Business

Onetime deficit hawk Mulvaney says soaring U.S. debt isn’t ‘holding us back’

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MIck Mulvaney, right, talks to Fox Business News host Maria Bartiromo at the Milken Institute Global Conference in Beverly Hills on Tuesday.
(Milken Institute)

Mick Mulvaney came to the Milken Institute Global Conference Tuesday with a straightforward message: President Trump’s economic strategy is working.

The acting White House chief of staff offered a broad defense of the administration’s tax cuts, trade wars and other policies — claiming the result is a strong economy lifting the boats of all Americans.

“We are talking about the economy. We are talking about healthcare. We are talking about trade, and we think we have a very compelling argument going into 2020,” Mulvaney told Fox Business Network personality Maria Bartiromo, who hosted the discussion.

“People will vote for somebody they don’t like if they think it’s good for them, and we think that generally speaking the economy has been good for everybody,” he said.

Mulvaney was one of several administration officials, including Treasury Secretary Steven Mnuchin, who have appeared at the four-day event at the Beverly Hilton. The conference is primarily directed at business people and focused on issues such as access to capital and healthcare.

The theme of this year’s conference is “Driving Shared Prosperity,” and many of the panel discussions have at least touched upon the growth of populism, driven by the widening wealth gap as the economy has recovered from the financial crisis.

Mulvaney came to the conference as the Democratic campaign to unseat Trump in 2020 has been picking up steam, with former Vice President Joe Biden formally announcing his candidacy last week. Mulvaney disputed charges from Democrats and other critics that the 2017 GOP tax cuts were a giveaway to corporations and high-income taxpayers.

The law permanently slashed corporate tax rates to 21% from 35%, and cut personal income tax rates across the board. But the nonpartisan Tax Policy Center has estimated that the average middle-income household would save just $800 this year while households earning more than $733,000 would save an average of $33,000.

Analyses and polls showing that most Americans don’t feel the law has benefited them have been seized upon by Democratic presidential candidates. Sen. Kamala Harris said during a recent televised town hall that her very first act as president would be to enact a tax cut that would give working families as much as $6,000 a year. Sen. Elizabeth Warren wants a tax on the super-rich that backers say could raise as much as $275 billion a year.

Mulvaney contended that the tax cuts as well as the administration’s deregulatory efforts have accelerated economic growth and are driving up wages for lower-income workers.

“The way you lift people up is by having a healthy economy, which is what you got. You don’t do it through redistribution. You do it through opportunity, which is what we think is what we are creating,” he said.

“We believe that what we did in the tax code was not a stimulus, it was not a one-time sugar high. It was a fundamental change. It’s a structural change to the way we tax.”

Long a deficit hawk, the former congressional representative from South Carolina has presided over a giant increase in the national debt since Trump came to office — first as acting budget chief and now in his current position.

The tax law is expected to reduce federal revenue by $1.5 trillion over a decade, and the budget deficit jumped 17% in the 2018 fiscal year compared with the year before.

Mulvaney admitted that the current level of national debt is something that keeps him “up at night.” He said it gave the U.S. less flexibility in dealing with “exogenous” overseas shocks to the economic system.

“Typically we would be able to fall back on our borrowing ability to sort of get us through that. I don’t know if you could do that when you are $22 trillion in debt,” he said.

But he added that at least for the short term, that has not been a problem.

“I’ll be the first to admit I’ve been complaining about the debt since I ran [for Congress],” he said. “It doesn’t seem to be holding us back from an economic standpoint.”

But Mulvaney contended that the current debate over infrastructure spending between the administration and Democrats is not really a deficit issue since only so much infrastructure work can be done at a time.

He called the size of the package being floated — whether $1 trillion or $2 trillion or more — “talking points for press releases.” The more relevant issue, he contends, is whether Democrats would be willing to loosen environmental regulations to speed up construction of roads and other projects. “I think that may be the place where the discussions break down,” he said.

Mulvaney also called on House Speaker Nancy Pelosi to allow the United States-Mexico-Canada Agreement to come to a vote on the House floor — where he thinks the new trilateral trade agreement would win — rather than seeking to score political points against Trump by withholding ratification.

“Is the environment really that poisonous? Vote against a good piece of legislation just because they don’t like the president? The answer is yes,” he said, adding that his own party has contributed to the partisan atmosphere in Washington.

Mulvaney recalled his election to Congress in 2011 as part of the Tea Party movement. “There were members of my freshman class who would never vote for anything that would make Barack Obama look good. That is growing in Washington D.C. That is a shame.”

He said, however, that if Democrats pursue impeachment hearings against the president it would shut down any new legislation before the next election — something moderate Democrats in swing districts would not like.

“To have an impeachment hearing on Monday, say, and then think you are going to talk infrastructure on Tuesday — that’s not how the world works, let alone Washington, D.C.,” he said.