The Deficits Generated by Trump’s Budget are Much Bigger than CBO’s Estimates

Jared Bernstein

Jared Bernstein Senior Fellow, Center on Budget and Policy Priorities

The figure below, from Senate Budget Committee staffer Bobby Kogan, shows four different estimates of projected budget deficits as shares of GDP:

–The lowest line is the administration’s own estimate, showing how if you buy their numbers–and if you do, I’ve got a bridge to sell you–the budget balances by 2027.

–The next line up is from today’s CBO release of their analysis of President’s budget. Note that CBO must adhere to claims that tax cuts will be paid for, even if there’s no credible plan to do so.

–The next line is CBO’s baseline, or the path they believe the deficit will follow if we stick to current law.

–The top line is the most important. It’s the deficit as a share of GDP under the far more credible assumption that team Trump fails to pay for their tax cuts (using Tax Policy Center static estimates of the cost of their tax cuts, with interest costs added; ftr, TPC’s dynamic score line looks the same).

The administration gets to balance in part by assuming economic growth rates about 50% higher than CBO’s (~3 vs. ~2 percent), which spins off  over $3 trillion in revenue that the budget agency wisely does not count (the admin also cuts trillions in spending on programs like Medicaid, nutritional assistance, education, and income security). As mentioned, the CBO must follow the administration’s “set of principles to guide deficit-neutral reform of the tax system,” or what budget wonks call “the magic asterisk.” The claim is that they’ll figure out some way to offset the costs of their tax cuts, so no need to add those pesky costs to projected deficits.

If you share my “yeah, right” response to that claim, then the yellow line’s the one for you.

To be clear, I’m the least hawkish budget guy you’ll meet, and I don’t fault them or anyone else for failing to balance their budget. But deficits growing to 7% of GDP due to wasteful, regressive tax cuts are completely unwarranted and squander valuable resources that could and should be put to much better use offsetting the negative impacts of poverty, inequality, climate change, and the deterioration of our public goods.

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Reposted from On the Economy

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow.  From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the author and co-author of numerous books, including “Crunch: Why Do I Feel So Squeezed?” and nine editions of “The State of Working America.”

Posted In: Allied Approaches

Union Matters

Saving the Nation’s Parks

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

The wildfires ravaging the West Coast not only pose imminent danger to iconic national parks like Crater Lake in Oregon and the Redwoods in California, but threaten the future of all of America’s beloved scenic places.

As climate change fuels the federal government’s need to spend more of National Park Service (NPS) and U.S. Forest Service budgets on wildfire suppression, massive maintenance backlogs and decrepit infrastructure threaten the entire system of national parks and forests.

A long-overdue infusion of funds into the roads, bridges, tunnels, dams and marinas in these treasured spaces would generate jobs and preserve landmark sites for generations to come.

The infrastructure networks in the nation’s parks long have failed to meet modern-day demand. The American Society of Civil Engineers gave parks a D+ rating in its 2017 infrastructure report card, citing chronic underfunding and deferred maintenance.

Just this year, a large portion of the Blue Ridge Parkway, which is owned and managed by the NPS, collapsed due to heavy rains and slope failures. Projects to prevent disasters like this one get pushed further down the road as wildfire management squeezes agency budgets more each year.

Congress recently passed the Great American Outdoors Act,  allocating billions in new funding for the NPS.

But that’s just a first step in a long yet vital process to bring parks and forests to 21st-century standards. America’s big, open spaces cannot afford to suffer additional neglect.

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There is Dignity in All Work

There is Dignity in All Work