trump did not personally convey that false information, his testimony hardly absolved the former president,” the outlet reported, referencing people with knowledge of the matter. 

“Mr. Corcoran also recounted to the grand jury how Mr. Trump did not tell his lawyers of any other locations where the documents were stored, which may have effectively misled the legal team.”

Additionally, the only reason that Corcoran handed over these notes was that he was under court order to do so. Corcoran had refused to turn the materials over, citing attorney-client privilege. 

A federal judge rejected that claim on the grounds that there was reason to believe a lawyer’s advice or services were used to further a crime — meaning prosecutors believed they had enough evidence to prove Trump may have acted criminally. 

See what others are saying: (The Guardian) (The New York Times) (Vanity Fair)

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Homeless Men Promised Money to Pose as Veterans in Anti-Immigrant Scheme, Sources Allege

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1 week ago

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May 22, 2023

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New York State Attorney General Letitia James said she is reviewing whether to launch a formal investigation into the ruse.

A story that was spread by right-wing media about homeless veterans getting evicted from their hotel rooms to make way for asylum seekers has turned out to be false, according to numerous sources.

Early this month, New York City Mayor Eric Adams announced a plan to bus some migrants to hotels in neighboring counties, where they would stay for several months.

Orange County and Rockland County filed lawsuits to block the move, and the state supreme court granted both temporary restraining orders, but many migrants had already arrived. To make room for the incoming migrants, one hotel in Orange County forced at least 15 homeless veterans to leave, media reported at the time.

But several homeless men told local outlets they had allegedly been offered payment if they posed as military veterans staying at the hotel.

Sharon Toney-Finch, head of Yerik Israel Toney Foundation (YIT), a nonprofit that houses the homeless, allegedly masterminded the scheme.

Her associates allegedly rounded up 15 homeless men at a shelter and promised them as much as $200 each if they spoke with a local politician about homelessness. But they told reporters that when they met Toney-Finch at a diner, she presented her real plan. They would speak to a local chamber of commerce instead, the men recalled, and if they weren’t comfortable with telling the lie, Toney-Finch instructed them to say they had PTSD and couldn’t speak.

After fulfilling their end of the bargain, however, they said she never paid them the cash they were promised.

Several of them described the ordeal to media outlets, and reporters soon poked more holes in the story.

The Times Union published a copy of a credit card receipt that purportedly showed a payment of more than $37,000 for rooms at the Crossroads Hotel for the unhoused veterans alongside a copy of what appears to be Toney-Finch’s credit card.

But a graphics expert who examined the documents said the receipt appeared to have been “altered with smudges behind the darker type and [had] different fonts,” according to Mid Hudson News.

A hotel manager also told the outlet he could not find any record of the transaction, and there were no veterans at the hotel and nobody was kicked out.

Local Republican state assembly member Brian Maher, who previously reacted to the fake story with outrage, told The Times Union he felt “devastated and disheartened” when he learned that he was duped.

“She alluded to the fact that, ‘Maybe it’s not exactly how I said it was,’” Maher recalled, describing a conversation with Toney-Finch. “This is something I believe hurt a lot of people.”

New York State Attorney General Leticia James is reportedly reviewing the incident to determine if a formal investigation is warranted.

See what others are saying: (The Guardian) (CNN) (The New York Times)

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