By Kate Davidson and Richard Rubin 

WASHINGTON -- The Trump administration assumes that its tax plan will pay for itself without factoring in potential economic growth that could stem from the plan, the White House budget director told senators, apparently marking a sudden and significant shift in the administration's priorities.

But Treasury Secretary Steven Mnuchin appeared to contradict that statement at a separate Senate hearing, saying the tax plan's accounting, when it is released, will count partially on economic growth spurred by tax cuts.

The officials' statements underscored just how unsettled the administration's tax policy plans are and showed the tensions between their claims of a balanced budget and their desire to enact tax cuts to boost the economy.

Testifying before the Senate Budget Committee, White House budget director Mick Mulvaney also insisted the administration isn't double-counting the revenue that it is claiming from faster economic growth in its budget proposal. The budget, which reaches balance after 10 years, assumes about $2 trillion in revenue caused by economic growth, but that is outside the estimates of the tax plan.

"You do recognize that if you count the growth here in the budget, and then you count it again in your tax proposal, that is a double counting, " Sen. Sheldon Whitehouse (D., R.I.) asked.

Mr. Mulvaney agreed and said the administration doesn't count the growth in its tax plan.

A plan that is revenue-neutral as scored on a static basis, without economic growth, has never been part of Mr. Trump's plan, either as a candidate or as president. Adopting that position would mark an enormous shift in policy.

The administration has proposed deep tax-rate cuts in its one-page tax-plan outline, but hasn't suggested nearly enough ideas inside the tax system, such as limits on deductions, to offset the cost of those tax cuts.

"The one pager puts forward numbers that do not come close to adding up, " said Sen. Ron Wyden (D., Ore.) "The math behind this plan would make Bernie Madoff blush."

The administration has said, repeatedly before Thursday, that growth caused by tax rate cuts would pay for some of the fiscal cost.

"I assure you when we present a tax plan we will not be double counting the growth," Treasury Secretary Steven Mnuchin told the Senate Finance Committee on Thursday.

Mr. Mnuchin wasn't asked directly during Thursday's hearing about whether the tax plan would be revenue-neutral without assuming economic growth.

Mr. Mnuchin emphasized that the administration is still working on its tax plan and that he would offer more details and estimates later.

The statements from Messrs. Mulvaney and Mnuchin mean that the administration either is now proposing a revenue-neutral plan in a major departure from its previous policies or that the budget wouldn't balance after 10 years as claimed.

Write to Kate Davidson at kate.davidson@wsj.com and Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

May 25, 2017 13:33 ET (17:33 GMT)

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