Paul Ryan: US can't hit 3% growth without tax reform

Key Points
  • Paul Ryan tells CNBC the U.S. cannot reach 3 percent economic growth without tax reform.
  • He wants to pass a tax overhaul by the end of the year.
Ryan: America's tax system is worst in the world

House Speaker Paul Ryan believes the United States cannot reach 3 percent gross domestic product growth — the Trump administration's goal — without overhauling the tax system.

"I do believe you cannot even get close to 3 percent if you don't get this kind of fundamental fiscal policy put to place. So I think tax reform's absolutely essential for getting faster economic growth that's durable, long-lasting," the Wisconsin Republican told CNBC's "Power Lunch" on Tuesday from the sidelines of the National Association of Manufacturers summit.

Since Republicans won the White House and both chambers of Congress, they have pushed for overhauls of the U.S. health-care and tax systems and moved to slash regulations, saying those measures will help the U.S. break out from sluggish economic growth. But the GOP has faced early setbacks in achieving its legislative agenda, particularly in its effort to pass an Obamacare replacement.

The Trump administration hopes that its policies, including slashing corporate and individual tax rates, will lift the U.S. to sustained 3 percent GDP growth. Critics, though, have said that goal is tough to achieve, as the U.S. economy grew only 1.6 percent in 2016.

Both Ryan and Vice President Mike Pence said earlier Tuesday that the GOP aims to pass tax reform by the end of the year. The House speaker told CNBC that the White House and Congress have "agreed on the timeline" to pass a tax system overhaul, after White House chief economic advisor Gary Cohn said the Trump administration aimed to have a bill on the floor of Congress by the first two weeks of September.

Ryan told CNBC that the White House, House and Senate are "narrowing" their differences on tax policy. The most notable disagreement between Ryan and the White House came on so-called border adjustment, which Ryan said is "not dead" but does not work "in its current form."

Ryan also did not rule out the Trump administration's desired 15 percent corporate tax rate, saying "it's actually possible." The House plan calls for a 20 percent corporate rate.

"We want to get these rates as low as we possibly can" while still making the numbers "work," he said.

The Trump administration has only released a one-page outline of its tax plan but is working with members of Congress on a joint proposal.

Republicans face their share of hurdles to accomplishing their legislative goals. Pence said earlier Tuesday that the GOP wants to replace Obamacare before the end of summer, before moving on to tax reform.

Congress takes the month of August off. Treasury Secretary Steven Mnuchin is calling for lawmakers to raise the debt ceiling before the August recess, and Congress will also need to pass an appropriations bill.

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