politics

Mulvaney Says U.S. Can Outgrow Higher Spending, Debt Costs

  • White House encouraged by fast corporate response to tax cuts
  • At conservative conference, blames budget blowout on Democrats
Mick Mulvaney Photographer: Zach Gibson/Bloomberg

At the recent pace of economic growth, gains in government revenue will outstrip rising spending and the extra borrowing costs connected to rising interest rates, President Donald Trump’s budget director predicted.

“If we can control our expenses and grow the economy,” the government’s revenue will rise as well, and deficits will shrink, Mick Mulvaney, director of the Office of Management and Budget, said at the annual Conservative Political Action Conference just outside Washington on Saturday.

Commerce Department figures showed the U.S. economy expanded at an annualized pace of 3.1 percent in the second quarter of 2017, followed by 3.2 percent in the third quarter and 2.6 percent in the fourth. Economist surveyed by Bloomberg expect growth of 2.7 percent in 2018 and 2.4 percent in 2019.

Mulvaney, a deficit hawk during his years as a Congressman from South Carolina, said he was disappointed by the recent bipartisan budget deal that the Congressional Budget Office estimated would add $296 billion in spending authority over the next two years. He blamed it on “extortion” from Democrats.

Companies Respond

Opposition lawmakers, Mulvaney said, would only support a necessary ramp up in defense spending if they got additional non-defense spending measures included. That response was similar to one by President Donald Trump, who said on Twitter on Feb. 9 that “we were forced to increase spending on things we do not like or want” in order to fund more military spending.

Mulvaney said the administration had been surprised by the rapid response by corporations to recent tax cuts in the form of employee bonuses, wage increases and share buybacks, and he encouraged Americans to start new businesses. “We’re not out to get you anymore,” he said.

The White House’s 2019 budget proposal, released on Feb. 12, would sharply raise the federal deficit, to $984 billion, nearly double the projection from last year. The red ink would total $7.1 trillion over the next decade and the budget wouldn’t come into balance, a break from a longstanding Republican goal.

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