Now is not the time to worry about the federal deficit

Treasury Secretary Steven Menuchin told CNBC on Monday that lawmakers should not be apprehensive of the nation’s deficit or the size of the Federal Reserve’s balance sheet to delay additional Kovid-19 relief.

Mnuchin, along with White House Chief of Staff Mark Meadows, who led the administration’s Kovid-19 relief talks, said the economic crisis caused extraordinary excitement from Congress and the Fed.

“Now is not the time to worry about reducing the deficit or shrinking the Fed balance sheet,” said CNBC’s “Squawk Box” from the White House. “There was a time when the Fed was shrinking the balance sheet and coming back to normal. The good news is that they were given a lot of space to raise the balance sheet, which they did.”

“And I think both monetary policy is dealing with fiscal policy and we were able to work with Congress in an unprecedented way, which is why the economy is doing better,” he said.

Mnuchin’s comments drew criticism from his fellow Republicans, who argue that improvements in jobs data and stronger housing figures reduce the need for additional spending to counter the effect of coronaviruses.

For example, Republican Sen. Rand Paul of Kentucky voted last week against a GOP “skinny” incentive plan and repeatedly attacked her party for what she sees as cynical spending.

Paul wrote on Twitter in July, “The majority of Republicans are no longer different from Socialist Democrats.” “They simply don’t care about the debt and are preparing to add at least one more trillion dollars this month, combined with trillions before the summer of this month.”

The cumulative federal budget deficit for the first 11 months of fiscal year 2020 was $ 3.0 trillion, a byproduct of intensive government spending to get the economy through an epidemic-related shutdown, according to the Congressional Budget Office.

Even arguing more incentives to help the US economy, Mnuchin said on Monday that “we are reborn in a very important way.”

Paul’s vote helped to sink Senate Majority Leader Mitch McConnell’s plan, which fell short of the 60 votes needed on a procedural move to move toward passage.

All Democrats and Paul present voted against the bill with a 52–47 vote. That law increased federal unemployment insurance at a rate of $ 300 per week, half of the $ 600 weekly payment that would have expired at the end of July.

But Mnuchin struck a more conciliatory tone on Monday, saying he was still willing to work with Pelosi on a new deal.

“I think there are many areas where there is an agreement between the Democrats and the Republicans, and in some areas we have differences on amounts,” he said. “But I will continue to work on it: I have told the chairman that I am available for talks at any time.”

The Treasury Secretary said he expected the Problem Solvers Caucus to be presented with a stimulus proposal later on Monday.