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nytimes – Here’s one thing President Biden’s budget is missing: Booming growth

“We’re a very large economy where there are really great forces shaping what happens to GDP growth,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution and former chief economist at CBO.

Even these moderate projections of the Biden administration imply that its policies will increase the growth of economic activity by a few tenths of a percent each year for a decade. This is significant when compared to the growth that would be expected by simply looking at demographics and historical averages of productivity growth. Forecasts are more inherently optimistic about Mr Biden’s policies – and their potential to increase productivity and workforce size – than they appear at first glance.

“To say that your fiscal policies will boost growth by four tenths of a point sounds optimistic, but I can see how they might do it,” she said.

Jason Furman, former chief economist in the Obama administration, said: “I think there’s a problem people have in their heads – more outlandish ideas about what economic policy can do and how quickly. she can do it. When you talk about improving productivity, you are talking about composition which becomes a big deal for a long time.

In other words, the difference of a few tenths of a percent in GDP growth may not mean much for a single year, but a gap of this size that persists for many years has a big impact on the level. of life.

Some of the administration’s policies, by design, would focus on the very long-term impact on the nation’s economic potential. For example, additional funding for community colleges could actually reduce the size of the workforce, and therefore GDP, in the short term if more adults return to school. But it would then increase the productive potential of these workers, and therefore their contribution to growth, for the decades to follow.

Conservatives, for their part, see the Biden program as likely to hold back growth, especially once tax increases and new regulatory measures take effect. Mr Mulligan, Trump’s adviser, said he believed the Biden program would reduce the country’s growth trajectory by about 0.8 percentage point per year from its trajectory during the Trump era. Douglas Holtz-Eakin, president of the American Action Forum, said he believes Mr Biden’s policies could create faster growth in the short term but slower growth in the long term because of taxes and spending. .

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