By David Lawder

WASHINGTON (Reuters)

Donald Trump's former Treasury secretary, Steven Mnuchin, stated he will not join the president-elect's new administration but is willing to advise his successor on key issues like sanctions against Iran and Russia and managing U.S. debt.

In an interview, Mnuchin emphasized the importance of the Treasury strengthening U.S. trade policy. This includes ensuring Beijing fulfills its commitments regarding U.S. goods purchases under Trump's January 2020 Phase One trade deal, which he asserts they have not honored.

Reflecting on his tenure, Mnuchin said, "Serving as Treasury chief during Trump's first term was the experience of a lifetime, and I'm happy to advise on the outside." However, he refrained from naming any favorites for the next Treasury secretary.

Potential Contenders

Reuters reported that two prominent hedge fund investors, Scott Bessent and John Paulson, are leading contenders for the Treasury secretary role, with Bessent having met with Trump.

After leaving his post, Mnuchin established Liberty Strategic Capital, a private equity firm backed by investments from Softbank Group and Abu Dhabi's Mubadala sovereign wealth fund.

ECONOMIC TEAM

Mnuchin highlighted the necessity for Trump's economic team—the Treasury, Commerce Department, U.S. Trade Representative's office, and the White House National Economic Council—to collaborate effectively, similar to their teamwork during the 2018 and 2019 China trade negotiations.

As a former Goldman Sachs executive, Mnuchin stressed the importance of both financial market experience and a strong management background for the Treasury secretary, due to the extensive areas the Treasury oversees, ranging from regulatory and tax policy to international sanctions.

Regarding sanctions, he mentioned that the U.S. should enhance its enforcement, particularly against Iran and Russia, asserting that the sanctions related to Russia's war in Ukraine have not been as effective as intended. While the G7 has imposed a price cap on Russian crude oil, he noted that Russia continues to sell significant amounts of oil and gas.

MANAGING DEFICITS

When asked about Trump's plans to extend individual tax cuts and the potential impact on U.S. debt, Mnuchin recognized the need to control growing deficits. He believes that a balance can be achieved between extending tax cuts and reducing spending in various areas, supplemented by stronger economic growth and increased revenue from Trump's higher tariffs.

Mnuchin defended the Trump administration's COVID-19 relief spending, acknowledging that it contributed to a record deficit of $3.1 trillion in fiscal 2020 but contended that the current Biden administration's spending is exacerbating inflation and deficits. He emphasized that the deficit in fiscal 2024 reached over $1.8 trillion, the highest outside the COVID era, with public debt interest exceeding $1 trillion for the first time.

"The spending we did in COVID was necessary," Mnuchin said, "or there would have been a worldwide depression, not a recession. However, the Biden administration's ongoing spending clearly has created inflation and significant deficits that must be addressed."