U.S. Markets

Mnuchin says U.S. government must cut spending, shrink deficits: CNBC

FILE PHOTO: U.S. Treasury Secretary Steven Mnuchin reacts during a session at the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 22, 2020. REUTERS/Denis Balibouse/File Photo

(Reuters) - Treasury Secretary Steven Mnuchin said on Thursday the U.S. government cannot sustain federal deficits growing at current levels and will have to slow the rate of spending.

As he acknowledged the administration of Republican President Donald Trump was considering additional tax cuts to stimulate the economy, Mnuchin blamed government spending - and Democrats in Congress - for the federal deficit.

In an interview with CNBC, Mnuchin said increased military and non-military spending was the cause of the deficits, not the tax cuts pushed through Congress by Trump in late 2017.

He said he remained convinced that those cuts would pay for themselves over a 10-year period. Yet economic growth rates have slowed this year as the benefits of the tax cuts fade and tariffs imposed on Chinese imports hurt American farmers and manufacturers.

Trump felt it was important to rebuild the U.S. military, but to get that done the administration had to agree with Democrats to increase non-military spending, Mnuchin said from the World Economic Forum in Davos, Switzerland.

“If you look at the increase in the deficit, a significant component of that is additional government spending,” he said.

“There’s no question we need to slow down the rate of growth of government spending because we can’t sustain these deficits growing at these levels.”

Reporting by Susan Heavey and Doina Chiacu; Editing by Alex Richardson and Paul Simao