Just in: The White House wants Americans to call the president's economic agenda “MAGAnomics,” not “Trumponomics.”
“We are promoting MAGAnomics—and that means sustained 3 percent economic growth,” wrote Mick Mulvaney, President Trump's budget director, in a Wall Street Journal op-ed Thursday.
Mulvaney gave a rehash of what Trump has been saying since he announced his run for president, including cutting taxes, slashing regulations and rewriting trade deals to boost growth. But here's the key part: Mulvaney promises 3 percent a year growth. It's in writing in America's top business newspaper.
With that promise, the architects of MAGAnomics are making the same error that the masterminds of Obamanomics made: They're promising far more than they are likely to deliver. Even worse, they are putting a very concrete target out there: 3 percent GDP or bust.
Trump's already off track. Growth this year is shaping up to be the same — or even worse — than under Obama. Expectations for the coming years are not much better.
On the same day Mulvaney published his MAGAnomics commentary, the Wall Street Journal ran a story with the headline “Forecasters lower economic outlook amid congressional gridlock.” Economists surveyed by the Journal predict 2.4 percent growth in 2018 and just 1.9 percent in 2019.
Of course, this is not the first time the Trump team has vowed “huge” and “spectacular” economic growth. Trump himself has said he can achieve 5 percent growth (annual growth has not exceeded 5 percent since 1984). The White House website promises 4 percent a year expansion and 25 million new jobs, the most of any U.S. president.
Trump's team should have learned from Obama: Be careful with concrete economic promises.
Obama spent a lot of his early days in the White House in 2009 trying to generate support for a big stimulus proposal by promising it would create millions of jobs. His team told the nation that unemployment was unlikely to go above 8 percent if the stimulus passed, part of detailed projections of the results they expected their plan to deliver. In reality, unemployment hit 10 percent a few months later.
Republicans pounced on Obama's inability to deliver. “The ‘stimulus’ has turned out to be a classic case of big promises and big spending with little results,” said House Speaker John A. Boehner (R-Ohio) in 2014. “Millions of families are still asking ‘Where are the jobs?’”
Sen. John Thune (R-S.D.) John Thune put it like this in 2014: “Five years … later, millions of Americans are still waiting for the relief Democrats and the president promised.”
Now Trump is about to fall into the same trap. The United States hasn't grown at 3 percent a year since 2005. And the country hasn't achieved that growth in a “sustained” way since the late 1990s. A lot has changed since then. The U.S. population is getting older. As baby boomers retire, there's a lower percentage of adults in the workforce than in the 1990s.
On a very basic level, the formula for economic growth is more workers plus higher productivity from employees. It's hard to see how Trump will get more workers with an aging population and his plans to curb immigration.
Mulvaney really wants to get people off welfare and back to work, but the problem is most of those people don't have the skills to get jobs. The U.S. has 5.7 million job openings. That's near the all-time high, and it's been that way for about a year now. The jobs aren't getting filled because employers can't find qualified people. On top of that, U.S. productivity growth has slowed for reasons experts still can't figure out.
Bottom line: Boosting growth much above two percent will be really hard. That's why the White House is about the only forecaster out there predicting a big boom. Consider that the Congressional Budget Office came out with a new report Thursday predicting Trump's budget would cause growth to go from 1.8 percent a year to 1.9 percent a year.
At the end of his op-ed, Mulvaney puts in a disclaimer: The economic renaissance will only happen “if we enact the president’s broad agenda” and “if MAGAnomics is allowed to work.”
Just ask Obama how well the excuse “they didn't let us finish our agenda” worked out.