CBO: Trump bud­get won’t grow econ­omy

The Denver Post - - BUSINESS - By Damian Paletta and Max Ehren­fre­und

WASH­ING­TON» The Con­gres­sional Bud­get Of­fice said Thurs­day that Pres­i­dent Trump’s first bud­get plan would not elim­i­nate the deficit over 10 years or grow the econ­omy at all by 2021, cast­ing doubt on the ad­min­is­tra­tion’s con­tro­ver­sial eco­nomic as­sump­tions that were sup­posed to bol­ster key parts of the White House’s agenda over the next year.

CBO pro­jected that the sweep­ing spend­ing re­duc­tions on anti-poverty pro­grams, hous­ing, en­vi­ron­men­tal pro­tec­tion, and a num­ber of other ini­tia­tives that the White House wants to cull back still would not be enough to elim­i­nate the deficit by 2027.

But in that year, the deficit would be $720 bil­lion un­der the White House’s bud­get, CBO said. The White House as­serted the gov­ern­ment would have a bud­get sur­plus in 2027 if its poli­cies were en­acted, bring­ing in more money through rev­enue than it spent. That’s a more than $700 bil­lion gap in just one year be­tween the CBO and White House.

This con­trasts sharply with the White House’s in­ter­nal es­ti­mates, which ar­gued that cut­ting taxes would cre­ate an eco­nomic boom that solved many of the coun­try’s bud­get prob­lems.

The White House also es­ti­mated that its bud­get changes would lead the econ­omy to grow by 3 per­cent per year. CBO found, how­ever, that eco­nomic growth would only av­er­age 1.9 per­cent per year un­der the White House’s plan.

The as­sess­ment raises new ques­tions about whether Repub­li­cans will be able to build a coali­tion of con­ser­va­tive and cen­trist law­mak­ers who can agree on a sin­gle bud­get pro­posal. By re­ject­ing the White House’s dec­la­ra­tion that large scale spend­ing re­duc­tions and un­spec­i­fied tax cuts will lead to eco­nomic growth, CBO could make it harder for this coali­tion of GOP law­mak­ers to band to­gether. House law­mak­ers had hoped to be­gin vot­ing on their bud­get plan as soon as next week.

Some key el­e­ments of the White House’s agenda rely on Congress’s abil­ity to pass a bud­get. For exam- ple, they only need 50 Repub­li­cans in the Se­nate to ap­prove a tax plan if it is part of an al­ready au­tho­rized bud­get plan through a process known as rec­on­cil­i­a­tion. If Congress doesn’t pass a bud­get plan, they will need 60 votes to au­tho­rize tax cuts. There are only 52 Repub­li­cans in the 100-seat Se­nate, mean­ing they would have to cut deals with Democrats un­der this sce­nario.

CBO’s new pro­jec­tions came with a sig­nif­i­cant caveat, say­ing the lack of de­tail the White House has pro­vided about its plans — pri­mar­ily its plan to over­haul the tax code — made it vir­tu­ally im­pos­si­ble for the agency to de­ter­mine what the eco­nomic im­pact of these ideas would be. The White House has put out only a sparse, onepage blue­print for over­haul­ing the tax code.

“The pres­i­dent’s pro­pos­als would af­fect the econ­omy in a va­ri­ety of ways,” CBO wrote in its as­sess­ment. “How­ever, be­cause the de­tails on many of the pro­posed poli­cies are not avail­able at this time, CBO can­not pro­vide an anal­y­sis of all their macroe­co­nomic ef­fects or of the bud­getary feed­back that would re­sult from those ef­fects.”

And there were cases where the CBO sim­ply re­jected the White House’s bud­get cut­ting as­sump­tions. For ex­am­ple, the White House said that “re­duc­ing im­proper pay­ments gov­ern­men­twide” would save $139 bil­lion over 10 years, some­thing they be­lieve would help them even­tu­ally elim­i­nate the deficit. But CBO said the White House sim­ply wouldn’t pro­vide enough de­tails as to where the White House would find such im­proper pay­ments to elim­i­nate, and it dis­counted any sav­ings from this en­deavor.

Still, CBO said the White House’s plan would es­sen­tially cut gov­ern­ment spend­ing by $4.2 tril­lion over 10 years com­pared with ex­ist­ing law, a very large sum.

The White House seized on this el­e­ment of CBO’s as­sess­ment in its ini­tial re­sponse.

“We are thrilled that CBO con­firms that the pres­i­dent’s pro­posed bud­get resulted in the largest deficit re­duc­tion they have ever scored,” White House Of­fice of Man­age­ment and Bud­get spokes­woman Meghan Bur­ris said. “This ad­min­is­tra­tion is com­mit­ted to mak­ing the nec­es­sary in­vest­ments to re­store our mil­i­tary, se­cure our bor­ders, and mod­ern­ize our in­fra­struc­ture.”

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