(In 2nd paragraph, corrects Trump address to a major policy
speech, not first "State of the Union" address)
By David Lawder
WASHINGTON Feb 26 U.S. President Donald Trump's
first budget proposal will spare big social welfare programs
such as Social Security and Medicare from any cuts, Treasury
Secretary Steven Mnuchin said in an interview broadcast on
Mnuchin said Trump would use a major policy speech to a
joint session of Congress on Tuesday night to preview some
elements of his sweeping plans to cut taxes for the middle
class, simplify the tax system and make American companies more
globally competitive with lower rates and changes to encourage
Speaking on Fox News Channel's "Sunday Morning Futures"
program, Mnuchin, who has acknowledged that tax reform is his
top policy priority, said the budget plan would not seek cuts to
federal benefits programs known as "entitlements."
"We are not touching those now. So don't expect to see that
as part of this budget, OK," Mnuchin said of the programs,
according to a transcript provided by Fox. "We are very focused
on other aspects and that's what's very important to us. And
that's the president's priority."
Mnuchin said Trump "will be touching on tax reform" as part
of his speech, which is not an official "State of the Union"
The plan will reduce the number of tax brackets for
individuals and offer a "middle income tax cut," Mnuchin said.
On the business side, Trump wants to "create a level playing
field for U.S. companies to be able to compete in the world."
Mnuchin said Trump was looking at a "reciprocal tax" that
would help create more parity with other countries. Trump
administration officials have complained that many countries
charge value-added taxes on imports while exempting exports from
taxation. The United States mainly taxes corporate income.
But Mnuchin again said he was only studying a House
Republican border tax adjustment plan that would levy a 20
percent tax on imports to encourage more U.S.-based production
and exports. That plan aims to raise more than $1 trillion in
revenue over a decade to offset lower tax rates for businesses.
"So let me just say this is something we are studying very
carefully," Mnuchin said. "There are certain aspects that the
president likes about the concept of a border-adjusted tax,
there are certain aspects that he's very concerned about."
He added that the Trump administration would work with the
House of Representatives and Senate to craft "a combined plan
that takes the best of all of this when we bring it forward."
In a comment suggesting that Trump's budget and tax plan may
use aggressive revenue assumptions, Mnuchin said the
administration "fundamentally believes in dynamic scoring," a
budget calculation method that assumes that a lower tax burden
boosts revenues by encouraging economic activity.
The Congressional Budget Office has previously used mainly
"static" scoring methods that assume very conservative economic
effects of budget and taxes.
"If we make business taxes more competitive, people will do
more business here and we'll get more revenues," Mnuchin said.
"So although there may be an absolute lower rate, that doesn't
necessarily mean it's a corresponding drop in revenues."
(Reporting by David Lawder; Editing by Jeffrey Benkoe and Alan