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Mnuchin: GOP, Trump tax law will pay for itself — as deficit rises

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steve mnuchin
Treasury Secretary Steven
Mnuchin

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  • Treasury Secretary Steven Mnuchin once again claimed
    that the GOP tax law would pay for itself.
  • Almost every independent analysis of the tax law
    projects that the law will increase the deficit.
  • Government agencies like the Congressional Budget
    Office and the White House’s Office of Management of Budget
    have shown the tax law will add to the deficit.

Treasury Secretary Steven Mnuchin on Tuesday fell back on a
dubious claim about the federal deficit to defend the GOP tax
law, insisting the budget-busting measure will “pay for itself.”

During an interview with CNBC, Mnuchin was asked about recent
trends in tax receipts — income taxes received by the federal
government. In his answer, the Treasury secretary pointed to a
long-held Trump administration claim that the tax law that was
implemented in January will pay for itself because of economic
growth.

“So our tax plan was really designed to stimulate the economy and
get growth,” Mnuchin said. “So we’re humming along on where
projections are and as I’ve said at 3% economic growth this tax
plan will not only pay for itself but in fact create additional
revenue for the government.”

The idea that the
GOP tax law would pay for itself,
or even bring down the
federal deficit, has been a
consistent talking point
 from Mnuchin
and Trump
administration officials
since the release of the bill in the
fall of 2017.

But every major analysis by independent government agencies and
outside groups directly contradicts Mnuchin’s assessment.

The Congressional Budget Office, a nonpartisan research agency
for Congress,
projected in April that the GOP tax law
will add $1.9
trillion to the federal budget deficit between 2018 and 2028,
even incorporating increased economic growth from the law.

According to the CBO’s report, the tax law will result in
substantially lower revenue than previously projected, while
spending is expected to continue rising.

The CBO also estimated that the US will face annual budget
deficits of $1 trillion or more by 2020 unless there are
significant legislative changes.

Even the White House Office of Management and Budget, in a July
report on the budget, found that
the tax bill will substantially
add to the federal deficit in
the years to come.

Other analyses by the
Tax Policy Center
,
Tax Foundation
,
Penn-Wharton Budget Model
, and Center
for a Responsible Federal Budget
also showed that the US
deficit will only grow under the GOP tax law.

Part of the split between Mnuchin and nearly every independent
analysis is that he maintains that the economic boost from the
tax law will be sustainable over the long-term.

But the independent analyses have found that the tax law would
help push up economic growth in the short-term but then fade away
or even become a drag on growth. As the growth boost fades, so
too would the revenue increase from a stronger economy.

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