Treasury Secretary Steven Mnuchin explained the budget math underlying the Trump administration’s new tax plan in a bit more detail Thursday morning, and it includes counting on economic growth from regulatory and trade reform.
Upon envisioning much faster economic growth and eliminating many tax breaks, “we’ll be comfortable that we can pay for most of the plan,” Mnuchin said on CBS.
The one-page summary of tax reform principles outlined by Trump officials Wednesday didn’t provide any summary of how much the plan might cut federal revenues, or how the funds lost from tax rate reductions might be made up by broadening the tax base. But a very rough estimate from one outside group, the Committee for a Responsible Federal Budget, suggests that the fiscal costs could be enormous, around $5.5 trillion over a decade.
Asked Thursday how he would prevent the plan from driving up the debt, Mnuchin answered that it would be a combination of ending tax breaks and accelerating economic growth to 3 percent annually on a sustained basis.
And it’s not just the tax reform that will generate that growth, Mnuchin explained, but also Trump’s broader agenda. “It’s a combination of the tax plan, it’s a combination of regulatory relief, and it’s a combination of our trade principles,” he said.
That would be a contrast with the House Republican tax plan, which is meant not to add to the deficit. That calculation also assumes that the reform would boost economic growth, but only based on the tax plan itself, not other considerations such as regulatory reform.
For the purposes of the procedures that would be needed to guide legislation through Congress with only Republican votes, relying on 3 percent economic growth attributed to policies outside the tax legislation would complicate matters.
