Can the U.S. return to 4% growth — a number not seen in this country since the early 2000s — as President Trump has pledged?
Economists Stephen Moore and Jeff Sachs have two very different opinions on that matter. They sat down with CNN’s Fareed Zakaria to debate the question. The full interview will air on CNN’s “GPS” Sunday at 10 am ET.
The US economy grew 1.6% in 2016, and the country hasn’t seen what economists deem “strong” growth — somewhere near 4% a year — since 2004, when the economy grew 3.8%.
And Moore, who served as one of President Trump’s advisers during his campaign and is now a CNN analyst, thinks there’s nothing stopping a massive surge in the U.S. economy “if we get the policies right.” And Moore says tax cuts are the key.
“In the ’80s, we were able to accomplish close to 4% percent growth,” he said.
Zakaria noted that while tax cuts under some presidents have spurred growth, tax cuts under President George W. Bush did not. And while Reagan’s tax cuts did jolt the economy, the nation’s debt also ballooned during his presidency. In fact, it nearly tripled.
Sachs, the director of Columbia University’s Center for Sustainable Development, argues that investing federal dollars in infrastructure and nationalizing health care are much more important than cutting taxes.
“We’re on a path of exploding national debt. And then Trump comes in and says, ‘I’m going to give even more tax cuts,'” he said. “I feel a lot with the wealthy, greedy people, they can’t wait. They’re salivating. These are tax cuts that, again, are going to go to the very top of the income distribution.”
Sachs added that he views tax cuts as a popular political promise that has a serious issue: It’s “short-termism.”
What the US should do, he argues, is focus on “investing, thinking ahead and paying for it along the way, not gimmickry, but actually paying for it.”
While Trump has proposed a massive investment in infrastructure spending — as much as $1 trillion — pairing that move with tax cuts could drive debt higher. (It doubled under President Obama.)
Trump is counting on growth to dig out of the debt.
Moore says that unless the economy returns to 3% or 4% growth, “there’s just now way we’re going to get enough revenue growth, even if we cut spending to the bone, to balance [the U.S. ] budget.”
“I think Donald Trump sees this as an issue of bringing up the economic growth rate. When I’ve talked to him on the campaign, what he would say is let’s get growth up to 3% to 4% and then some of these other problems — like income inequality, like solving the problems of the environment, like the debt — will be a lot easier to solve,” he said.
