Playfully doing little to hide his longing for the days when he called Los Angeles home, Treasury Secretary Steven Mnuchin kicked off the first full day of the Milken Institute Global Conference with a relaxed one-on-one interview session with Fox Business News anchor Maria Bartiromo.
Bartiromo began the session by asking Mnuchin about the “white paper” the Trump administration released last week summarizing its goals for tax reform. Calling it a “white paper” grew a few chuckles from the audience, so Mnuchin explained that the document was more of an “outline” that was intended to leave plenty of room for negotiation.
For example, on the topic of a border adjustment tax (BAT), Mnuchin said the idea is not a dealbreaker and that there are “lots of other ways” the government can raise the mooted $1 trillion that has been attached to the BAT.
A key element of Trump tax plan is based on reducing the corporate tax rate to 15%. Bartiromo asked Mnuchin how the government would prevent people from gaming that kind of tax code via pass-throughs, also known as fire-me, hire-me. Mnuchin did not have a solid answer for how such tax maneuvers would be prevented, and instead pivoted to the idea of having a “business tax rate” for smaller firms.
Mnuchin also shared with the audience one tidbit he reckoned many of them overlooked. Everyone knows the role he is playing in domestic and international financial policies, but Mnuchin revealed he spends about half of his time dealings with matters of foreign policy, such as terrorist finance and sanctions.
Ultimately, one of the principles Mnuchin said the Trump administration is trying to make clear to the American people is that it doesn’t believe it is the job of the federal government to subsidize the states. Another issue Mnuchin said was near and dear to his heart - and the audience at Milken - is the reform of government sponsored entities like Fannie Mae and Freddie Mac. Mnuchin said GSE reform is on his “Top 10 list.”
One of the other principles that is paramount to the White House’s plans is that regulation has been acting as a restraint to economic growth. Mnuchin said that is one of the reasons the stock market has enjoyed a “Trump Bump” since the election. Knowing his audience, Mnuchin wisecracked to the crowd, “You should all thank me for your bank stocks doing better."
There is little doubt the Beverly Hilton, home of Milken Institute Global Conference, represented a sort of “friendly confines” for Mnuchin. And as one attendee noted when the session concluded, “The financial community knows him and trusts him.”
That kind of trust represents a currency that is stronger than gold, which is likely to serve Mnuchin well now that his work extends far beyond the Golden Triangle.