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Donald Trump’s Budget Has A Problem

DO GROWTH ESTIMATES ADD UP? We’ve yet to dive into the weeds of U.S. president Donald Trump‘s latest budget proposal, but we’re pleased to see he is proposing some long-overdue cuts to the federal behemoth – as much as $3.6 trillion over the coming decade, as a matter of fact….

DO GROWTH ESTIMATES ADD UP?

We’ve yet to dive into the weeds of U.S. president Donald Trump‘s latest budget proposal, but we’re pleased to see he is proposing some long-overdue cuts to the federal behemoth – as much as $3.6 trillion over the coming decade, as a matter of fact.

“Our nation must get our fiscal house in order now, or else we may never have another opportunity, and President Trump has provided a pathway to bring our nation back from the brink of insolvency,” Rick Manning of Americans for Limited Government (ALG) wrote in a guest column praising Trump’s budget.

We concur …

There is one area, however, in which Trump’s budget is inviting legitimate criticism.  Specifically, we’re referring to its long-term economic assumptions.

Specifically, Trump’s budget presumes the American economy will expand at a 2.3 percent annual clip in 2017 and gradually improve to three percent annual growth by 2020.  This three percent growth is projected to continue until 2027.

Take a look …

(Click to view)

(Via OMB)

Are these valid assumptions?  In a word, “no.”

The American economy has expanded – albeit anemically – for the last eight years.  To assume it will continue to expand over the next decade without a recession seems overly optimistic to us.

Furthermore, the economy hasn’t grown at a three percent clip since 2005 – and doesn’t seem likely to hit that mark this year, either.  To assume it will grow at that level from 2020 through 2027 again seems overly optimistic to us.

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