Mnuchin: Tax plan will cut deficits by $1 trillion

Mnuchin: Tax plan will cut deficits by $1 trillion
© Greg Nash

The tax cuts proposed by Republicans and the White House will stimulate enough economic growth to overcome expected deficits, Treasury Secretary Steven MnuchinSteven Terner MnuchinSchiff blasts DOJ over memo on withholding Trump tax returns Schiff blasts DOJ over memo on withholding Trump tax returns On The Money: DOJ offers legal opinion backing refusal to release Trump tax returns | Centrist Democrats raise concerns over minimum wage | Trump bashes Powell ahead of crucial Fed meeting | Design leaks for Harriet Tubman bill MORE said Thursday.

“We think there will be $2 trillion of growth. So we think this tax plan will cut down the deficits by a trillion dollars. That's a large number,” he said in an interview on Fox Business Network’s "Mornings with Maria."

The impact of the tax cuts on the deficit is a major hurdle for Republicans as they seek to pass a tax overhaul. The framework released Wednesday for the bill is already drawing criticism from Democrats and ruffling feathers among fiscal conservatives in the party. 

While many economists agree that tax cuts stimulate the economy, there is skepticism over whether revenues from extra economic growth would produce enough tax revenue to pay for the cuts.

The Center for a Responsible Federal Budget has estimated that the GOP's tax proposal would add $2.2 trillion to the deficit.

Mnuchin said economic growth would return to a steady 3 percent once a tax overhaul passes.

“We're focused on growth. We think that 3 percent GDP is a very moderate aspiration and we can do higher than that.”

President Trump this week said he believes annual growth would reach 6 percent.

The Congressional Budget Office estimates that growth under current law would average 1.8 percent over the next decade.