Brocker.Org: Trump: Debt and deficits will rise, but it’s all in the name of growth


Treasury Secretary Steven Mnuchin interjected during the interview that the administration believes its proposals can generate $2 trillion in revenue over the next decade.

“So priming the pump in the short term leads to growth,” Mnuchin said.

How much growth has been a matter of debate.

Most economists believe that the Trump fiscal plans will get the economy above the 1.6 percent or so annual growth experienced under former President Barack Obama.

However, they doubt the administration will reach its targeted growth of 3 to 4 percent in the years ahead.

“There is little evidence to support the claim by (Mnuchin) that tax cuts
would pay for themselves by boosting economic growth to 3 percent or even higher, particularly not when the economy is already so close to full employment,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note responding to the Economist interview.

“Rather than boosting sustainable economic growth, big tax cuts are more likely to result in a marked widening in the federal budget deficit, at a time when the debt burden is already high,” Ashworth added. “The risk then is that rising debt could trigger a sharp increase in long-term interest rates, which would end up offsetting any of the potential benefits from lower taxes.”

Still, Trump believes the goal is realistic, saying during that interview that “I happen to think that 3 percent is low.”