Posted at http://www.commondreams.org/news/2017/02/21/trump-administration-toying-alternative-economic-facts
Published on Tuesday, February 21, 2017 by Common Dreams
Trade deficit tweaks and overly-optimistic growth forecasts dubbed economic ‘voodoo’
By Lauren McCauley, staff writer
Describing the revised forecasts as “budget voodoo,” Forbes contributor Stan Collender writes: “To say the least, this first set of economic assumptions and the resulting phony deficit will be fake news—lies, in other words—from Trump.” (Photo: Shutterstock)
The Trump administration’s hallmark “alternative facts” may infiltrate U.S. economic data.
The Wall Street Journal reported Sunday that the White House “is considering changing the way it calculates U.S. trade deficits, a shift that would make the country’s trade gap appear larger than it had in past years.”
People familiar with the matter told the Journal that employees of the U.S. Trade Representative’s office were asked to tweak trade data by excluding re-exports, or goods that are first imported to the U.S. and then exported unchanged to a country such as Canada or Mexico.
The change effectively increases the perceived trade deficit—for example, the $63.1 billion trade deficit with Mexico in 2016 would become a $115.4 billion deficit—which observers warned could be used for political means.
Pointing to President Donald Trump’s repeated promises to bring back jobs and increase domestic manufacturing, MSNBC noted Tuesday: “At least in theory, trade data calculations that make the gap appear bigger could make it easier for the president to push his vision on stricter trade deals. A larger trade deficit could give the administration leverage to renegotiate deals such as NAFTA, which Trump has vowed to rework.”
Similarly, Ben White and Mary Lee wrote at Politico‘s “Morning Money” column on Tuesday that “the idea makes no economic sense and would simply inflate the trade deficit, allowing the administration to scream louder about unfair trade deals.”
“Seems like alternative data to me. That is, data with no meaning.”
—Mark Zandi, Moody’s Analytics
Mark Zandi with Moody’s Analytics further explained how “as currently measured, products that are imported into the country and then exported without change have no impact on the trade deficit. It’s a wash. As it should be.”
“With the proposed measurement change,” Zandi continued, “these products would be counted in imports, but not exports, increasing the trade deficit, and presumably reducing GDP. But the trade deficit didn’t widen nor did GDP decline. Seems like alternative data to me. That is, data with no meaning.”
Despite the senselessness of the numbers, one source reportedly told the Journal that the “alternative data” will be presented to members of Congress.
On a similar front, a separate Journal report on Friday noted that “[t]he Trump administration has drafted preliminary economic growth forecasts in its federal budget planning that rely on assumptions that are far rosier than projections made by independent agencies and most private forecasters.”
Describing the revised forecasts as “budget voodoo,” Forbes contributor Stan Collender writes: “To say the least, this first set of economic assumptions and the resulting phony deficit will be fake news—lies, in other words—from Trump.”
Collender continued:
We’ve known since the campaign that the Trump promises of tax cuts, increases in military spending and a new $1 trillion infrastructure program would result in a big increase the federal deficit and national debt unless they were matched with similarly large tax hikes and spending cuts. But with Congress almost certain to reject tax increases unless they’re used to pay for corporate rate reductions, Social Security and Medicare cuts possible but not likely, interest rates and federal interest payments rising in the coming years and not enough other domestic spending left to be a complete offset, economic occult from Trump was a virtual certainty.
Outlining other examples of economic “gimmicks” likely to be used by the White House and the Republican-dominated Congress, Collender warns that “the possibility of other Trump budget sorcery has to be taken very seriously.”
Or as former Secretary of Labor Robert Reich put it, the data manipulations are simply “[p]art of Trump’s war on truth.”
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