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Mnuchin sees 3% growth in US

CONSENSUS:Steven Mnuchin said a White House tax proposal was purposely vague so that it could work with legislators to craft a bill that would pass the US Congress

Reuters, BEVERLY HILLS, California

US Secretary of the Treasury Steven Mnuchin speaks at the Milken Institute Global Conference in Beverly Hills, California, on Monday.

Photo: Bloomberg

US Secretary of the Treasury Steven Mnuchin said on Monday that economic growth of 3 percent is achievable in the next two years as the administration of US President Donald Trump sets out to dramatically cut taxes.

Speaking at the Milken Institute Global Conference in Beverly Hills, California, almost a week after he helped unveil plans to cut taxes for many people and corporations to 15 percent, Mnuchin said tax reform and regulatory relief would help spur economic growth.

Mnuchin’s comments also came days after government data showed tepid economic growth of 0.7 percent for the past three months.

“The tax plan is our version of a jobs bill,” Mnuchin said in an onstage interview with journalist Maria Bartoromo.

Although the stock market has reacted positively to Trump’s election — with the S&P 500 up 11 percent since November last year — critics of the tax plan have said it is ambitious and lacks details.

In a light-hearted moment, Mnuchin quipped that many at the conference had him to thank for the surge in bank stocks that has helped lift their portfolios, bringing laughter from the audience, but with few fresh details about Trump’s plans and an uncertain time frame, some at the conference expressed concern that the generally optimistic atmosphere might begin to fade.

“I’m concerned that if we don’t see tax or healthcare reform by the end of the year, markets will start to doubt the administration’s ability to deliver it,” Guggenheim Partners global chief investment officer Scott Minerd said.

Mnuchin said he has been working with congressional leaders to push tax reform and he hopes for bipartisan support. Mnuchin told CNBC on the sidelines of the conference that the tax proposal was purposely vague so that the administration could work with legislators to craft something that would pass the US Congress.

The Trump administration has invited many business leaders into the White House, and is listening closely to their concerns and hopes on tax changes, he added.

Goldman Sachs Group Inc president and joint chief operating officer David Solomon said the great sense of optimism early in Trump’s tenure might be fading.

“This quarter, it feels like conviction for tax and regulatory reform is more muted,” Solomon said.

Solomon’s predecessor at Goldman Sachs, Gary Cohn, joined the Trump administration as director of the National Economic Council and one of his primary goals has been to work on tax reform.

One concern associated with the Trump tax plan is how the government plans to pay for it. Mnuchin said that there are plenty of other ways to off set the revenue that would be lost through reduced tax receipts. He did not offer many specifics.

Indeed many at the conference, including investment managers whose businesses could benefit dramatically from the cut in taxes, were cheering the new administration and its can-do attitude, which also includes plans to tackle healthcare reform.

Prospects for growth look to be better around the world, several attendees said.

Yet there were also some rumblings of concern that ambitious projects would not be completed and that tensions around the world with other governments would increase.

Allianz SE chief economic adviser Mohamed El-Erian said that optimism is off the charts according to the stock market, but geopolitical issues are a real concern.

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