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- Treasury Secretary Steven Mnuchin wants to channel unspent stimulus funds into the US economy, he said Thursday evening.
- “I hope Congress will seriously consider reallocating $ 580 billion of already earmarked funds that would not cost taxpayers a dime,” Mnuchin told Bloomberg.
- This decision would require the approval of Congress.
- Mnuchin’s comments come after announcing that he was not extending most of the Fed’s emergency lending programs past year-end. This sparked a rare reprimand from the central bank.
- Visit the Business Insider homepage for more stories.
Treasury Secretary Steven Mnuchin wants to redirect unspent stimulus funds to the US economy, he said Thursday evening.
“I hope Congress will seriously consider reallocating $ 580 billion from already earmarked funds that would not cost taxpayers a dime,” he told Bloomberg. The fund pool includes money allocated by Congress through the CARES Act in March.
Mnuchin suggested that the unspent money could be used to expand unemployment benefits and help hard-hit small businesses with travel, entertainment, and dining. The move would require congressional approval.
“I think it will have a significant impact on people whose businesses have been affected by COVID – then they can move on early next year when we have vaccines widely distributed and fully reopen the economy,” said Mnuchin.
The remarks come after Mnuchin announced that he was not extending most of the Federal Reserve’s emergency lending programs beyond year-end, including those supporting corporate bond markets and another providing loans to medium-sized businesses and state governments. The Treasury and the central bank manage them jointly.
Mnuchin also asked the Fed to return the money in the letter. This drew a very rare reprimand from the central bank, which seemed caught off guard.
“The Federal Reserve would prefer that all of the emergency facilities put in place during the coronavirus pandemic continue to play its important role in supporting our still strained and vulnerable economy,” the central bank said in a statement on Thursday.
The Fed’s programs at the heart of the conflict were instituted shortly after the passage of the CARES law. Congress allocated $ 454 billion to the treasury to support Fed lending and fix turmoil markets when the pandemic first hit.
Yet a substantial part of the money remains intact, The Wall Street Journal reported, in part due to the strict terms governing some of the programs.
Some Republicans have welcomed Mnuchin’s decision. “The intention of Congress was clear: these facilities were to be temporary, provide liquidity and cease operations by the end of 2020,” Senator Pat Toomey of Pennsylvania said in a statement.
But Democrats criticized it as a move to cripple the new Biden administration because it could prevent another Treasury secretary from restarting emergency loan programs early next year.
“This is economic sabotage,” Senator Ron Wyden, a senior Democrat on the Senate Finance Committee, said in a statement. “Secretary Mnuchin is dirtying the earth in an attempt to inflict political pain on President-elect Biden.”
Experts say failure to expand the Fed’s programs could exacerbate the risks facing the U.S. economy as it grapples with a further rise in virus cases. Many states are moving forward with new restrictions and business closures.
“This winter is going to be an extremely difficult risk glove for the United States”, Ernie Tedeschi, political economist at Evercore ISI, said on twitter. “The 13 (3) facilities haven’t seen high usage in the past, and they may not be used much more in 2021, but getting rid of them now adds even more risk.”
Congress has been hugely divided over passing another coronavirus relief bill that most economists say is badly needed. Nearly 12 million workers are at risk of losing all their unemployment assistance next month, according to new analysis from the progressive Century Foundation.
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