That's what happened Friday morning with President Trump's chief economic adviser, Larry Kudlow. Kudlow took to the Fox Business Network to boldly claim that a growing federal budget deficit was declining — and then threw in a “rapidly” for good measure.
“The deficit, which was one of the other criticisms, is coming down — and it’s coming down rapidly,” Kudlow claimed. “Growth solves a lot of problems.”
There is no publicly available justification for this claim.
The deficit in fiscal year 2017 ($665 billion) was bigger than it was in fiscal year 2016 ($587 billion). And the GOP has now passed its big trillion-dollar tax-cut package and ramped up spending in other areas. The result? The nonpartisan Congressional Budget Office projects that the deficit will climb to $1 trillion annually by 2020 — a number not hit since the recession spurred Congress to pass an economic stimulus package in 2009.
Even if you consider the deficit not as a raw number but as a percentage of the broader economy — which is probably a better measure, given inflation — it is expected to grow and then stay steady in the coming years, per CBO.
Economist Stan Collender said Kudlow's claim has “no substantive justification whatsoever. It absolutely qualifies as 'pants on fire.' ”
Also appearing to vehemently disagree with Kudlow's evaluation? His fellow White House economic adviser. Kevin Hassett, the chairman of the Council of Economic Advisers, acknowledged just this week at a Washington Post Live event that the deficit was "skyrocketing."
We're relying on months-old data and forecasts, and Republicans have increasingly pointed to past CBO estimates that didn't pan out. Who knows what will happen in the future? But Kudlow was talking about what's happening today. The most recent monthly statement we have from the U.S. Treasury Department is through April, and despite showing a record surplus that month — owing to record tax collections from stock market gains — the deficit was still widening as a result of increased spending.
For the first seven months of fiscal year 2018 (October through April), the deficit stood at $385 billion, which was 12 percent more than it was the same period a year earlier. And although April featured a record surplus, the two previous months — February and March — featured the biggest monthly deficits of Trump's presidency, each cresting $200 billion. Kudlow may point to April as a sign of progress, but it's always the big revenue month, given that it includes Tax Day.
We don't know where it will end up! Maybe Kudlow knows something we don't. But if he does, the White House may want to substantiate the claim. At best, Kudlow seems to be surmising that the deficit may decline as a percentage of GDP (the first chart above) because of growth. But we don't have data to back that up — much less data that shows it is happening “rapidly.”
And if Kudlow is making his own projection, everyone should be very careful. He promised in late 2007 and early 2008, after all, that there would be no recession. And, as fate would have it, that was exactly the question he was again responding to Friday on Fox Business.