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Global market slump a "reality check" for tech, says economist

A gigantic plummet in US stocks is hitting indexes as far away as Europe and Asia. Robert Koepp, Director of The Economist Network, Speaks with CNN News Stream.

Posted: Oct 12, 2018 4:31 AM
Updated: Oct 12, 2018 4:50 AM

US deficits are expected to balloon to $1 trillion when official figures are released next week -- but Treasury Secretary Steven Mnuchin says the massive Republican tax cut won't be to blame.

Instead, Mnuchin said Democrats were at fault for pushing spending increases on health and education in exchange for military budget increases as part of a massive spending package President Donald Trump signed in September 2017.

"People are going to want to say the deficit is because of the tax cuts. That's not the real story," said Mnuchin in an interview Thursday with CNN. "The real story is we made a significant investment in the military which is very, very important, and to get that done we had to increase non-military spending."

To avert a government shutdown, Republicans and Democrats struck a deal last year that included raising the spending on other government programs.

"If we could have approved that with 51 votes instead of 60 votes, we would not have spent as much money on non-military spending and the budget deficit would have been considerably smaller," Mnuchin said on the sidelines of the annual International Monetary Fund conference in Bali, Indonesia.

Yet the Republican tax cuts are costing the Treasury billions in revenue. The nonpartisan Congressional Budget Office, which analyzes legislation for Congress, forecast the tax cuts will expand the deficit to $804 billion in fiscal 2018, which ended on September 30. That's up from the $665 billion in fiscal 2017.

The cost of the tax cut, along with last year's spending bill, is expected to add up to roughly $1.5 trillion over the next decade.

The secretary declined to comment on details of the coming deficit numbers, which are due to be released by the Treasury Department on Monday.

The White House has claimed the tax cuts will pay for themselves and have been a driving factor boosting the economy in the nine full months since the tax law took effect on January 1. The US economy is expected to grow by 3% this year.

"We're on our way on growth, the tax bill will pay for itself and provide additional revenue," Mnuchin said.

The Trump administration projects that the economy will grow 2.9% each year over a 10-year window. If it does, the government expects to draw between $300 billion to $400 billion in excess revenues from the tax bill.

The Treasury secretary said the US may be drawing in less revenue initially from expensing but over time the administration expects it will help spur capital investment.

"We'll ultimately collect the revenues," Mnuchin said. "But clearly it will have an impact on short-term revenue."

Democrats have opposed the tax bill, attacking Republicans for crafting legislation that they say help wealthy Americans and corporations.

The country's debt is higher than in any year since World War II, according to the CBO, and now accounts for 77% of gross domestic product, a measure of the size of the economy.

The CBO predicts that by 2028, the national debt is on track to approach 100% of gross domestic product.

The $300 billion spending package signed by Trump allocated $165 billion to the Pentagon, a major priority for the White House and Republicans.

While the increase in military spending was a big win for Trump meeting a campaign promise, it came at the cost of maintaining programs like environmental protection, health research and foreign aid. It also marked a departure from GOP demands to cut spending under the Obama administration.

The widening deficit comes just ahead of the midterm elections as House Republicans are fighting to keep control of the House and Senate.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 137536

Reported Deaths: 2421
CountyConfirmedDeaths
Hennepin34657994
Ramsey14342362
Dakota10027138
Anoka9039151
Washington608972
Stearns599144
Scott349634
Olmsted331430
St. Louis307970
Wright260915
Clay236243
Nobles230916
Blue Earth20667
Carver18477
Kandiyohi17535
Sherburne173322
Rice167410
Mower153517
Winona127819
Chisago10832
Crow Wing106222
Lyon9966
Benton9769
Waseca9379
Beltrami9147
Otter Tail9017
Todd8656
Steele7823
Morrison77610
Itasca76317
Nicollet74718
Douglas7283
Polk7244
Freeborn6914
Le Sueur6456
Goodhue62511
Martin61518
McLeod6104
Becker5884
Watonwan5794
Isanti5715
Pine5540
Chippewa4663
Carlton4622
Mille Lacs42715
Hubbard4103
Dodge4040
Wabasha3970
Cass3905
Pipestone35917
Rock3484
Meeker3453
Brown3333
Yellow Medicine2926
Roseau2900
Murray2893
Cottonwood2860
Redwood28411
Fillmore2640
Sibley2603
Renville25812
Wadena2553
Faribault2390
Kanabec22510
Jackson2171
Houston2121
Swift2091
Pennington2071
Unassigned19353
Lincoln1890
Stevens1871
Aitkin1862
Koochiching1725
Pope1650
Lac qui Parle1443
Big Stone1431
Wilkin1404
Marshall1311
Lake1260
Norman1210
Mahnomen1172
Clearwater1140
Grant994
Red Lake812
Traverse580
Kittson490
Lake of the Woods441
Cook170

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 117876

Reported Deaths: 1666
CountyConfirmedDeaths
Polk19173289
Woodbury728597
Johnson590630
Black Hawk5727101
Linn5692132
Dubuque529558
Scott466241
Story403918
Dallas348544
Pottawattamie326744
Sioux247017
Buena Vista226812
Marshall204436
Webster189115
Plymouth167831
Wapello154162
Clinton150227
Muscatine148758
Des Moines140910
Cerro Gordo140227
Crawford136314
Warren12737
Carroll116813
Jasper112334
Henry10745
Marion103211
Lee95910
Tama95837
Delaware80213
Dickinson7529
Wright7341
Boone7269
Mahaska70924
Bremer6879
Harrison67315
Washington66711
Jackson6463
Benton5982
Lyon5568
Clay5414
Louisa52515
Winnebago50219
Hardin4837
Winneshiek4839
Hamilton4784
Cedar4777
Kossuth4770
Buchanan4625
Poweshiek46211
Jones4544
Clayton4503
Floyd44011
Emmet43520
Iowa4189
Page4130
Guthrie40715
Cherokee4062
Mills4053
Sac4034
Cass4023
Butler3883
Fayette3844
Franklin38218
Shelby3812
Allamakee3809
Chickasaw3641
Madison3643
Clarke3573
Humboldt3383
Hancock3314
Grundy3186
Palo Alto3162
Calhoun3124
Osceola2890
Mitchell2831
Howard2749
Monroe26211
Union2524
Taylor2482
Jefferson2451
Monona2452
Appanoose2333
Pocahontas2322
Fremont2091
Lucas2066
Ida1962
Greene1880
Van Buren1812
Montgomery1807
Davis1794
Adair1771
Keokuk1641
Decatur1530
Audubon1511
Worth1460
Wayne1323
Ringgold922
Adams830
Unassigned150
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