Trump Administration Forecasts Growth Better Than CBO and Private Economists, Considers Recalculating Deficit To Appear Larger
February 20, 2017
The Trump administration is considering changing how U.S. trade deficits are calculated, a move that would make the deficit look larger on paper; A tax debate is heating up and lawmakers are thinking of an alternative solution; Trump team’s growth forecasts far rosier than those of CBO, private economists.
- The Trump administration is considering changing how U.S. trade deficits are calculated, a move that would make the deficit look larger on paper. The leading idea is to count “re-exports” — goods that are imported to the U.S., and then exported to a third country unchanged — as imports, but not export. The change would inflate the trade deficit number, an important figure in trade negotiations and policy. [The Hill]
- A tax debate is heating up and lawmakers are thinking of an alternative solution. Border adjustment, a pillar of House Republicans’ tax proposal, is being discussed and debated – bringing into question an alternative. Large U.S. retailers are lobbying against the proposal, which would tax imports and exempt exports. Senate Republicans have expressed views ranging from skepticism to hostility and with Democrats sidelined just three GOP senators could end the House tax plan. [WSJ]
Economic Indicators & News
- The Trump administration has drafted preliminary economic growth forecasts in its federal budget planning that rely on assumptions that appear much better than projections made by independent agencies and most private forecasters. The forecasts are being revised, these people said, following an internal debate. The deliberations show the challenge the administration faces as it tries to reconcile the competing goals of cutting taxes, boosting military and infrastructure spending, preserving Medicare and Social Security programs and keeping budget deficits from soaring. [WSJ]