Ted Cruz thinks the US will have a “minimum of 5% GDP growth” if he’s elected president.
Speaking on CNBC’s Squawk Box on Friday morning, Cruz — currently sitting in second place behind Donald Trump in the Republican field — emphasised that increasing economic growth would be his “No. 1 priority” as president.
“Every other problem we’ve got, whether it’s unemployment, whether it’s the debt and the deficit, whether it’s strengthening and preserving Social Security and Medicare, or whether it’s building up the military and keeping us safe, you’ve gotta have growth to make it work,” Cruz said Friday.
And look, economic growth is wonderful. The problem, of course, is that no one can guarantee it.
Cruz noted Friday that since 2008 — which conveniently includes the recessionary years of 2008 and 2009 — the US economy has grown an average of 1.2% per year, less than the post-World War II average of 3.3%.
Even excluding these years, growth has been around 2.3%, less than the historical average and, overall, not great.
Of course, Cruz isn’t the first Republican candidate in this cycle to call for higher GDP growth and claim that he will be the candidate to do it: former Florida Gov. Jeb Bush said he’d grow the economy at 4% back in June 2015.
The problem, then as now, is that economic growth as calculated by GDP involves many factors well outside the purview of any one president’s policies.
Right now, the global economy is sluggish and just this week the International Monetary Fund cut its outlook for global growth in 2016 to 3.2% from 3.4%.
The US, as the world’s largest economy — and an economy that is also open, meaning goods and services freely flow between the US and other economies — is unlikely to grow much above the prevailing global trend unless things turnaround not just in the US but in big chunks of Europe and Asia.
“We have been trapped in stagnation for the last seven years,” Cruz said. “And if we don’t turn that around nothing else gets fixed.”
This stagnation, however, is happening on a global scale well outside the effect that any tax plans offered by a Cruz administration might have on the US economy.
And, perhaps much to Cruz’s chagrin, Larry Summers (formerly Bill Clinton’s treasury secretary) would agree!
No one, however, likely thinks Cruz and Summers would see eye to eye on how to go about snapping the world economy out of this sluggish growth path.
Which is sort of why calling for higher growth and bemoaning the current level of GDP growth seen in the world are just Summers and Cruz playing two sides of the same coin.
Cruz’s talk about 5% growth is standard presidential campaign bluster. Summers’ proclamations of a “dangerous” economic state of affairs is bureaucratic jawboning.
But both claims, ultimately, are targeted at pawning off lukewarm economic growth onto someone else: another country, another administration, another set of ideologies.