Trump Boom May Go Bust Without More MAGAnomics, White House Says

Plus, who's financing the budget deficit

Trump’s Economists Says Growth Will Slow Without More MAGAnomics

The U.S. economy is chugging along. A new CNN poll found that 71 percent of Americans say that economic conditions are good, the highest percentage to say that since 2001. And the White House is happy to take credit for it. The 2019 Economic Report of the President, released Tuesday, says that the economy is strong thanks to the Trump administration’s economic program of tax cuts and deregulation.

Coming in at more than 700 pages, the report sings the praises of Trump’s economic policy and attempts to make the case that the last two years mark a new era of growth. Looking ahead, the report projects higher levels of growth well into the future, with output rising “at an average annual rate of 3.0 percent between 2018 and 2029.”

This estimate, however, comes with a huge footnote: It assumes the “full implementation of the Trump Administration’s economic policy agenda.”

What’s in that agenda? A host of proposals that are unlikely to become law anytime soon, given Democratic control of the House: more tax cuts, a major infrastructure bill, more deregulation and new policies for moving people from government aid programs to full-time, private-sector employment.

If the Trump administration is unable to enact its agenda, economic growth will fall below 3 percent next year and drop to 2.5 percent by 2022 and about 2 percent by 2026, the report said.

Here’s the chart from the report showing the different trajectories, with the top line representing GDP growth assuming Trump’s economic policies become law and the lower red line showing growth if they don’t:

In comments Tuesday, White House officials appeared to ignore the clear implications of the report for lower growth. Kevin Hassett, the chair the Council of Economic Advisers and lead author of the report (pictured above), again stated his argument that the 3 percent growth rate is sustainable due to investments sparked by the tax cuts. And he rejected the idea that the higher growth seen in 2018 was just a short-term boost.

“Some folks have said, ‘Oh, sure, we did have 3 percent growth [in 2018], but that was a sugar high,’” Hassett told reporters. “Our view is that’s really not a sugar high at all. A sugar high would be, ‘We spent a lot of money on Twinkies, and now we’re sorry we ate all those Twinkies, and we don’t have any money left.’”

Hassett continued, “But this is — we actually cut taxes to encourage people to build new factories, and we got the new factories last year. We’re going to get more new factories this year, but we’re also going to get the output from the factories we built last year as they turn them on.”

However, the president’s economic report undermines these claims, and just about every other expert agrees that last year’s growth was closer to a sugar high than a fundamental rewiring of the economy.

The CNBC Fed Survey for March, also released Tuesday, showed that analysts expect GDP growth to fall to 2.3 percent this year and 2.0 percent in 2020. Slowing global growth and Trump’s protectionist trade policies were cited as the top two problems weighing on the economy.

Pentagon Provides List of Projects That Could Have Funding Redirected to Pay for the Border Wall

The Pentagon on Monday provided lawmakers with a list of military construction projects that could be affected by President Trump’s declaration of a national emergency at the southern border. The list had been requested by lawmakers as part of their effort to oversee the administration’s repurposing of as much as $3.6 billion in military construction funds for border wall construction under Trump’s emergency declaration.

The list contains $12.9 billion worth of construction projects all over the world that have not yet received contracts, including aircraft hangars, water treatment plants, training facilities, roads and medical facilities. The Pentagon said that some of the project funds would be exempt, including those related to military housing and “military construction projects with FY 2019 award dates.”

The military news site Task & Purpose said the list, which does not make clear which projects are exempt, was “about as clear as mud.” The site’s article was titled, “Pentagon to Congress: Here's every project that could be used to fund Trump's wall. Or not. We don't even know.”

Sen. Tim Kaine (D-VA), who sits on the Armed Services Committee, said he hopes the list will inspire lawmakers to override the president’s recent veto of a congressional effort to block his national emergency declaration, though analysts doubt there will be enough votes to do so.

Still, the use of Pentagon construction funds to build the border wall remains a controversial issue, the outcome of which depends in part on budget negotiations in Congress and between lawmakers and the White House.

To Cut Costs, a Third of Uninsured Americans Don’t Take Their Medicine as Prescribed

More than one in nine Americans — and more than a third of those without insurance — did not take their medications as prescribed in 2017 in an effort to lower their costs, according to a report released Tuesday by the National Center for Health Statistics.

The report further highlights how Americans are struggling to afford their prescription drugs.

“Cost-saving strategies to reduce prescription drug costs may have implications for health status and have been associated with increased emergency room use and hospitalizations compared with adults who follow recommended pharmacotherapy,” the new report says.

More from the report:

  • Nearly 60 percent of adults aged 18 to 64 reported being prescribed medication over the past 12 months, as of 2017.

     
  • About one in five of those people asked their doctor for a lower-priced prescription, down from nearly 26 percent in 2013. Women were more likely than men to ask for a lower-cost medication (22 percent vs. 16.4 percent). Uninsured adults were about twice as likely to ask for a lower-priced prescription (nearly 40 percent, compared to 18 percent among those with private insurance and about 16 percent among those on Medicaid).

     
  • More than 11 percent of adults did not take their medication as prescribed to try to reduce their costs, with women more likely than men to do so (12.7 percent vs. 9.7 percent). Among the uninsured, 33.6 percent said they did not take their medicine as prescribed in an attempt to cut costs. Among those with private insurance, that figure was far lower, 8.4 percent.
  • More than 5 percent of adults with prescriptions used alternative therapies to try to bring down their drug costs. The uninsured were far more likely to try such therapies, with about 14 percent reporting they had done so.

Charts of the Day: Who’s Financing the US Budget Deficit?

Torsten Slok, chief economist at Deutsche Bank, provides this look at how Treasury borrowing has grown as a share of overall bond market debt …

… and a breakdown of who’s financing that U.S. borrowing. The U.S. deficit, he writes, used to be financed by foreigners, but is now being financed by domestic investors.

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C-SPAN is 40 years old today. Read Karen Tumulty’s piece at The Washington Post to see why she says it was a radical idea that “upended the balance of power in the marble corridors of Capitol Hill.”

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