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Trump’s great growth debate is all about guesswork

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The argument between the Trump administration and its critics over a sustainable rate of economic growth raises profound questions about America’s future. Have we entered a prolonged period of slow growth? If so, how does that alter society and politics? Or will the “right” policies raise growth to past levels?

If you haven’t paid attention, here’s a brief overview of the debate.

In its budget, the White House projected annual inflation-adjusted economic growth of 3 percent over the next decade. This almost equals the average rate of 3.2 percent since 1950. Meanwhile, the Congressional Budget Office and many private economists project an annual growth rate of about 2 percent, or roughly what it has been since 2010.

Predictably, the Trump forecast has been savaged. Jason Furman, head of the Council of Economic Advisers under President Barack Obama, notes that the gap between the administration’s forecast and the “Blue Chip consensus” of private forecasters is much wider than anything experienced in “the 24 budgets under Presidents Bill Clinton, George W. Bush and Barack Obama.” Furman estimates the chances of reaching 3 percent growth at about 1 in 25.

Economist Simon Johnson of the Massachusetts Institute of Technology argues........

© Washington Post