Evan Vucci / AP
- The Congressional Budget Office predicted that the federal deficit would exceed $ 1 trillion this year for the first time since 2012.
- Economists say Republican tax law president Donald Trump, approved in 2017, triggered a sharp surge in the federal deficit.
- But the White House is doubling the claim that the $ 1.5 trillion package will eventually break even.
- You can find more stories on the Business Insider homepage,
The US economy is growing at a healthy pace, with unemployment at its lowest level in half a century. So why is the government spending hundreds of billions more than necessary?
Economists say Republican Tax Law President Donald Trump, approved in 2017, has triggered a sharp surge in the federal deficit, which usually decreases in times of economic growth. But the White House is doubling the claim that the $ 1.5 trillion package will eventually break even.
"I stand by our comments that the tax cuts will pay for themselves," said Treasury Secretary Steve Mnuchin at a congressional hearing on Wednesday. "It will be simple math."
This was just the latest in a series of similar comments from government officials who have argued that lower taxes over a decade would spur enough economic activity to offset revenue losses.
Independent economists have mostly disagree, Tax revenue fell sharply in 2018 when the tax cuts and jobs law came into effect and businesses benefited the greatest rate breaks in the history. Republican MP Kevin Brady from Texas, who helped build the package, admitted in June that it was not clear whether it would pay off.
"We'll know in eighth, ninth, or tenth year what the government's earnings have been over time, so it's far too early to judge," he said at an economic summit in Washington.
The White House referred comments to the Council of Economic Advisers, who failed to respond to multiple emails.
At the hearing, Mnuchin added that spending increases were behind the deficit and downplayed the effects of lost revenue. The bipartisan legislature passed a spending package last year that is expected to increase government debt by $ 500 billion.
"Let me just comment that spending is going up too, but the $ 1.5 trillion in tax cuts we've made will pay off," he repeated.
The comments came just a few days after Congress's budget office predicted that the federal deficit would exceed $ 1 trillion this year for the first time since 2012.
"We don't need false promises about rapid economic growth or tax cuts that will pay off," said Maya MacGuineas, president of the responsible budget committee. "We need measures to reverse our trillion-dollar deficits."
(tagsToTranslate) Economy (t) Trump (t) Tax cuts (t) Deficit (t) Budgetary policy (t) Politics (t) Politics