Great expectations for US economy: Are Obama, Romney too optimistic?
Mitt Romney and President Obama both present to voters rosy views of future economic growth. Those scenarios aren't impossible, but it's fair to attach some big asterisks to them.
Steve Helber/AP, Brian Snyder/Reuters
Here's a pocketbook pointer for American voters to consider: As the presidential candidates make their closing arguments, both President Obama and rival Mitt Romney are offering visions of the economy that tilt heavily toward optimism – and that may not be a good thing when it comes to making good on their fiscal promises.
A case in point: Mr. Obama's budget proposal this year assumed an economy growing by 3 percent, adjusted for inflation, during the 2013 calendar year. The consensus among top private-sector forecasters calls for 2 percent growth, according to a monthly survey by Blue Chip Economic Indicators.
A single percentage point may not sound like much, but the difference amounts to one-third of the economic growth that the White House had planned for. If 2 percent proves to be correct, the change would mean about $165 billion less in gross domestic product (GDP) for the US, slowing the pace of everything from job creation to tax revenues.
The GOP's Mr. Romney has his own big expectations that could prove to be hard to realize. His campaign hasn't released formal economic forecasts. (Challengers don't tend to do that.) But the former Massachusetts governor has sketched a vision that counts on rapid economic growth.
Romney vows that after cutting income-tax rates by 20 percent, under his plan "we keep taking in the same [tax] money when you also account for growth." Independent analysts challenge his assertion that the tax cuts can be paid for (so they bring in the same amount of revenue) through Romney's recipe of faster GDP growth and reducing tax breaks such as deductions.
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