Larry Summers, the former Treasury secretary and key economic advisor to President Barack Obama, ripped the Trump administration Thursday for “real sacrifices of seriousness and credibility” about its tax reform proposal.
“We’ve seen an unprecedented level of factual errors and statements that aren’t supported by any economic analysis from the administration on a range of questions,” Summers said during an appearance on CNBC’s “Fast Money Halftime Report.”
“In particular, the claims that it will produce enough growth to pay for itself in terms of the tax reform bill and the claims that it will be distributionally neutral and won’t favor those with high incomes I think are indefensible and not supported by economists.”
Summers has been out front in his criticism of the White House’s proposals to cut taxes for corporations and individuals and simplify the system. Administration officials have said the tax cuts will pay for themselves through the economic growth they will generate.
Earlier this year, Summers, who led the Treasury under President Bill Clinton, said he would have resigned had he been asked to champion such a plan.
In Thursday’s interview, he went back on the attack.
“I never spoke this way about the proposals of the Bush administration, but I do think there are some real sacrifices of seriousness and credibility in the policy process in the way that tax change is being advocated,” Summers said.
Current Treasury Secretary Stephen Mnuchin earlier in the day said he remains confident that even if the tax cuts cost $1.5 trillion — he believes the cost is closer to $1 trillion — the economy soon will be growing at a 3 percent clip, which will offset the decline in revenue.
But Summers said the big beneficiary will be the wealthiest Americans, who will pay lower taxes and then get more money returned to them if the repatriation part of the tax plan goes through. The administration wants to allow companies to bring the $2.5 trillion in profits they have stashed overseas back home for a one-time tax at a reduced rate.
Repatriation “will help people with 401(k)s, but people look at the actual data and what the actual data shows is that the very large majority of all the stockholding is institutions like Harvard and the like and people who are in the top 1 percent of the income distribution,” he said.
Summers called for a return to traditional accounting of how tax plans will affect the budget.
“This is the first administration that believes if you’re rich and you make an assumption, that constitutes fact,” he said.
“All I’m asking is that we use the same discipline that we always have rather than move back to the world of assertion,” he added. “It’s analysis versus vague claim that is my problem.”
Source : CNBC