Mnuchin: Congress Must Redirect $455 Billion, Not Biden

Treasury Secretary Steven Mnuchin on Tuesday contended that he was required by law to move $455 billion in unspent emergency pandemic relief money into an account that would lock it away from President-elect Joe Biden’s administration.

“It is my intent to completely follow the law, and the law requires the amounts transferred,” Mnuchin said during a Senate Banking Committee hearing in Washington.

Mnuchin has come under fire for demanding that the Federal Reserve return $429 billion in unused funds from the Cares Act in hopes it would help break the logjam on Capitol Hill over additional relief spending. That money, along with an additional $26 billion for company loans that the Treasury Department hasn’t spent, will be placed in the department’s general fund, which can only be tapped with congressional approval.

If the Treasury funds instead remained in its Exchange Stabilization Fund, that would allow Janet Yellen -- Biden’s pick to succeed Mnuchin -- access without congressional action.

“This is not discretionary,” said Mnuchin, who testified alongside Federal Reserve Chair Jerome Powell. “I urge Congress that if you want to extend this, bring back legislation that authorizes me to do it.”

Powell said at the same hearing that Congress gave the Treasury secretary “sole” authority over the Cares Act funding for the Fed facilities. “We accept that reading of the law,” he said of Mnuchin’s interpretation. The Fed chair noted that the Treasury could still use money in its Exchange Stabilization Fund as the law allows.

While Republicans have applauded Mnuchin’s move, Democrats and the Federal Reserve have criticized it. The Fed said it should keep the emergency lending facilities intact, while Democrats accused Mnuchin of hamstringing the incoming administration.

“You’ve killed the Cares Act loans that were supposed to be a tool to help smaller businesses and their workers, and buried the money,” Democratic Senator Sherrod Brown of Ohio said.

Senator Bob Menendez, urged Powell not to release the money back to Mnuchin unless the Treasury secretary agrees to keep it accessible to Biden’s administration.

Earlier Tuesday, a bipartisan group of senators unveiled a $908 billion stimulus proposal in an effort to break a months-long impasse that’s now threatening to tip the economy back into contraction.