WASHINGTON- The U.S. economy is coping with large budget deficits at the moment, but government spending cannot continue to expand at the current rate indefinitely, Treasury Secretary Steven Mnuchin said in an interview with CNBC on Wednesday.

"At this point the economy can handle these deficits, but there's no question over time we need to look at these government spending issues. We can't continue to expand government spending at the rate that we are," Mnuchin said.

He said increased military and non-military spending was the cause of the deficits, not tax cuts pushed through by Republican President Donald Trump, and he remained convinced that those tax cuts would pay for themselves over a 10-year period.

The U.S. government ended fiscal year 2019 with a budget deficit of $984 billion, which was 4.6% of the nation's gross domestic product and the largest budget deficit in seven years, as gains in tax receipts were offset by higher spending and growing debt service payments. 

It is the first time since the early 1980s that the budget gap has widened over four consecutive years. The figures reflect the second full budget year under Trump and come at a time when the country has an expanding tax base with moderate economic growth and an unemployment rate currently near a 50-year low.

The deficit reached a peak of $1.4 trillion in 2009 as the Obama administration and Congress took emergency measures to shore up the nation's banking system during the global financial crisis and provide stimulus to an economy in recession.

Mnuchin said military spending increases were critical to Trump, but in order to secure them, the administration had to forge agreement with lawmakers to boost non-military spending.

At the moment there was bipartisan consensus over the current spending plans, he said, but he anticipated that a bipartisan review would be needed over time.

(Reporting by Andrea Shalal and Susan Heavey; Editing by Giles Elgood) ((andrea.shalal@tr.com; +1 202-815-7432;))