WASHINGTON—The Trump administration has drafted preliminary economic growth forecasts in its federal budget planning that rely on assumptions that are far rosier than projections made by independent agencies and most private forecasters, according to several people familiar with the discussions. The forecasts are being revised, these people said, following an internal debate. One concern is that pressing staff economists to produce aggressive forecasts might undercut the credibility of top appointees forced to later defend those numbers. The deliberations show the challenge the administration faces as it tries to reconcile the competing goals of cutting taxes, boosting military and infrastructure spending, preserving Medicare and Social Security programs and keeping budget deficits from soaring.
The internal Trump projections are at odds with other assessments of the economy’s long-run growth prospects. The Congressional Budget Office, a nonpartisan agency that provides analysis to Congress, estimates the economy will grow 1.9% annually between 2021 and 2027. The Federal Reserve forecasts growth of 1.8% over the long run. While there are often disparities between the White House and other agencies on growth projections, they are rarely this large.
During the campaign, Mr. Trump made apparent his low regard for economists. His administration has yet to name any of the three members to his Council of Economic Advisers, which oversees forecasting and other modeling.
“It is awfully hard to get to 3%. I don’t know where a number like that would come from,” said Dale Jorgenson, a Harvard economics professor who specializes in such projections. Mr. Jorgenson’s most recent forecasts show an economy growing by 1.8% annually over the next decade. That’s in part because the labor force is aging, meaning there are fewer workers to produce goods and services, and because the educational attainment of the workforce has plateaued, meaning workforce skills aren’t advancing. Major policy changes such as a tax-code overhaul could boost growth to 2.4%, he said.
Great so he is telling his team to lie. Par for the course.