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Trump officials feud with IMF over growth, tax policy predictions

Trump officials feud with IMF over growth, tax policy predictions
© Greg Nash

The Trump administration feuded with the International Monetary Fund (IMF) on Wednesday after the global lender threw cold water on the Republican efforts to spur economic growth through tax cuts.

IMF said it no longer expected the United States to boost its economy through fiscal policy changes and pushed back on the GOP’s argument that cutting taxes would expand the economy.

The lender revised down its forecast for U.S. economic growth from 2.3 percent to 2.1 percent from July and called on countries with significant debt to raise taxes to protect their financial stability.

Trump administration officials fired back at the IMF, arguing the lender had a vested interest in preventing the U.S. from revamping its fiscal policy.

“There are folks that are invested in seeing this fail because if it works then what is their argument for re-regulating?” White House budget director Mick MulvaneyJohn (Mick) Michael MulvaneyOvernight Regulation: EPA sued over water rule delay | House passes bill to ease ObamaCare calorie rule | Regulators talk bitcoin | Patient groups oppose FDA 'right to try' bill Mnuchin wants to know how consumer bureau is handling Equifax breach Overnight Finance: Senators near two-year budget deal | Trump would 'love to see a shutdown' over immigration | Dow closes nearly 600 points higher after volatile day | Trade deficit at highest level since 2008 | Pawlenty leaving Wall Street group MORE told the Financial Times.

“By the same token, if lowering tax does actually lead to growth, what is their argument going to be for raising taxes in the future?” he asked.

Administration officials and GOP lawmakers have insisted that the basic mechanics of their tax plan, revealed in a broad outline last month, would boost economic growth by spurring companies to expand and hire more with saved revenue from tax cuts.

While GOP fiscal hawks have expressed concerns about the plan adding to the the more than $20 trillion federal debt, Republican leaders say the growth unleashed by the plan would make up much of the revenue lost from lower tax rates.

A Treasury Department official told reporters that the tax plans are still a work in progress and that the IMF shouldn’t make assumptions about the likelihood of U.S. policy changes, according to Bloomberg.

Rep. Patrick McHenry (R-N.C.), the House GOP chief deputy whip, said Wednesday he expected both the House and Senate to finish work on a tax revamp bill on Christmas Eve.