The White House has started work on a second round of tax cuts even as the budget deficit continues to grow, Treasury Secretary Steven Mnuchin said Thursday.

"The president has asked us to start working on what we call 'tax 2.0,' and that will be additional tax cuts," Mnuchin told CNBC during an interview at the World Economic Forum in Davos, Switzerland. "They'll be tax cuts for the middle class, and we'll also be looking at other incentives to stimulate economic growth."

Talk of election year tax cuts comes amid a swelling budget deficit that eclipsed $1 trillion for the 2019 calendar year. In addition, total government debt recently passed $23 trillion, despite President Donald Trump's promises that economic growth would wipe out the deficit and pull down the federal IOU.

Mnuchin maintained that the tax cuts would pay for themselves even as growth has fallen well short of the administration's promises of 3%-4% annually. He did concede that the level of spending needs to be curtailed.