Chris Wallace vs. Mick Mulvaney On Tax Cuts: "There Is No Evidence They Pay For Themselves"

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CHRIS WALLACE, FOX NEWS SUNDAY: Let's turn to the tax reform plan that the president and Republicans in Congress rolled out this week. The president told Americans who benefits.

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TRUMP: By eliminating the tax breaks and special interest loopholes that primarily benefit the wealthy, our framework ensures that the benefits of tax reform go to the middle class, not the highest earners.





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WALLACE: But, Director Mulvaney, independent experts say what the president just said there isn't true. I want to put up this chart. The non-partisan Tax Policy Center did this analysis. It shows the middle fifth of households in America, those earning between $48,000 and $86,000 a year, they'll get an average tax cut of $660 next year. Meanwhile, the top 1 percent, people making more than $730,000 a year, will get an average tax cut of almost $130,000 next year.

Now, I understand that your -- that this isn't done yet, that they're only basing it on the plan as it exists at this point. But according to their analysis, that middle fifth gets 1.5 percent of the total benefit of the tax cut, while the top 1 percent gets 8.5 percent of the benefit. That doesn't seem fair.

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: Sure. A couple of different things, and, obviously, I can't see the graph that you just put up, but I think that I have seen in previous to this. And what I think that particular organization did was, number one, they didn't do any dynamic scoring. If you go look at the -- the details of what they put out, they assumed no benefit to the overall economy, which is just absurd to think that there won't be any economic benefit to the overall --

WALLACE: But I'm not talking -- sir, I'm not talking about the economy, I'm talking about the benefit of the -- the benefit -- the tax cut they get.

MULVANEY: No, no, let me finish. I got it, but let me go through. You can't look at the tax cut on a family until you realized how -- how much better off they're going to be in a growing economy. But beyond that, they had to make assumptions because we didn't put any in the framework yet about where those particular tax rates kick in. They're -- there's nothing in the document yet about that. Not because we're hiding it, but because we're working with Congress to try and establish where the different rates kick in.

Keep in mind, there's four rates. There's zero percent rate, and we know that will go up to $24,000. After that it's 12, 25 and 35. But there's been absolutely no decisions made yet on where those -- those percentages kick in, in terms of the tax bracket. It's impossible to do what the National Tax Center just did. So my guess is, and I think that's the one that Jared Bernstein (ph) works for -- it's not surprising that, you know, a former chief economic for a Democrat vice president doesn't like a Republican tax plan. So I don't put very much weight on that particular (INAUDIBLE).

WALLACE: But this is a -- it's a non-partisan -- it's a non-partisan group, first of all, sir. And, secondly, I mean, you know, you can talk about, well, it's going to kick in at this level or that level. But if the middle income person is getting a $600 tax cut and the top 1 percent is getting $130,000 tax cut, I mean I thought the whole point was that the wealthy weren't going to get a tax cut at all.

MULVANEY: It was. And I'm laughing because I was on one of your -- I've been on a -- I've done a couple of these interviews this week, Chris, and I was on one of your sister networks and they were accusing the tax plan of not giving any tax cuts to the wealthy. In fact, they were accusing it of raising the taxes on the wealthy. And then I was on another network and they were accusing the tax plan of giving all of the benefit to the wealthy. So it sounds like the beauty is in the eye of the beholder at this point.

And the real details are this, is that we're looking at the middle class in terms of making sure they can pay less and -- and this doesn't get nearly enough attention -- it's easier for them to pay. Almost 90 percent of American families, not businesses but families, actually pay someone else to do their taxes. So there's another benefit we're trying to give to them.

The second thing we're trying to add to this is that lower corporate tax rates as we try and spur the economy. So that's where the president's attention is. The president's attention is on the middle class, making sure that's simple, fair and better. And then on the corporate tax rate, to try and get folks to invest in America again. His focus has not been on the impact on the top 1 percent.

WALLACE: All right, now let's get to the other issue you were discussing, and I -- I interrupted you and I -- forgive me for that, and that is the issue of cost because the Senate Republican budget plan calls for a tax cut that is going to cost the Treasury $1.5 trillion over the next ten years. And some outside experts say that the plan that was unveiled this week actually will add $2 trillion to the debt over the next ten years.

Now, back when you were in Congress, you were a deficit hawk. What happened, sir?

MULVANEY: Yes, I think that $2 trillion number is coming from that same organization that did not score this dynamically, didn't look at the potential for economic growth. But you're right, the --

WALLACE: That's coming from a bunch of different groups.

MULVANEY: It does, but let's talk about this. I've been very candid about this. We need to have new deficits because of that. We need to have the growth, Chris. If we simply look at this as being deficit-neutral, you're never going to get the type of tax reform and tax reductions that you need to get to sustain 3 percent economic growth. We really do believe that the tax code is what's holding back the American economy.

The reason we've been growing at 1.8 percent for the last eight, ten years, which is way below the historical average, is in large part because of our tax code. It is important to us to get the biggest, broadest tax reduction, tax cuts, tax reform that we can possibly get because it's the only way we get back to 3 percent growth. That's what's driving all of this, how do you get the American economy back on that historical growth rate of 3 percent and out of these doldrums of 1.8, 1.9 that we had of the previous administration?

WALLACE: I want to pick up on this because their -- some of your fellow colleagues in the Trump administration are not just saying that it's going to unleash massive growth, they are saying more than that. Here is Treasury Secretary Steve Mnuchin this week.

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STEVEN MNUCHIN, TREASURY SECRETARY: That's $2 trillion of additional revenues. That's $10 trillion of economic activity. And not only will this tax plan pay for itself, but it will pay down debt.

WALLACE: But the fact is, there is no evidence the tax cuts pay for themselves. The Reagan tax cut, back in 1981, added -- added, $208 billion to the deficit over four years. The Bush tax cuts in 2001 and 2003 added $1.5 trillion to the debt over ten years.

Mr. Mulvaney, you can argue whether or not tax cuts spur economic growth. I think that's a perfectly legitimate argument. There is no evidence that they pay for themselves.

MULVANEY: Well, look -- just look at the facts. And you can go back, Chris, and make an assumption and you can run some numbers. You have to make a couple of assumptions about growth rates and so forth. But if we had 3 percent growth, which is what we're trying to get to, what we're at, by the way, right now, we're trying to maintain that 3 percent growth. If we had been at 3 percent growth over the last ten years, the budget very nearly would be balanced this year. That's how big a difference it makes when you grow the American economy that additional 1 percent over ten years.

Over the next ten years, if we can grow at 3 percent instead of the 1.8 percent that the non-partisan Congressional Budget Office says that we're going to grow and has been the average under the previous administration, if we can get to that 3 percent, it is $2 trillion to $2.5 trillion worth of more government revenues. It's 12 million additional jobs. And those are 12 million jobs paying into Medicare, 12 million jobs paying into Social Security. Growth really is what's driving all of this and growth is what our focus is, which is why we're willing to accept increased short-term deficits in exchange for that long-term payoff.

WALLACE: But, I mean, that's the point I want to make, and you seem to be agreeing with me, growth is a great thing and there's no question tax cuts can produce growth, although it isn't just tax cuts. In fact, in the '90s, Bill Clinton had a tax increase and we had the biggest growth we've had in any decade in recent history.

So, I mean, there are a lot of other factors, I think you would agree, other than government fiscal policy. But the -- the chairman of the Council of economic Advisors for Ronald Reagan said that the benefit, the payback from a tax cut is $0.35 on the dollar. So, in other words, he's saying, if you cut taxes a dollar, you add $0.65 to the debt.

MULVANEY: Yes, I'm sorry, I'm not -- not familiar with that -- with that math. In fact, I'm sitting here trying to think of how to respond to it.

But, in any event, there are a lot of other fiscal policies that we have put in place already, Chris, and I don't want to draw attention away from the regulatory reform that we've done.

And, by the way, why -- why do I talk about these things. We're at 3 percent already. I think I was on your show a couple months ago and you had criticisms from some of the same groups saying there was no way that we would get to 3 percent ever during this administration, and here we are already in the first eight months.

Growth works. What we're doing in the administration to spur growth in terms of regulatory form work. And what we're working on right now is to make sure that those tax cuts add to that. We do believe that sustained 3 percent economic growth is possible and that that is the way you can balance the budget long-term. Without 3 percent growth, Chris, you'll never balance the budget at 1.8 percent growth again.

And as the budget director, you asked me an opening question, what happened to me? Why am I -- why am I now interested in deficits? The only way you balance the budget in this country long-term is through sustained economic growth. And that's what everything we are doing in this administration is aimed at that end goal.

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