The Trump administration’s budget plan rests heavily on the assumption that the American economy will grow much more rapidly in the next decade than the Congressional Budget Office (CBO) and many private-sector economists have projected.
The Concord Coalition, the Committee for a Responsible Federal Budget and many other analysts have expressed skepticism about this highly optimistic assumption about future economic growth.
Democrats have been critical as well. But in addition, Rep. Mark Sanford (R-S.C.) took the opportunity at a House Budget Committee hearing last week to present Mick Mulvaney, the White House budget director, with a forceful explanation of the risks and consequences of unrealistic growth projections.
The CBO is projecting average economic growth over the next decade at a little under 2 percent a year. The administration’s budget, however, calls for annual growth to climb from 1.6 percent last year to 2.4 percent next year and to 3 percent in 2021 and beyond.
This growth assumption is crucial to the administration’s claim that its tax and spending policies would eventually clear a path to a balanced federal budget.
But Sanford, as reported in the Washington Post, blasted the assumed 3 percent growth rate projection as unrealistic:
“I have looked every which way at how you might get there, and you can’t get there,” he told Mulvaney at the hearing. “I think it is just disastrously consequential to build a budget on 3 percent growth.”
Sanford said the administration’s projection “perpetuates a myth that we can go out there and balance a budget without touching entitlements. It’s not only a myth, it’s frankly a lie, and if it gets started at the executive branch level it moves from there.”
The congressman also noted that if the administration was wrong on its numbers, “it means all of a sudden we’ve created a $2-plus-trillion hole for our kids and grandkids here going forward.”
In a press release last week, Sanford also offered this analysis:
“The proposed 3 percent economic growth assumes a Goldilocks scenario regarding several major economic indicators, such as a sustained unemployment rate of 4.8 percent — when the last 10 years have averaged at 7 percent. It assumes another 10 years of continuous economic expansion, which would be unprecedented because we are already in our country’s third-longest period of economic expansion. And it ignores significant demographic and financial headwinds, such as the continuing retirement of the baby boomer generation and slowed private investment due to an increased public sphere in the economy.”
Such criticism should give Mulvaney pause, particularly from a lawmaker who is a member of the highly conservative House Freedom Caucus that Mulvaney helped launch when he was in Congress.
In an era when Democrats and Republicans often abandon critical analysis in favor of their respective party talking points, it is refreshing to see at least one lawmaker break the mold.
As Sanford put it in the committee hearing: Republicans and Democrats may have different views, “but for us to have a real debate, we have to base it on real numbers.”
