Blam­ing Trump for deficits misses their ‘in­ven­tor’ — Obama.

Blam­ing Don­ald Trump for deficits misses their ‘in­ven­tor,’ Barack Obama

The Washington Times Daily - - FRONT PAGE - By Stephen Moore

There is an old say­ing that you can’t teach an old dog new tricks, and we’ve learned that again with the Con­gres­sional Bud­get Of­fice and its lat­est highly mis­lead­ing fis­cal fore­cast.

For years, we’ve been try­ing to get the CBO to use real-world scor­ing that re­flects how busi­nesses, work­ers and fi­nan­cial mar­kets re­act to changes in tax rates. But no go.

This is why the left is hav­ing a field day with the CBO fore­cast that deficits un­der Pres­i­dent Trump will av­er­age a tril­lion dol­lars a year for the next decade. This is sup­posed to be a re­sult of Mr. Trump’s tax cuts, but hold on here. Take a look at the nearby chart. It shows the deficit fore­cast with and with­out the tax cuts. They are ef­fec­tively the same.

Mr. Trump didn’t cre­ate $1 tril­lion deficits, he in­her­ited them from the grand mae­stro of debt spend­ing, Barack Obama. Pres­i­dent Obama in­vented and then per­fected the con­cept of 13-digit bor­row­ing. His deficits in his first term reached $1.5 tril­lion — an Olympic record of fis­cal reck­less­ness.

Is there any­thing more hyp­o­crit­i­cal than lib­er­als, who sup­ported Mr. Obama’s poli­cies that ran the debt from about $11 tril­lion to al­most $20 tril­lion, now faint­ing over

The fan­tas­ti­cal claim of the CBO is that the econ­omy will grow by only 1.9 per­cent an­nual growth for the next decade.

run­away deficit spend­ing? Yes, Chuck Schumer, there is gam­bling go­ing on here at this casino.

The CBO says that the deficit will be about $1.5 tril­lion higher be­cause of pol­icy changes. Al­most 40 per­cent of that is the in­ex­cus­able om­nibus spend­ing bill — a bi­par­ti­san raid of the fed­eral cookie jar.

About $1 tril­lion of the higher bor­row­ing over 10 years is due to the tax cut. By the way, this is the low­est es­ti­mate for the “cost” of the tax cut, we’ve seen. That $1 tril­lion rev­enue loss is out of al­most $40 tril­lion of ex­pected rev­enue. That’s a 2.5 per­cent tax cut — which is hardly the fire hose of lost rev­enue that is be­ing de­picted.

At the very least we can dis­pense with the hy­per-in­flated rhetoric of $3, $4 and $5 tril­lion debt in­creases due to the tax cut — that are thrown around in the me­dia from lib­eral in­ter­est groups.

The fan­tas­ti­cal claim of the CBO is that the econ­omy will grow by only 1.9 per­cent an­nual growth for the next decade. (This is up a smidgeon from its 1.8 per­cent pre­dic­tion at the start of the Trump pres­i­dency.) To be fair, CBO’s growth es­ti­mate is in line with most of the Blue Chip fore­cast­ers as well.

That pre­dic­tion makes no sense. GDP growth av­er­aged 1.95 per­cent an­nu­ally un­der Mr. Obama — and nearly ev­ery­thing he did on the econ­omy was anti-growth.

Now we have a pres­i­dent who is cut­ting tax rates, chop­ping down reg­u­la­tions, pro­mot­ing mas­sive new en­ergy and min­eral de­vel­op­ment, re­form­ing wel­fare to get peo­ple into the work­force, re­design­ing trade pol­icy to get bet­ter deals for Amer­i­can com­pa­nies and prod­ucts — and this is go­ing to only give us the measly rate of growth we had un­der Mr. Obama?

No. The core prin­ci­ple of Trumpo­nomics is to at­tain at least 3 per­cent growth. Ev­ery pol­icy is fo­cused like a laser beam on that goal. It’s not a shot to the moon. The av­er­age growth rate of the U.S. econ­omy for the past cen­tury is about 3.3 per­cent.

In a re­cent eco­nomic anal­y­sis, Rob Arnott, founder of Re­search Af­fil­i­ates, and I re­cal­cu­lated the CBO numbers and plugged in 3 per­cent growth, not 1.9 per­cent growth.

Guess what? The debt to GDP ra­tio goes down, down, down ev­ery year. In­stead of a hor­rific debt to GDP ra­tio of 150 per­cent in 20 years, that ra­tio ac­tu­ally falls to about 50 per­cent — very man­agable.

With long-term growth of GDP of 3 per­cent all the en­ti­tle­ment deficits be­gin to dis­ap­pear as well. This is be­cause tax rev­enues over­whelm spend­ing over time with 3 per­cent GDP growth. It’s called the power of com­pound in­ter­est.

The point here is that CBO’s creaky com­puter mod­els be­gin with the firm con­vic­tion that Trumpo­nomics won’t work and then … sur­prise, it cranks out a con­clu­sion that Mr. Trump’s poli­cies won’t work. This is what passes for rig­or­ous anal­y­sis these days.

Wel­come to la la land.

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