Treasury Secretary Steve Mnuchin today acknowledged that it “probably” takes two years to reach the promised 3% annual growth rate, once the tax reform is approved, the financial deregulation agenda is advanced and trade agreements are improved.
“In our projections, it probably takes two years to raise annual growth to 3 percent and then we can have a sustained level. That’s what we’re projecting,” Mnuchin told the Milken Institute global conference in Los Angeles (CA).
Thus, the Treasury Secretary lowered President Donald Trump’s expectations of rapidly accelerating economic activity in the United States, at 3% a year or more, compared to the average of his predecessor, Barack Obama, of around 2% annual.
“Obviously, the sooner we pass the tax reform, the sooner we get regulatory relief, the better we will be,” he said.
The head of the US Treasury’s statements came after the first estimate on the evolution of gross domestic product, which was a disappointing annualized rate of 0.7%, was released last Friday.
On the tax reform, of which the White House presented a generic draft with tax cuts for the companies and the workers but in which it did not detail how it will compensate the consequent the reduction of income, emphasized that it will not generate deficit since it will be paid alone With the economic momentum generated by Trump’s policies.
“We expect to pay for it through economic growth and eliminating many deductions. The difference between growing at 2% and 3% per annum is about 2 trillion tax revenues over a decade,” the former Wall Street banker said.
Although Trump has insisted on the need for an aggressive fiscal stimulus that combines tax cuts and increases in public spending, Congress must ratify the proposal, and negotiations will be fraught with obstacles, even though Republicans have the majority in Both chambers, as has shown the legislative rejection to its reform of the health law.
Faced with Trump’s optimism, the International Monetary Fund (IMF) offered a more cautious outlook, predicting GDP growth of 2.3% for this year and 2.5% for 2018.