Thursday, March 21, 2019

Trump's New Budget Uses More Realistic Assumptions Than His Predecessors' Did: New at Reason

By Reason Staff - March 21, 2019 at 07:01AM

The Congressional Budget and Impoundment Control Act of 1974 requires that each administration report "the economic and programmatic assumptions" underlying a budget. The result is a database of every administration's growth forecasts released since 1975. Using this data, the Council of Economic Advisers (CEA) just released a report showing that this administration "is the first on record to have experienced economic growth that meets or exceeds its own forecasts in each of its first two years in office."

For both years, the Trump administration's actual growth was equal or slightly higher than the projected growth rates. While it forecasted growth of 2.3 percent during Trump's first year in office, it reached 2.5 percent. In the second year, its projection of 3.1 percent was equal to actual growth.

By comparison, President George W. Bush's projections were seriously off during his first year in office. His administration predicted 2.6 percent growth but only achieved 0.2 percent. His second-term projections were again overly optimistic by nearly a full percent. Growth projections for his father, President George H. W. Bush, were off by 0.6 percent during his first year and by 1.7 percent in his second year. President Ronald Reagan's projections were only off by 0.1 percent in his first year, but his forecast was off by 4.6 percent during his second year due to a recession.

The Trump administration's humility will serve the administration well, writes Veronique de Rugy.

View this article.

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