Former Obama Treasury Secretary says the GOP tax law is a 'ticking time bomb'

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Former Treasury Secretary Jack Lew

• Former Treasury Secretary Jack Lew said the GOP tax bill is the opposite of what the US economy needs at this point in the economic cycle.
• Lew said that the increased debt load from the bill will also lead Republicans to believe that key social programs like Medicare need to be cut to deal with the issue.

Former Treasury Secretary Jack Lew, who served under President Barack Obama, slammed the recently passed Republican tax law as counterproductive for the US economy, saying it could lead to cuts to important government programs.

In an interview with Bloomberg, Lew said the tax law could end up doing the "exact opposite of what anxious and angry voters were calling for" during the 2016 election.

"What we've seen is a tax cut that spends money we don't have to have very concentrated benefits for global corporations and the top 1%," Lew said. "It's leaving us broke so that we cannot deal with these fundamental problems."

Lew said the projected $1.5 trillion in new deficits would add to the "ticking time bomb in terms of the debt."

With the economy currently in a cycle of expansion, Lew said the US economy does not need broad fiscal stimulus from the tax bill but targeted investment in areas like education and training to help boost workers getting left behind by shifts in industries.

The former Treasury secretary also said he is concerned that after increasing the debt load due to the bill, Republicans will use the growing deficit to target essential programs for many Americans.

"I fear that the next shoe to drop is an attack on the most vulnerable in our society," Lew said. "How are we going to pay for the deficit caused by the tax cut? We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security. One could not have made up a more cynical strategy."

Lew also said that changes in foreign policy and trade policy under the Trump administration could pop up as a surprise for financial markets going forward, despite relative calm in the markets during 2017.

"You look at markets over the last year, the calmness of markets, the enthusiasm of markets almost suggests that there's been a decision to look beyond all this chaos and uncertainty becuase there's nothing we an do about it," Lew said. "But, the moment comes when something happens that is a surprise that shouldn't be a surprise, I worry about binary changes."

Watch the interview via Bloomberg: