President Trump received his first official estimate Thursday of how his proposals would affect the economy. The results were mediocre — especially compared with the numbers for President Barack Obama while he was in office.
Trump's proposals so far would only add about 0.1 percentage points to growth in gross domestic product, according to the nonpartisan Congressional Budget Office (CBO). That would increase the pace of GDP growth to just 1.9 percent a year, much slower than the 3 percent administration officials have promised.
After a decade, GDP would only be about 0.7 percent greater if Trump's proposals were enacted, the CBO predicted. Obama's plans would have expanded GDP by substantially more. For instance, the budget he put forward in 2014 would have increased overall economic activity by 2.1 percent after a decade, the CBO said at the time.
There are two main reasons for the discrepancy between the forecasts for Trump's and Obama's proposals. The first is that Obama's plans would have reformed the immigration system, which would have resulted in more people living and working in the United States.
In other words, the main reason that the economy would be expanded by Obama's proposals is simply that with a larger population, the country would have more economic activity. The CBO's analysis did not investigate the question of whether workers already in the country would be better off — a point of debate among experts.
Research generally shows that immigration increases wages for most native workers, but some economists argue that immigration brings down earnings for those who are already in the country and who lack skills or education. These are the workers who must compete the most directly with immigrants if they are also less skilled, and the CBO did not go into this level of detail in its studies of Obama's budgets.
Putting aside these questions over the benefits of immigration, Trump's proposals are difficult to evaluate because they are, so far, described only in relatively vague terms. The CBO said in the forecast it issued Thursday that the Trump administration has not put forward plans that are detailed enough for the agency to analyze their economic benefits.
Above all, Trump has not put out a plan for overhauling the tax system, despite the White House's promises to deliver the greatest tax cut in U.S. history. A change in taxes could have major economic consequences, but because of the Trump administration's unusual slowness in developing complete proposals on taxes and other major issues, the CBO is not giving the president credit on his economic agenda.
Under Obama, the CBO put out separate reports analyzing the effects of the president's budgets on the economy. CBO staff have indicated that they will not do the same for Trump's first budget because of the lack of detail.
For many Americans, the most important consequences of Trump's proposals would not relate to GDP or the state of the economy overall. The administration's budget calls for bringing down spending on public assistance, including a $1.9 trillion cut in health-care benefits over a decade, the CBO said. The document also contains a reduction of $238 billion in food stamps and other programs for those in need.