Donald Trump has handed his first budget request to Congress, and as you might expect it is in many ways a standard Republican budget – slashing government assistance programs while boosting investment in border security and the military. It proposes to cut $3.6 trillion in federal spending over the next 10 years.
It also contains, hilariously, a casual $2 trillion math error.
Trump’s budget contains deep tax cuts for the rich, which is expected. However, his team claim that slashing taxes will actually increase government revenue, thanks to the economic growth they reckon tax cuts encourage. This is a pretty fanciful (and, honestly, downright stupid) assertion.
In fact, the US economy would have to grow at 4.5 percent over the next 10 years – more than double the estimates from the Congressional Budget Office – for that claim to add up, but let’s assume just for a minute that Trump is right. Yes, it requires some suspension of disbelief, but you can do it.
But it still doesn’t add him. Trump’s budget claims that the tax cuts will boost economic growth enough to pay for $1.3 trillion in spending by 2027, but also claims that the tax cut is revenue-neutral – meaning that it pays for itself. That double counting error leaves a pretty bloody big hole.
Former Treasury Secretary Lawrence Summers has penned an op-ed for the Washington Post calling out Trump’s bad math.
The Trump team prides itself on its business background. This error is akin to buying a company assuming that you can make investments that will raise profits, but then, in calculating the increased profits, counting the higher revenue while failing to account for the fact that the investments would actually cost some money to make.
He goes on to say that it is “the most egregious accounting error in a presidential budget in the nearly 40 years I have been tracking them.”
Trump’s Secretary of the Treasury Steve Mnuchin was asked about this, uh, very minor error by a reporter at a press conference. This was the response:
Harwood asks Mnuchin about double-counting gimmick: “This is a preliminary document that will be refined” #FiscalSummit
— David Wessel (@davidmwessel) May 23, 2017
That’s a good take: oh, we miscalculated several trillion dollars? Meh, it’s a draft. We’ll fix it later.
Source: Washington Post.
Photo: Getty Images.
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