Friday, July 14, 2017

Think Progress -- Here’s where the White House got its insane growth projections

Trump’s budget sets a wildly implausible growth target and then seeks to achieve it by cutting food stamps and disability benefits.

The central pitch for the Trump administration’s proposed federal budget is that it will jump start economic growth. “A New Foundation for American Greatness,” as the budget revealed is being called, promises a spike in annual GDP growth over the next decade from less than 2 percent to 3 percent.

This surge in economic activity will then, ostensibly, boost the government’s revenue and allow the federal budget to balance out — even once a series of colossal tax cuts on the rich are factored in.

It’s a wild promise to make, and one that few economists are taking seriously. The Congressional Budget Office, for example, projects that the economy will grow by approximately 1.9 percent annually over the next decade. But White House Office of Management and Budget Director Mick Mulvaney thinks the CBO just isn’t thinking big enough. He has a theory about what makes spectacular growth achievable.”

The Trump administration is promising 3 percent annual growth to justify cutting taxes on the rich and gutting programs for the poor and working class. It's nothing more than supply side nonsense, but don't take it from me.

A new analysis from the nonpartisan Congressional Budget Office finds that Trump's proposed budget would generate a $720 billion deficit -- not the surplus the White House touted. Nor would their plan boost growth. The CBO projects annual growth of 1.9 percent, which is consistent with recent trends.

I'll say it again: Tax cuts don't spur growth. Corporations already have more cash than they can possibly use, which is why they're buying back their stock and going on a spree of acquisitions and mergers. If their profits rise even more because of a tax cut, they'll just use it for more stock buybacks and more acquisitions.

Our economy needs investments in workers to boost productivity and growth, not handouts to the wealthy.

By Ned Resnikoff