US Treasury Secretary Steven Mnuchin on Thursday pledged a new round of tax cuts that he said would benefit ordinary Americans.
President Donald Trump, who faces a tough reelection bid in nine months, raised the possibility of tax cuts earlier this week, saying a proposal could be rolled out within three months.
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Any new stimulus would add to 2017’s budget-busting $1.5 trillion round of tax cuts, mostly aimed at corporations and the wealthiest taypayers.
“The president has asked us to start working on what we call tax 2.0,” Mnuchin said told CNBC from the global economic forum Davos, Switzerland.
“They’ll be tax cuts for the middle class and also be looking at other incentives to stimulate economic growth.”
Trump needs a strong economy to boost his chances for a second term in the White House.
Mnuchin said the 2017 tax cuts had not caused runaway budget deficits and rejected claims that they would not pay for themselves ultimately, as he and other proponents claimed.
But to get there spending will have to be reined in, he said.
“But there’s no question we need to slow down the rate of growth of government spending because we can’t sustain these deficits growing at these levels,” he said.
The federal deficit last year surged 26 percent or $205 billion to its highest level in seven years, and the Congressional Budget Office projects it will surpass $1 trillion this year.
Trump said this week he was open to the idea of cutting spending on entitlements like health care and retirement, which would spark outrage among Democrats and mark a sharp break with his earlier position.
Prior to the 2018 mid-term elections, Trump also floated the idea of a new round of tax cuts, which never materialized.