Ted Cruz announced on CNBC’s Squawk Box on Friday morning that the US will have a “minimum of 5% GDP growth” if he’s elected president. Unfortunately for the Republican presidential candidate, that number is simply impossible.
Cruz stated on the show, “Every other problem we’ve got, whether it’s unemployment, whether it’s the debt and the deficit, whether it’s strengthening and preserving Social Security and Medicare, of whether it’s building up the military and keeping us safe, you’ve gotta have growth to make it work.”
Economic growth is definitely a good thing, and the United States could use a little more of it. However, no one can guarantee it. For the past several years, the country’s economy has grown about 2% a year. A 5% GP growth hasn’t happened since 1984 and is unlikely to happen in the near future.
So, how could Ted Cruz make historic GDP gains? According to the candidate, it would mean going back to Reagan-style economics, including cutting taxes, scaling back regulation, and repealing Obamacare.
Cruz may be confident of his plan, but there are several skeptics he can’t convince, including Dan Sichel, a professor of economics at Wellesley College and a former Federal Reserve forecaster. Sichel noted of the 5% GDP claim, “It’s a very optimistic projection they are making.”
The non-partisan Tax Policy Center was harsher. The center has analyzed all of the 2016 candidates tax plans. While most Americans would pay less in taxes under Cruz’s flat tax proposal, government debt would probably soar.
The Tax Policy Center explained, “The Cruz plan would require unprecedented spending cuts to avoid adding to the federal debt.”
The other problem with claiming a certain GDP growth is that the number involves factors outside the purview of any one president’s policies. The United States’ GDP is also affected by other countries.
The International Monetary Fund this week cut its outlook for global growth in 2016 from 3.4 to 3.2%. The United States is unlikely to grow far above the global trend unless the economies of countries in Europe and Asia also grow.
The stagnation that Cruz claims we are trapped in is less a U.S. problem and more a global issue. Because of this, Ted Cruz’s GDP growth claim is really just campaign blustering and, essentially, b.s.