- 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)
Biden Signs 17 Executive Order During His First Day in Office. Here’s What You Need to Know
- In the first hours of his presidency, Joe Biden signed 17 executive orders and proclamations, many of which focused on rolling back Trump administration policies regarding immigration, the environment, and protections for minority groups.
- Biden also implemented several measures to tackle the coronavirus, including requiring masks to be worn on federal property and by federal employees. He is also expected to announce a new national strategy aimed at restructuring the federal response to the pandemic.
- On Thursday, Biden will also invoke the Defense Production Act, which would speed up the development and distribution of vaccine-related equipment.
Biden Rolls Back Trump Policies
President Joe Biden signed 17 executive actions and proclamations Wednesday afternoon. Many of his first acts in office are focused on rolling back several policies implemented by former President Donald Trump that Biden’s aides said have caused the “greatest damage” to the country.
“I thought there’s no time to wait, get to work immediately,” Biden told reporters present during the signed of several of the orders.
Here is a breakdown of some of the key measures Biden implemented.
Biden immediately ended all construction on the border wall by overhauling the national emergency declaration Trump had enacted to divert billions in federal funds to his central campaign promise.
The new president also expanded protections under the Deferred Action for Childhood Arrivals program (DACA) and overturned a Trump policy that made immigration enforcement more strict and
In similar actions, he also ended the travel ban on multiple Muslim-majority countries and revoked a Trump administration order that would have excluded non-citizens from the 2020 Census count.
One of the most significant actions Biden took was signing a letter to rejoin the Paris Climate Agreement. It will take 30 days for the return to go into effect.
The president also issued a sweeping order that reversed a number of the Trump administration’s environmental policies, including revoking the permit for the Keystone XL pipeline, re-establishing a working group to look into the social costs of greenhouse gasses, and temporarily banning oil and natural gas leases in the Arctic National Wildlife Refuge.
Justice for Minority Groups
In one far-reaching order, Biden directed all federal agencies to review equity in their programs and policies. They are required to issue a report within 200 days that, among other things, details how each will remove barriers to opportunities and ensure all Americans have equal access to federal resources.
Biden also ended Trump’s policy that limited federal agencies, contractors, and other organizations from holding diversity and inclusion training. The same order also disbanded the 1776 Commission created by Trump to study his claims that the education system was too liberal in its teaching of American history.
In a separate order, the president issued changes that will broaden federal protections against sex discrimination to include LGBTQ+ Americans, reversing a previous action by Trump.
As part of a broad measure aimed at general accountability in the executive branch, Biden issued an order that will establish ethics rules for all people in his administration. The same order will also require all executive branch appointees to sign an ethics pledge.
Separately, the president additionally froze all new regulations Trump had put in place during his last few weeks in office until they can be further evaluated.
Economy and Coronavirus
Chief among Biden’s first acts in office were his plans for the coronavirus pandemic and the damage it has caused to the American people.
In terms of financial relief, Biden extended the ban on evictions and foreclosures and paused student loan payments until September.
As for direct actions concerning the pandemic, the president imposed a mask mandate for all federal employees and anyone on federal property. He also signed an extensive order aimed at restructuring the federal response to the pandemic.
Biden is expected to enact more policies in regards to the coronavirus in the coming days, including taking more executive actions to ramp up testing and vaccine distribution, safely reopening schools and businesses, and provide more money to states to help carry out those efforts, among other things.
To achieve these goals, he will also invoke the Defense Production Act, which will compel American companies to manufacture supplies for the pandemic response such as PPE and other items needed for vaccines.
See what others are saying: (The New York Times) (ABC News) (The Washington Post)
U.S. To Join WHO-led Vaccine Distribution Plan as Biden Implements a Flurry of COVID-19 Executive Orders
- Dr. Anthony Fauci indicated Thursday that President Joe Biden will join COVAX, a World Health Organization-led COVID-19 vaccine distribution plan.
- Fauci’s announcement comes one day after Biden signed an executive order reversing former President Donald Trump’s plan to remove the United States from the WHO.
- Among other orders, Biden plans to implement a mask mandate for airports, planes, trains, and other forms of interstate travel. He has already ordered masks to be worn on all federal property.
- Biden is also expected to invoke the Defense Production Act on Thursday, which would speed up the development and distribution of vaccine-related equipment.
U.S. To Join COVAX
Just one day after President Joe Biden signed an order to keep the United States in the World Health Organization, Dr. Anthony Fauci said the country will join its global COVID-19 vaccine distribution plan.
That plan, COVAX, is a collaborative effort between 92 countries to ensure that COVID vaccines aren’t only distributed in wealthy countries.
The idea behind the plan is that establishing a global herd immunity will be much more effective at curbing the spread of the virus than just establishing herd immunity in countries that can afford to buy large quantities of the vaccine, especially when international travel picks back up.
The plan is not without its shortcomings. Earlier this week, the WHO stated that some countries participating in COVAX have been disregarding the plan and buying large quantities of vaccines for themselves.
Nonetheless, in a video conference call Thursday morning with the WHO’s executive board, Fauci — now chief medical advisor to the president — said the Biden administration believes it can inoculate every American while also helping people in other countries.
Biden’s plan to join COVAX is a stark contrast from the Trump administration, which refused to participate in the program.
Fauci said Biden will issue the directive to join COVAX later Thursday.
Additionally, Fauci noted that the U.S. once again “intends to fulfill its financial obligations” to the WHO.
In his attempt to leave the organization, Trump cut off payments from the U.S.; however, his administration never got the chance to fully cut ties with the organization because the U.S. wasn’t scheduled to officially leave until July of this year.
Biden Signs Mask Mandate, Other Orders To Come
Among other COVID-related executive orders signed Wednesday, Biden implemented a national mask mandate for people on federal property.
Sometime Thursday, Biden is also expected to sign another order requiring masks to be worn in airports, as well as on airplanes, trains, and other interstate transit systems.
Also on Thursday, Biden is also expected to sign an order that will establish a COVID-19 testing board. Once implemented, the board will be responsible for increasing testing rates, addressing supply shortfalls, and determining the rules and regulations for international travelers coming into the U.S. It will also have the power to distribute resources to minority communities that have been disproportionately affected by the virus.
On top of that, Biden plans to sign an order that will direct the Federal Emergency Management Agency to reimburse states and Native American tribes for their emergency response efforts. Notably, those reimbursements include costs related to reopening schools.
Finally, Biden is expected to invoke the Defense Production Act on Thursday. Such a move would speed up the production of masks and other equipment needed to help administer vaccines.
See what others are saying: (Business Insider) (Reuters) (CNBC)
Trump Issues Over 140 Pardons and Commutations Ahead of Biden’s Inauguration
- In his last moments in office, now-former President Donald Trump granted clemency to more than 140 people at 1 a.m. Wednesday morning.
- Among the notable pardons and commutations were rappers Lil Wayne and Kodak Black, former Trump adviser Steve Bannon, and Trump megadonor Elliott Broidy.
- Trump’s final round of clemency did include several nonviolent drug offenders whose requests had been supported by criminal justice reform advocates.
- Still, many also condemned Trump for overlooking people wronged by the justice system or those who have been rehabilitated. Instead, critics feel he was focused on giving out political favors to his allies.
Trump Grants Clemency
Former President Donald Trump issued more than 140 pardons and commutations at 1 a.m. Wednesday morning, just hours ahead of President Joe Biden’s inauguration.
The move marks Trump’s final major act before the end of his term. Many of the most notable pardons and commutations were given to people whose names had been circulating in reports earlier this week, including rappers Lil Wayne and Kodak Black, as well as former adviser Steve Bannon.
Bannon’s pardon is especially significant because he has not yet stood trial for the charges he faces. The charges against Trump’s former right-hand man center around allegations that he defrauded half a million people who donated to a crowdsourcing campaign to fund the construction of the border wall.
The leaders of the charity, aptly named We Build the Wall, had claimed that the more than $25 million they had solicited in donations would go to their goal, but prosecutors claim that Bannon took $1 million for his own personal expenses.
Bannon’s pardon is also significant because, according to reports, the reason the clemency announcements were late was because Trump could not decide whether or not to pardon him. However, as The Washington Post notes, Trump’s ultimate decision “underscores how Trump has used his presidential power to benefit allies and political backers.”
Trump has recently granted pardons to several of his former top aides, many of whom seem to have a knack for committing crimes for him.
At the end of last year, he pardoned his former campaign chairman Paul Manafort, his former national security adviser, Michael Flynn, and his close friend and adviser, Roger Stone. All three had been convicted of crimes during the probe into Russian interference in the 2016 election.
In this newest batch of clemency grants, the former president also pardoned Elliott Broidy, a top Trump campaign fundraiser. Broidy pleaded guilty last year to conspiring to violate foreign lobbying laws and accepting millions of dollars as part of a secret campaign to lobby the administration for Malaysian and Chinese interests.
Trump additionally pardoned a number of politicians who have been indicted for corruption, including three former Republican members of Congress and one former Democratic mayor.
Those Left Out
Trump’s last round of pardons and commutations did include several nonviolent drug offenders whose requests had been supported by criminal justice reformers. One of those individuals was Chris Young, a man who had been sentenced to life for drug conspiracy, and whose commutation Kim Kardashian West had lobbied.
But in general, Trump has largely been condemned by criminal justice advocates for overlooking people wronged by the justice system or those who have rehabilitated. Instead, they feel he was focused on giving out political favors to his allies.
Despite the attention some of his pardons have received, either because they had celebrity power behind them or were controversial, Trump has actually approved fewer clemency requests than most previous presidents who served one term or less. Until this week, he had only granted clemency to 95 people.
Also of note are the controversial pardons that Trump was reportedly considering but ultimately decided against. These included WikiLeaks founder Julian Assange, former NSA contractor Edward Snowden, and “Tiger King” star Joe Exotic, the latter of whom was so sure he would be pardoned that he had a limo waiting for him outside his prison.
Trump was also reportedly considering preemptively pardoning himself and his children, but he apparently decided against the move. In addition to a self-pardon being questionably unconstitutional, any clemency for the former president and his family would require them to admit they committed crimes they have not yet been charged with.
While Trump decided against becoming the first president to ever pardon himself, the fact that he decided to give clemency to so many of his allies might pose some issues.
President Bill Clinton faced both congressional and criminal investigations for giving out 140 pardons and commutations on his final day in office in 2001, though notably, no wrongdoing was ultimately found.