How to boost Pentagon and infrastructure spending, leave Medicare and Social Security alone and not increase the budget deficit or add to the nearly $20 trillion in national debt? That’s the dilemma facing both the Trump White House and, later in the year, congressional Republicans.
One answer: be more optimistic about how fast the economy can grow. How far those assumptions can go, and at what point they begin to lose credibility, may end up being at the center of budget battles later this year.
That dichotomy was on display in recent days in comments from the new Treasury Secretary Steven Mnuchin and House Budget Committee Chairman Diane Black (R-Tenn.). Mnuchin in a CNBC interview and a Wall Street Journal interview said the White House will be aiming for “sustainable growth of 3 percent or more” in its budget submission to Congress.
Discussing a tax overhaul plan and how it would be scored by the Joint Committee on Taxation, Mnuchin said, “My guess is that our growth assumptions will be higher than what they use to score the plan.”
But Black, who’s responsible for shepherding a Republican budget through the House, was more wary about going to the growth well too often during an interview on radio station News Talk 98.7 in Knoxville, Tenn., Feb. 22.
“We’re wanting to see if you put people back to work, you get this economy working, you could see a 4 or 5 percent growth,” Black said. “But we’re not going to do that right now, we’re not going to take that as a for-sure to say, ‘We’re going to start all this spending over here’ before we actually have revenue coming in.”
Given slow growth in labor force—thanks to the retirement of Baby Boomers—and sluggish productivity, most economists are skeptical that U.S. economy’s long-term maximum growth rate can be increased much from around 2 percent.
In recent testimony before the Senate Budget Committee, Keith Hall, director of the Congressional Budget Office, noted the agency’s estimate annual economic growth between 2016 and 2026 was just 1.9 percent under current law.
The Federal Reserve’s central tendency estimate of long-run growth issued Feb. 14 was 1.8 to 2 percent. The range of long-run projections went from a low of 1.6 percent, the Fed said, to a high of 2.2 percent.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)