“President Trump's proposed budget released Tuesday rests on a key assumption: The economy will grow much faster than it has in recent years — and at a more robust pace than most analysts predict.”
Robert Reich:
The Trump administration’s new budget assumes a 3 percent rate of economic growth to keep the budget balanced -- more than 50 percent higher than forecasts.
Budget director Mick Mulvaney says that growth will come from pulling some of the 6 million people who have been stuck on the sidelines of the economy – working part-time but would prefer full-time jobs, or too discouraged to look for work -- back into the labor force.
Rubbish.
1. There are about 160 million Americans in the labor force, who together generate GDP growth of just under 2 percent. Another 6 million people couldn’t possibly raise the growth rate another 50 percent.
2. Besides, it would be a one-time boost to growth. It wouldn’t expand the labor force for a sustained period of time, like the 10-year window of Trump's budget.
3. Mulvaney says the economy has often grown in the past at a 3 percent rate. "In fact, it's been normal for the history of the country,” he said. But the country's productivity and labor force growth were significantly higher between 1946 and 2010. Now, the giant baby boom generation is retiring. If you look at the longer term -- between 1881 and 2007 -- America’s average annual growth rate was 2 percent.
Bottom line: Trump's budget will cause giant deficits and explode the debt.
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White House Budget Director Mick Mulvaney
speaks to the reporters about President Trump's
proposed budget on Tuesday.
Andrew Harnik/AP
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By Yuki Noguchi
