Speaking at at an event hosted by The Hill this morning, Treasury Secretary Steven Mnuchin made a grand introduction for today's main event: he said President Trump's forthcoming tax plan will be the "biggest" tax cut in history, even if he provided few clues as to what will actually be contained in the package, set to be unveiled at 1:30pm today.
As previewed last night, Mnuchin confirmed that the proposal would cut tax rates for businesses to 15%, with the rate applying to both corporations and owner-operated businesses known as "pass-throughs." The 15% rate was also part of Trump's campaign plan. Mnuchin said that Trump thinks that's "absolutely critical" for driving economic growth. As the Hill adds, Mnuchin also said that the administration wants to simplify the personal tax system and that most Americans should be able to file their taxes on a large postcard, although so far there has been virtually no discussion, or leaks, on whether personal income taxes would be affected
“The average American should have simple taxes,” Mnuchin said, adding that many people won't end up paying any taxes under the administration's plan.
Mnuchin also said that Trump's proposal won't include infrastructure spending. “This plan is just tax reform,” he said.
According to The Hill, the Treasury secretary and National Economic Council Director Gary Cohn met Tuesday night with Brady and other top GOP lawmakers. Mnuchin called the meeting "very successful" and that lawmakers are all in agreement that tax reform is a top priority in order to help boost the economy.
Still, many questions remained unanswered, especially since as Mnuchin said, the BAT is now effectively gone as a revenue offset. As a result, the new White House plan is likely to resemble Trump's campaign tax plan, which was estimated to cost trillions of dollars over 10 years. In fact, while the leaks have been generous on the spending boosts, so far little if nothing at all has been revealed on how Trump's plan will be funded, aside from "3% growth", which not even the ever cheerful Goldman Sachs believes is possible.
Addressing this issue, earlier today JPM said that "it will be virtually impossible to pass through Congress." In other words, for all its huge bluster, absent substantial trimming, the plan is Dead on Arrival in the House. That is also a structural problem since a tax-reform bill that increases the deficit could be challenging to pass with just Republican votes under budget reconciliation, since reconciliation bills cannot add to the deficit outside of the 10-year budget window. Tax cuts that lose revenue either need to pass with Democratic support or expire.
This, however, did not appear to deter Mnuchin, who said the administration's goal is for a tax bill to be permanent. However, “if we have it for 10 years, that’s better than nothing,” he said. He also said that the White House is focused on tax reform rather than tax cuts, noting that tax reform is "the center and the core" of Trump's economic plan. Trump has been "very involved" in the tax-reform efforts, Mnuchin said.
So how does Mnuchin hope to pass Trump's plan? He said said that he hopes that Democrats will work with Republicans on taxes; needless to say, they won't.
As The Hill further adds, Mnuchin also touched on the debt ceiling, vowing that it would be lifted later this year. He said he had already begun talks with Congress and that the issue would not become a political crisis. Once again, this may be optimistic since a tax plan without offsetting revenue gains will add at least an additional $2 trillion to the US debt, something which conservative Republicans will defy.
"Again, this is a discussion we're having with the House and Senate. I do think we need to raise the debt ceiling" he said, for obvious reasons. "There's no question about that. People agree ... we're not going to let this become an issue." He added: "By the way, we're not going to do one of these wait to the last minutes either. So we'll get the debt limit done in plenty of time."
Mnuchin also said he does have the money to manage the government through the summer, and he noted that the Treasury took in a huge amount of revenue on April 18, the deadline for filing last year's taxes. "We have the cash flow to manage the government. Matter of fact, we had one of the largest days ever of collecting tax receipts on April 18."