CNBC Transcript: Treasury Secretary Steven Mnuchin speaks with CNBC’s “Squawk on the Street” today on why we can’t shut down the economy again, PPP, commercial rent and future stimulus.
WHERE: CNBC’s “Squawk on the Street”
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Treasury Secretary Steven Mnuchin: 'We can't shut down the economy again'
Treasury Secretary Steven Mnuchin on PPP, commercial rent, future stimulus
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JIM CRAMER: Someone who's quite pertinent, particularly with the market down and worried about what the Fed said yesterday is the Treasury Secretary Steven Mnuchin. Mr. Secretary, thank you so much for coming back on “Squawk on the Street.”
SECRETARY STEVEN MNUCHIN: Of course, Jim. It's great to be back with you.
JIM CRAMER: There's been tremendous success with PPP. Because there have been very few companies that have gone under. And I think that, what I was surprised about, Mr. Secretary, is there's still some money left, when the money, frankly, is something that keeps businesses alive. It seems --- what's going on?
SECRETARY STEVEN MNUCHIN: Well, Jim, first of all, we couldn't be more pleased with the success of the PPP. And you saw that in the unemployment number. So, not only did we save millions and millions of jobs, but there's no question in my mind, the increase in jobs was a direct result of the PPP and reopening the economy. Those are both very important factors. Now, you have got to remember when we asked Congress for money, they were afraid we were going to run out again, so they gave us an extra $60 billion. So, when we modeled this, we didn't think we'd end up spending all this money. And now, that we've given the restaurants more flexibility of 24 weeks, which that was the number one ask they had for the President when they came in, my guess is you're going to see the restaurants come in and now take up a bunch of this money. But we're in productive discussions. Yesterday, I was at the SBA Committee and huge bipartisan support for this program.
JIM CRAMER: Well, look, as someone who follows the restaurant community well and is involved in associations, I think it has been miraculous. Because that's where 13-14 million people are working. But rent. We have to talk rent throughout the system. Because rents been okay, as there's been a lot of forgiveness for the last couple of months and you can't evict. But that should be the next. You get great flexibility with PPP. You have more money to go toward rent. But what do you do with all the landlords who have mortgages themselves, and the restaurants that may not get the traffic in but have to pay that rent?
SECRETARY STEVEN MNUCHIN: Well, Jim, let me just first comment on the residential side. And I think the moratorium has really helped on the residential side and you know, when you look at the numbers and the number of people it was not overwhelming, the number of people that needed to do this. So, again, I think that's an indication of the $3 trillion we pumped into the economy, both in terms of the economic impact payments and PPP and extended unemployment. And on the commercial side, you're right. It is more complicated. You have companies, particularly in retail, that are having a lot of issues. They're going to have to deal with the rent. The landlords then have to deal with mortgage payments. And that's why I said yesterday when we look at the next round of CARES 4, I think one of the things we're really going to need to be very focused on is how do we help the industries that are especially impacted? And I would say, you know, hotels, travel, entertainment, restaurants are right up there. So, we're going to be much more targeted in making sure that we get people back to work, and we help these industries. And the President and I won't be done until we get every single person back to work.
JIM CRAMER: Mr. Secretary, how closely do you follow things like the monoclonal antibody tests from Regeneron or Lilly, or the possible Moderna or J&J vaccines? And I say that because if you give us that bridge, including the $600 unemployment, and we get to the end of the bridge, then things are going to be – look, I’m going to say it, they’re going to be spectacular. So, do monitor it and say, “You know what? We’ve got to keep this thing going,” or does there come a time where you just say, “Alright, we've done everything we can—let's hope science prevails”?
SECRETARY STEVEN MNUCHIN: We're never going to say we've done everything we can. We're going to do everything until we get rid of this virus both economically and on the medical side. You did mention the unemployment. Let me just be clear. You know, we knew there was an issue with the unemployment where some people were getting paid more to stay home than to work. So, whatever we do with unemployment, we're going to fix that. But on the medical side, and I can't comment on any specific one of these, but I can tell you we had a very productive update this week at the Taskforce. The Vice President led us, and we had a presentation on both the viral and the vaccines and the investments that the U.S. government is making. And I am quite optimistic in the medical progress that we have made and what will be done between now and the end of the year. And Jim, let me just say, as we reopen the economy, you know, as I said before, I think you're going to see a pretty big rebound in the third and fourth quarter. I know the blue-chip survey for GDP has a growth rate of 17% in the third quarter. So, with the reopening of the economy, with the $3 trillion dollars, plus a new round in CARES 4, I think you're going to see a lot of Americans getting back to work.
CARL QUINTANILLA: Mr. Secretary, when you look at the increases in cases in certain states, largely in the South, what do you make of that and how is Treasury modeling for a potential second wave? Is that something you’re actively trying to model in? And what would policy look like if that effect happened?
SECRETARY STEVEN MNUCHIN: Well, Treasury isn’t modeling the medical side. We’re leaving that to the Taskforce. And I’d say, you know, the good news is, again, plenty of hospital capacity, a lot of progress on testing—I think we’re over 20 million people that have been tested and we’ll continue to test people. So, the good news is, you have a lot of capacity in testing and hospitals. And that was something that was the big problem and the reason why the President needed to close down parts of the economy. So, I think now you’re going to see, with the reopening, yes, you will see there’s areas, but contact tracing is getting much better, the technology is getting much better. I think we will deal with this in the appropriate way.
DAVID FABER: Mr. Secretary, I would assume that means we're not going to--we're not going to shut down the economy again, in your opinion?
SECRETARY STEVEN MNUCHIN: We can't shut down the economy, again. I think we've learned that if you shut down the economy, you're going to create more damage, and not just economic damage, but there are there are other areas. And we've talked about this. Medical problems and everything else that get put on hold. I think it was very prudent what the President did, but I think we've learned a lot. And I also would just say, the fact that Congress, the House, the Senate responded with the administration in an unprecedented way to put $3 trillion in the economy--I heard you had Ron Johnson on this morning and he said this, we discussed this last night, actually. There's only about 1.6 trillion of that money actually in the economy. So, you know, over the next month, you're going to see over another trillion dollars pumped into the economy. That's going to have a big impact. We have the Fed program, we have Main Street, which is going to be now up and running. And we're prepared to go back to Congress for more money to support the American workers. So, we're going to get everybody back to work. That's, that's my number one job, working with the President. And we're going to do that.
DAVID FABER: Yeah, well, when it comes to getting back to work, Mr. Secretary, and this is a question I asked the Vice President last week when he joined us, and I think I've asked you as well: the states, there are many that are in fairly dire fiscal situations, in terms of not collecting anywhere near the tax revenues they originally budgeted for this year. And cuts in their municipal workforces are occurring and may occur at a higher rate. What about more aid to the states? I know it was part of the last deal. But it may not many ways be nearly enough. Are you considering that in the next go around?
SECRETARY STEVEN MNUCHIN: Well of course it's going to be subject to a discussion. You know we've talked to Senator Kennedy who has a potential bill that will create more flexibility for the money that we've already given out. That's something that's being contemplated. And there's other things. Now, I will say the flexibility we've already given from Treasury makes sure that all of the policemen firemen first responders get paid. We've also put out guidance that we expect the states to send money down to cities, and in local communities, a lot of that money is still being held at the state level. But this is a complicated issue. You know, if the federal government sends more money to the states, it's, in essence, some states subsidizing other states. And again, we're where there have been hotspots, we've sent a lot of money to that area for hospitals and other things. But this will be something we'll be discussing on a bipartisan basis and making a decision when we go forward.
JIM CRAMER: Mr. Secretary, a man I know, you know and a man you respect, Ray McGuire, was on our air yesterday—Citi, and just a titan in the industry. And he talked about minority invest -- he talked about minorities. And he talked about minority business and how there's not enough reference to it. And I know you care passionately about this, too. And I am concerned that the -- it is great that you're doing PPP and you know I think it's terrific program, you know I think that the programs you're doing are really bridging as to when things get better. But how about the minority business people that did get hurt, in, in, in protests and riots that followed peaceful protests, that I know I supported? Is there any way to earmark—I mean, I know you care about this, what can you do personally to direct the money for those minority businesses that were really hurt?
SECRETARY STEVEN MNUCHIN: Well I've known Ray for a long time, and it was great to hear him on the show. I mean, he is a great American success story. And we need to make sure that more people have opportunities for education and have opportunities for the success that he's done. He's a great person. Let me just say that we all need to do a better job at creating opportunities. But, having said that, that's very different from the looting and the damage that went on to small businesses. And we shouldn't confuse these two issues. There was no excuse for the looting and destruction. One of the things I got asked yesterday at the SBA hearing was whether we've estimated the damage on the looting. That's something we're looking for. There was some discussion whether we should allow for that to be picked up in the next bill. But we got to make sure that the people who were hurt by looting, whether they were minority businesses or not, that’s just—we can’t go through that again. But we all need to do a better job and we're focused on CDFI lending to small businesses.
JIM CRAMER: Excellent. And last question, Mr. Secretary. There are a bunch of us who are all trying to figure out frantically, what we can do as restaurant and small business owners. We – the patchwork is so hard, sir. New Jersey is different from New York State. New York State is different from New York City. What do you think we should do? I mean, honestly, I mean, you’re a straight shooter. Can you help advise some of these governors and mayors about what the right thing is? We want to open. We want to do business. And we don't know if we're doing it right. We don't know if we're going to get in trouble. We don’t know—we don’t have a clue. And you can help us. What should we do?
SECRETARY STEVEN MNUCHIN: Well, Jim, restaurants are a big part of the economy and a big part of small business and employment. So, it's an area that we very much want to support. We made a change to the PPP. The President wants us to very seriously bring back the deduction for people going to restaurants. That's something that's very important to spur it. And, you know, I've gone out to local restaurants the last few nights because I want to support local restaurants here. And let me tell you, I've been impressed with the social distancing, and how they've been able to do it. What makes no sense to me is you can eat outside, but you can't eat inside. And I don't see why we can't have proper social distancing inside in restaurants. And obviously, if it rains outside, you can't eat outside. So, I think that restaurants can open in a safe way. But this is an industry that's going to need a lot of help--continued help, until we have a virus and a viral. Which I'm very confident, we're making incredible progress on those fronts.
JIM CRAMER: Treasury Secretary Steve Mnuchin, thanks so much for calling in today. “Squawk on the Street.”
SECRETARY STEVEN MNUCHIN: Thank you.