US President-elect Donald Trump is sending another strong signal that he plans to take a pro-growth and business friendly approach to economic policy, with leading New York investors Steve Mnuchin and Wilbur Ross on his short list for Treasury and Commerce secretary.
The pair on Tuesday won the endorsement of billionaire investor and Trump backer Carl Icahn who turned to Twitter after speaking with the incoming Republican president to reveal they were in the running for the top economic roles.
“Both would be great choices,” Mr Icahn said. “Both are good friends of mine but, more importantly, they are two of the smartest people I know.”
Both men are pragmatists and free marketeers who would focus on ways to unleash US growth through business-friendly policies.
Mr Mnuchin, a 17-year veteran of Goldman Sachs who served as the Trump campaign’s chief fundraiser, is chairman of Dune Capital Management and Dune Entertainment Partners and a longtime business associate of Mr Trump.
The softly-spoken Mr Ross is a private equity investor with a long history of striking deals around the world. He served as a senior economic adviser to the Trump campaign and was one of the main public articulators of his trade policy.
Speaking to the Financial Times on Tuesday, Mr Ross refused to comment on any possible role in a new administration.
But he said the top economic priorities for a Trump administration would be encouraging infrastructure investment, the repatriation of profits parked overseas by US multinationals and corporate tax cuts and other measures to encourage investment. Among those is a plan designed to make it easier for companies to write off capital expenditures, much as they can now write off the interest they pay on debt, though not both at the same time.
“We are tying to spur more investment. The big lagging thing in our economy has been shrinkage of gross private sector investment. I think it is one of the reasons why [US] productivity gains have not been so strong [in recent years],” he said.
Low investment and bad trade agreements were in fact the two biggest things holding back the US economy, Mr Ross said.
But he also rejected the charge that a Trump administration would herald a new era of American protectionism, saying it would be focused on negotiating smarter trade pacts with the US’s major trading partners.
A Trump administration would work to narrow its trade deficit with China and other countries. But it would not do so by applying blanket tariffs on imports from any country, he said.
“The US is the reason why the whole world has a trade surplus. We have a $500bn deficit which is a 3 per cent permanent reduction in the size of our economy,” Mr Ross said. “Cutting our balance of payments deficit doesn’t mean slapping on 45 per cent tariffs on everything from China. Absolutely not.”
“But here is the key issue. We should treat ourselves as the world’s biggest customer and treat nations that are selling to us as suppliers to us,” he said. “One of the great dangers for trade is that since the free trade people are so ideological they do not admit that anything was wrong on any trade agreement so they run the risk of free trade going right down the drain — [which is why] there is all this populism and protectionism.”
To secure better trade deals the Trump administration would pursue a three-point plan which would call for clear cost-benefit analyses, their automatic reopening for possible adjustments after five years and a requirement that other countries implement required changes to laws and other policies at the same time as the US.
Speaking at a CME conference in Florida on Monday, Goldman Sachs veteran Gary Cohn pointed out that Stephen Bannon, Mr Trump’s newly-appointed senior strategist, had left Goldman Sachs 26 years ago “which was exactly the same time I arrived — and he was much more senior than me.” As a result there are almost no Goldman executives who know Mr Bannon today.
However, Mr Mnuchin worked at Goldman Sachs more recently and is known by a number of past and former colleagues as a hard worker, who tended to have a tough, ruthless streak with an intense focus. He was not considered to be particularly sociable or deft at navigating relationships.
“He’s not a people-person or salesman, not at all,” another former colleague recalled, adding that like many of his colleagues he appeared to have a strong free-market ethos.