Mnuchin remarks: Report sees mixed bag for tax cuts
In an 18-minute CNBC interview Thursday, Trump Treasury Secretary Steve Mnuchin told Americans that the United States can more than double economic growth to a fast "3 percent or more" a year by 2018. He also touched on a string of hot topics. Analysts Brian Gardner and Michael Michaud of Keefe, Bruyette & Woods help interpret:
In an 18-minute CNBC interview Thursday, Trump Treasury Secretary Steve Mnuchin told Americans that the United States can more than double economic growth to a fast "3 percent or more" a year by 2018. He also touched on a string of hot topics. Analysts Brian Gardner and Michael Michaud of Keefe, Bruyette & Woods help interpret:
Tax reform. Mnuchin "threw some cold water on corporate tax cuts, but reiterated support for individual tax cuts." It looks as if Trump now wants to "simplify" taxes, "rather than cutting tax rates," the Keefe analysts told clients in a report.
Mnuchin said the Trump administration is "primarily focused on middle-income tax cuts" and "corporate tax relief." But the analysts conclude that Mnuchin's goal of a summer 2017 tax-reform plan is "politically unrealistic."
Home-loan reform. It "is not one of the administration's top priorities," the Keefe analysts concluded.
Mnuchin still wants to reorganize the two big mortgage-finance companies under private management, but warned that there's "careful study" ahead, and tax reform will come first.
Fannie Mae and Freddie Mac stocks lost more than a third of their values after the federal appeals court in Washington ruled Tuesday that hedge fund preferred-stock investors aren't entitled to billions in Fannie-Freddie dividend refunds from taxpayers. The investors said billions were taken illegally.
IRS upgrade. "We're going to update the systems" and improve security at the tax agency, Mnuchin pledged.
EX-IM Bank won't die. "We're not interested" in just "subsidizing large corporations," but will look at whether the Export-Import Bank can help more small and midsize exporters, Mnuchin said. He noted that the bank is already doing smaller loans, not just backing lead borrowers such as GE and Boeing.
By contrast, conservative Republicans such as Sen. Pat Toomey (R., Pa.), over the objections of industry-friendly congressmen such as Rep. Patrick Meehan (R., Pa.), wanted to kill the bank.
Import tax. Mnuchin sidestepped the question of a billion-dollar "border adjustment tax" to promote U.S. manufacturing.
He said he found the tax proposal "interesting." U.S. factory owners want to use it against foreign competition, but is also "concerning," he said. Mnuchin has met with Walmart and other import sellers who complain that import taxes will boost the prices they charge U.S. consumers.
China a currency manipulator? Candidate Donald Trump had promised "to declare China a currency manipulator on Day One," but that was just talk.
"I had a terrific conversation with my counterparts" in China, Mnuchin said Thursday. He plans more meetings, and to review Treasury's "process" for rating other nation's currency actions. At this point, "we're not making any judgments."
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