Treasury Secretary Steven Mnuchin said Thursday the Trump administration is aiming to pass tax reform by the August congressional recess but predicted the resulting economic growth wouldn’t be noticeable until the end of next year.
In an interview on CNBC’s Squawk Box, Mnuchin called tax reform his No. 1 priority.
“The first, most important thing that will impact growth is a tax plan, so we are committed to passing tax reform,” he said. “It’s going to be focused on middle-income tax cuts and simplification in making the business tax competitive with the rest of the world, which has been a big problem and a big reason why businesses are leaving and cash is sitting offshore.”
He said economic growth can rise above 3 percent with a combination of tax reform and regulatory relief, a projection that is far higher than those of the Federal Reserve and Congressional Budget Office.
Mnuchin said the Fed and the CBO aren’t “missing anything” in their projections of roughly 1.8 percent economic growth.
“They’re making those projections based on the status quo, and that’s where the economy has been,” Mnuchin said. “I think we’re looking at significant economic changes.”
He said he has been working closely with House and Senate leadership to develop a combined tax plan.
On the controversial border-adjustment tax proposal, Mnuchin said there are “some interesting aspects of it” but reiterated that the administration has some concerns.
Asked whether the plan might contribute to the deficit, Mnuchin said he guessed that the administration’s growth assumptions will be higher than those calculated by the Congressional Budget Office, citing his preference for so-called dynamic scoring.
He also praised his fellow economic officials, saying he speaks with National Economic Council Director Gary Cohn “many times a day” and that the two of them met with Budget Director Mick Mulvaney on Wednesday.
Mnuchin demurred on whether Treasury would name China as a currency manipulator, a determination that’s usually made on a semiannual basis in a statutorily required report.
“I’ve had a terrific conversation with my counterparts there,” he said. “I look forward to meeting them.”
“We have a process within Treasury, where we look at currency manipulation across the board, and we’ll go through that process,” he added. “We’re not making any judgments until we continue that process.”
He also didn’t provide much clarity on the administration’s position on the Export-Import Bank, but indicated they would like the agency to stick around in some capacity. The export credit agency’s board doesn’t have a quorum and so can’t approve projects above $10 million.
“I’ve talked to the president about it,” Mnuchin said. “It’s something we’re looking at.”
He cited concerns that the bank “is just subsidizing large corporations, and that’s not something we’re interested in doing.”
“On the other hand, we’re going to take a serious look at to the extent that we think the Ex-Im can be competitive in helping small and medium-sized businesses export,” he said. He added that he has a team looking at the impact on the economy if the bank were working at full steam.