Kevin Hassett, the White House’s chief economist, insisted this week that the economy will grow at or above 3 percent for the next several years – a highly dubious belief that undergirds Donald Trump’s entire budget plan for the near future.
“Some folks have said, ‘Oh, sure, we did have 3 percent growth [in 2018], but that was a sugar high,’” Hassett told reporters yesterday. “Our view is that’s really not a sugar high at all.”
The truth is a little more complicated. For one thing, we didn’t quite reach 3 percent growth in 2018, at least if we measure GDP the way it’s supposed to be measured.
For another, as the White House quietly conceded yesterday, Team Trump’s growth projections come with some important fine print. The Washington Post explained:
President Trump has promised an economic boom that will last for years to come, but he’s unlikely to get one without the help of Congress to pass major new legislation, according to estimates by Trump’s own economic team.
To achieve about 3 percent growth for the next decade, Trump would need a big infrastructure bill, more tax cuts, additional deregulation, and policies that transition more people off government aid and into full-time jobs, according to the 2019 Economic Report of the President, released Tuesday by Trump’s Council of Economic Advisers.
Oh. The original promise was that the Republicans’ tax-cut package, approved in late 2017, would fuel economic growth for a long while. A little more than a year later, that promise apparently comes with a catch: the tax breaks will fuel economic growth just so long as policymakers approve a series of other economic measures – including even more tax cuts.
The key portion of the report from the president’s Council of Economic Advisers said, “Because the Administration’s forecast is policy-inclusive, a key downside risk is the political contingency of full implementation of the President’s economic agenda, particularly in light of the inherent unpredictability of the legislative process. In addition, by definition the policy-inclusive forecast assumes that the Administration’s policies will be implemented and remain in place throughout the forecast window.”
Clearly, this language is a little clunky, but the phrase that stood out for me is “a key downside risk.” The idea, in other words, is that the White House expects to see great economic results, though there’s a “risk” that Congress won’t approve a series of wish-list agenda items – by the end of this year.
And as the argument goes, if lawmakers don’t approve Trump’s entire economic agenda – including proposals that don’t actually exist, such as the White House’s imaginary infrastructure plan – then the promised economic results will never materialize.
At that point, the president will presumably say it’s Congress’ fault that the White House’s economic plan failed to produce the results the president promised.
To believe this will be to have fallen for a rather clumsy scam.