“The Treasury has a cash pile of well over $1 trillion, which will allow the government to quickly disburse money in line with the sweeping new law, including direct checks to millions of Americans that are expected to start hitting bank accounts in the coming week. That robust rainy-day fund was built last year by then-Treasury Secretary Steven Mnuchin, who preemptively cranked up the pace of government borrowing, unsure of how and when Congress might mandate further relief measures.
So, despite concerns that markets will be flooded with new U.S. government debt to pay for the rescue package, the Treasury Department might not have to change its borrowing plans much at all to fund the legislation signed into law”
““There are enormous implications for everyone else, but the Treasury was out in front of this nine months ago,” said Lou Crandall, chief economist at research firm Wrightson ICAP.
The advance moves by the Trump team are proving to be key to limiting turbulence in government debt markets from such massive spending. Bond yields have already been inching up in recent months due to brighter prospects for the economy”
“The planning by Mnuchin also demonstrates that, even as Republicans now balk at the price tag of Biden’s rescue package, the Trump administration itself was prepared for the possibility that the economy would need another big infusion of cash to fully emerge from the pandemic.”
“Key divisions at Treasury have been hollowed out by attrition during the Trump administration under Secretary Steven Mnuchin, who has sought to cut “wasteful spending,” including on personnel he sees as superfluous. Between fiscal years 2016 and 2019, the department’s main offices — Domestic Finance, Economic Policy and International Affairs, among them — saw their staffing levels plunge by nearly a quarter as budgets were slashed.”
“A former Treasury official argued that it made some sense that Mnuchin allowed staffing to decrease; once implementation of sweeping new financial rules after the 2008 credit crisis began to wind down, the domestic finance division probably didn’t need as big of a staff at the beginning of the Trump administration.
“But you always have to think about the tail risk — a financial crisis or a pandemic that causes a financial disturbance,” the former official said. “That’s when a smaller staff can expose some problems.”
Klein said it was positive that Yellen, a former Federal Reserve chair, already knows what it’s like to run a large agency, and her designated deputy, Wally Adeyemo, has extensive experience at Treasury, including as deputy chief of staff.
But Yellen and Adeyemo could face barriers to bringing in their own people, given the possibility of a Republican-controlled Senate. That will create pressure for the new leadership to find ways to bring people on board quickly, such as by appointing counselors.”
“In picking former Federal Reserve Chair Janet Yellen to serve as his first Treasury Secretary, Joe Biden is leaning on a well-known figure who is trusted and beloved by most Democrats, respected by many Republicans, acceptable to Wall Street and aligned with the no-surprises approach expected to be a hallmark of the incoming president’s tenure.
Yellen, widely seen as the obvious choice when Biden teased last week that he had made his pick, is slightly untraditional for Treasury. Her pre-government background came largely as an academic economist and monetary policy expert. The top Treasury slot often goes to people — until now all men — with extensive corporate backgrounds and high-profile international experience.”