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New US Treasury Secretary Counting on Massive Tax Cuts to Reduce National Debt

New US Treasury Secretary Steven Mnuchin, an ex-partner at Goldman Sachs, has given reassurances that the US will honor its debt, and move to quickly raise its borrowing cap.

U.S. President Donald Trump delivers remarks at the National Prayer Breakfast in Washington, U.S., February 2, 2017. - Sputnik International
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On Monday, the US Senate confirmed ex-Goldman Sachs banker Steven Mnuchin, who was finance director of Donald Trump's presidential campaign, as Treasury Secretary. Mnuchin's appointment was approved by 53 votes to 47 against; when he filled the post it had been empty for a record 22 days.

Mnuchin has also worked as a hedge fund manager, and from 2009 to 2015 ran OneWest Bank, which became known as a "Foreclosure Machine" for its activities in the wake of the financial crisis.

The US Treasury oversees the country's economic and financial policy, and is responsible for imposing sanctions. At a press briefing on Tuesday, Mnuchin didn't say whether sanctions against Russia would be lifted under his leadership.

"Our current sanctions programs are in place, and I would say sanctions are an important tool that we will continue to look at for various different countries … the existing policies are in place," the Treasury Secretary said.

One of the most pressing tasks he faces is the reduction of the US national debt. Mnuchin told his Senate Finance Committee hearing that Trump's corporate and income tax cuts will enable the US to reduce the debt by stimulating economic growth.

"I'd like us to raise the debt ceiling sooner rather than later," Mnuchin said, in order to avoid a situation like the 2011 debt ceiling crisis. Then, the US came perilously close to default because the US Congress went months unable to find a compromise plan to raise the borrowing cap, as Republicans demanded spending cuts to go with it.

The US Congress has a deadline of March 15 to lift the current debt limit of $20.1 trillion, which would allow the government to pay its debts and stave off default.

This file photo taken on January 07, 2016 shows a street sign at the corner of Wall and Broad Street across from the New York Stock Exchange - Sputnik International
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Mnuchin allayed fears that the US might default on its debt, telling senators, "I fully believe that the US has the obligation to honor its debt." 

During his election campaign, Donald Trump suggested that the country might give its creditors only "half" of the money owed in case of default.

"Nobody knows debt better than me. I've made a fortune by using debt and if things don't work out, I renegotiate the debt," Trump told CBS This Morning.

"Well, you go back and you say, 'hey, guess what? The economy just crashed. I'm going to give you back half,'" Trump said.

In an interview with CNBC in November, Mnuchin said that Trump's tax reforms will "bring huge amounts of jobs back to the US."

Simplifying and cutting corporate taxes "will create huge economic growth, and we'll have huge personal income so the revenues will be offset on the other side. We'll have a big middle income tax cut," Mnuchin said.

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