In his 2016 State of the Union Address, President Obama proclaimed, “The United States of America, right now, has the strongest, most durable economy in the world,” despite lackluster growth that has lagged behind every other recovery since 1960 following recessions lasting longer than six months.  In previous years, optimistic projections accompanied bold White House assertions about how the economy would surge, but no more.  Unfortunately, the economic projection in the Administration’s budget released today shows that it expects no more than lackluster growth going forward, though its forecast is still more optimistic than those of the Federal Reserve, the Congressional Budget Office (CBO), and the Blue Chip Economic Indicators.

Our economy has been like a football team that could not move the ball into the red zone, much less into the end zone.  Previously, the Administration had repeatedly predicted that the economy’s growth rate would surge coming out of the recession and make up for lost time, but it never did.  The Administration’s policies failed to deliver.

Note: OMB assumptions are based on passage of the President’s budget, and other assumptions are based on current law.

The graph shows the economic growth rates that the Office of Management & Budget (OMB) had forecast in its annual budgets going back to 2010.  They suggest belief in the Administration’s economic policies to return the economy to its potential rate of output at an accelerated pace.  But that expectation has waned over the years in the face of reality, as reflected by lower and flatter lines in the graph, and now the growth trajectory has flattened. Despite attaining average real GDP growth of only 2.1 percent over the course of the current recovery, President Obama’s Fiscal Year 2017 Budget still assumes a relatively optimistic 2.4 percent average GDP growth over the next five years, ticking down to 2.3 percent average growth from 2022 through 2026. By contrast, CBO expects a more conservative average rate of 2.1 percent over the next five years and 2.0 percent average growth from 2022 through 2026. A smaller economy over the next decade would mean less revenue than the Obama Administration expects to meet ever-growing spending obligations.

In its analysis of economic assumptions, the Obama Administration’s budget details the effect of a real GDP growth rate that is permanently reduced by 1 percentage point compared to the current forecast, with no change in the unemployment rate—a scenario that could arise due to a permanent decline in productivity growth. The Obama Administration points out that such a scenario would leave a significant impact on the budget deficit, and the cumulative effect over the 11-year window would amount to an additional $3 trillion in deficits.

To compare the U.S. economy, as the President has, with that of Europe, which is struggling to integrate fiscally and financially into the Eurozone, with that of Japan, which is on its second or third “lost decade” of economic growth, and that of China, whose emerging economy is decelerating after years of double digit growth, is hardly relevant to what Americans have a right to expect of the U.S. economy. Under the weight of the policies and regulations of this Administration, the economy is unable to grow faster.  OMB has started to acknowledge this truth, even though the Administration continues to believe that its policies are the right ones.

Among other economic assumptions, OMB’s forecast still is higher than CBO, Fed, and Blue Chip forecasts, which helps make its projected federal revenue and deficit projections look better.  If only underemployed and discouraged Americans could get better jobs, earn higher incomes, and grow the economy, that would increase government revenue, making it less likely that Administration would continually overestimate the numbers.