Republican presidential candidate Jeb Bush says he has a secret plan to bring the economy up to 4 percent annual growth. The White House responds that 4 percent growth is not achievable. The Congressional Progressive Caucus People’s Budget shows it is, but certainly not the way Bush plans to do it.
Bush says he can promise to bring the economic growth rate up to 4 percent a year because Florida achieved a 4 percent growth rate while he was governor. (He doesn’t say that Florida’s growth was largely built on an unfortunate housing bubble at that time, with growth driven by construction of houses and condominiums that stayed empty and were later foreclosed.)
Bush has not laid out an actual plan to achieve 4 percent growth, talking vaguely (as all Republicans do) of cutting taxes, cutting government spending and cutting regulations to create jobs and growth.
In a speech arranged by the Chamber of Commerce corporate lobbying organization Bush vowed to cripple government by:
- Cutting 10 percent of government employees.
- Stop giving government employees raises and get rid of due process to get even more of them to quit.
- Give government managers pay incentives to reduce spending rather than prioritize based on America’s needs.
- Push for a line-item veto so he, not Congress, can decide where to spend money.
- Require that the government’s budget be balanced and do it through spending cuts only.
In the Fox News debate Bush said, “I cut taxes every year, totaling $19 billion” as Florida’s governor, and “I vetoed 2,500 separate line-items in the budget.”
For what would drive his 4 percent growth strategy as president, Bush said during the debate:
- “A four percent growth strategy means you fix a convoluted tax code. You get in and you change every aspect of regulations that are job killers. You get rid of Obamacare and replace it with something that doesn’t suppress wages and kill jobs.”
- “You embrace the energy revolution in our country.”
- “And frankly, fixing our immigration system and turning it into an economic driver is part of this as well.”
- “If you do that and apply conservative principles the right way, you create an environment where everybody rises up.”
- “But Washington is holding us back. How we tax, how we regulate. We’re not embracing the energy revolution in our midst, a broken immigration system that has been politicized rather than turning it into an economic driver.”
Summary: Gut government and make it unable to react to the needs of the American people, gut government’s ability to regulate corporations, gut government’s ability to collect taxes, gut the health care system and return to the days of health care costs gutting government budgets and being the primary cause of bankruptcies, gut what little infrastructure maintenance and modernization remains after previous cuts, gut investment in scientific research, gut working people’s wages and gut government support for the victims of these policies (thereby killing off what spending power remains).
It is unclear how any of this would help grow the U.S. economy, but there it is.
White House Response
The White House responded this week to Jeb’s promise by saying 4 percent growth just can’t be done. Reuters, White House adviser says Bush GDP growth goal beyond reach
Florida Governor Jeb Bush’s goal of 4 percent annual U.S. economic growth is not something “any serious economist” thinks is achievable, a top White House adviser said on Friday.
“I haven’t seen any serious economist say that that is within the realm of possibility,” White House Council of Economic Advisers Chairman Jason Furman told CNBC. “The debate we should be having is not targets no economist thinks we can hit but are we doing everything we possibly can to strengthen our economy.”
What Hits Growth?
Solving some of America’s pressing problems would boost our country’s economic growth.
Our enormous, humongous trade deficit cuts more than 1 percent from economic growth all by itself.
Our underinvestment in infrastructure hits economic growth two ways. First, the millions of jobs that would be created would boost the economy. Then the improved infrastructure would itself continue to boost the economy.
Our country’s enormous student debt load is hitting the economy because people cannot afford housing, cars, and other purchases.
Economic inequality also hits economic growth.
The People’s Budget Boosts Growth 3.9%
The Progressive Caucus People’s Budget for 2016 does, in fact, achieve significant economic growth for the U.S. economy. It directly addresses our major problems, thereby growing the economy, while paying for this in ways that cut inequality – which also grows the economy.
The People’s Budget would:
- Spend roughly $528 billion in job creation and public investment measures in calendar year 2015 alone and roughly $1.34 trillion over calendar years 2015–2017.
- End currency manipulation, immediately reducing the trade deficit.
- Make $95 billion in investments to help states and municipalities rehire police, firefighters, healthcare workers, teachers, librarians, and other public employees as well as to maintain investments in affordable higher education and local safety net
- Provide for debt-free college, treat higher education as a pubic good, and “cover the total cost of college attendance without taking on debt.” For current debt-holders, it would allow students to “refinance their student loans at low rates” and “private borrowers to shift to more affordable government loans.”
- Create new income tax brackets: (Note that these are still lower than Reagan-era levels.)
- $1-$10 million: 45 percent
- $10-$20 million: 46 percent
- $20-$100 million: 47 percent
- $100 million-$1 billion: 48 percent
- $1 billion and over: 49 percent
This People’s Budget would boost growth by 3.9% – even before its measures to reduce the student debt load, reduce inequality, raise wages, cut the trade deficit and realize the gains from a modern infrastructure come into play. The Economic Policy Institute (EPI) explains in, “The ‘People’s Budget’: Analysis of the Congressional Progressive Caucus Budget for Fiscal Year 2016,”
The People’s Budget would … boost gross domestic product (GDP) by 3.9 percent and employment by 4.7 million jobs at its peak level of effectiveness (within one year of implementation)
Again, this doesn’t even account for the gains that would be realized from long-term investment in our economy and our people.
Sanders And Clinton Plans Grow Economy
Democratic candidates Bernie Sanders and Hillary Clinton have both outlined plans that would significantly grow the economy.
Sanders, for example, calls for immediately spending $1 trillion over 5 years to start maintaining and modernizing the country’s infrastructure. This would achieve a growth boost similar to the boost that EPI attributes to the People’s Budget. Sanders also proposes tuition-free higher education and has several other proposals similar to and thereby offering similar benefits to the People’s Budget plan.
Clinton also calls for making the “necessary” investments in infrastructure, research and education. Though she has yet to offer specifics, any “necessary” increases in infrastructure spending would significantly boost the economy. Her website also calls for tax “relief” for working families and raising the minimum wage.
Note that even the People’s Budget and Sanders’s trillion-dollar-level infrastructure proposals fall far short of what is needed. The most recent American Society of Civil Engineers (ASCE) Infrastructure Report Card says that $3.6 trillion of spending on maintenance and modernization is needed by 2020 “to maintain a state of good repair.”