Trump Pinning Hopes on Economic Growth to Avoid Budget Cuts


WASHINGTON — A day after announcing a big increase in military spending, President Trump on Tuesday appeared to be having second thoughts on the need for austerity across much of the federal government to pay for it, clinging instead to hope that a surge in economic growth would do the trick.

The comments, made ahead of his first presidential address to Congress, reflect the tension within the Trump administration over how to make bold investments in infrastructure and the military, cut taxes, protect Social Security and Medicare — and still remain fiscally responsible. Mr. Trump’s hopes, moreover, appear at odds with the lower growth forecast by his own economic team and the forecasts of most economists.

“I think the money is going to come from a revved-up economy,” Mr. Trump said in an interview with Fox News on Tuesday when asked how he would pay for his plans. “I mean, you look at the kind of numbers we’re doing — we were probably G.D.P. of a little more than 1 percent, and if I can get that up to 3 or maybe more, we have a whole different ballgame.”

Mr. Trump’s budget outline has made some Republicans nervous because he appears to be keeping his campaign pledge not to touch Social Security or Medicare, the two biggest drivers of the national debt. Mr. Trump’s budget director, Mick Mulvaney, has been a fierce advocate for making cuts to the programs, but Mr. Trump said on Tuesday that it would not be necessary because his tax cuts and the repeal of the Affordable Care Act would unleash a torrent of growth.

“If the economy sails, then I’m right, because I said I’m not touching Social Security,” he said.

Few if any economists foresee the burst of growth Mr. Trump is counting on. The Congressional Budget Office predicts that the real gross domestic product will grow at an average annual rate of 2.1 percent through the end of 2018.

Even the president’s own budget office is using an optimistic forecast — 2.4 percent economic growth to calculate the White House’s anticipated deficit for the coming fiscal year. That rate is above most other estimates but well below the 3 percent Mr. Trump president appears to be counting on.

Mr. Trump faces significant obstacles when it comes to turning his budget blueprint into reality. He will need to get Congress to lift the military spending caps mandated by the 2011 Budget Control Act, and he will have to convince Democrats and members of his own party that his priorities make economic sense.

Early doubts among Republicans were palpable on Tuesday. Senator Marco Rubio, Republican of Florida, suggested that Mr. Trump’s proposal to reduce spending on foreign aid would be unwise for both fiscal and security reasons.

Senator Lindsey Graham, Republican of South Carolina, panned Mr. Trump’s plan to make deep cuts at the State Department, calling the idea “dead on arrival.”

On the other side of the ledger, House Republicans openly worried about Mr. Trump’s plans to increase spending on military and other programs while taking entitlement cuts off the table.

“It is essential that we put our nation onto a sustainable fiscal path,” Representative Jeb Hensarling of Texas, chairman of the House Financial Services Committee, said while discussing the 2018 budget. “We cannot simply call for more spending and more taxes that grows Washington’s economy at the expense of the Main Street economy.”

As the budget negotiations move forward, Mr. Mulvaney, a former representative from South Carolina who once favored government default over adding to the deficit, will be instrumental in persuading his old colleagues that Mr. Trump has the right approach. But asked on Tuesday about how the president would manage to keep all of his promises without making politically fraught cuts to entitlement programs, Mr. Mulvaney was noncommital.

“Those are bigger discussions for another day,” he said on ABC News.



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