President Donald Trump’s top economic adviser said Thursday that the administration’s historic $1.5 trillion tax-cut package was already paying for itself amid sustained economic growth.
“I think we have already paid for a good chunk of it,” National Economic Council Director Larry Kudlow said at an event in Washington, adding that the U.S.’s budget outlook is not “as bad as many people say.”
But Kudlow’s claim contrasts with available government data. The U.S. budget deficit has continued to widen since the 2017 tax overhaul, a trend that began under the Obama administration due to an aging population and rising entitlements. The tax cuts, which came into effect last year, have exacerbated the U.S.’ deteriorating budget outlook.
The Treasury Department released data on Wednesday showing that the budget deficit widened to $691 billion in the first half of fiscal 2019 as spending outpaced an increase in revenue.
The budget deficit as a share of gross domestic product is expected to widen to 5.1 percent this year, up from 3.8 percent a year ago, according to projections from the White House Office of Management and Budget. The shortfall is expected to be 4.9 percent of GDP in 2020, and further narrow every year through 2024, according to the estimates.
U.S. economic growth cooled by more than initially reported last quarter on revisions to consumer and government spending to 2.2 percent, according to data released last month by the Commerce Department.
The U.S. is facing global headwinds from Europe to China, prompting the Federal Reserve to stand pat on rates for the rest of the year, though policy makers have signaled they’re prepared to move interest rates higher or lower as needed.
Kudlow on Thursday reiterated the administration’s stance that the U.S. can get back to a sustained 3.5 percent growth level, based on Trump’s three-pronged economic agenda that includes tax cuts, deregulation and new trade deals.
Trump has repeatedly blamed Fed Chairman Jerome Powell for previous interest rate hikes that he has said are holding back an economic boom. Kudlow on Thursday said that Powell was doing a good job, though he agrees with the president’s criticisms of the last few rate increases.
Kudlow, 71, said he doesn’t see rates increasing “again in my lifetime.”
© Copyright 2021 Bloomberg News. All rights reserved.