Trump’s Budget Math Grapples With Economic Reality

As a result, the administration sees federal debt held by the public — the national debt, essentially — declining from 79 percent of the overall economy this year to 66 percent in 2030. The budget office sees it rising, to 98 percent, a level not reached since 1946.

In order to justify that optimism, administration officials are contending that their overly optimistic growth forecasts of the past were a fluke of circumstance.

Mr. Trump’s first budget, in the spring of 2017, predicted growth of 2.3 percent that year using the administration’s preferred measure — the change in the size of the economy from the fourth quarter of the preceding year. It was a mild undershoot; growth actually hit 2.5 percent.

The next two budgets predicted 3.1 percent growth for 2018 and 3.2 percent for 2019. Both were off, badly. Growth was 2.5 percent in 2018, from fourth quarter to fourth quarter, and 2.3 percent in 2019, according to the Commerce Department.

Officials on Sunday attributed a half-point of the missed forecast last year to the effects of American trade policy — specifically, uncertainty over resolution of trade talks with China and congressional approval of a new trade agreement with Canada and Mexico. They said those uncertainties were now resolved and that growth would accelerate accordingly.

The senior administration official also said that a General Motors strike, aerospace giant Boeing’s struggles with its 737 Max aircraft and flooding in the Midwest had reduced growth by an additional three tenths of a percent last year.

Mr. Trump has long asserted that his push to negotiate with the Chinese and reopen North American trade talks were helping the economy. In the 2016 campaign, his advisers said that tariffs on Chinese imports — even more aggressive levies than what Mr. Trump ultimately imposed on Beijing — would increase growth, by pushing multinational companies to invest in the United States instead of China.

Article source: https://www.nytimes.com/2020/02/10/business/economy/trump-budget.html?emc=rss&partner=rss