“How much of that reduction in revenue projection is from the tax cut?” Yarmuth asked.
Mulvaney’s response: “Roughly $1.8 trillion.”
The straightforward statement amounted to a rare admission from an administration official about the costs to the federal Treasury of the unpaid-for GOP tax bill. Almost without exception, GOP lawmakers and administration officials have argued that the bill passed in December will more than pay for itself by generating robust economic growth — far more robust than independent analysts project.
Indeed, even as Mulvaney delivered his testimony on the House side of the Capitol on Wednesday, Treasury Secretary Steven Mnuchin was telling a Senate committee that the legislation would, in fact, pay for itself by generating 3 percent annual economic growth over the next decade. Independent forecasters see a possibility of 3 percent growth this year but expect growth to head back down to 2 percent shortly thereafter.
“So we should see, if your projections are correct about approaching 3 percent growth, not only a revenue neutral tax bill, but one that does exactly what it was intended, generating surplus?” Sen. Mike Crapo (R-Idaho) asked Mnuchin at a Senate Finance Committee Hearing.
“That is correct,” Mnuchin replied. “I stand by my previous comments on this.”
Mnuchin’s testimony toed the party line on the tax bill even as Mulvaney departed from it.
As for why the $1.8 trillion figure cited by Mulvaney was even bigger than the $1.5 trillion price tag assigned to the tax bill, the budget director explained that’s because the administration differs with the Congressional Budget Office over the impact of repealing the Affordable Care Act requirement for individuals to carry health insurance.
The repeal was included in the tax bill, but the administration does not expect it will cause as many people to leave the Medicaid rolls as CBO does. If more people stay on Medicaid, federal costs are even higher.