from National Review and Kevin Williamson, Don’t Count On the Growth Fairy
The powers that be in Washington dream of stronger growth, because stronger growth would mean that they could put off some hard and unpleasant decisions. Stronger growth would raise revenue without raising tax rates, bolster Social Security and our other wobbly entitlement programs, and potentially lower deficits. And while stronger growth helps on the revenue side of the budget, it also helps on the spending side: When growth is strong, unemployment tends to be lower and wages tend to be higher, which relieves pressure on welfare programs. You can understand the economist Robert Lucas’s maxim: “Once you start thinking about economic growth, it’s hard to think about anything else.”
People associated with the Trump administration have taken up 3.5 percent economic growth as a goal. It’s a fine goal, but it probably is not going to happen.
To balance budgets governments overestimate revenues and underestimate expenses.
It seems preposterous that we treat our economy like a machine that needs precise adjustments from an expert mechanic to deliver precise outputs. This is delusional. We should reduce friction costs where ever we can including the the removal of special privileges granted to rent seeking lobbyists. As long as the growth is real we should not worry about it being too high. Real growth comes from ideas and work rather than targeted stimulus.
We have resorted to economic growth as a last effort to reduce the deficit rather than face the hard spending cuts that will remain when the growth projection falls short.