President Trump's tax plan won't cut federal revenue, at least for the purposes of the budget request he put together.
That was the argument Office of Management and Budget Director Mick Mulvaney submitted Thursday, trying to explain a major question about the budget he introduced Tuesday.
The issue was that Mulvaney had been accused of "double-counting" $2 trillion in revenue in his blueprint for balancing the federal budget over 10 years. Critics said that the budget relied on an assumption that the tax reform, with other policy changes, would generate $2 trillion in revenue as a result of economic growth to ensure that the reform did not add to the deficit. Then, it relied on that same $2 trillion in growth to balance the budget as a whole over next 10 years. In effect, the same revenue from faster economic growth were counted twice.
Under questioning Thursday from Sen. Sheldon Whitehouse, D-R.I., though, Mulvaney said instead that revenue would not be counted on to make the tax reform add up — a major change from previous administration statements about the tax plan.
"I'm aware of the accusations of double-counting, I do not believe we engaged in that," Mulvaney said.
Whitehouse then said that, for Mulvaney's statement to be true, the envisioned tax reform would have to maintain constant tax revenue, even without considering any new revenue from faster economic growth.
"We are agreeing on that point," Mulvaney said. The administration assumed that the tax reform would be revenue-neutral, he said, simply because Trump officials had to choose an assumption for the purposes of putting together the budget and there are not enough details about the tax legislation to specify details.
To this point, the administration has submitted a one-page outline of tax reform goals. That framework, however, likely would lose $3 trillion to $7 trillion in revenue over 10 years, according to a rough estimate from the Committee for a Responsible Federal Budget.
Mulvaney's statement Thursday, however, is that the Trump tax plan would lose zero in revenue. In effect, it wouldn't be a tax cut at all. For every dollar lost through tax rate reductions, another dollar would have to be raised through eliminating deductions, credits and other breaks.
In terms of drafting a budget, the administration can make whatever assumptions it wants.
But Trump has long promised that his plan would be a major tax cut.
"Donald Trump will sign into law the most consequential tax cut in American history," Vice President Mike Pence tweeted this month.
Treasury Secretary Steven Mnuchin has repeatedly said that faster economic growth generated by the tax reform will be a key part of ensuring that the tax reform does not add to the deficit.