He said it, repeatedly, with brio.
He, Donald J. Trump, would personally return rates of American economic growth to 4 percent a year. Don’t worry about the details! It’s gonna happen! No problem! People who say it can’t happen? Losers! Weak! Not strong! Sad!
“But we’re bringing it from 1 percent up to 4 percent. And I actually think we can go higher than 4 percent. I think you can go to 5 percent or 6 percent,” he said in an October debate against Hillary Clinton.
Later that month at a speech in North Carolina, the then-candidate continued his pledge: “I’m going to get us to 4 percent growth and create 25 million jobs over a 10-year period.”
And right after his inauguration, Trump updated the White House website’s section on jobs and the economy to reiterate his plan to “return to 4 percent annual economic growth.”
Turns out, not so much.
In an opinion piece published in the Wall Street Journal Thursday Trump’s budget director Mick Mulvaney laid out his vision for what he calls “MAGA-nomics” — a play on the popular Twitter shorthand (#MAGA) for the president’s campaign rallying call “Make America Great Again.” It’s a catchy name. But in fact, the unveiling of MAGA-nomics, as articulated by Mulvaney, represents a retreat from Trump’s oft-stated 4 percent goal. MAGA-nomics, Mulvaney clearly states, “means sustained 3 percent economic growth.”
As most economists know, three is as smaller number than four. But, to be fair, stepping back from the 4 percent promise is probably a good idea, especially since GDP growth in the first quarter was running at about 1.4 percent annual rate. As I’ve argued before, it could be possible to get the U.S. economy revved up to four percent — but not without taking a lot of risks by letting banks create another mortgage bubble that’s bound to end badly.
Of course, consumer borrowing would have to play a big part in getting the economy to grow at even three percent too, since other key drivers of economic growth, like population growth and advances in productivity, are pretty much stagnant.
In his op-ed, Mulvaney reiterates the standard catalogue of policies that Republicans say would boost growth: tax cuts, regulatory rollbacks, and cutting government spending. Yeah, yeah. We’ve heard it before. I frankly doubt any of those would do much to boost the economy over the short term. In fact, cutting government spending would likely hurt the economy, given that federal money is an important part of the economy, as with all advanced countries around the world.
My best guess is that MAGA-nomics, like the 4 percent goal, will largely turn out to be a branding exercise. MAGA-nomics will end up generating roughly 2 percent economic growth rate and enough of an increase to continue to keep adding jobs and unemployment low. That’s not terrible. It’s what the economy has been doing for most of the last six years. And it’s also called Obamanomics.