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Rescuing Economy By Spending $2T

WASHINGTON (AP) — President Donald Trump aims to shovel $2.2 trillion into the U.S. economy over the next few weeks to try to cushion its free fall. But that means putting his fate in the hands of banks, profit-minded businesses and government bureaucrats he has frequently derided, along with a man who has emerged as arguably the biggest power broker to business in Washington: Treasury Secretary Steven Mnuchin.

The massive bailout package, which includes direct cash payments, $349 billion in loans for small businesses and a $500 billion corporate rescue fund, is the biggest ever in U.S. history. It’s an attempt to keep the economy afloat as Trump warns Americans to brace for a “hell of a bad two weeks,” with 100,000 to 240,000 coronavirus deaths now projected in the U.S. even if current social distancing guidelines are followed. At the same time, the country is hemorrhaging more than 3 million jobs a week, with economic forecasters warning of a deep recession that could compromise the president’s reelection chances.

At the center is Mnuchin, a former hedge fund manager and movie producer who helped to write the package and shepherd it through Congress and now has enormous discretion over which industries are most in need and how to dole cash out accordingly.

And then there is the matter of the president — and questions about whether he’ll want to meddle.

Trump has already made clear he is more inclined to work with those who earn his favor, including returning the calls of governors who praise him and prioritizing requests for equipment and vital supplies from Republicans he gets along with in states that will be crucial to his reelection, like Florida.

As for Mnuchin, “He has so much authority under the CARES Act that he can determine pretty much any terms that he wants,” said Peter Henning, a law professor at Wayne State University and a former Justice Department attorney. “He can negotiate the terms of any loan or loan guarantee, so it’s a much broader authority than back in 2008,” when Congress offered a bailout to banks and automakers during the last financial crisis.

With so much discretionary power, Henning wondered whether businesses with political ties to Trump might end up benefiting.

“Is he going to favor businesses that are friendly to the president? I don’t know,” Henning said. “He’s got $2.3 trillion to dole out. That’s an awful lot of money.”

The legislation does establish a system of oversight on how companies can use the money that is widely thought to exceed the standards set in 2008-09. Borrowers, for instance, must be based in the U.S. and companies cannot repurchase outstanding stock or pay dividends until one year after their borrowing is repaid. The legislation also prevents companies from providing raises to executives earning over $425,000 annually. And it makes companies ineligible for loans if top Trump administration officials, members of Congress or their families have 20% control of the company or more.

The law also created a new government watchdog — a special inspector general to be appointed by Trump — and a panel appointed by Congress to monitor how the aid is deployed. Trump, however, has already rejected the independence of the office and disputed other aspects of the oversight rules, including that Congress should be consulted in the allocation of relief money.

The Treasury Department did not respond to questions about Mnuchin’s role. And the White House declined to answer questions about the potential for influence and instead offered a statement trumpeting the bill.

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