[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
HEARING WITH TREASURY SECRETARY
STEVEN T. MNUCHIN _
THE TRUMP ADMINISTRATION'S RESPONSE
TO THE ECONOMIC CRISIS
=======================================================================
HEARING
BEFORE THE
SELECT SUBCOMMITTEE ON THE CORONAVIRUS CRISIS
OF THE
COMMITTEE ON OVERSIGHT AND REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 1, 2020
__________
Serial No. 116-114
__________
Printed for the use of the Committee on Oversight and Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
41-939 PDF WASHINGTON : 2021
--------------------------------------------------------------------------------------
COMMITTEE ON OVERSIGHT AND REFORM
CAROLYN B. MALONEY, New York, Chairwoman
Eleanor Holmes Norton, District of James Comer, Kentucky, Ranking
Columbia Minority Member
Wm. Lacy Clay, Missouri Jim Jordan, Ohio
Stephen F. Lynch, Massachusetts Paul A. Gosar, Arizona
Jim Cooper, Tennessee Virginia Foxx, North Carolina
Gerald E. Connolly, Virginia Thomas Massie, Kentucky
Raja Krishnamoorthi, Illinois Jody B. Hice, Georgia
Jamie Raskin, Maryland Glenn Grothman, Wisconsin
Harley Rouda, California Gary Palmer, Alabama
Ro Khanna, California Michael Cloud, Texas
Kweisi Mfume, Maryland Bob Gibbs, Ohio
Debbie Wasserman Schultz, Florida Clay Higgins, Louisiana
John P. Sarbanes, Maryland Ralph Norman, South Carolina
Peter Welch, Vermont Chip Roy, Texas
Jackie Speier, California Carol D. Miller, West Virginia
Robin L. Kelly, Illinois Mark E. Green, Tennessee
Mark DeSaulnier, California Kelly Armstrong, North Dakota
Brenda L. Lawrence, Michigan W. Gregory Steube, Florida
Stacey E. Plaskett, Virgin Islands Fred Keller, Pennsylvania
Jimmy Gomez, California
Alexandria Ocasio-Cortez, New York
Ayanna Pressley, Massachusetts
Rashida Tlaib, Michigan
Katie Porter, California
David Hickton, Select Subcommittee Staff Director
Russ Anello, Chief Counsel
Senam Okpattah, Clerk
Contact Number: 202-225-5051
Christopher Hixon, Minority Staff Director
------
Select Subcommittee On The Coronavirus Crisis
James E. Clyburn, South Carolina, Chairman
Maxine Waters, California Steve Scalise, Louisiana, Ranking
Carolyn B. Maloney, New York Minority Member
Nydia M. Velazquez, New York Jim Jordan, Ohio
Bill Foster, Illinois Blaine Luetkemeyer, Missouri
Jamie Raskin, Maryland Jackie Walorski, Indiana
Andy Kim, New Jersey Mark E. Green, Tennessee
C O N T E N T S
----------
Page
Hearing held on September 1, 2020................................ 1
Witnesses
Steven T. Mnuchin, Secretary, Department of the Treasury
Oral Statement................................................... 6
The written statement of the witness, and written opening
statements by Members, are available in the U.S. House of
Representatives Document Repository at: docs.house.gov.
Index of Documents
----------
* Report regarding Review of the Paycheck Protection Program,
Economic Policy Institute; submitted by Rep. Jordan.
* Article regarding Loss of Employer-sponsored Health
Insurance; submitted by Rep. Kim.
* Article regarding Unemployment Insurance; submitted by
Chairman Clyburn.
* Article regarding Covid-19 Layoffs Make Job Reductions
Permanent, Wall Street Journal; submitted by Rep. Kim.
* Article, "With Second Stimulus Checks on Hold, Americans
Spend Less at the Grocery Store,'' Wall Street Journal;
submitted by Rep. Foster.
Documents entered into the record during this hearing and
Questions for the Record (QFR's) are available in the U.S.
House of Representatives Document Repository at:
docs.house.gov.
HEARING WITH TREASURY SECRETARY
STEVEN T. MNUCHIN --
THE TRUMP ADMINISTRATION'S RESPONSE
TO THE ECONOMIC CRISIS
----------
Tuesday, September 1, 2020
House of Representatives
Select Subcommittee on the Coronavirus Crisis
Committee on Oversight and Reform
Washington, D.C.
The subcommittee met, pursuant to notice, at 1:01 p.m., in
room 2154, Rayburn House Office Building, Hon. James E. Clyburn
(chairman of the subcommittee) presiding.
Present: Representatives Clyburn, Waters, Velazquez,
Foster, Raskin, Kim, Jordan, and Luetkemeyer.
Chairman Clyburn. Welcome, everybody. Today, the Select
Subcommittee is holding a hybrid hearing where some members
will appear in person, and others may appear remotely via
Webex. Since members are appearing in person, let me first
remind everyone that pursuant to the latest guidance from the
House Attending Physician, all individuals attending this
hearing in person must wear a face covering. Members who are
not wearing a face covering are not permitted to remain in the
hearing room, and will not be recognized to speak.
Let me also make a few reminders about hybrid hearings. For
those members appearing in person who will be able to see
members appear remotely on the two monitors in front of you. On
one monitor, you will see all the members appearing remotely at
once, in what is known in Webex as grid view mode. On the other
monitor, you will see each person speaking during the hearing
when they are speaking, including members who are appearing
remotely. For those members appearing remotely, you can also
see each other, each person speaking during the hearing,
whether they are in person or remote if you have your Webex set
to active speaker mode. If you have any questions about this,
please contact committee staff immediately.
Let me also remind everyone of the House procedures that
apply to hybrid hearings. For members appearing in person, a
timer is visible in the room directly in front of you. For
those who may be remote, we have a timer that should be visible
on your screen when you are in the active speaker with
thumbnail mode, and you have the timer pinned.
For members who may be appearing remotely, a few other
reminders. The House rules require that we see you, so please
have your cameras turned on at all times, not just when you are
speaking. Members who are not recognized will remain muted to
minimize background noise and feedback. I will recognize
members verbally, and members retain the right to seek
recognition verbally.
In regular order, members will be recognized in seniority
order for questions. If you are remote and want to be
recognized outside of regular order, you may identify that in
several ways: You may use the chat function to send a request;
you may send an email to the majority staff; or you may unmute
your mic to seek recognition.
Obviously, we do not want people talking over each other,
so my preference is that members use the chat function or email
to facilitate formal verbal recognition. Committee staff will
ensure that I am made aware of the request, and I will
recognize you. We will begin the hearing in just a moment when
they tell me they are ready to begin the live stream.
Good afternoon. The committee will come to order. Without
objection, the chair is authorized to declare a recess of the
committee at any time. I now recognize myself for an opening
statement.
Today, the Select Subcommittee welcomes Secretary of the
Treasury, Steven Mnuchin. This is the first time Secretary
Mnuchin has testified before the subcommittee, and I thank him
for his appearance here today. On July 29, the Federal Reserve
wrote, and I quote, ``The path of the economy will depend
significantly on the course of the virus.'' Federal Reserve
Chairman Jerome Powell, who was appointed by President Trump,
emphasized this point, saying, ``It's so fundamental, I think
we can't say it enough.''
Tragically, seven months since the first case was
discovered on our shores, the course of this coronavirus
continues to be devastating. Nearly 6 million Americans have
tested positive, and more than 182,000 Americans have died, far
more than any other Nation on earth. This summer, while most of
other countries were successfully containing the virus, the
United States saw a surge in cases and three deaths, and we
know why. Instead of leading with a national strategy, the
White House pushed states to reopen without a plan to keep
people safe.
Instead of communicating science-based public health
guidance, the President claimed the virus would, and I quote
here, ``sort of just disappear, I hope.'' These failures are
costing hundreds of Americans' lives every day. Just as the
Federal Reserve described it, the failure to address America's
health crisis has also caused an unprecedented economic crisis
that has left many Americans out of work, and struggling to
feed their families and pay housing costs.
The most recent data showed the unemployment rate was 10.2
percent at the end of July, higher than the worst month of the
Great Recession and its aftermath. As of August 1, 29 million
Americans were receiving, or waiting for unemployment benefits.
Unemployment claims are more than 10 times higher than they
were at the beginning of the year and show little sign of
returning to normal levels any time soon.
Of course, some jobs lost at the beginning of the pandemic
have returned, as certain businesses have reopened. That is a
good thing. The administration has claimed this positive
rebound means we are guaranteed a V-shaped economic recovery,
where the economy returns to full strength quickly, but the
evidence does not bear that out.
We continue to see, roughly, 1 million Americans file new
unemployment claims every week, a clear sign that the economy
remains in serious trouble. And rather than a V-shaped
recovery, economists have warned, we face an uneven K-shaped
recovery where the wealthy quickly bounce back to pre-pandemic
prosperity while lower income families continue to suffer
economic harm.
In July, former Fed Chairs Ben Bernanke and Janet Yellen
testified before this subcommittee. Quoting from their joint
written statement, ``Lower paid workers, as well as women and
minorities, are over-represented in the most affected sectors,
and, thus, have borne a disproportionate share of the job and
income losses,'' end of quote.
Today's hearing is a call to action. The most important
step we can take to fix the economy in the long term is to get
the pandemic under control. But American families are hurting
now, and there are urgent steps the administration must take to
prevent our Nation's economic crisis from becoming a
catastrophe.
First, additional fiscal stimulus is urgently needed. Many
of the safety nets Congress established in the CARES Act have
expired, and millions of Americans are now facing eviction,
debt, and hunger. As the pandemic drags on, states, cities, and
businesses, are warning that more layoffs may be coming.
On May 15, more than three months ago, House Democrats
passed a comprehensive bill to address these problems. The
HEROES Act would extend $600 weekly unemployment benefits, help
families with food and housing assistance, and support state
and local governments and the millions of essential workers
they employ. Republicans rejected the bill. When the House
offered to meet them in the middle with a compromise proposal,
Republicans rejected that, too.
Instead, the President offered a fake solution, executive
orders, that give the appearance of action, but were clearly
insufficient to address the economic peril Americans face.
Secretary Mnuchin, I hope you will return to the
negotiating table prepared to find common cause on legislation
that meets the pressing needs of America's families and
communities that are hurting from this crisis.
Second, the Treasury Department must improve its
implementation of relief programs passed by Congress. So far,
the administration has prioritized big businesses over small
businesses and the American workers that Congress intended to
protect. The administration needs to refocus the Paycheck
Protection Program, payroll support for the airline industry
and other relief programs, to ensure that they are preserving
jobs, not lining the pockets of wealthy executives.
Third, Treasury must improve oversight and accountability
to ensure that taxpayers' dollars are not squandered. Today,
the Select Committee is releasing a staff report raising
serious concerns about potential waste, fraud, and abuse, in
the Paycheck Protection Program. Based on an analysis of the
Treasury data, the subcommittee identified more than 10,000
loans to companies that received multiple PPP loans, a
violation of the program's terms. Thousands of other loans were
awarded to companies that were ineligible for the program or
had red flags indicating potential fraud.
Secretary Mnuchin, I think you had previously testified
that given the need to get relief money out quickly, it was
inevitable that Treasury, and I quote, ``ran into a lot of
issues,'' end of quote. That is a false dichotomy. Taxpayers
should not have to choose between quickly getting aid to those
who need it, and wasting Federal funds, and there are simple
steps that could have been taken to improve oversight and
reduce fraud.
Our report makes recommendations for steps that Treasury
can still take to safeguard taxpayer money, including improving
the agency's weak audit plan for PPP.
As I have said before, the purpose of our oversight is not
to cast blame for past failures, but to make improvements to
ensure future success. I hope this hearing will be an
opportunity for Democrats and Republicans to come together to
acknowledge the serious problems Americans face, and identify
real solutions. Thank you.
And in the ranking member's absence, I now yield to Mr.
Jordan or a Republican member he may designate for an opening
statement. Mr. Jordan, I think you may need to unmute. We see
you, but we can't hear you. Please unmute.
Mr. Jordan. I thought I had it unmuted.
Chairman Clyburn. OK.
Mr. Jordan. Thank you, Mr. Chairman. I--I was unmuted, but
I don't know how it got muted back, but it's good to be with
you.
Mr. Secretary, thank you for--thank you for joining us.
It's unfortunate that the chairman criticized your work in this
unprecedented time we find ourselves. $3 trillion package that
Congress put together with your leadership, President Trump's
leadership, $500 million total in the PPP program, 5 million
loans you made to help 85 percent of the small businesses
around this country, 51 million jobs, and you come here, and
you get criticized by this chairman.
I want to thank you for the great work that you have done.
It's unfortunate that the chairman didn't take into account the
fact that the ranking member was not going to be available for
today's hearing. We appreciate the fact, Mr. Secretary, that
you're here and you're willing to provide testimony, again,
about the Treasury's extraordinary response to the virus and
what this virus did to our economy.
The Trump administration's work combating this virus and
this crisis is unprecedented. From the beginning, Speaker
Pelosi and the Democrats stood in the way of the President. The
congressional Democrats were focused on their impeachment sham.
The President was starting a task force to combat the virus.
When the Speaker said San Francisco is fine, the President
was blocking travel from China. When Mayor de Blasio and New
Yorkers said, quote, Go about your lives, the President was
starting research on a vaccine. And while Vice President Biden
has been locked in his basement, the President built the
world's leading testing system from scratch.
We heard just the other week from Dr. Fauci himself about
how the President's actions saved lives. We've heard a lot
about science and following the recommendations of the CDC and
the guidelines that they put forward. It would have been nice
if the state of New York had done the same, where for 46 days,
Governor Cuomo sent COVID positive patients back into nursing
homes and resulting in all kinds of tragedy for the individuals
and families of those folks who live in those facilities.
When the economy shut down, it was tough. It was difficult.
People couldn't operate their business. People couldn't go to
church. People couldn't go to school. The President knew help
was required, and in just 10 days, again, working with you, Mr.
Secretary, Congress passed the largest spending relief bill in
the history of the country. In that legislation was the
Paycheck Protection Program, which extends, as I said, 5
million loans through 6,000 vendors totaling over $5 billion,
direct help to small business owners and families and
individuals across this great country. And due to your hard
work and the administration, the PPP was stood up in just hours
and ran out of money in less than two weeks.
The President and congressional Republicans went to Speaker
Pelosi to ask for money, but she wanted to bail out Democrat-
run cities instead of helping small businesses. Leader
McConnell had a bill. It didn't get a vote, not until June when
an oversight colleague, Mr. Roy, introduced a bill that would
replenish the funds and make it even more helpful to businesses
on the ground. The PPP stood empty because of the Beltway gains
from the Democrats. But the PPP program which supported 51
million jobs and 85 percent of the small businesses in America,
how many more faltered while the Democrats held the additional
support hostage?
Fifteen days after the CARES Act, Treasury began
distributing checks, direct checks to individuals and families.
A few months later, you had successfully distributed 120
million checks by direct deposit, 35 million paper checks, and
4 million prepaid debit cards, for a total of almost $270
billion. Again, unprecedented.
Next, you successfully implemented the payroll support
program, $32 billion in loans direct to the airline industry in
support of hundreds of thousands of jobs. Amazingly, the
application for this program was ready in a matter of hours.
Again, unprecedented.
Finally, you directed $150 billion straight to the states
and localities. By July, Treasury had obligated all of this
money, but much of it, much of it still remains unspent by the
states. New York state has only spent 53 percent, but Governor
Cuomo asked for more. Michigan has only spent eight percent,
but Governor Whitmer asked for more. The Speaker continues to
say states don't have the money, but they do. Every single
state has money available to them because of the Trump
administration.
Now, it's not to say everything was perfect, but we need to
remember it's the Federal Government. And the quick response
that we were trying to get and actually did achieve, there's
going to be a few mistakes when you do that. When you approve
$3 trillion and expect the Federal Government to get it out the
door and to people in a matter of days, of course, there may be
a few mistakes. What should be commended, though, as I've said
already, is the hard work done to correct those mistakes. These
programs save, and continue to save jobs.
Eventually, though, the best way to estimate an economy,
the absolute best way to stimulate and grow our economy, is to
let people go back to work. And when it was time, the President
led the charge to reopen the country, get Americans back to
work, and get our kids back to school. We are seeing a steady
decrease in unemployment, a steady increase in jobs. The
President built the greatest economy in the world once before,
and I know we can do it again.
Mr. Secretary, again, thank you, and I look forward to
asking questions, and Mr. Chairman, I yield back. Oh. I do ask
this, Mr. Chairman. I'd ask unanimous consent that we enter the
Republican report on the Paycheck Protection Program, which as
I said, supported 51 million jobs and 85 percent of the small
businesses out there across the country. So I'd ask unanimous
consent that that be made part of the record.
Chairman Clyburn. Without objections, it will be done.
Thank you, Mr. Jordan.
Chairman Clyburn. Allow me to introduce our witness. Today,
the Select Committee is pleased to welcome the Honorable Steven
T. Mnuchin, Secretary of the Treasury. Thank you, Mr.
Secretary, for being here today. Will you please stand so I may
swear you in? Please raise your right hand. Do you swear or
affirm that the testimony you are about to give is the truth,
the whole truth, and nothing but the truth, so help you God?
Secretary Mnuchin. I do.
Chairman Clyburn. You may be seated.
Please let the record show that the witnessed answered in
the affirmative. Without objection, your written statement will
be made part of the record. Secretary Mnuchin, you are now
recognized for your opening statement.
STATEMENT OF HON. STEVEN T. MNUCHIN, SECRETARY, DEPARTMENT OF
THE TREASURY
Secretary Mnuchin. Chairman Clyburn, members of the
subcommittee, I'm pleased to join you here today to discuss the
Department of the Treasury's response to COVID-19 pandemic. For
the last five months, Treasury has been working hard to provide
fast and direct economic assistance to American workers and
their families. We remain committed to making sure that every
American gets back to work as quickly as possible.
The bipartisan CARES Act is the biggest economic relief
package in American history. Economic relief totaling nearly $3
trillion, which is approximately 15 percent of GDP, is having a
tremendous impact on the economy leading to increases in jobs,
retail sales, business activity, and home sales. I also want to
thank Chairman Powell and the Federal Reserve for its
substantial work executing 13 unique 13(3) lending facilities.
For the third month in a row, the jobs report exceeded
forecasts with a gain of 1.8 million jobs in July. This brings
the three-month total to more than 9 million jobs, meaning over
40 percent of jobs due that were lost have been recovered. The
job openings and labor turnover survey suggest the job market
has continued to strengthen, with the ratio of unemployed
persons to job openings dropping by nearly one fourth in June.
We also see signs of strengthening economic recovery across
industries. Retail sales increased in July for the third
consecutive month, signaling consumer spending on goods has
recovered. The ISM manufacturing survey indicated growth for
the second consecutive month, both satisfying increased
business activities. The housing market has nearly returned to
pre-pandemic levels fueled by strong housing starts, and
existing home sales in July. Leisure and hospitality firms,
among the businesses hardest hit by the pandemic, hired 592,000
workers in July, indicating confidence in the economy
reopening.
While we continue to see signs of a strong economic
recovery, we are sensitive to the fact there is more work to be
done, and certain areas of the economy require additional
relief. When it became clear that previous negotiations were
not moving forward, the President took executive action to
provide critical relief to Americans through lost wages
assistance and other important items. We will continue to work
with the Senate and House on a bipartisan basis for a Phase 4
relief package.
I believe a bipartisan agreement still should be reached,
and would provide substantial funds for schools, testing,
vaccines, PPP for small businesses, continued enhanced
unemployment benefits, childcare, nutrition, agriculture, and
the U.S. Postal Service, along with liability protection for
universities, schools, and business.
We have released a signature amount of information on our
website, Treasury.gov, and are providing more information on
USAspending.gov. We have also provided regular updates to
Congress with this marking my fifth appearance before Congress
for a CARES Act hearing. Additionally, we are cooperating with
various oversight bodies, including three inspector generals,
the new congressional Oversight Commission, and the GAO.
Treasury and the Internal Service have made data and
information regarding millions of economic impact payments
available on the websites. The Department heads disclosed all
payroll support payments to airlines and other programs on
Treasury.Gov. We've also posted extensive documentation related
to coronavirus relief fund payments to state, local, and Tribal
governments on our website.
We're also pleased that the Federal Reserve has posted loan
information on its website regarding its lending facilities. We
appreciate the subcommittee's interest in these issues, and
have devoted significant resources to responding to each of the
inquires. We remain committed to working with you to
accommodate Congress' legislative need, and to further our
whole-of-government approach to defeating COVID-19.
I would like to thank the members of the committee for
working with us to provide vital economic relief to the
American people. I would be pleased to answer any questions you
may have.
Chairman Clyburn. Thank you very much, Mr. Secretary. Mr.
Secretary, I wish to yield myself five minutes.
Before we can fix the economy, we have to acknowledge the
scale of the problem. On July 2, President Trump declared our
economy is roaring back, is coming back extremely strong. He
also predicted that the economy will have a fantastic third
quarter. Today, we begin the last month of the third quarter.
There's only one Wall Street with a small percentage of people,
but this chart shows that there are 27 million American workers
still receiving unemployment insurance. This is as of August 8,
three weeks ago. That is more than 10 times the number of
Americans receiving unemployment benefits before the pandemic.
And since August 8, more than 2 million American workers have
filed new unemployment claims.
Mr. Secretary, do these record high unemployment numbers
indicate that our economy is coming back extremely strong with
a fantastic third quarter?
Secretary Mnuchin. Mr. Chairman, let me first say we're in
unprecedented situations where we closed down the entire U.S.
economy, so this is not like a normal economic crisis. I'm
having a tough time reading your graph from here, but let me
just comment. There's 16 million people unemployed, down from
24. People thought we were going to have 40 million people
unemployed, but fortunately, we never had. And the continuing
unemployment claims are 14.5 million as of August 15.
So, I do think the economy is recovering very strongly, but
let me just say, there are still areas of the economy, no fault
to small businesses or our workers, that it needs more help to
recover.
Chairman Clyburn. Well, if we are to quibble--I won't
quibble about the numbers as of the 8th. These numbers we have
here are as of August 8, so maybe there's been that big a drop
since August 8. At that point, we indicated that there were
about 27 million Americans who were out of work and on
unemployment, unemployment assistance.
Now, many economists have warned that as relief measures
expire, and as you know, unemployment has expired. The
unemployment supplement that we provided has expired. Things
will get even worse unless Congress enacts additional fiscal
stimulus. Just last week, former Chair Janet Yellen, Fed Chair
Janet Yellen, stated that ``Without congressional action, and
I'm quoting her here, Americans will suffer, and the overall
economy could degrade from its current slow rebound in growth
to no growth at all,'' end of quote. Yet, the administration
has refused to agree to the HEROES Act, or to any meaningful
compromise to protect American families.
When asked by this committee whether the $1 trillion relief
package as the Republicans have proposed would be sufficient,
Chairman Yellen replied, and I quote, ``I would be concerned
about capping it when we know the needs of the state and local
governments alone come close to that, and a substantial amount
will also be needed for unemployment insurance for the public
health needs,'' end of quote.
Chair Ben Bernanke agreed, telling us that Congress needs
to do whatever it takes to address the economic crisis.
Mr. Secretary, will you commit to working in good faith
with the congressional Democrats who want an agreement that
does whatever it takes to assist struggling Americans to end
this crisis?
Secretary Mnuchin. Mr. Chairman, let me--let me say I very
much agree with you and those other experts that more fiscal
response is needed. The President and I want to move forward
with more fiscal response. And let me just say the expiration
of enhanced unemployment insurance is something that we are
concerned about.
I am very proud of the last two bills in the--in the
Senate, passed 96-0 and 100-0. That is the definition of
bipartisan support. I said in my opening testimony I believe
that Republicans and Democrats need to work together to have
additional support. As you know, I've worked very closely on
these before. I'm prepared to sit down with the Speaker at any
time to negotiate. I think the issue is not what is the top
line; I think the issue is we need now support quickly. That's
what's important to the American economy. And if we need to do
more, we can come back.
So, again, I want to emphasize, the President and I do
support additional fiscal response, and we've been working hard
to try to get a negotiated agreement on a bipartisan basis.
Chairman Clyburn. Well, thank you very much for that. I see
my time has expired, and so, hopefully, we have--I think we
have a second round. I do have one or two more questions.
With that, Mr. Jordan--I recognize Mr. Jordan for five
minutes.
Mr. Jordan. Thank you, Mr.--thank you, Mr. Chairman.
Mr. Secretary, is it--is it fair to say that if Democrat
Governors would let people go back to work in their states,
we'd probably have less unemployment?
Secretary Mnuchin. I--I believe there's no question that
the reason we have unemployment is that certain states are not
opening up, and that there are issues. Obviously, some of that
has to be balanced with the medical issues appropriately. But
yes, we would expect unemployment to drop significantly between
now and the end of the year.
Mr. Jordan. Yes. And it's largely Democrat states. I mean,
Democrats keep their states locked down, then they complain
about unemployment. Here's a novel idea. Let people go back to
work, and I bet you'll get a lot less of it. You'll get
stronger economic growth that will build on what we have seen
in the last three months. How many jobs have been added to the
economy in the last three months, Mr. Secretary?
Secretary Mnuchin. An extraordinary amount. I think as you
commented earlier, close to 10 million new jobs.
Mr. Jordan. Ten million jobs in the last three months we're
adding back. So, this is idea that there is not a V--there is a
V-shaped recovery. It's happening. It would happen a lot sooner
if you didn't have Democrat Governors keeping people from going
back to work.
Mr. Secretary, how many times have you testified in front
of Congress?
Secretary Mnuchin. More--more times than I can count.
Mr. Jordan. Numerous times, right?
Secretary Mnuchin. Yes.
Mr. Jordan. I think you said--I think you said five times
earlier. And you're--you're willing to come and talk about
everything you've--you've done and the administration has done,
because what you have put in place, the programs you have
recommended, the programs that the Congress approved, they
worked. How many--how many loans, again, in the PPP program?
Secretary Mnuchin. The PPP program, as you know, kind of
has 5.2 million loans that have supported an extraordinary
number of jobs for small business.
Mr. Jordan. Yes. I think the number is 50--over 50 million
jobs, 51 million jobs through the PPP program. 85 percent of
small businesses received support, and as--as you just said a
few minutes ago, this had strong bipartisan support, this thing
worked. You're not afraid to come and testify any and every
time. I mean, not that you always want to be testifying in
front of Congress, I understand that, but you're willing to
come testify because the programs that were put in place, that
the White House and the Trump administration and you supported,
have actually made a huge difference for this economy, and are
paying off now.
If we didn't have this PPP program, would we be adding 9
million jobs that you just saw in the last three months.
Secretary Mnuchin. No. There--there are over--50 percent of
the private jobs are small businesses, and let me comment. We
have over $130 billion left in PPP, which I believe, if
Congress is able to take up a standalone action to repurpose
this money for additional funds, I believe this would pass with
overwhelming support in the House and the Senate, and I would
encourage the House to move forward with that.
Mr. Jordan. Well, that's a great point, Mr. Secretary.
Would you say that's the most important thing? If we were going
to come together, forget all the other stuff the Democrats want
to put in this bill, all the left-wing baloney they want to
add, and we just focused on small businesses owners, helping
families, focusing on the PPP program, is that the most
important thing we should focus on if, in fact, there's going
to be another piece of legislation?
Secretary Mnuchin. I would say kids and jobs are the most
important thing. And as it relates to jobs, the area that has
overwhelming bipartisan support that I believe would be easiest
to pass on a standalone basis would be the PPP.
Mr. Jordan. Yes. If we just focused on that, and frankly,
that's what you guys are trying to do. That's what you've been
focused on in the negotiations with Speaker Pelosi.
Unfortunately, she wants to add, and the Democrats want to add
all kinds of other things, and frankly, they want to bail out
the states. The same states, by the way, who are most clamoring
for the bailout are the very states that won't let their folks
go back to work, that are adding to that unemployment number
that Mr. Clyburn, the chairman, talked about just a few minutes
ago.
I think it's--I think we're well past the time, well past
the time when we should be focused on one thing and, one thing
only, and that is letting people go back to work, getting this
amazing economy we had just a few months ago, getting it back
on track, the great American comeback, making that happen. And
if we're going to do any legislation, let's focus just on the
PPP program, which we know was so effective, so helpful to so
many Americans.
Mr. Chairman, I yield back.
Chairman Clyburn. Thank you.
Before yielding to Ms. Waters, I want to say I--I agree
that jobs are important. I agree that children are important,
and I have a few grandchildren. They're important. But health,
health of every worker and every child, is most important.
With that, I yield to Ms. Waters, five minutes.
Ms. Waters. Thank you very much, Mr. Chairman, for holding
this meeting. It's sad to see that we have a member on the
opposite side of the aisle who will come here this morning
playing the blame game.
First of all, let me say that for the CARES Act, we commend
everybody. We commend the Democrats. We commend the
Republicans. I worked closely with Mr. Mnuchin. Nydia Velazquez
and I worked closely on the PPP program, the MDI, the CDFI.
Everybody that worked to get that CARES Act passed should be
commended. Now, having said that, we can't rest because we did
a good job with the CARES Act. $600 supplemental employment is
out. And so, we have people with very meager benefits from the
unemployment insurance who need their government to step up to
help them.
And then, we are facing a housing crisis. The millions of
folks who are needing rental assistance are facing eviction.
We're in the middle of a--of an epidemic with homelessness,
with slum landlords. They're businesspeople, too. The mom-and-
pop landlords are struggling to pay their mortgage and other
property maintenance costs, and their rental income has
declined, or stopped all together. And I can go on and on about
what's in the HEROES bill. And, so, instead of coming here
bragging about what we've already done and trying to have
everybody believe that the economy is so much better, that we
really don't have to worry, that jobs are increasing to the
extent that we should be happy instead of talking about what we
do to create more jobs, let's put all of that aside. Let's put
that aside and stop blaming Nancy Pelosi and stop blaming
others who are basically negotiating.
I'm not blaming Mr. Mnuchin. I want the Secretary to get to
the negotiating table with Nancy Pelosi and Schumer and Meadows
and get this job done.
Now, this is not just about poor people. This is about
middle class people also. Let me read you something from my
district of one of my middle class people. This is from Mr.
Kevin McGuire. He says ``I'm a venue operator in the
entertainment business. When COVID-19 hit, I lost contracts
with Coachella, the Olympics, and Kendrick Lamar, just to name
a few. We're the ones that do your conventions. We're never
going to rebound from this. I went from $1,000 a day to $900
with EDD every two weeks. Twelve million of us are dying in the
music industry. What are you going to do for us? If you need a
voice, I'm here to help. I'm an emotional wreck. I'm not sick
all by myself. There are others who are having panic attacks.
Please, please help us.''
And so, stop bragging about what we've already done. We
have people who are hurting. And, you know, as we sit here, we
have people who have not been able to pay their rent for almost
three months. Some are almost three months behind. Certainly,
many are two months behind. These are children. And while we
have those who are talking about what we're going to do to get
the children back in school, get the children back, if the
children don't have a place to live and a bed to sleep in,
school doesn't even matter. While all of us want our kids to be
educated, we don't want any gaps in this education, they've got
to have a place to live. And so, we have $100 billion in the
HEROES Act for rental assistance.
Please, please get back to the negotiating table. Forget
all of this name blame mess that I hear going on. Get back, and
let's get this country going. Let's stimulate this economy.
This is our job. This is what people are expecting of us.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Chairman Clyburn. I thank the gentlelady.
Mr. Luetkemeyer, you are recognized for five minutes.
Mr. Luetkemeyer. Thank you, Mr. Chairman. I just have a
couple of comments here before I get started for some questions
of Mr. Mnuchin. But in response to a couple comments you made
with regards to oversight, you know, I--I did some quick
calculating, and the initial first tranche of money from the
PPP program was, I think, $342, $350 billion. And I think there
was, if I remember correctly, about $280 billion that was out
there that was inappropriately applied for or incorrectly given
out. And I think the error ratio for that--while $280 billion--
$1 million is a lot of money, the error ratio is about 8/10ths
of a percent. Anybody in the private sector would love to have
that sort of error ratio.
Then we start talking about the number of loans. You said
10,000 loans are--are out here that have got problems with
them. OK. Of the total of 5.2 million loans, that is less than
2/10ths, 2/10ths of a percent. Again, let's keep perspective on
this. You throw the numbers out there, but let's put
perspective on them. Again, a 2/10ths percent error ratio, or
fudge factor, or whatever the problem is there, that--that's a
pretty good rate. Even--that's well beyond what we would expect
from the government to be able to do.
I think, you know, I've got a couple questions here with
regards to some regulatory stuff, Mr. Secretary. You and I talk
about this almost every time we meet. As you know, CECL is one
of the hot button issues for me. That is a regulation that is
out there that you, I think, have supported in the past to try
and change and get rid of. I know the FDIC, the Fed, and
comptroller had an interim rule back in March in the CARES Act
which suspended it. I've got a bill to try and get rid of it
altogether. I would hope you would be supportive of an effort
like that.
Secretary Mnuchin. We would be supportive of that.
And--and I hope you don't mind. Since Chair Waters didn't
ask me any questions, I do just want to acknowledge her work
that she did with us on CDFIs. I want to thank her for that.
Mr. Luetkemeyer. Well, to followup Ms.--Ms. Waters' remarks
there, you know, you were getting hammered for bragging about
the successes and the implementation of the program, but I
think a lot of your--your statements were in response to
criticisms by--by the chairman initially. So, you know, it's
kind of hard to figure out which hand you're--you're supposed
to respond to here.
The other thing I want to talk about with regards to
regulation is the Trouble Debt Restructuring rules. You know
there's a--also an--in the CARES Act, we suspended that rule
for a certain period of time here, and I think it's going to be
continued to be important that we allow forbearance for--from
the regulators to the banks and credit unions to be able to
give forbearance to their customers to be able to get our
economy back on track, unlike what happened in 1908 and 1909,
as a result of the regulators going in and--and having to come
in and classify all these loans and then force the banks to
foreclose on all these folks, destroying businesses, jobs,
communities as well as the banks and credit unions themselves.
So, I'm hopeful, and we talked about this before, but I'd
just like a quick response from you with regards to forbearance
as well. It's really important, I think, to be--that we
understand the importance of giving forbearance to the
regulatory--to the lending institutions.
Secretary Mnuchin. Yes. I agree with you on that as well.
Thank you.
Mr. Luetkemeyer. One other thing I want to talk about very
quickly here is, I know that one of the things that was of some
concern, and we go to oversight here with regards to the
stimulus checks that went out. A lot of people are concerned
that the people who are--who have passed, that are deceased,
were getting those checks. And it came up in one of the other
previous hearings that you didn't have access to the files from
Social Security of those folks who had passed.
Do you have that access now, or is there negotiations going
on? We were told there was some negotiations going on to allow
you access that if we have a second round of stimulus checks,
you'd be able to do a better job implementing those the next
time.
Secretary Mnuchin. We do have access now, and we've
recovered the majority of--of those funds. And there is a
proposal in the Senate about potentially moving the death file
to the IRS, which we would support going forward, but we do
have access to that information if we get approval for more
checks.
Mr. Luetkemeyer. Thank you very much.
With regards to, you know, again, improving the PPP program
and going to stimulus checks or other programs out there, thank
you for all you did with the Fed with regards to setting up all
these different facilities. You were--you were able to prop up
and give liquidity to and help capitalize a lot of stuff that's
going on out there in different areas of the economy. What do
you see as the weak areas of the economy that the PPP program
would be helpful with regards to helping? And in the next
tranche, or next support or passage of PPP, do you see that
there would be a--like a loss of revenue trigger in there, a--a
cap on the number of loans that--that businesses could apply
for, or there are some types of businesses that could actually
apply for it as well?
Secretary Mnuchin. Well, as I said earlier, there's--
there's money left over, and I would very much target that
money for businesses that have been the hardest hit. I think a
decrease in revenues or a decrease in profits is the--the right
approach. Again, I think we have bipartisan support for that,
and it's many of the industries. It's--it's travel,
restaurants, entertainments, hotels, many industries that had
been still hit very, very hard.
Mr. Luetkemeyer. Thank you, Mr. Secretary. I--my time is
up, and I yield back.
Chairman Clyburn. I thank the gentleman for yielding back.
The chair now recognizes Ms. Velazquez for five minutes.
Ms. Velazquez. Thank you, Mr. Chairman, and ranking member,
for holding this important hearing.
It really amazes me to hear that what does it represent,
10,000 of loans being granted to ineligible businesses. The
problem is that I just hear the Secretary saying that we should
repurpose the $137 billion that is left for the PPP program.
Well, as I mentioned to the Secretary, and thank you for
working with me and Chairman--and Chairwoman Maxine Waters on
the PPP, we have to make a commitment that we are going to use
that money to provide access to those that were left behind.
And this is why--one of the reasons why I insisted that SBA and
Treasury collect the demographic data so that we were able to
assess whether or not the PPP program was working as we
intended.
The reality is that the Office of Access to Capital of SBA
said that they are seeing several lenders who are not
collecting demographic data from borrowers on forgiveness
application. So, how can you implement a program like PPP when
you are completely unaware of the businesses that have received
those loans?
Look. SBA just came out and stated that Latino businesses
declined by 32 percent, and that black owners have seen nearly
three times the decline of other owners. So, I am happy to
hear, and I welcome the Secretary's statement that that money
should be intended to those businesses that have not been able
to access PPP money.
Mr. Secretary, is it true that you committed--that you have
committed to audit only the tiny fraction of PPP loans that
exceed $2 million, leaving the over 99.94 percent of loans with
little or no oversight?
Secretary Mnuchin. First, let me acknowledge the work that
you've done with us already, and we look forward to working
with you on making changes going forward to the program to make
sure that the neediest have access.
The answer to your question is no. What I have said
publicly is every single loan that's $2 million and greater
will go through an individual audit. All of the rest of the
loans are also subject to audit. So, no, we've never said those
loans wouldn't be audited. Whether it's 10,000 loans or whether
it's 1 million loans, those loans will go through automated
audits. Many of the things that the committee found, I would
expect that SBA, when they review those loans and audit them,
also will find those things on electronic basis. So no, I've
said that all loans over $2 million will have 100 percent
audit. That will be appropriate----
Ms. Velazquez. Thank you. Thank you for your answer. My
guess is that you disagree with the Senate bill that contained
a streamlined forgiveness for those loans up to $2 million. So,
to be eligible for a PPP loan, applicants must be in operation
as of February 15, 2020, right?
Secretary Mnuchin. Yes.
Ms. Velazquez. Did you know how many companies received a
PPP loan that were not in existence prior to February 15?
Secretary Mnuchin. Well, I saw that, but let me just
emphasize that these loans were based upon certifications, and
obviously, all the certifications that are wrong, we'll get the
money back. We had over $30 billion that was returned
immediately. And in regard to your other comment, the Senate
bill has been changed, so that even with streamlined
forgiveness, they will be subject to audit by the SBA.
Ms. Velazquez. OK. And do you know, prior to today, how
many businesses on SAM's suspended and debarred list received
PPP loans?
Secretary Mnuchin. I do not, and let me just emphasize. We
are working very closely with SBA.
Ms. Velazquez. That's $96 million.
Secretary Mnuchin. I understand that. Again, I appreciate
the committee's work, and let me just emphasize we are working
with SBA. It is their primary responsibility. They are standing
up a detailed audit program, and I look forward to this
committee and your committee and all the other oversight
committees making sure they're comfortable with SBA's audit
plan.
Ms. Velazquez. OK. Thank you. And would you agree that
stimulus checks and enhanced unemployment insurance benefits
passed in CARES increase GDP and consumer spending, benefiting
small businesses?
Secretary Mnuchin. Yes, and that's why we--we'd like to
extend enhanced unemployment, and we'd like to send out more
economic impact payments. Those both have been critical to the
economic recovery.
Ms. Velazquez. Thank you. I yield back.
Chairman Clyburn. Thank you, Ms. Velazquez.
The chair now recognizes Mr. Foster for five minutes.
Mr. Foster. Thank you, Mr. Chairman. And, first, I have a
unanimous consent request. I would like to enter into the
record a recent Wall Street Journal article on how the
expiration of the $600 of expanded unemployment assistance and
the failure to pass the HEROES Act or any Senate alternative
has harmed Americans families. The article describes how
Americans are spending less on groceries which, according to
the article, quote, ``is a sign that Americans are hurting for
cash as the Federal unemployment and stimulus remains on hold
for most recipients.'' The article is titled ``With Second
Stimulus Checks on Hold, Americans Spend Less at the Grocery
Store,'' published in the Wall Street Journal on August 27,
2020, and I seek unanimous consent to have that entered into
the record.
Chairman Clyburn. Without objection, so ordered.
Mr. Foster. Thank you.
And, thank you, Mr. Secretary, for appearing here. I'd like
to speak more about the need to extend the enhanced UI, and I'm
interested to hear that you agree in principle with this, and I
wonder why we haven't seen the Senate pass an alternative to
the HEROES Act. The job crisis that has caused--been caused by
the administration's continuing failure to control the
coronavirus is, unfortunately, far from over. In 22 of the last
23 weeks, including the most recent week, more than 1 million
Americans have filed for new unemployment claims. Enhanced
Federal unemployment insurance has helped millions of Americans
keep food on the table and a roof over their heads. And that's
why we Democrats voted to extend these payments, because we
know from talking to our constituents that the economic fallout
from this pandemic is far from over.
Unfortunately, because Senate Republicans refuse to agree
to an extension, these benefits expired at the end of July, and
left almost 30 million Americans without Federal help. This is
not only wrong, Secretary Mnuchin, it is counterproductive if
your goal is to actually fix the economy. The macroeconomic
effects of the Senate's failure are huge. Former Fed Chair Ben
Bernanke testified at this subcommittee that renewing
unemployment insurance is important to, quote, ``increase
aggregate demand and boost spending in the economy.'' The
former Chair of the Council of Economic Advisors, Jason Furman,
testified to our committee that the failure to remove these
benefits are causing our country to lose, and I quote, ``about
one years' worth of economic growth.''
In the past, recessions have shown that every dollar spent
on unemployment insurance generates as much as $2 in additional
GDP for the economy. Conversely, the loss of extra job benefits
is affecting consumer spending and their outlook. In August,
the consumer confidence index unexpectedly fell to its lowest
level in six years, not exactly a roaring-back economy. And
this is especially worrisome because, as you know, consumer
spending accounts for about 70 percent of economic activity in
the U.S., and it has been hit most savagely by the coronavirus.
So, Secretary Mnuchin, my question is, do you agree with
Chair Bernanke and Mr. Furman that enhanced unemployment
insurance provides an economic boost? And why is there
opposition to extending the $600 in weekly benefits because,
you know, in your words earlier, quote, ``in some cases, people
are overpaid, and we want to make sure that there are the right
incentives.'' Is that--do you view that as a serious argument?
Secretary Mnuchin. Well, let me just say, the President
extended through executive authority enhanced unemployment up
to $400 per person. Now, we, unfortunately, don't have
unlimited amounts of money that we can do that, but the
President wanted to move forward, and many states have adopted
this. So, I think there is----
Mr. Foster. So, what you're saying then, you're saying that
the President wanted to move forward, the House wanted to move
forward with full unemployment benefits, and it is only the
Senate that's holding it back?
Secretary Mnuchin. No. What I said is, the President moved
forward with enhanced unemployment. The Senate did move forward
with a proposal of 70 percent of wages, capped at $600. I
believe that was something we talked about----
Mr. Foster. By moving forward that bill that they passed--
when you say the Senate moved forward, what bill did they pass
that had this?
Secretary Mnuchin. Well, again, unfortunately, Senator
Schumer and Speaker Pelosi have not agreed to do this on a
piecemeal basis. And I think you know anything takes 60 votes
in the Senate. So, no, nothing could be passed without
bipartisan support.
But, again, I would encourage both the House and the
Senate, there are areas that we have overlap in agreement.
Let's move forward for the basis of the American people and
American workers and kids. Things that we can agree on, let's
pass quickly.
Mr. Foster. OK. And so, in my second round, I'll have some
more questions about the nuts and bolts of the executive order
and how it is or is not working as promised.
Thanks much. I yield back
Chairman Clyburn. Thank you for yielding back.
I now yield five minutes to Mr. Raskin.
Mr. Raskin. Thank you, Mr. Chairman.
Secretary Mnuchin, welcome.
President Trump has called our Postal Service a joke. And
as he's gotten you more involved in the Postal Service, I
wonder whether he's told you which changes he's specifically
seeking in the post office relating to elections or Amazon?
Secretary Mnuchin. Well, I think you know I chaired a
postal task force. One of the recommendations we made was for
the post office to look at package pricing for e-commerce. Now,
that's not part of the universal obligation. I recommended that
to the President. But other than things I've recommended, the
President has not made any specific comments to me.
Mr. Raskin. OK. You were national finance chairman of the
Trump campaign and Louis DeJoy was the deputy national finance
chairman of the Republican National Committee. Did you first
get to know him in that political context or did you know him
through a business context? And based on your experience with
him in either the political or business arenas, did you
consider him qualified to be the Postmaster General?
Secretary Mnuchin. I first met him in 2016. I had not seen
or spoken to him in the last year. I do consider him to be very
qualified to be the Postmaster General. But, again, I had no
specific conversations with him about that job until the
committee updated me that he was one of the finalists.
Mr. Raskin. Did you ever discuss his possible appointment
or his qualifications with the Republican Governors on the
Postal Board, such as Mr. Duncan?
Secretary Mnuchin. I never discussed his qualifications.
Again, they gave me an update on their search process, but I
never made any specific comments recommending him or not
recommending him.
Mr. Raskin. Well, it's been widely reported that in
February you met with two Republican members of the Postal
Governors Board to discuss the replacement of outgoing
Postmaster General Brennan. Why did you get involved in that
process? And why did you invite just Republican Governors on
this bipartisan board with a nonpartisan mission to have a
discussion with you, but no Democratic Governors?
Secretary Mnuchin. Well, let me just say, one of my things
that I'm very proud of is I recommended, as part of the task
force, that we have the Senate confirm a board of Governors,
that for too long there had been no oversight. So, I'm very
pleased the Senate had a bipartisan board.
In that one case, again, one of the people was chair of the
board and the other was chair of the subcommittee. I had other
meetings that did include Democrats. And, again, as the largest
creditor, it was appropriate for them to keep me posted. But,
again, I had no involvement in the recruitment of the
Postmaster General at all.
Mr. Raskin. It's been stated by the former Vice Chairman of
the board that when Mr. DeJoy somehow mysteriously surfaced as
a candidate at the end of the process, when he had not been
part of the original search firm process, that he seemed almost
reluctant to take the job, and when he first appeared before
the selection committee it was as if he was interviewing the
selection committee, to the point where one of them said at the
end: Well, we better ask you a question just so we can say
there was a real interview.
Were you involved in trying to convince Mr. DeJoy to take
this position? And what kind of communications did you have
with him during the process as it unfolded?
Secretary Mnuchin. Again, I did not try to convince him to
take it. Again, I had no involvement. As I've said before, I
was quite surprised when I found out that he was a candidate.
Again, I had no involvement in that process whatsoever. But let
me just say, he was approved on a bipartisan basis by the
committee.
Mr. Raskin. Well, yes. And one member resigned, of course,
in protest.
But in any event, it's been reported that you pressured the
Postal Service to give the President and the Treasury
Department sweeping control over the internal operations of the
post office, including over hiring decisions for senior
appointees and over service contracts with third-party private
shippers, in exchange for an urgently needed Federal loan.
According to a former member of the Board of Governors, you
pressed for these changes even after the Postal Service general
counsel told you that these demands were illegal.
Can you explain why you think it would benefit the American
people to give greater operational control over the post office
to the administration in exchange for this loan? And what
specific requests and demands did you, in fact, make?
Secretary Mnuchin. So, let me be perfectly clear, OK.
Whatever was made was solely from the Treasury Department and
was not in any way from other areas of the administration, No.
1.
No. 2, I chair the Federal Financing Bank. We are the
largest creditor.
No. 3, I was authorized by Congress to lend additional
money. And, yes, as a typical creditor would, we wanted details
of the largest contracts. That's typical of what would be
required from a lender. And in no way did we ever try to have
operational control on the post office. I think that's
absolutely ridiculous.
I would also comment, we did agree with Senator Schumer and
the Speaker on money for the post office. This was an area of
agreement. The post office has substantial cash, and we want to
make sure they have plenty of liquidity in any scenario going
forward.
Mr. Raskin. OK. And so, can you commit that the post office
will get the resources it needs to deliver the mail on time and
so that we can have a fair and accurate election in 2020?
Secretary Mnuchin. I can only commit that they will have
the funds available. I can't make any other commitments other
than money. We have a signed term sheet. They have $10 billion
they can draw down whenever they need it, subject to very
minimal conditions that they've signed and agreed to.
And as part of a new package, we've agreed, again, we'll
give them another $10 billion, which is more than enough money
on top of their 14 billion of cash.
Mr. Raskin. My time's up. I yield back, Mr. Chairman. Thank
you.
Chairman Clyburn. Thank you.
The chair now yields five minutes to Mr. Kim.
Mr. Kim. Thank you, Mr. Chairman.
Secretary Mnuchin, thank you so much for coming over here.
Appreciate your time.
I wanted to just start with a question from a restaurant
owner in my district. He asked me this question and I promised
him that I would come down to D.C. and ask this to you.
I wanted to just ask you, what does success mean to you
when it comes to this economic recovery? What is the goal that
you're trying to achieve and the metrics and the measures of
success that you're using to see if we're getting there?
Secretary Mnuchin. Well, let me first say I think there's
many measures of success. There's not a single measure. But one
of the most important measures is getting everybody back to
work who lost their jobs as a result of this. Another measure
is to make sure that small businesses can succeed. Another
measure is to make sure that we have money that our kids can go
to school safely.
So, there are many measures. But I think on an economic
standpoint, things like employment, retail sales, GDP are all
important statistics.
Mr. Kim. Earlier this summer the National Economic Council
head, Larry Kudlow, stated, and I quote: ``At the moment the
story looks very good. We're set for a V-shaped recovery.''
Mr. Secretary, would you say that the V-shaped recovery is
achievable? Is that what looks like is happening to you?
Secretary Mnuchin. I think we are set for a very strong
recovery. But let me just say that there are many industries
and many small businesses that have been destroyed by this. And
that's why I urge Congress, the House and the Senate, to move
forward and let us provide help, especially for those hardest
hit businesses.
Mr. Kim. I think the point that you just made is one that
we need to linger on some more. So, I wanted to just raise
something here, because I feel like the language being--coming
from you and from this administration is not hitting at the
urgency that we see out there right now.
Many experts that I've talked to are warning about this K-
shaped recovery rather than a V-shaped recovery. And if you
look at just this chart back here, what it's showing is that
when it comes to high wages, that a lot of the unemployment has
bounced back. The employment has bounced back. It's about minus
0.5 percent. But when it comes to lower wages, we're looking at
about negative 15.7 percent in terms of employment coming back
on that front.
So it's that inequality that is something that I'm
concerned about, Mr. Secretary, here, is that I understand that
there is momentum and progress in some parts of it, but I don't
feel like that inequality is being addressed to the level that
we need to. I just read through your testimony, I listened to
your opening statements, and at no place are you mentioning the
inequality that is happening in our recovery.
So, I just wanted to ask you, again, looking at this chart
behind me, does this look like the signs of a healthy recovery
to you?
Secretary Mnuchin. Well, I'm not familiar with the chart,
so I'd be more than happy to look at the numbers and get back
to you. But what I would say I am familiar with is, the
services industries have been particularly hard hit. Many of
the service industries do employ people at lower wages. So,
again, I can't verify the numbers, but I'm not surprised
directionality.
And, again, I just want to assure you, the President, the
entire administration, thinks there is more work to be done.
Let's not get lost on different letters of the alphabet. Let's
move forward on a bipartisan basis on areas that we can agree
upon because there are clearly parts of the economy that need
more work.
Mr. Kim. When it comes to this inequality that's built into
this recovery, what concerns me is that if we don't seriously
address it that we could see this pandemic actually exacerbate
this inequality in our Nation.
We had inequality well before this pandemic. I think you
would agree with that. But what I worry about is the trajectory
that we're on is something that could actually make America
more unequal than it was before the pandemic. Is that a concern
that you have?
Secretary Mnuchin. Well, it's something we're focused on.
And let me just say, one of the areas we've agreed upon, on a
bipartisan basis, Chair Waters, Chair Velazquez, Senator
Warner, others, Crapo, is an idea to put $10 billion into CDFI
banks that would create a hundred billion dollars of lending in
areas that have been hardest hit and minorities and other
areas.
So, again, I urge Congress needs to work to move forward
because there are areas we need to focus on.
Mr. Kim. And what I just urge you to consider here is, as
you speak about the economy and as you're talking about it,
whether in this Chamber or elsewhere, on the media or
elsewhere, is really try to continue to highlight that
inequality that is built in there. I think your messaging has
been too geared toward one that is only looking at a certain
segment of America, and a lot of people in my district don't
align with that, don't--your comments aren't resonating with
them because they are experiencing a tremendous amount of hurt
right now.
So, I'd just ask for that continued attention and emphasis
on that as we move ahead.
Thank you, Mr. Secretary.
Mr. Chairman, back to you.
Chairman Clyburn. Thank you.
Before going to a second round, the chair would declare a
five-minute recess.
[Recess.]
Chairman Clyburn. The committee will reconvene.
I'm going to begin the second round by recognizing myself
for five minutes.
Mr. Secretary, I've asked the staff to provide you with a
copy of this chart. When numbers are that far apart, mine and
yours, I think the public and the record are deserving of
knowing what we're talking about here.
Now, the blue in this chart, these are the people who are
the traditional unemployment people, and I think that's your
number.
When you add the red to that, the people that we created,
with the contractors, et cetera, that added with the stimulus,
you get up to about 27 million.
So, I think it's--we need to make sure that we're talking
about the same thing. So, I'm talking about all people,
traditional as well as the ones we made eligible with the
appropriations of the CARES Act.
Secretary Mnuchin. We'd be more than happy to followup with
your staff and make sure we reconcile this afterwards. I think
yours are all the claims if you add them up on a cumulative
basis as opposed to how many people are on unemployment
assistance as of August 4. Because as I said, there's more
people here than there are unemployed. But we'd be happy to
followup with you and reconcile.
Chairman Clyburn. Thank you.
Now, there are a couple of things that were said in the
first round that I want to really clarify. We keep talking
about if the Democrats were to reopen their state governments.
Now, the fact of the matter is, many of us have been crying out
for a long time for a national program, which we don't have.
This is an international pandemic, and we need to have a
national program in response to it, which we don't have. It has
been left up to the states, all states.
And as far as I can determine--I'm from South Carolina and
we've got a very Republican Governor, and we have not reopened.
Partially, yes, but it's not reopened. This is not just
Democratic Governors not reopening schools and businesses. This
is every Governor taking into account the health situation in
their particular state.
So, this foolishness about if the Democratic Governors were
to reopen their states, I'm looking forward to all 50 states
reopening, and we are not there yet.
I would like to ask, though, do these record high
unemployment numbers indicate that our economy is coming back
extremely strong with a fantastic third quarter? I asked that
really before.
Now, I've seen the headlines today. What a great day, I
think a record day that Wall Street had. The stock market is
doing great, the investor class doing fantastic. But I
represent an equal number of people that's in the other of the
434 other Members of Congress. They are not feeling it. There's
one Wall Street and there are thousands of Main Streets that
are not doing well.
So I just--I'm having a real problem with us judging this
economy based upon some minute percent of one percent doing
well when millions, literally millions, are hungry, being
evicted, for three months now not able to pay rent, people
having--seeking mercy for mortgages. There's no jobs, no food
on their table.
How do we factor them into our thinking when you start
talking about this great third quarter and we are now in the
final month of this great third quarter? How do you reconcile
that?
Secretary Mnuchin. Well, let me just emphasize--and, again,
I agree with you--we are still very far from where we were in
January where we had a record economy. We have 10 million
people who are still impacted by loss of jobs as a result of
this.
So ``great'' is a relative term. Relative to shutting off
the entire economy and relative to people thinking we'd have 40
million unemployed, we are doing great. Relative to we were in
January, we have more work to do, particularly in certain areas
of the economy that have been hit very, very hard.
And, again, I want to emphasize, that's why we support
Congress moving forward with more targeted measures, especially
for those people who are still impacted no fault of their own.
This is not like the recession. This is a health-related issue.
Chairman Clyburn. Well, Mr. Secretary, if Democrats in the
House--and we are, for whatever reason, we're closer to the
day-to-day people simply because we represent congressional
districts, we don't represent states, we represent
congressional districts, we have a smaller group of people that
we work with--and if we are finding that in order to address
the concerns that are bigger than us, these small local
governments that are now about to lay off people--which would
then close down some local banks that I know. I spent 14 years
in the banking industry before coming here. I know a little bit
about banks and what they rely upon.
And we are saying that we think it takes $3.2 trillion to
address this issue so the state and local governments can be
involved, and you are proposing a $1 trillion program with no
regards to state and local governments at all. And we're
saying, let's find some common ground here, we are willing to
come down from 3.2 trillion down to maybe 2 if you all are
willing to come up and include in what you're doing state and
local governments. Is that unreasonable?
Secretary Mnuchin. Mr. Chairman, if the Speaker wants to
include you at the negotiating table, I'd welcome you there
with us.
Let me say that, as I said before, unprecedented bipartisan
support. We spent 15 percent of GDP. Last time, we agreed to
support state and local. The President and I have agreed for
more money on state and local.
Again, like any other negotiation, in my opinion, we should
agree on areas where we can agree and move forward for the
benefit of the American people. That's what we're all here for.
So, whether it's 1 trillion or 1.5 trillion, again, let's not
get caught on a number. Let's agree on things, we can move
forward on a bipartisan basis now.
I don't think the right outcome is zero. Nobody thinks the
right outcome is zero.
Chairman Clyburn. So just so I can understand, you're
telling me that you agree that we need to have state and local
governments included in the next tranche of funding?
Secretary Mnuchin. Chief of Staff Meadows and I put on the
table some more money for state and local government in the
context of an overall bipartisan deal. That was in an effort to
reach an agreement.
And, again, as I've said before, we've done multiple deals
before. We can do multiple deals again. We don't all know
exactly where the economy is going. What is the most important
thing is we deliver some relief quickly to the American workers
that are most impacted by this.
Chairman Clyburn. Thank you. I think my time is expired.
The chair now recognizes Mr. Jordan for five minutes.
Mr. Jordan. Thank you, Mr. Chairman.
Secretary Mnuchin, doesn't every state and every local
government have some money right now that was allocated in the
CARES Act back at the end of March?
Secretary Mnuchin. They all have money left, and they also
have access to a Federal Reserve facility if they can't borrow
in the markets.
Mr. Jordan. And would maybe a smarter approach be
legislation that my colleague from our state, Mr. Davidson, has
put forward to give additional flexibility to state and local
governments with that money? For example, my understanding is,
it was largely targeted for COVID direct expenses, talking
about local city, local township, local county government, it
was largely targeted for COVID direct expenses. Why not give
some flexibility?
They got additional dollars that they didn't spend on COVID
directly, money that could be used to keep a policeman on the
force, hire a fireman, keep a first responder. Why not just
give that flexibility? Does that make sense to you?
Secretary Mnuchin. We do support additional flexibility in
legislation. We've already did guidelines so that money can be
spent for firemen, policemen, health workers, first responders.
But, yes, we do agree with you, we would support additional
flexibility in an additional legislation.
Mr. Jordan. It's so common sense. The money's out the door.
It's there. It hasn't been spent. In some cases, it's lots of
money that hasn't been spent. Give local governments the
flexibility to do what's best for their community versus
spending the additional trillions of dollars, $3 trillion that
the Democrats want to spend.
Unfortunately, I have to run to across the state, Mr.
Secretary, to the other side. I'm running tight on time. I want
to thank you for great work.
Mr. Chairman, I apologize, but I have to go. So, I yield
back.
Chairman Clyburn. I thank the gentleman for yielding back.
The chair now recognizes Ms. Waters for five minutes.
Ms. Waters, you need to unmute.
Ms. Waters. There we are.
Our Speaker, Nancy Pelosi, was, I think, perhaps the first
in the negotiations to compromise. Yes, the House passed a 3.4
trillion, I believe it was, for the HEROES Act. The Republicans
have been stuck on the total response in HEROES for only $1
trillion. And at this point, you mentioned, Mr. Chairman,
perhaps a 2.2.
And I'd like to ask, Mr. Mnuchin, the Secretary, whether or
not you have agreed or you support something in the
neighborhood of 2.2 as a compromise from your position on 1
trillion.
Secretary Mnuchin. I do not support 2.2 trillion, but
what's more important is what is the breakdown in getting money
to American workers, American families, kids, where we can
agree on money. There is tremendous areas of agreement, and
that's what we should be doing right away.
Ms. Waters. So, what are those areas of agreement?
Secretary Mnuchin. Oh, I believe there's enormous agreement
on the PPP. I want to thank you and others, I think, on a
bipartisan basis. The committees here and the Senate have made
improvements to the PPP going forward.
I think there's an agreement on money for schools. There
may be a difference as to what it is. There's an agreement on
enhanced unemployment going forward. There may be a slight
disagreement in what the amount is in calculation. I think
there's been an agreement on direct payments.
As I mentioned earlier, there was even an agreement on
postal, which seems to have more excitement and more interest
than the postal has ever had in the history of time.
But there's plenty of areas of agreement where we may be
differing on amount. But, again, my----
Ms. Waters. If I may, your big disagreement is on city and
state. Is that right?
Secretary Mnuchin. Again, it's----
Ms. Waters. Mr. Jordan keeps saying they have plenty of
money----
Secretary Mnuchin. Again, I----
Ms. Waters [continuing]. And I'm not so sure that's true.
Secretary Mnuchin. Chair Waters, I want to be careful,
because I think it is hard to negotiate in a public agreement,
in a public way.
But I would say, we conceded, Chief Meadows and I, on
behalf of the President. We had reviewed this with the
President in an effort to get a deal done and get other things
that are very important for the American public, even agreed to
put more money on the table for cities and states.
Unfortunately, Senator Schumer and Speaker Pelosi do not
want to sit down at the negotiating table unless we publicly
agree on a top line. My own opinion is we should go piece by
piece and any area of the legislation we can agree on, we
should have the House and the Senate pass.
Ms. Waters. On city and states there has been some
reference to police and fire, and there's a lot of discussion
about the funding of police now. Don't you understand, for
those people who are worried about the funding for police as
this whole discussion takes place about defunding, that to the
degree that you are not agreeing on city and state funding,
that you are, in essence, defunding the police and the fire
departments?
Secretary Mnuchin. No, let me be clear. We are not
defunding the police or fire. We gave complete flexibility, and
the money that every state has, they can use that money right
now to pay policemen, firemen, first responders instead of
laying them off. Every single state has access to those funds.
And as part of additional funding, we would be willing to
provide more money.
Ms. Waters. Well, let me just say this. The cities, in
particular, are using some of that money for rental assistance.
Many of them had eviction moratoriums. Those moratoriums are
over. We've not done anything for them in the Federal
Government.
As a matter of fact, the President of the United States, in
one of his executive orders, did not give any support to rental
assistance and threw it over to HUD and two of the other
agencies to say review this, take a look at this.
And so, cities are stepping up to the plate to the degree
that they can. My city of L.A., the county of L.A., other
cities are doing what they can to keep from putting people out
on the sidewalk.
So when you talk about the cities having money, you're
talking about the cities having look--looking at what to do to
take care of the heroes, the first responders, what to do, and
how to be of assistance to those who need rental assistance.
So, what do you think, that the cities and the states have
unlimited money to take care of everything that we're not
taking care of? Did you know that the cities are using money to
extend the moratorium so that people are not put out on the
street? Did you know that?
Secretary Mnuchin. I did. And let me just say, after the
market closes this afternoon, we'll be releasing specific
information from the administration on the moratorium. I think
you'll be quite pleased with the impact that it'll have.
I would also say we did have bipartisan agreement about
putting more money for rental assistance. Again, we maybe
differ on the amount, but I can say we've agreed with the
Democrats on the idea of providing money for rental assistance.
And, yes, I know, as you know, I appreciate what's going on in
Los Angeles.
Ms. Waters. Well, thank you so very much.
And let me just say that on that rental assistance--and I'm
very pleased that you support that and there may be an
agreement forthcoming. But let me just say, we put a hundred
billion in there. And so, if these negotiations are talking
about 5 billion, 10 billion less, I'm sure you can come
together on that. But if you're talking about half of it
instead of 100 billion, that's going to be a problem.
So, I'm hopeful that you're able to move closer to the
amount that we placed in the HEROES Act, because I'm absolutely
worried about the children and the families and their ability
to have a roof over their head. So, go back to the negotiating
table.
Would you be willing to call my Speaker and say you want to
go back to the negotiating table today?
Secretary Mnuchin. I would publicly say I am willing to sit
down at the negotiating table with the Speaker with no
conditions whatsoever any time, other than I think the chair
expects me here for a bit longer, but maybe even he would
concede if the Speaker wanted to interrupt this to negotiate
right now.
Chairman Clyburn. Absolutely.
Secretary Mnuchin. Let me just say one thing. When we ran
out of money at the PPP, what did we do? We came back to
Congress and on a bipartisan basis more money was agreed to.
So, I happen to think the hundred billion dollars is way
too much. That's not what I think we need. But, by the way, if
we agree on money and we run out quickly, you are all still
here for us to come back. So, let's start spending money where
we can agree to help the American people.
Ms. Waters. Well, I thank you. You're right, there's
opportunity to always come back. It's harder in some cases. But
if you don't start out too low, we won't have that problem.
And so, I'm so pleased that you're willing to go back. I
ask if you are willing to call her and say: Let's get back. And
I'm not concerned about the hours. I know you work long, hard
hours.
But this is the kind of thing that if negotiations take 24
hours a day, we've got to get it done. The people are hurting.
And we can't stimulate the economy unless we have money to
spend. The only way to have money to spend is to put a stimulus
package out there, to supplement the unemployment, so that when
they get this money they don't hold on to it, they put it right
back into the economy, they spend the money.
So, you want to go back in and try to get back in as soon
as possible, even today?
Secretary Mnuchin. Can I tell her that you suggested I call
her right after the hearing?
Ms. Waters. Yes. Yes. Yes.
Secretary Mnuchin. Done. I will call her right after the
hearing. Thank you, Chairwoman.
Ms. Waters. Thank you very much. Thank you.
I yield back.
Chairman Clyburn. Thank you, Ms. Waters.
The chair now recognizes Mr. Luetkemeyer for five minutes.
Mr. Luetkemeyer. Thank you, again, Mr. Chairman.
And thank you, Secretary Mnuchin, for your continued
patience with the discussions we're having here today.
I'd like to go back to the PPP for a second with regards to
the forgiveness provision that's in the program. I know there's
been a lot of discussion about how quickly we can get that
forgiveness done, can you streamline it.
Can you tell us where you're at and what your thoughts are
on the forgiveness portion of the PPP?
Secretary Mnuchin. So, let me just say the SBA system is
now open for forgiveness applications. I think, as you know,
we've been having conversations on a bipartisan basis with the
committees in the House and the Senate on the smaller loans,
how to strike the right balance between proper audits and not
bureaucracy for very small businesses, and we're open to
working on any additional thoughts with the committees on
future legislation.
But we want to strike the right balance between, as the
chair has noted, there are appropriate people out there that
took loans that shouldn't have taken loans. We want to get
money back for the taxpayers with making sure that, for most of
the people out there, they can get forgiveness quickly.
Mr. Luetkemeyer. Well, you know, I think the numbers will
tell you that 99.9 percent and above was correctly applied for.
And I think, you know, the financial institutions as well as
the individuals will like to have some certainty with regards
to how quickly we get this thing done and how expensive it's
going to be for them to get this program behind them.
I mean, for some of these small businesses to apply for
forgiveness, it'll be very, very expensive to have to go
through the process. So that's what they're telling me anyway.
I mean, can you give us any insights or any thoughts with
regards to streamlining the process for small loans? I mean,
this is a really, really big deal to a lot of small businesses.
And I know this is a targeted group that you really were
wanting to try to help, and yet the forgiveness part of this
program seemed to be a little more punitive than we really need
to have it. What are your thoughts on that?
Secretary Mnuchin. Well, first, let me just say, I want to
thank the financial institutions, because we never could have
done it without them, particularly the smaller institutions, a
lot of the institutions that were a billion dollars of assets
or below 10 billion and the CDFIs. We had over 300 CDFIs that
participated.
And, again, we want to strike the right balance, because
there's a lot of people who have $10,000, $20,000 loans that
should be really easy for them to get forgiveness.
Mr. Luetkemeyer. OK. Moving on to a little bit different
subject here. With regards to the package of a second round of
the CARES Act 2.0, whatever we call it here, everybody's
talking about trying to be negotiated at the present time.
A couple things that I am surely encouraging and hope that
you get in there is some dollars for nursing homes and
hospitals, especially for testing. The continued testing that
these institutions have to do is really, really expensive,
especially if you wind up with the COVID going through the
institution.
And a second group would be the schools. You know, most
of--our public schools are all financed through state funding,
and state funding has a lot of times been cut or are just not
there at all.
And so those two groups of entities really need some help,
and I'm hoping that that would be included in there. And if you
had some thoughts on it, I'd sure appreciate what your thoughts
would be along that line.
Secretary Mnuchin. So, we do want more money for testing
and vaccines. I've been working closely with Mark Meadows on
the testing issue. I must say we're really pleased with the
announcement last week with Abbott. We're procuring 150 million
tests that are point-of-care tests that can be done right away.
Five dollars apiece, so very, very cost effective. And there's
going to be enough tests that we could deliver them to every
single school so they could test students three times if
needed. We'll also send them to nursing homes, hospitals.
But our work's not done. We need more money for testing. We
have more things lined up. Point-of-care testing, which is now
available, is critical. That allows people to get results very
quickly, cost effectively.
And let me just say on the 150 million tests, these will be
paid for by the Federal Government and distributed to the
states for them to use as they deem best.
Mr. Luetkemeyer. OK. My final question deals with the
incentives that we had in the--and the $600 payment that we had
with regards to those who were unemployed. You know, I'm of the
opinion that I would hope that in the next package, instead of
what basically wound up being an incentive to stay home and not
work, that we find a way to incentivize people to work, either
through incentivizing the business to hire or incentivizing the
individual themselves to go back to work.
Have you had some thoughts along those lines and what your
ideas may be?
Secretary Mnuchin. Well, we have a series of proposals,
including tax credits to incentivize companies to hire people.
Again, these would be targeted to the hardest hit businesses
that need help.
So, yes, I think it's got to be a combination of having
enhanced unemployment at the appropriate dollar level. And
there's no question, there are areas of the economy where the
$600 is preventing people from being hired. I spoke to one
company that's trying to hire 5,000 people that's having a very
difficult time and they're having to pay their own workers a
thousand dollars a person to refer people.
But we do need enhanced unemployment and we do need
incentives to rehire people, combination of both.
Mr. Luetkemeyer. I appreciate that. I know anecdotally a
couple of my employers locally here in my district, they
couldn't hire anybody for any amount of money it seemed like.
And then as soon as the $600 check went away, why suddenly
they've got more applications for the jobs they have than what
they can fill now.
So, it was a disincentive to many, many people to find work
and find that right balance of individuals who, through no
fault of their own, are still unemployed because they're in an
industry that is still hard hit. That's one thing. But to
incentivize people at a level that you're talking about here,
to find that balance, I think that's critical to make sure we
don't incentivize them to stay home. That doesn't help our
economy, doesn't help them at all as well.
Thank you, Mr. Secretary.
With that, I yield back.
Chairman Clyburn. I thank the gentleman for yielding back.
The chair now recognizes Ms. Velazquez for five minutes.
Ms. Velazquez. Thank you, Mr. Chairman.
I just would like to react to a comment made by Secretary
Mnuchin. You said that the economy was doing so well before
COVID. However, the Federal Reserve stated that before COVID
even hit, 40 percent of Americans do not have $400 in the bank
for emergency expenses.
To me, that's an economy that is working for the top, is
working well for those at the top. And I hear you that we need
to address those that are the ones hardest hit by this pandemic
and areas in the country that have not been able to really get
back on track.
So, I just would like to discuss with you the Federal
Reserve's Main Street Lending Facility. That facility was set
up by you and others at the Federal Reserve, right?
Secretary Mnuchin. Yes.
Ms. Velazquez. And the Fed's August report stated that the
Main Street Lending Facility had made only 14 loans and one for
50 million. So why is that? If the need is there, why only 14
loans when in the CARES Act we invested $75 billion? Why to
this day only 14 million--14 loans nationwide?
Secretary Mnuchin. Let me just say, I want to commend the
Federal Reserve because it's really, really difficult to get a
program like this up and running. So even though we would have
liked to have done it quicker, it was an extraordinary amount
of work. It's now up. We've done over a billion dollars of
loans. I think our estimate is we will do 25 to 50 billion
dollars of Main Street.
Now, fortunately, a lot of businesses have been able to
access bank financing so they won't need Main Street. And,
unfortunately, there's many businesses that won't be able to
access Main Street because they have significant problems. They
don't just need more debt. And, again, that's one of the
reasons why I think the increase in the PPP is so important.
Ms. Velazquez. Mr. Secretary, with the financial crisis
that is hitting every corner of our country, and 28 million
businesses, only 5 million got PPP money and another 2, 3, 4
million of EIDL money.
So to have a facility such as that, and out of the 14
loans, eight were made in Florida, two were made in
Pennsylvania, so just--I just can't grasp how could we explain,
given the need, that only 14 loans have been made.
What changes are going to be made to the Federal Reserve's
lending programs to assist small firms that truly need it?
Secretary Mnuchin. I, unfortunately, don't know the exact
number, but I'll get it to your office this afternoon. As I
said, I know we're up to over a billion in volume on the way to
what we think is 25 to 50 billion. So now it's up and running,
there are a lot of loans in the system, and we'll get you the
exact number this afternoon. It's way more than 14.
So, I expect----
Ms. Velazquez. The numbers that we have, it's eight in
Florida. Two loans, including the 50 million, were made in
Pennsylvania. So, I would love to see those numbers.
But, again, what type of changes are you going to make to
the program so that we can really assist the small businesses
that need it the most?
Secretary Mnuchin. Well, right now it's up and running and
banks are originating. It took a long time to get up and
running. So, the changes that we are making are the Fed will be
rolling out a facility to extend it to nonprofits. But, again,
I think for the existing facility, it's now up and running and
I think you're going to see a lot of volume over the next two
months.
Ms. Velazquez. OK. Mr. Secretary, President Trump's recent
executive order related to housing does little to protect the
renters and homeowners facing evictions and foreclosures. Among
my numerous concerns with the order is that it does provide no
Federal funding to help households struggling to afford their
housing costs. It merely directs you as Secretary of the
Treasury, as well as Secretary Carson, to identify existing
Federal funds that could be used to provide temporary
assistance to renters and homeowners.
So, my question to you is, what funds have you and
Secretary Carson identified? And do they come close to the $162
billion that renters and homeowners are currently estimated to
need?
Secretary Mnuchin. Our first choice is to have bipartisan
legislation that allocates specific rental assistance to people
hardest hit. But you will see rolled out after the market close
this afternoon specific guidelines that I think you'll
appreciate are quite significant on allowing moratoriums for
people who certify that they can't make their rental payment
due to coronavirus-related issues.
Ms. Velazquez. So, are you admitting that the executive
order put out issued by the President was basically a PR stunt?
Secretary Mnuchin. No, quite the contrary. That executive
order is what will roll out this afternoon. What you will see
are very, very significant actions.
So, yes, we do have some money. We have a couple of
billion. But because we don't have enough money, we are rolling
out very significant guidelines that will impact not just the 4
million homeowners--excuse me--renters that were in
coronavirus. This will be up to the 40 million renters in the
United States. So, again, you'll be seeing that rolled out.
Ms. Velazquez. So, all that money is coming out of where?
All that money that is needed is coming out of what program?
Secretary Mnuchin. It's actually not using money. What it
is doing is using executive authority to create a moratorium.
Our first choice would be to have rental assistance, were
to have enough money. We need legislation. But since we don't
have that, the President is using executive authority, which
will allow for a moratorium so that people who are impacted by
this don't get thrown out of their rental homes.
Ms. Velazquez. So, you are telling us that you will not
take money out of Section 8 vouchers or project-based Section 8
properties to pay for this?
Secretary Mnuchin. No, we're not redirecting. There's a
small amount of money that will be rental assistance. But the
main part of this program is a real moratorium that impacts
close to the 40 million renters. And, again, I think everyone
will be very pleased. But, again, that's not a reason we
shouldn't have legislation with rental assistance.
Ms. Velazquez. OK. So, I have spoken to several small
businesses in my district, including restaurants, hairdressers,
dry cleaners, who are all concerned about making September's
rent. Many of these businesses have already taken out PPP, but
are still in need for additional resources. In fact, 84
businesses in the northern part of my district, Williamsburg
and Greenpoint, since the start of the pandemic shut down their
businesses.
As the administration was considering an eviction
moratorium for renters and homeowners, did you also consider
doing the same for commercial properties?
Secretary Mnuchin. We did, but I don't believe we have the
executive authority to do that. And that's all the more reason
why I think we should take the 130 billion that we have left in
PPP, add another 120 billion, and let's get 250 billion to help
all those businesses that you specifically identified and many
more that can't make their rent, can't pay their payroll, no
fault of their own. This is all COVID related.
Ms. Velazquez. Sir, are you committed to work with me to
make the changes that are necessary to put guardrails so that
those businesses that are ineligible to access the PPP program
will not be able to do so?
Secretary Mnuchin. Absolutely. And I'd encourage your
committee to move forward with stand-alone legislation. Let's
get this passed on a bipartisan basis and move to the next
issue.
Chairman Clyburn. A very generous five minutes has expired.
Ms. Velazquez. I yield back.
Chairman Clyburn. Thank you.
The chair now recognizes Mr. Foster for five minutes.
Mr. Foster. Thank you, Mr. Chairman.
Also thank you, Mr. Secretary, for announcing yet another
executive order. I'd like to talk about just how well some of
your previous executive orders are working. They tend to be
announced with a lot of sound and fury, and then when you
actually look at the details and the implementation, there's a
lot less than what appeared to have been announced.
So, for example, the lost wage assistance executive order,
which it turns out has proven to be a very weak and unworkable
substitute for enhanced unemployment insurance. Instead of
agreeing to simply extend the $600 benefit, this executive
action taken last month slashes the enhanced benefits by $200
to $300 and does this by raiding a very limited FEMA Disaster
Relief Fund to cover part of the cost and then forces cash-
strapped states to pick up the rest of the bill, those that
can.
All right. So how is this actually working? Secretary
Mnuchin, on August 10, you said that most states would be able
to execute this program, and I quote, ``within the next week or
two.'' But as of Friday, only six states have started paying
out even these reduced benefits.
So, can you tell us today how many Americans have actually
received these limited benefits, how many are still waiting,
and how many may never get them at all?
Secretary Mnuchin. I'd be happy to get back to you with the
exact statistics. I think there's something like 26 states have
signed up. I am not aware of how many of them are actually
paying, but we're happy to followup with you.
And, again, our first choice is to have legislation. This
was an area to move forward where there was not bipartisan
agreement to move forward with something. And, again, I think
for the people who are getting those $300 or $400 checks right
now that's very meaningful and it's half the country.
Mr. Foster. I don't think half of the country is
receiving--has received those checks at this point.
And I just--I know the situation in Illinois where we
diligently applied to FEMA to participate in this program, but
our Department of Employment Security tells us that even if it
was able to be implemented, there are a huge number of issues
at stake.
I don't--there are too many of them just to tick off here,
but among them that includes the fact that under the
President's program you don't get to access any benefits at all
if you don't meet this arbitrary minimum weekly benefit of
$100. And this includes about 55,000 claimants from Illinois,
many of whom are mixed income earners who earn W-2s and work as
self-employed workers or independent contractors.
Also, it requires states to set up a completely parallel
system to administer this aid, which is a huge administrative
burden when they're very busy with other things right now.
And, finally, it provides zero stability to workers,
because there's only a limited amount of FEMA money that's
available to be drawn. And the program claims to expire at the
end of December, but we all know that that money is likely to
be gone, if it ever gets started, within a few short weeks.
So, first, is it really true that there's only about $44
billion in FEMA disaster funds available to cover these
benefits? And what do you do when that runs out?
Secretary Mnuchin. Well, there is more FEMA money, but we
wanted to make sure we had money for hurricanes and other
items. So, yes, we've allocated a little over $40 billion. And
hopefully, again, all the more reason why we need legislation
to replenish those funds and allow people to do it. And we're
more than happy to followup. I'm not aware of what the--the
issues are in your state. We're more than happy to followup on
the specifics of that.
Mr. Foster. No, we have a very good write-up, and I'll be
happy to get to you on that.
The second executive action is this payroll tax deferral.
You know, this is another one of his, sort of, not-very-well-
thought-out executive orders. So this, I understand, is a--it's
a payroll tax holiday. So, is it the position of the
administration that this will have to be paid back by workers,
you know, by next April or not?
Secretary Mnuchin. Oh, it's--it's quite clear that, again,
the President is going to go to Congress and--to get authority,
but we need congressional authority. This is a deferral. Again,
we need congressional authority.
Mr. Foster. So, the answer is yes. The workers--as it
stands right now, unless the Senate finally passes anything,
we're not going to--you know, workers are going to have to pay
this back, correct?
Secretary Mnuchin. Again, this is--this is like other tax
deferrals that we gave which were very helpful to people. And,
yes, this is money in people's pocket that they need now that--
that is very important and very meaningful.
Mr. Foster. OK. And, now, how does the--the President has
proposed various mechanisms for paying this back, including
basically taking--defunding Social Security or--yes, Social
Security funds to pay for it. Is this really--is this your
plan? Is that what you're proposing?
Secretary Mnuchin. No. That's completely inaccurate, OK.
This is a deferral, so it will be paid back. And if we pass
legislation, then in the legislation, this would come out of
the general fund and make Social Security 100 percent whole. We
have no intention of having this cost one penny out of the
Social Security trust fund, which, I might add, I'm--I'm the
managing trustee of.
Mr. Foster. All right. Well, that's interesting to compare
that with some of the statements that your boss has made.
I guess I'm out of time here, and I'll yield back.
Chairman Clyburn. Thank you.
The chair now recognizes Mr. Raskin for five minutes.
Mr. Raskin. Thank you, Mr. Chair.
Mr. Secretary, I'm pleased to hear that you are open to
state and local funding in the next round of legislation that
we do, and this definitely strikes a very different tone from
one of our colleagues, who seems to think that support for
state and local governments is left-wing baloney. As you know,
state and local governments provide the vast majority of
services to our people, including fire, police, public health,
libraries, first responders, rescue, and so on. And they've
been on the front lines of the--of the COVID-19 crisis which,
of course, has cost more than 180,000 American lives, and
afflicted more than 6 million of our people.
States and localities now face nearly $1 trillion in budget
shortfalls, $1 trillion. My state, Maryland, is projected a
$2.6 billion shortfall by the end of 2021, and it could be $4
billion by 2022, and this is reflective of what's taking place
across the country, red states, blue states, southern states,
northern states and so on.
The state governments are being forced to cannibalize their
rainy-day funds, they're cutting essential services, and
they're laying off workers. According to the Department of
Labor, 1-1/2 million state and local government workers have
lost their jobs since February. And the economists tell us that
if we don't act, another 2.8 million could lose their jobs
within the next year.
So here is what our key economic actors and thinkers are
saying. Fed Chairman Jerome Powell warns that state and local
government layoffs and budget cuts will, quote, ``hold back
economic recovery.'' Former Fed Chairs Bernanke and Yellen
testified that state and local budget cuts and layoffs stifle
economic recovery from the Great Recession, and those job
losses at the state and local level were just half of what
we've already seen during COVID-19.
So, Secretary Mnuchin, do you agree with these three Fed
Chairs that state and local budget cuts and layoffs will exert
a serious drag on national economic recovery? Do we need to act
in a way commensurate with this threat?
Secretary Mnuchin. Well, I don't know if it's going to be a
serious drag or not, but there's no question that the President
and I think that we should not be having layoffs of policemen,
firemen, first responders, and others. I think there are budget
holes. I think the $1 trillion is way too high. That was a two-
year number. Matter of fact, if you look at The Wall Street
Journal today, they talk about how state revenues are coming in
significantly higher than they expected. And again, let--let's
deal with and fund the issue we have now, and next year, we can
worry about if more money is needed.
Mr. Raskin. OK. That's a fair point, but I keep hearing
this talking point that the states have a lot of money left
over from the CARES Act, and your department published a report
saying that the states had only spent 25 percent of the $150
billion that we have in the coronavirus relief fund that was
set up for the state and locals. But that was a really
disoriented claim, because 75 percent of the CARES Act funding
had already been allocated and obligated for expenditure. So,
it may be true that only 25 percent of it is spent, but more
than three-quarters of it had been obligated.
And the report also covered spending only through June 30,
failing to account for state spending in July and August, and
also ignoring the fact that obligated funds weren't being spent
yet because of the Department's own guidances and red tape.
So, do you still assert now in September that most of the
CARES Act money is still available to state and local
governments?
Secretary Mnuchin. Well, let me just say, we worked with
our inspector general since we didn't have authority, and we
asked the inspector general to work with us so that states
would be reporting. We will be getting updated reports. I do
know as a fact there are many states that are hoarding the
money because they want to use it for lost revenues and not use
it now. I'm not saying that's every case. There's also some
states that did a very good job of passing it down to local
cities and counties. There are other states that have kept the
money.
So, yes, I--I think there is still money available. I'm not
sure what it is. But again, as part of a compromise, the
President authorized Mark Meadows and I to put more money on
the table in--in a larger deal.
Mr. Raskin. Have you met with the National Governors
Association or the National League of Cities, or any of the
state and local government organizations to discuss the $1
trillion budget shortfall, because I can assure you they see it
very differently from the way that you're describing it today?
Secretary Mnuchin. I've spoken to many Governors, both
Republicans and Democrats. I've also spoken to many mayors who
are Democrats and Republicans. I've reached out to states. I
have specific numbers of what they need for schools and other
issues. So yes, I've--I've also participated on many video
calls with the Vice President and--and all the Governors. Yes,
we've had a lot of reach-out.
Mr. Raskin. Well, I'll just leave you with the words of
Republican Senator Bill Cassidy who said, ``As Congress drafts
the next round of COVID-19 spending, lawmakers are debating
whether to give states money. We should. Without such funding,
cities and municipalities will be forced to lay off workers and
may, therefore, be unable to provide basic services to keep
small-and medium-sized businesses running.'' Senator Cassidy
warned that submitting half measures will not restart our
economy.
So, I hope you will pay attention to this bipartisan
consensus that we need a substantial and meaningful investment
in this coordinate part of the U.S. Government in the states
and localities.
Thank you very much. I yield back, Mr. Chairman.
Chairman Clyburn. Thank you for yielding back.
The chair now recognizes Mr. Kim for five minutes.
Mr. Kim. Thank you, Mr. Chairman.
Secretary, again, thanks--thank you for joining with us
here today. I wanted to just go back to something you said a
couple times earlier in this hearing, which is about--you know,
you said a line that said, you know, on the things we can agree
on, let's move forward, and I think that that's a great
centimeter. I just want to focus in on a couple issues here.
So, going back to housing, we've talked--you just talked
about it a couple times. You said that you agree that it's
important to support Americans with housing. You made reference
to an announcement that will come later on today about a
moratorium. First of all, just to be clear, you agree that a
moratorium is not enough. Is that correct?
Secretary Mnuchin. My first choice, as it relates to
rentals, is rental assistance, not a moratorium. And as it
relates to mortgages, I think, as you know, a substantial
portion of the market is Fannie Mae and Freddie Mac, and I
think they've created a very successful program in forbearance,
which I support.
Mr. Kim. So when we're looking at this question now, if we
have agreement, that we need to have some support here for
renters and for others, to keep a roof over our head; now the
question is, how much and how we can provide that type of
support. And here, I want to just drill down a little bit. When
the Aspen Institute recognizes that we have, perhaps, the
largest housing crisis in our country's history, they're
saying, you know, 30 to 40 million Americans may very well be
at risk of eviction in the next couple of months.
That, then, would take into account in terms of calculating
what support we can provide here. You know, when I see the
Senate HEALS--the Senate Republicans HEALS Act put in $3.3
billion as opposed to what, in the HEROES Act, was about $100
billion, you said $100 billion was too much, in your opinion.
But if you look at the $3.3 billion, let's say we use the
conservative element of 30 million Americans, the conservative
side which the Aspen Institute estimates. 30 million Americans,
$3.3 billion, that's about $110 a person. So, I just kind of
want to ask you. What is the right level? Do you think $110 a
person is the correct amount to be able to help with rental
assistance?
Secretary Mnuchin. First of all, I just want to say, thank
you for being here in person. I--I think that 30 to 40 million
people is just absurdly high. I mean, there's--there's only 40
million rental units. And--and I would also add, depending upon
what we do with enhanced unemployment, has a relationship to
what you need to spend on rental assistance. If you're giving
people enhanced unemployment who are out of work, they can use
some of that money to pay their rent.
So, these things are all interrelated. But no, I think that
30 to 40 million is grossly high in terms of estimates, and I
think this is nothing close to what was the mortgage and
housing crisis that we had during the recession.
Mr. Kim. Let me just switch gears here to healthcare. So
just a quick question: Do you think it's a good idea or a bad
idea to have millions of Americans lose healthcare during the
middle of a pandemic?
Secretary Mnuchin. I--I don't think it's a good idea.
That's one of the reasons why I support the PPP and other
things that keep workers attached to their business so they can
continue to get healthcare. And I think, as you know, as--as
part of first bill that we passed with the House and the
Senate, we allowed small businesses to maintain money for
healthcare.
Mr. Kim. But despite those changes, despite those efforts
that we've had, there's been an estimate of about 5.4 million
American workers stripped of their health insurance between
February and May. We expect many more. And that's on top of the
30 million Americans in our country that did not have
healthcare to start with before this pandemic.
So one of the big efforts that we try to do when it comes
to the HEROES Act was to try to provide Federal financing for
Americans to be able to keep insurance through January 31,
2021; also, to be able to have a special enrollment period for
coverage through the ACA. Those are some of the efforts we're
trying to do. But when it comes to the Republican Senate bill,
none of that is in there. So, you know, look, when you agree
that we don't want to have Americans losing their healthcare
during the middle of a pandemic, why is that provision--why
aren't those provisions ones that you would agree upon?
Secretary Mnuchin. I'm not familiar with those specific
provisions. We'd be happy to followup with you. Again, I think
our first choice is getting people back to work where they--
they have healthcare, but if there's areas as you've described,
we'd be happy to--to look at that.
Mr. Kim. I would--I would ask you to take a look at that.
I'll have my office send it back over, but it--it's important
here, because, again, when we're talking from the level--and
I'll go back to what you said about trying to find areas of
agreement and move forward on that. I want us to make sure that
we are looking at it through the eyes of people in my district
and people all over this country. People in my district that
have lost healthcare, or are on the verge of losing their home,
they don't have the luxury of just, you know, coming up with
some of the low-hanging fruit and then kick the can down the
road. We have to step up and have some of these tough
discussions with each other, try to make sure that we move
forward on this.
I agree with you. Let's start with the areas of agreement,
but we cannot just keep kicking the can down the road, and
that's what the American people are seeing over and over and
over again.
So, again, I'm just grateful for you coming in today and
having a chance to talk with you. I hope we can continue to
work further.
Mr. Chairman, just before I--I yield back here, I just have
a unanimous consent request here. I seek unanimous consent to
enter two documents into the record. The first is a Wall Street
Journal article stating that major U.S. employers are
considering significant new layoffs, and making furloughs
permanent as the coronavirus pandemic drags on. This includes
American Airlines, Coca-Cola, Salesforce, United Airlines, MGM,
and many others.
According to this article, a recent survey, quote, found--
found nearly half of U.S. employers that furloughed or laid off
staff because of COVID-19 are considering additional workplace
cuts in the next 12 months.
The second document is a report from the Economic Policy
Institute, showing that the historic layoffs from the
coronavirus have led to approximately 12 million people being
cutoff from employer-sponsored healthcare, health insurance, in
the middle of a public health crisis.
Thank you, Mr. Chairman.
Chairman Clyburn. Thank you very much. Without objection,
we will. And I think that that's--I was about to enter that
in--in my final statement----
Mr. Kim. OK.
Chairman Clyburn [continuing]. But I guess I can skip over
that.
In closing this hearing, I want to thank the Secretary for
coming today. We appreciate the opportunity to directly address
these critical issues with you as Congress works to help our
country get beyond this pandemic. In his two-volume work,
Democracy in America, Alexis de Tocqueville observed the
greatness of America lies not in being more enlightened than
any other Nation, but rather, in her ability to repair her
faults.
This pandemic has exposed some faults that need to be
repaired, including significant inequities in access to
economic opportunity. Today's hearing has made clear that the
Federal Government's economic recovery efforts have failed to
repair these faults, and is at risk of getting worse.
But before we can repair these faults, we must agree on the
problem. I'm a bit concerned that the Secretary and I seem to
be a bit far apart on the number of unemployed people in this
country. You decided--you cited various numbers, 10 million, 16
million, but the data demonstrates that as of August 8,
approximately 27 million Americans were collecting some form of
employment insurance. This number includes those on regular
state jobless benefits plus freelancers, gate workers, and
others who are not eligible for regular state jobless benefits.
Now, to support this, I--we are entering into the record
the statement from the Economic Policy Institute, and I think
it supports what we are saying here today.
I think we can all agree that there are steps Congress and
the administration must take now to put our economy back on
track for all Americans and ensure that taxpayers dollars are
not diverted to waste, fraud, and abuse.
First, congressional Republicans and the administration
must agree on compromise legislation that includes an extension
of enhanced unemployment insurance, food and housing assistance
to American families, and support for state and local
governments. Republicans continue--continuing to refuse to
compromise is causing harm to American children, American
workers, and American families.
Second, Treasury must implement key relief programs,
including the Paycheck Protection Program for small businesses,
and the payroll support program for the airline industry, as
Congress intended. Congress created these programs to protect
workers and preserve American jobs, not to funnel taxpayer
dollars to big companies and corporate executives.
Third, and finally, Congress must immediately institute
strong safeguards--or Treasury, I'm sorry--must immediately
institute strong safeguards to ensure that taxpayer dollars are
not squandered. Contrary to--Mr. Secretary, contrary to your
previous statements, it was not inevitable or necessary for
millions of taxpayer dollars to be diverted through waste,
fraud, and abuse, in order to quickly get aid to those who
needed it. Treasury must improve its oversight mechanism to
ensure that relief funds and PPP and other programs are
provided only to the intended recipients and that improperly
awarded funds are promptly returned.
Mr. Secretary, as you continue to implement the legislation
Congress has enacted and negotiate the next legislative
package, I urge you to remember that millions of American
families are suffering, and are counting on us to help,
regardless of our party or ideology.
I hope that you will act in accordance with De
Tocqueville's view of American greatness by working in a
bipartisan way to repair this fault.
I want to thank you for your testimony today. And without
objection, all members will have five legislative days within
which to submit additional written requests for the Secretary
to the chair, which will be forwarded to him for his response.
I ask him to please respond as promptly as he is able.
With that, this hearing is adjourned.
[Whereupon, at 3:24 p.m., the subcommittee was adjourned.]
[all]