- Steve Mnuchin, a long-serving Cabinet member during Trump’s first term, extolled the value of tax cuts at a recent conference—but warned that some of Trump’s campaign promises could prove “very expensive.” However, tips might be on the menu.
Steve Mnuchin became one of Donald Trump’s earliest supporters when the real estate mogul and reality TV star initially launched a long-shot bid for the 2016 Republican presidential nomination. When the banking executive was appointed Treasury secretary, he shepherded some of the president’s major policy moves—overhauling America’s tax system through Congress and dramatically ratcheting up tariffs on China. But now, with his former boss back in the White House, Mnuchin has some hesitations about the new administration’s economic agenda.
Tax cuts
Mnuchin said he was proud of his role in helping develop the 2017 Tax Cuts and Jobs Act, which dramatically slashed taxes for individuals and corporations. Many of the individual tax cuts are set to expire this year. Mnuchin said renewing those measures should be relatively simple compared to when he had to get them through Congress the first time.
“I think that’s got to be the priority to continue,” he said. “I do think Secretary Bessent needs to be very focused on working with the House and the Senate to get this across the finish line,” he said Wednesday at a conference hosted by Bloomberg in downtown Manhattan.
Mnuchin warned that Trump’s proposals for removing taxes from Social Security benefits and overtime pay would be “very expensive,” though he said the president’s proposal for doing the same with tips could be feasible.
On the campaign trail, Trump proposed exempting tips, overtime pay, and Social Security from federal income taxes; he doubled down on the plan in Tuesday's address to Congress. “I'm calling for no tax on tips, no tax on overtime, and no tax on Social Security benefits for our great seniors,” he said, reiterating his call for “permanent income tax cuts all across the board.”
Meanwhile, markets have been significantly shaken by Trump’s latest tariff salvo, which included blanket 25% taxes on imports from Canada and Mexico—America’s two largest trading partners—and a 10% hike on top of existing taxes on Chinese goods. (A pause on auto tariffs was announced Wednesday). But Mnuchin backed Trump’s position that tariffs can function as an important source of revenue and incentivize companies to produce in the U.S.
“It could be used to pay for tax cuts,” Mnuchin said.
Social security
When it comes to the “third rail” of American politics, meanwhile, Mnuchin didn’t sugarcoat the situation—Social Security’s trust funds are running out of money, he said. According to the Congressional Budget Office, that could happen as soon as 2033.
“I hope that in the second half of the President’s term he can focus on Social Security reform,” Mnuchin said, “because it's a problem. The fund is going to run out of money, and there [are] lots of people who rely upon it, so it needs to be fixed.”
Federal Deficit
While Trump seems fixated on America’s trade imbalances with other nations, Mnuchin said the national deficit, which totaled $1.83 trillion in 2024, is the most important issue facing the country. It spiked dramatically, he noted, when the first Trump administration was forced to borrow heavily during the COVID-19 pandemic.
“The first $2 trillion was well spent,” Mnuchin said. “The next 2 trillion, we never should have spent. And then the Biden administration kept on spending.”
“[Treasury Secretary Scott] Bessent has talked about getting the deficit down from 6% to 3% of GDP,” he added, “and that's got to be a major focus.”
A U.S. sovereign wealth fund
Last month, Trump signed an executive order calling for the creation of a sovereign wealth fund. The biggest of these state-owned investment vehicles, Saudi Arabia’s $925 Public Investment Fund, is one of the main investors in Mnuchin’s private equity firm, but that doesn’t mean the former Treasury secretary is on board.
Most nations with such a fund, Mnuchin said, have a budget surplus thanks to revenues from finite resources like oil and gas, and are looking to preserve wealth for future generations. The U.S., meanwhile, would presumably need to borrow to fund its cash pot.
“If we did that, I think it should be very limited in scope,” Mnuchin said.
Currency
While distancing himself from some of Trump’s new policy goals, Mnuchin also appeared comfortable cracking select jokes about his former boss. While Congress member Joe Wilson (R-S.C.) has sponsored legislation to put Trump’s portrait on a new $250 bill, exempting him from the current rule that presidents can only receive the honor posthumously, Mnuchin said Trump should aim for the $1,000 bill if such a law were to pass.
Mnuchin noted that, as Treasury secretary, he worked hard to improve his own signature so it could be printed on the U.S. dollar.
“I wonder if President Trump wants his signature on the money,” he said, prompting laughs from the audience.
