Hi everyone, this is Dr. Nitin Chhoda with another
important update from Ignition Time where I go over some additional comments
from the US Treasury Secretary, Steven Mnuchin,
in today's interview on Fox Business. He said some very, very interesting things
that have never really been discussed before.
I'm going to go FOUR things that he discussed and I'm going to break them down
for you, analyze them for you, read between the lines and actually show
you the clip side by side so you can judge for yourself.
Secretary Mnuchin said, .
#1, we cannot force people to participate in the payroll tax deferral.
And he also said this will not impact Social Security.
#2, he said the economic policies
are working and he said that people are very encouraged.
#3, he said, let's do this Democrats.
Let's get let's get everyone back to the table.
We do not have to do everything back at once.
#4, he said something that I thought was incredible.
And I believe this has never, ever been reported before.
He said that initially the administration
considered doing $400 a week, $600 a week,
$800 a week in different parts of the country.
And he said that would not be fair.
So let's get into the key comments
from the Treasury secretary and let's analyze this interview in more detail.
So Mnuchin was specifically asked, where is the money going to come from?
Let's say you defer the payroll taxes or you have a payroll tax holiday.
How are things actually going to get paid?
What is actually going to happen?
And he said we are going to create a level of certainty for employers to participate
because the administration does want employers to participate so
that individuals can go home with larger paychecks, individuals earning less than
$100,000 a year, which, by the way, happens to be a large
section of the individuals who have been impacted by the economy.
And a significant portion of those
individuals are going to participate and play a key role in the November election.
So he said something that was extremely important.
He said, and I quote, "We cannot force people to participate."
In other words,
businesses cannot be forced to participate in the payroll tax holiday.
And I did allude to this earlier.
If a business is not sure that, hey,
if I don't pay the payroll taxes, I'm going to have to pay it at some point
in the future, they may simply continue paying payroll taxes.
But then if a business decides not to pay
payroll taxes and they essentially withhold it.
Now, when do they have to pay it?
Because the business doesn't want to get
into trouble or get fines and penalties from the IRS.
So some specific guidelines about this
will probably be issued soon by the administration.
But a lot of employers will simply continue paying payroll taxes.
I can tell you for me personally,
I have US based employees and we'll continue paying payroll taxes because as
far as I'm concerned, I just don't want to.
For me, it's not clear.
So we're just going to continue paying it.
And I'm sure a lot of other
companies will continue paying payroll taxes as well, which, by the way,
then defeats the purpose of the payroll tax holiday by the administration.
So there is some, there is a bit of a gray area there about what's going to happen.
Am I going to have to as an employer, even as an employee,
am I going to have to then pay those payroll taxes come December, come January?
And if you have that concern, then
you may want to simply continue paying the payroll taxes.
So Mnuchin said we cannot force people to participate, but I think many small
businesses will do this and pass on the benefits.
I think the president would like to do a payroll tax cut.
So he'll go back to Congress when he wins the election and ask Congress to have this
money forgiven and have the Social Security trust fund
fully stocked up in such a way that it does not impact Social Security.
So I thought that was very interesting.
Secretary Mnuchin is sort of in one segment talked about the payroll tax
holiday becoming potentially becoming permanent if the president gets re-elected
and Social Security getting funded from the general.
What he said
the so from the from the trust fund, from the general fund, if you will.
So the Social Security trust fund money
would get topped up from what he mentioned earlier as a general fund.
Now, I don't know and I'm not exactly clear where that money will come from.
He hasn't talked about that.
But let's watch what the treasury secretary said about this.
Let's roll the tape. How does that money get generated,
if not through this tax cut? Where does the money come from to replace it?
Well, we're going to we're going to create
a level of certainty for employers that want to participate.
We can't force people to participate.
But I think many of small businesses will do this and pass on the benefits.
I think, you know, the president would like to do a payroll tax cut.
So he'll go back to Congress when he wins the election and ask Congress to have
this money forgiven and have the Social Security trust fund fully
topped up so that in no way does this impact Social Security.
In the next segment of the interview, the secretary was asked,
how are things working on things actually getting better?
Where does a country stand right now?
And he did project a very optimistic tone.
He said that the economic policies are working.
Individuals are very encouraged.
In fact, he said, we literally shut down the entire economy.
It's like a water faucet.
It's like taking a faucet and turning it off.
And he said that has an enormous economic impact.
And he said, now,
as we safely start to reopen the economy, he said the entire economy,
the numbers were dreadful earlier and now you start to see the numbers increase.
He said, we've been bringing back a lot of jobs.
The economic policies are.
Working and he said the previous legislation is working.
He's talking about the Kazakh, the stimulus checks,
the paycheck protection program, the main street lending program,
the economic injury disaster loans, all the things that were a part of the kids.
And I do believe that a lot of those measures were very timely.
It's just unfortunate that now things have
deteriorated into a lot of partisan bickering.
And in the words of the Senate majority
leader now is not as serious as it was back then.
Those are his words.
OK, but regardless, there are individuals who need help.
And I hope we can put all of this all of this partisan bickering to end.
And he said there are things we'd like to do with additional legislation.
And he said we are going to see very good
numbers between now and the end of the year.
And he said if the Democrats can be
reasonable and put politics aside, it will be good for American workers
and the American people will continue this expansion.
The president wants to make sure every
single person that lost their job because of the pandemic gets it back.
And he said the president had the best
economy we've ever had prior to the pandemic.
So this is an optimistic picture from the White House because, again,
Treasury Manoogian, Treasury Secretary Mnuchin does speak for the White House.
Let's roll the tape and see what he had to say in his own words.
Well, you just have to put this
in perspective, because this is unlike any other economic situation we've ever had.
And that is because as a result of covid, we literally shut down the entire economy.
It's like taking a water faucet and turning it off.
And obviously, when that occurs, it has an enormous economic impact.
We've never shut down voluntarily the entire economy before.
So there's no question that the numbers in the second quarter were dreadful.
And as we now safely reopen the economy, you see the numbers increase.
And that's why you've seen we've brought back a lot of jobs.
The economic policies are working.
The previous legislation is working,
helping small businesses, helping employers.
And, you know, we're making a lot of progress on vaccines and virals.
I think people are very encouraged by that.
And as you see the economy reopen, I think you're going to see very good
numbers between now and the end of the year.
Now, having said that,
there are things that we'd still like to do with additional legislation.
And if the Democrats can be reasonable and put politics aside,
this will be good for American workers and the American economy.
And we'll continue this expansion.
And the president wants to make sure every
single person that lost their job is recovered, gets it back.
Let me just remind you, the president had the best economy we've
ever had when we started this before covid.
Now, in the next segment of the clip, the Treasury secretary highlighted
the differences in approaches between the Democrats and the Republicans.
Like I mentioned, that Republicans are fiscally more
conservative and the Democrats want a whole bunch more money.
In fact,
now with Vice President Joe Biden, speak with Kamala Harris, who, by the way,
wanted a two thousand dollar a month payment to Americans during the pandemic.
And by the way, the Biden campaign has not commented on that.
You can see that there's a clear difference in ideologies between the two
sides, and that's going to play a big role leading up to the November election.
So he said we have injected this is what Treasury Secretary Manoogian said.
We have injected 20 percent of our GDP back into the economy or we will inject
because he's counting the one trillion dollar proposal that they have now,
in addition to the three trillion in the case at which which totals four
trillion, which is 20 percent of the US GDP, which is 20 trillion.
He said that that's an extraordinary number.
And my point to the Democrats and the Republicans is, well, let's do this.
This will be the fifth bill.
We can always come back in the year or in January and do a sixth bill.
We do not need to do everything all at once.
And he said the Democrats started at three
point five trillion and he said they had a lot of stuff there that was unnecessary.
And he said that, you know, I can't figure it out.
And he said that they've been bouncing
around so much of their numbers, he's not exactly sure where they are right now.
And he said, my view and he said our view
is let's spend over a trillion dollars on the areas of the economy that are going
to be impacted now so that we can agree on it.
And allocation of the money in an intelligent way is always, always,
always a better idea than just sort of dropping money across the country
in an inconsistent way, in a haphazard way.
So the allocation of the funds needs to be precise no matter what.
So he said now is the time to have
bipartisan support to help our kids go back to school, to have small businesses,
hospitals, rental assistance, airports, broadband's vaccine.
These are all things that are critical to the American public.
And as opposed to bickering, let's get money to work now.
He said we need to come back and do more work together.
So let's watch.
In the words of the Treasury secretary, let's roll the tape.
Maria, you know, we've already put three trillion dollars into the economy.
A lot of it has not made its way in.
So it will continue to put money in with a little over another trillion dollars.
We will have injected 20 percent of our GDP back into the economy.
And that's really an extraordinary number.
And my point to the Democrats and the Republicans are, let's do this.
This will be the fifth bill.
We can always come back later in the year or in January and do a sixth bill.
We don't need to do everything at once.
Now, the Democrats started it three
and a half trillion dollars, which had everything in there,
including lots of stuff that was nothing to do with covid leave increase.
Or offer by another couple of hundred
billion dollars, so I actually think it got closer to four trillion and now
they've offered to take a trillion dollars off.
So I can't quite figure out whether we're
a two and a half trillion or three trillion.
But our view is let's spend a little over a trillion dollars on areas of the economy
that are going to be very impactful now that we can agree on.
And we need to do more.
We'll come back and do more and work together.
But now is the time to have bipartisan
support, to help our kids go to school safely, to help our small businesses,
to help our hospitals, to help rental assistance, airports, broadband vaccines.
These are all things that are critical to the American public.
And as opposed to bickering about whether
there's enough money, let's get money to work now.
And in the final segment of this interview, which I thought was the most
telling aspect of the interview, he was specifically asked about the six
hundred dollars a week, which is now four hundred dollars a week,
down from four hundred dollars down to three hundred dollars a week.
And he was specifically asked how they came up with that number,
as you might expect, resolution to Manoogian compared
that with the twenty five dollars a week top up that the Obama administration had
offered and said, hey, we're doing a whole lot more.
But he said something that was very, very telling.
He said that when the faucet was closing, he's referring to the economy and the six
hundred dollars was an average number across the country.
We knew in certain places it would be too
high and in certain places it would be too low.
In other words, they implemented it back in March because it was an emergency.
It was a public health emergency. It still is.
And there was bipartisan support and they
just rolled it out so that people would get help.
But he said we knew that was a show.
And he said that in some cases, in some places was too high, too low.
And he also said we contemplated is the first time I've ever heard him say this.
He said in his own words, we contemplated doing four hundred,
six hundred or eight hundred dollars in different parts of the country.
And he said that we thought that that wouldn't be fair because it
would impact different places differently from the federal government.
So it's clear that if they did it
differently, some parts of the country would get more money.
Some parts of the country would get less
money, presumably individuals and states with the highest standard of living.
This is just my assumption.
Individuals in states like New York, California would get more individuals
in states with the lower cost of living would get less.
But that would create a fundamental unfairness.
People would say, hey, why am I getting less money
and unemployment benefits simply because of where I live?
So that's presumably why,
amongst other factors, implementation probably would have been a big nightmare.
Presumably those were the factors that the that prompted the administration
to say, hey, let's just make it the same number throughout the country.
At that point in time, it was six hundred dollars.
Steven Mnuchin said that that's going to be a short term issue.
He said that when we came back with the Modisane proposal of two hundred
dollars, he said that was about seventy five percent wage replacement for most
people because remember, three hundred dollars a week is
the average unemployment benefit from the state.
So that's where they said that two hundred dollars would be a fair number.
But he said the president agreed to go
higher, which is how they ended up with that four hundred dollar number.
And he said that's why the president put that in the executive action.
And he also said that between two hundred
and six hundred, four hundred was a compromise.
And that's why the president said so. He said.
And so the Democrats basically saying,
don't give anything to anybody unless we can get exactly what we want.
The president wanted to move forward with a very fair proposal.
So let's watch the clip
from Stephen Manoogian and let's see what he had to say about the unemployment
benefits and about the administration's consideration to defend unemployment
benefits for different parts of the country.
Let's watch what Maria, let me just put this in perspective.
During the financial crisis.
Under Obama, the federal government had a twenty five dollar top up.
So when we sat down and negotiated
with the Democrats, we shut down the entire economy.
So we knew that unemployment was going to be a problem and we thought this was
going to be for a short period time was that while the water faucet was closed
and the 600 dollars was an average number across the entire country,
and we knew in certain places it would be too high in certain places would be too
low, and we contemplated doing 400, 600, 800 in different parts of the country.
We thought that that wouldn't be fair
because it would impact different places differently from the federal government.
But we knew that was a short term issue.
Now, when we came back with the two hundred dollars, the two hundred dollars
is about 75 percent of wage replacement for the majority of the people.
But the president agreed to go higher.
We fought a very fair compromise was four hundred dollars.
And that's why the president put that in the executive action.
And that's why we're moving forward with that.
And, you know, two hundred, four hundred, six hundred, four hundred of compromise.
So instead of the Democrats basically
saying don't give anybody anything unless we can get exactly what we want,
the president wants to move forward with a very fair proposal so that you have
everybody was from the US Treasury Secretary,
Steven Mnuchin, about the administration actually considering different
unemployment benefits at different with the different parts of the country.
So he said specifically that they considered four hundred dollars,
six hundred dollars and eight hundred dollars in different parts of the country.
But they decided not to do that because it wasn't fair.
Now, think about this.
This would presumably mean that some states would get eight hundred dollars
a week as a boost and some states would get 400.
A week as a booster, this obviously
would create a lot of problems, this would create a lot of complaints.
Let me know what you think in the comments section below.
Do you think a flat rate like it's been the six hundred dollars in the past
and like it is now the four hundred dollars a week,
do you think that that flat rate makes sense or do you think four hundred,
six hundred, eight hundred a week booster, depending on where you live,
would have made more sense because of the standard of living.
So let me know what you think in the comments section below.
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