treasury

Trump adds a billionaire investor and a Goldman Sachs alum to his cabinet picks. What does it mean for economic policy?

By Tina Irgang

This week, the Trump transition team announced picks for secretary of commerce and secretary of the treasury — arguably the posts with the most influence over the country’s economic direction. So what do we know about Wilbur Ross and Steve Mnuchin?

Ross, Trump’s choice to lead the Department of Commerce, is most often described as a “billionaire investor.” Forbes estimates his net worth at $2.9 billion. As chairman of his own private equity firm, Ross “has made a career of resurrecting dying companies. Fittingly, some of Ross’s biggest hits have been in the same demoralized industries that Trump wants to revive: steel and coal,” reports CNN Money.

In addition, Ross has been an advocate for cutting the corporate tax rate “to 15 percent, from 35 percent, and reducing taxes and regulations on energy companies,” according to The New York Times.

This aligns Ross squarely with Trump’s campaign positions, as does his outlook on trade deals. In an interview in August, Ross said, “Free trade is like free lunch: There is no free lunch. Somebody wins and somebody loses. And unfortunately, we’ve been losing with these stupid agreements that we’ve made.”

Ross also “has advocated threats of steep tariffs on Chinese goods,” The New York Times notes.

Given his positions, Ross’s tenure as commerce secretary is likely to be a significant departure from Penny Pritzker, who currently holds the post. As CNN Money reports, “Pritzker strongly supported free trade and has traveled to 38 countries during her tenure. She advocated clean energy partnerships and the Trans-Pacific Partnership trade deal, both of which Donald Trump campaigned hard against.”

A Wall Street insider goes to Washington

Trump’s pick for Treasury secretary, Steve Mnuchin, served as his campaign finance chairman. Previously, Mnuchin had spent 17 years at Goldman Sachs, and he now leads a hedge fund, according toNPR.

Mnuchin “was involved deeply in developing the president-elect’s tax proposals, which could deliver as much as $6 trillion in tax reductions over 10 years, but might also contribute to much larger budget deficits. As treasury secretary, he would take a lead role in developing policies aimed at boosting the country’s economic growth,” the article goes on to say.

The Wall Street Journal notes that Trump’s choice “presents a stark contrast with the populist themes [he] struck in his campaign, railing against big banks and vowing to close tax loopholes that benefit hedge funds.”

One of Mnuchin’s top priorities as treasury secretary will likely be winning Congressional approval for Trump’s tax plan, says The Washington Post. In addition to the proposal to cut the corporate tax rate to 15 percent, that plan includes streamlining individual tax rates so they fit into three brackets.

Furthermore, “Mnuchin would be responsible for the Trump administration’s response to the aftermath of the housing bust. A crisis-era program that helps homeowners refinance their mortgages, for example, is not scheduled to end until next year,” The Post notes. Mnuchin’s previous employer, Goldman Sachs, earlier this year paid a settlement of $5.1 billion and admitted it had issued mortgages and securities backed by bad residential loans, which helped tip the economy into recession, according to Fortune.

Mnuchin’s ties to Goldman Sachs could be a complicating factor in his ability to win Congressional confirmation, The Washington Post notes.

However, if Mnuchin and Ross are indeed confirmed, expect the Trump administration to push for tax cuts, deregulation and a more protectionist approach to trade.

Tina Irgang is SmartCEO’s managing editor. Contact her at tina@smartceo.com.