The administration’s target of 3 percent economic growth is “very achievable” because tax reform, regulatory relief and cuts to banking regulation that encourage lending will boost growth, Treasury Secretary Steven Mnuchin said Thursday morning in his first televised interview since taking office last week.
In an interview on CNBC’s “Squawk Box,” Mnuchin said the policy changes would not likely begin to translate into economic growth until the end of next year.
Many economists are projecting lower rates of economic growth than the administration. In December, the Federal Reserve estimated longer-run growth rates of 1.8 percent, while the Congressional Budget Office, a nonpartisan group, projected growth rates of 2.3 percent for 2017, falling to 1.9 percent in the longer run.
When asked about these projections, Mnuchin said the Fed and CBO have not missed anything but have made their judgments based “on the status quo" while "we’re looking at significant economic changes.”
In the interview, Mnuchin emphasized tax reform as President Trump’s first priority and said the administration expects to have a tax bill passed by August. He said the administration would use these higher growth assumptions in calculating its budget plan. “We believe in dynamic, not static, scoring,” he said.
When asked about a border-adjustment tax, which would tax imported goods sold domestically but exempt exports, Mnuchin said the plan had “some very interesting aspects,” as well as “some concerns about it.” He said the administration is looking closely at it.
In his comments, Mnuchin appeared to walk back more inflammatory statements by Trump and others in the administration. He attributed the strength of the dollar, which Trump criticized in January, to “confidence in the Trump administration.”
When asked about Fed Chair Janet L. Yellen, whom Trump accused of holding interest rates low for political reasons during the campaign, Mnuchin said that commenting on the pace of interest rate hikes was “not my role.”
He cited “terrific conversations” with International Monetary Fund chief Christine Lagarde and walked back speculation that the Trump administration would move quickly to label China a currency manipulator.
Mnuchin said the Treasury Department was having profitable conversations with Chinese counterparts and would not make any judgments on the country’s status as a currency manipulator until the department has completed its established process for reviewing such designations. In its last report issued in October, the Treasury Department found that China met only one of the three standards it currently uses to designate a country a currency manipulator, while Japan, South Korea and Germany each met two.
In his comments, Mnuchin also said Treasury was considering whether to introduce longer-term bonds, of a period of 50 or 100 years.
Mnuchin said that he “absolutely” viewed the stock market rally as a reflection on the Trump administration. While he said he has given up trying to figure out why the market goes up or down on a given day, “we’re in an environment where there’s very attractive investment opportunities in the U.S., and I think that's reflective of the administration's goals and what the market thinks of it.”