Trump’s Economists See Themselves as Defenders Against Socialism

(Bloomberg) -- The Trump administration lambasted socialism and the Democrats’ Medicare for All proposal while extolling the benefits of capitalism and its own tax cuts in the annual “Economic Report of the President.”

In setting out what it probably hopes will be themes for the 2020 presidential campaign, the administration spent one of the 10 chapters of the 705-page report outlining the costs of state control of the economy, replete with references to Karl Marx, Mao Zedong and present-day Venezuela.

“There is a lot of confusion about this,’’ Kevin Hassett, chairman of President Donald Trump’s Council of Economic Advisers, told reporters Monday in explaining why the “Markets Versus Socialism’’ section made it into the report.

In that chapter, Hassett and his fellow CEA economists attacked the Medicare for All proposal first put forward by self-avowed socialist and Vermont Senator Bernie Sanders but since taken up by many Democrats.

The proposal -- which aims to extend the government’s health-care program for seniors and the disabled to the rest of the population -- would lop 9 percent off of the nation’s gross domestic product in 2022 because taxes would have to be raised so much to pay for it, the economists argued.

Sanders and the Democrats have a different take on the plan, saying it would lower the cost of health care in the U.S. while providing all Americans with free access to medical treatment.

Earlier: White House’s Hassett Says Wage Growth Will Exceed 4% This Year
 
In contrast to the ills of socialism, the Trump team portrayed itself as a promoter of free enterprise and competitive markets that has lifted economic growth through lower taxes and less regulation. Wage growth has accelerated, particularly for those on the lower pay scales, while numerous Americans have rejoined the labor force and gotten jobs, the economists said.

Hassett defended the administration’s forecast of a sustained GDP growth of around 3 percent per year, noting that its predictions of a pick-up in 2017 and 2018 had proven correct. GDP rose 3.1 percent on a fourth quarter to fourth quarter basis last year, its fastest pace since 2005 -- a point that Trump made in a presidential tweet on Monday.

Many economists, including those at the independent Federal Reserve, expect growth to slow noticeably below 3 percent this year as the impact of the personal income tax cuts fades.

The CEA chairman also sounded a political note when asked about dangers to the expansion. He said he saw a “very real risk” that financial markets and corporate executives would be spooked if they thought that Trump’s policies would be reversed after the next election.

That’s “the one that jumps out at me,’’ Hassett said.

To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, John Harney

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