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White House/Pete Souza
This article appears in the September 10, 2012 issue of National Review.
When a Republican is in the White House, the mainstream media pore over every nuance of the economic outlook of the president’s team, and any hint of optimism is ridiculed as voodoo economics or supply-side fantasy. The worst crime a Republican administration can commit is to propose a forecast that is different from that of the “nonpartisan” Congressional Budget Office. When that happens, the Krugmans of the world howl about Republican lies.
Perhaps the most memorable of these moments occurred back in 1981, when Ronald Reagan proposed his budget for fiscal year 1982. Critics decried his optimistic economic forecasts, which called for GNP growth of 5 percent in 1983. These forecasts were, the media reminded us, an average of two points higher than CBO forecasts. Reagan was accused of using his “Rosy Scenario” forecasts to hide the massive deficits that his tax cuts would produce.“The assumptions that presidents make in their budget proposals are certainly important. After all, they affect all the other calculations.”– Kevin Hassett
The assumptions that presidents make in their budget proposals are certainly important. After all, they affect all the other calculations. If a president assumes growth will be high, that will give him lots of revenue to play with, helping him justify spending increases or tax cuts. So it’s more than a small technicality when a budget calls for much larger or smaller growth than the economy ends up experiencing.
In the case of Reagan, despite all the howling, the Rosy Scenario’s forecasts for 1983 through 1985 turned out to be much closer to actual economic growth than the CBO’s. Reagan’s economic team correctly anticipated growth effects from tax cuts. But today we have witnessed presidential budgets that have been as inconsistent with CBO forecasts as any in history. When one looks at GDP growth forecasts, or those for unemployment, there has never been a president and an economic team with the temerity to mislead as much as Obama and his advisers have done.
The nearby chart shows the average difference between the assumptions in the past five presidents’ budgets and the projections that the CBO made for the same years as those budgets. Since projections can be difficult to make for the more distant future, and we wanted to compare Obama’s record to actual history as well, we looked at predictions in each budget for the subsequent two years, for both GDP growth and unemployment. As the chart shows, most of the presidents, on average, assumed slightly more positive outcomes than the CBO, perhaps because of the desire to understate deficits. President Obama’s budgets, however, differed from the CBO’s projections in a much more dramatic way than those of any of the previous four presidents, and especially those of his two immediate predecessors.
President Obama’s predictions have not proved especially accurate over the past three years either: In 2010, his economic team projected growth this year to reach 4.6 percent; instead, it has been slogging along in the twos. Even when it became clearer in 2010 and 2011 that the recovery from the recession could drag on, his assumptions continued to call for high growth in the near future. When one considers the myriad ways the mainstream media have failed to critically inspect the activities of this president, his economic forecasts take the cake. Obama and his economic team have consistently overstated growth in an attempt to misrepresent the massive deficits their policies will produce. While pitching the propaganda that they will stabilize the debt, they have posted growth forecasts that are shockingly out of sync with the CBO.
They do this because they know that the mainstream media will let them get away with it. If a Republican disagrees with the CBO, it is malpractice.
If a Democrat does it, it’s not worth a mention.
Kevin Hassett is the director of economic policy studies at AEI.
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