CBO Chief Skeptical of Bush's 4% Economic Growth Target

By Jonathan Nicholson

Sept. 17 — Keith Hall, director of the nonpartisan Congressional Budget Office, said it would be difficult for the U.S. economy to increase its annual growth rate to 4 percent, the pace targeted by Jeb Bush, a Republican running for president.

“You're going to need a lot more productivity growth than we have in our forecast,” Hall said Sept. 17, in response to a question at the National Economists Club in Washington. The Bush campaign has said his policies would almost double the approximately 2 percent annual economic growth of recent years and that some economists say may represent a new natural growth limit.

Hall said demographics work against faster U.S. growth as well as slowing productivity growth. Since 2007, Hall said, productivity growth has been “inexplicably slow.” Even with a return to annual productivity growth of 1.4 percent a year, Hall said, “It would be really tough to get that sort of growth at that level of productivity.”

Bush, a former governor of Florida, has made his plan to accelerate U.S. economic growth to a 4 percent annual pace a central pillar of his campaign.

Working Beyond Death

“The point is that some numbers matter a great deal, and our nation’s economic growth rate is one of them,” Bush said in a Sept. 9 speech.

“The difference between 2 percent growth and 4 percent growth is this: At 2 percent, we stay where we are, with millions on the sidelines falling behind,” he said. “At 4 percent, we grow at a pace that lifts up everybody, and there is no excuse for not trying.”

Bush's plan relies in part on overhauling the federal tax system to make taxes “lower, simpler, fair and clear.” It would reduce the number of income tax brackets from seven to three and increase the standard deduction.

Hall said the aging U.S. work force is a major part of the problem in boosting long-term economic growth. “Unless nobody ever is going to retire,” he joked, “unless Baby Boomers work till beyond death.”

In its long-term budget outlook issued in July, the CBO said the U.S. labor force is projected to grow at an annual rate of only 0.5 percent annually over the next 25 years, compared to 1.7 percent from 1965-2007.

To contact the reporter on this story: Jonathan Nicholson in Washington at jnicholson@bna.com.

To contact the editor responsible for this story: Heather Rothman in Washington at hrothman@bna.com.