White House

White House budget chief Mulvaney argues for 'new' budget deficits. He used to rail against them

Key Points
  • Office of Management and Budget Director Mick Mulvaney argues that deficits are necessary to create growth under the GOP tax plan.
  • As a fiscally conservative congressman, he repeatedly argued against increasing budget deficits.

In selling the Republican tax plan, White House budget chief Mick Mulvaney has moved away from the principles that made him stand out in Congress.

Early estimates of the GOP tax framework released last month say it will cause the budget deficit to balloon, as only some of the broad tax cuts are canceled by scrapping deductions and closing loopholes. On Sunday, the Office of Management and Budget director argued that deficits are necessary to unlock the growth the Trump administration wants to see.

"We need to have new deficits because of that. We need to have the growth," Mulvaney told CNN. "If we simply look at this as being deficit-neutral, you're never going to get the type of tax reform and tax reductions that you need to get to sustain 3 percent economic growth."

Those comments appear to stand in contrast to Mulvaney's reputation as a budget deficit hawk when he served as a congressman from South Carolina.

He was first elected to the House in 2010, one in a wave of fiscal conservatives who argued for major spending cuts. He co-founded the hardline House Freedom Caucus.

"We really believe you can't spend money you don't have," Mulvaney said in his 2010 victory speech, according to The Washington Post.

In 2013, he supported major budget cuts to offset a relief package for the areas battered by Superstorm Sandy. At the time, he said Congress needed to find "ways to pay for it rather than adding to the nation's ballooning deficit."

Mulvaney previously voted against raising the federal debt ceiling.

Republicans have merely released an outline of their tax plan, not a bill. So, the framework could change as it works its way through the tax-writing committees.

As it stands, the proposal could blow a $2.4 trillion hole in the federal budget, according to a Tax Policy Center estimate. Republicans have disputed the findings, saying they have not finalized many of the plan's features.

The White House has argued that initial deficit estimates do not matter because the tax plan will pay for itself. Economic growth will create higher tax revenue, reducing the effect of chopping tax rates, the administration says.

As OMB director, Mulvaney has repeatedly called for spending discipline and defended proposed Trump administration budget cuts.

OMB did not immediately respond to CNBC's request to comment.