Thursday, July 13, 2017

CBO Analysis Of Trump Budget Proposal Provides A Failing Grade

Donald Trump will probably be our president for awhile.  Much of the recent news about his administration has been about Trump's campaign's connection to Russian trolls.  The country needs to operate during this process so its useful to turn to the problem of governance under Trump.  The CBO analyzed the Trump budget and it did not stand up well to the analysis.  Trump's team proposed a budget which was supposed to eliminate the federal budget deficit by 2027 and expand the economy by 3% per year.  The CBO determined that the budget deficit would not be eliminated and that the economy would only grow by 1.9% annually.  If that was not bad enough, the CBO claimed that the details provided in the budget were so vague that it was almost impossible to score.  It was forced to come up with a score without adequate detail.  For example, there was not enough detail in Trump's tax plan to determine how it would produce a 3% growth rate.  The CBO modified the growth rate to reflect recent experience on the impact of tax cuts and GDP growth rate.  The relationship has not been very strong.  Since the economy will only grow by 1.9%, which is the economic consensus, it will not produce the growth in tax revenue assumed the Trump budget.

Trump is still hoping to get the healthcare bill that he promised, but that is still uncertain.  The senate is proposing a new bill that might appease moderates.  On the other hand, they could lose some conservative votes.  Moreover, two Republican senators have drafted their own bill which they would like to include in the senate debate on the healthcare proposal.  Trump is no longer concerned about the details of the healthcare bill.  He is simply demanding that he gets a bill that he can sign.

If we ignore all of the issues about the Trump campaign's connection with Russia we still need to be concerned about the ability of the administration to govern.  This can't be done by Trump's favorite method of governing through his Twitter account.

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