Senator Mark Warner questioned OMB Director Mick Mulvaney and Treasury Secretary Steven Mnuchin today at a set of Budget and Finance Committee hearings to review President Trump’s budget and tax cut plans.
Sen. Warner has said the Trump budget is “based on unrealistic growth estimates” and has called instead for a “more responsible approach to fixing our nation’s balance sheet.”
During the hearings, Sen. Warner told both Director Mulvaney and Secretary Mnuchin that the Administration’s budget numbers do not add up, and questioned how the Administration could pay for $5 trillion in vague tax cuts without threatening popular tax deductions such as the mortgage interest deduction, charitable donations and the deduction for employer-provided healthcare plans.
Q&A: Mulvaney
Warner: The specific question is: you have 5 trillion dollars in costs in your tax plan—unpaid for. You cannot pay for it in any revenue neutral basis without double or triple counting, or dynamic scoring on steroids. If you take charitable, home mortgage, and retirement accounts off the table as not being cut.
Mulvaney: Right.
Warner: You can’t get there. The numbers do not add up. And, by the way, I don’t think you haven’t told the American public yet that—to even get close—you’re going to have to then take off the deductibility of employer provided healthcare plans. So that’s on the table?
Mulvaney: Here is what’s on the table, which I think the one page of principles that we sent to—
Warner: Sir, I’ve gone through these—I know you have as well. I spent years going through these numbers to try to get them to balance. You have to go where the money is if you’re talking about any kind of rational revenue neutral plan. And I don’t think you can get there. I don’t think your numbers add up. I think they don’t pass the smell test. And I think, frankly, what Senator Whitehouse was pushing at—that you are not double counting—I just don’t see that as well because you have put dynamic scoring in place. Dynamic scoring assumes the tax cuts. Because you can’t say dynamic scoring alone is going to come about without the tax cuts in place. So if you’re counting those on the dynamic scoring process, you have to bake that in, so it’s not truly a revenue neutral tax plan. To get 5 trillion dollars in savings, when you take charitable, home mortgage and retirement accounts off the table the numbers just don’t add up.
Q&A: Mnuchin
Warner: Right now at $20 trillion, as interest rates go up…again we discussed this before, that adds just an additional debt service: $140 billion a year in additional payments right off the top. So, I’d argue, you balloon the debt and whatever benefit you get from the tax cut is going to be erased by additional deficit payments.
Mnuchin: Senator Warner, I assure you that we appreciate the significance of the debt having gone from $10 trillion to $20 trillion—
Warner: And again, both sides bear responsibility. All I would say sir is, I’ve spent a couple of years looking through these numbers pretty closely. I think, based on reasonable, normal assumptions with anything close to traditional scoring—even if you do a little bit of bump on dynamic scoring. You can’t get to $5 trillion dollars of tax expenditures without going after the largest one like employer-based healthcare. I really fear that this becomes harder than it looks and I am worried if you are around the 3% growth rate assumptions, I’ll look more, but I am worried as ell about dynamic scoring that has to include the tax cut assumptions yet you are saying that they are not counted in the budget. So there seems to be again double-counting. I’m also very worried that we are taking domestic discretionary spending down to 3% of GDP—that’s the lowest it’s ever been. And, you know, we were both business guys. You invest in a business if that business invests in education, plant and equipment, and staying ahead of the competition. A government does that by investing in education, infrastructure, and research and development. Unfortunately, your budget slashes investments in education, infrastructure and research and development. That’s not going to lead, I believe, to the kind of growth that you have in your underlying assumptions.
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