WASHINGTON – Trump budget director Mick Mulvaney, defending an administration that promises more economic growth than many think it can deliver, said Tuesday it’s the Obama administration that went overboard in its forecasts for growth. His indictment glosses over significant differences in the economy now and then.
A look at his statement on the subject:
Mulvaney, head of the Office of Management and Budget: “I went back and looked at some of the economic assumptions that the Obama administration made in its first couple of years. And I want to say on a couple of different occasions, their assumed growth rate was more than 4.5 percent. Come on, this is the first administration in history — OK? — it was the first decade, the first eight-year period in history not to have a 3 percent growth rate. Yet they were promising us 4.5 percent growth.”
THE FACTS: Former President Barack Obama’s expectations for growth were in line with accepted economic views at the time. Here’s why:
When Obama became president in 2009, the economy was stuck in the Great Recession. The gross domestic product had plunged 2.7 percent in 2008. It fell further in 2009. So Obama’s economics team figured that the economy would naturally rebound at a stronger pace than its average growth rate_the kind of acceleration that had previously happened coming out of downturn.
Obama’s first budget in 2009 estimated growth would be above 4 percent in 2011, 2012 and 2013. It would then settle into an average growth rate of 2.6 percent starting in 2015. That isn’t that far from separate estimates by the Congressional Budget Office that expected growth to average 4 percent from 2011 to 2014, before reverting to a 2.4 percent average.
Of course, the growth expected under Obama never materialized. The economy expanded instead at a sluggish pace, closer to 2 percent a year, leaving many voters who supported President Donald Trump feeling left behind.
Trump’s budget is more ambitious than Obama’s, rosy but thin on rationale for the optimism. It anticipates shifting growth above 3 percent, much higher than Obama’s long-term average.
Average growth has declined from its averages in the decades after World War II because fewer workers are entering the economy_largely a reflection of the aging baby boomer population that is starting to retire. Productivity gains have also been poor in recent years, limiting how much the economy can expand.