And the nominee for Treasury Secretary is … Steven Mnuchin, producer of the Lego Movie, American Sniper, and Rules Don’t Apply. But “producer” is a recent addition to the resume of Wall Street-insider Mnuchin, who spent 17 years at Goldman Sachs before starting his own hedge fund. He also led a group that bought failed subprime lender IndyMac at a bargain-basement price in 2009 and renamed it OneWest. Regulators questioned OneWest's aggressive foreclosure practices, and the bank was one of many that agreed to pay millions in fines to compensate customers. He has not held a public office, but served as Trump's national finance chairman toward the end of his campaign.
The Treasury Department has extensive power over US business, oversees banking regulations, financial markets, and the IRS. Mnuchin will lead the incoming administration’s effort to cut the corporate tax rate from 35% to 15% (or 20%), while greatly simplifying a complicated tax code. He also hopes to privatize Fannie Mae and Freddie Mac and roll back portions of the Dodd-Frank Act that he says prevent banks from lending. Lowering personal income taxes for middle-income Americans is also a goal, although this might be accomplished largely through a child-care tax credit.
A corporate tax cut of this magnitude would result in a significant bump in earnings for many companies, especially those with largely domestic operations, like banks, drug distributors, and retailers, which tend to have the highest effective tax rates. If this windfall materializes, it could mean more money will be available for wages and benefits for American workers. Mnuchin is hoping it will stimulate faster economic growth.
"Our most important priority is sustained economic growth. I think we can absolutely get to sustained 3% to 4% GDP, and that is absolutely critical for the country," Mnuchin told CNBC in late November. "To get there, our No. 1 priority is tax reform. This will be the largest tax change since Reagan."