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Trump Campaign Press Release - Mark Zandi Is An Obama Adviser And Clinton Donor

June 21, 2016
  • Zandi believes the stimulus worked, but his forecast was way off the mark. In 2009, he claimed that in 2012 we would have 141.4 million payroll jobs if stimulus passed and only 135.8 million without it. In 2012, there were 134.2 million payroll jobs (annual average) or 134.9 million (4th quarter over 4th quarter). Zandi's stimulus projection was not achieved until the 2nd quarter of 2015.
  • Zandi's forecasts for GDP growth were also wildly off. He projected that with the stimulus the economy would grow by 9.1 percent from 2008 through 2012. Actual growth, however, was 3.5 percent over the four years.
  • Zandi's analysis of the Trump plan is based on the same model, which, as shown above, is notably horrible at forecasting and providing policy guidance. Such models assume little or no benefit from tax rate cuts and were used to oppose Reagan's 1986 tax cut and Bush's 2003 tax cut. Zandi believes Food Stamps and Unemployment insurance provide more stimulus than tax cuts or infrastructure spending (see attached chart).
  • The analysis assumes little or no productivity boost from better trade deals, from drawing more Americans into the labor force, and from freeing business from onerous regulations. There's almost no recognition of the importance of new business formation (which has ground down) to job growth and increases in median incomes, and it completely ignores the millions of jobs that will be created through energy policy changes
  • There's no acknowledgment in the report that current policies have caused business investment to disappear and that Trump's effort to battle the establishment and strengthen the rule of law will aggressively attract new business investment (from inside the U.S. and from all over the world).
  • Zandi's analysis warns about the tightening of the labor mark from immigration control, yet admits this will boost wages and incomes for American workers.
  • Zandi's analysis assumes large Fed rate hikes — to 4% in 2017 and 6.3% in 2018, up from 2% in 2017 and 3.6% in 2018 in the baseline scenario — as a result of large deficits. It is unclear that the Federal Reserve would need increase rates to these levels to prevent overheating in an economy that many fear could slide into recession in the next year. On this alone, the report should be put in the trash can.
  • Zandi admits the arbitrariness of the assumptions by providing three different scenarios. Under the scenario that assumes enacted legislation negotiated with the Congress, the federal budget deficit in 2026 is $1.4 trillion--only some $100 billion higher than Zandi's baseline scenario of $1.3 trillion. Considering that the campaign does not have a complete fiscal plan yet, it is remarkable that Moody's likely scenario leads to deficits that are relatively close to baseline. Given the imprecision of estimates for fiscal results 10 years into the future, that difference is not material.
  • One could equally conclude from the report that the Trump policies would do no harm rather than the great harm portrayed by Hillary Clinton in citing Zandi's analysis.
  • What has the Hillary/Obama economic policy given us – the weakest recovery on record!
  • Since the recession ended, real GDP has grown at an annual rate of just 2.1 percent. Other recoveries since 1960 averaged 3.8 percent over the comparable period. GDP would be $2.0 trillion (real)/$2.2 trillion (nominal) larger if the recovery had only been average. Cumulative lost economic output (real GDP) compared with average recovery is $8.0 trillion.
  • Private-sector payrolls have grown by 12.3 percent since the end of the recession. Average recovery post-1960 over a comparable time frame was 16.3 percent. Average growth would have yielded an additional 5.8 million private-sector jobs than has been achieved under Hillary/Obama.
  • Even from the cycle low in February 2010 (Obama's cherry-picking of date), this recovery comes up 2.9 million short.

Moody's Estimates of the Multiplier Effect of Federal Policies:

Donald J. Trump, Trump Campaign Press Release - Mark Zandi Is An Obama Adviser And Clinton Donor Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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