Mitt Romney’s outline for lowering deficits includes an assumption that the U.S. economy will grow at 4 percent annually. Tim Pawlenty was questioned for making a similar promise in his economic plan, and rightly so. Although 4 percent GDP growth, especially in the wake of a recession, should be attainable, there’s nothing to be gained by assuming that it will happen. For Romney to use a 4 percent growth baseline in planning to lower deficits is a perversion of “plan for the worst, hope for the best.”
So I’m not persuaded by arguments like Jim Pethokoukis‘s:
Romney said his policies would help U.S. growth accelerate to 4 percent annually. Gutsy. Recall how Tim Pawlenty was mocked mercilessly for setting a 5 percent growth target. Overall, U.S. GDP growth has averaged 3.3 percent the past 50 years. But many economists think aging America will need to settle for growth closer to 2 percent long term. Romney, however, seems to agree with consultant McKinsey that a higher retirement age and smarter immigration policy, along with smarter regulation and pro-investment tax policy, could allow the United States to maintain its historic growth rate, if not higher. More importantly, the target represents a rejection of the declinist mentality.
Promise all the growth you want. Just prepare for a lingering recession when you’re figuring out how much spending needs to be cut.