Director of the Office of Management and Budget (OMB) Mick Mulvaney used to be one of the fiscal conservatives pushing for spending cuts, co-founding the House Freedom Caucus. As the Trump administration pushes its tax reform framework, he says he is still worried about the deficit. But that doesn’t stop him from supporting tax reform.

“The size of the debt concerns me now. Let’s be perfectly straightforward about that,” he said. “In fact the 75% is just the public debt. If you do the whole debt subject to the capital, what we call gross debt, total debt, then you end up with about 100% of the American economy right now. And those numbers concern me right now.”

An expanding deficit could impact rising entitlement costs (including Social Security) and also put downward pressure on asset prices, moving interest rates up quickly and hindering economic growth.

But Mulvaney insists that GDP growth will offset any worries about the deficit.

“Debt to GDP is a ratio,” he said. “It’s got two different pieces to it. It’s the size of the debt, but the denominator is the size of the GDP. And if we can grow GDP quicker than we’re growing the debt, then that ratio will start to come down. And that’s one of things we’re focusing on.”

The administration insists that cutting marginal tax rates and corporate taxes will spur investment, hiring and economic activity, which would ultimately boost long-term GDP growth projections from 2% to 3%.

“Let companies succeed here. Let them make money here. Let folks get better jobs here. And let that rising tide lift all ships,” Mulvaney said.

Pushing tax reform forward

Debt-to-GDP currently stands at 75% and would rise to more than 100% a decade from now based on the current Trump framework, Moody’s Mark Zandi said. Zandi added that even with no changes to tax policy, it would rise to 93%. Furthermore, the non-partisan Tax Policy Center estimates that the current framework will reduce government revenue by $2.4 trillion in the first decade.

And there’s limited evidence that cutting marginal tax rates will impact growth. In fact, the economy saw strong growth following the tax increase under Bill Clinton in 1993. On the contrary, the Bush tax cuts in 2001 and 2003 did not improve economic growth. Meanwhile, studies show that cutting corporate taxes will mostly benefit shareholders versus workers.

The Council of Economic Advisors (CEA) produced a report this week connecting corporate tax cuts to wage growth of about $4,000 for the average family but others, including former Treasury Secretary Larry Summers, have called it ‘dishonest.’