Not only does the Trump administration's budget proposal rely on economic growth assumptions that are wildly more optimistic than those produced by any private sector forecaster, but it turns out that embedded within those assumptions is a completely ridiculous accounting error.
The underlying issue here, beyond Trump's habit of overpromising and general disregard for the truth, is the slapdash process through which his tax plan was released. According to Politico's Shane Goldmacher, Trump's economic team was busy working on the difficult problem of designing a revenue-neutral tax plan when someone showed him a New York Times op-ed by Steve Forbes, Larry Kudlow, Arthur Laffer, and Stephen Moore that argued Trump should forget about deficit neutrality and endorse a big deficit-increasing tax cut like he did on the campaign trail.
"Trump summoned staff to talk about" the op-ed, according to Goldmacher. "His message: Make this the tax plan."
Then we get to the double counting. Trump's budget also says the growth-boosting impact of his policies will generate an extra $2.1 trillion in federal revenue, even though some of that growth is supposed to come from tax cuts he already banked on to try to make his tax reform deficit-neutral. The White House doesn't say exactly how much of that extra growth was supposed to come from tax policy as opposed to other things, but taxes are clearly a centerpiece of Trump's growth strategy, so let's call it half and add $1.05 trillion to the $4 trillion to $6 trillion hole the Tax Foundation found.
Now rather than a balanced budget you have a $5 trillion to $7 trillion deficit — and that's under very aggressive supply-side assumptions.
Then two days later, on a Friday, Trump told the press that his tax plan would be ready by next week, even though his staff didn't have a plan. Consequently, they rushed out a blueprint based on his campaign plan and didn't worry too much about the fact that it isn't remotely deficit-neutral. The budget team, meanwhile, just plowed ahead as if none of that had happened and Trump was still working on a deficit-neutral plan.
Trump's White House is just going through the motions. They're supposed to release a budget proposal, so they released a budget proposal. Whether or not it makes any sense is a matter of total indifference to them. But they've now kicked the can to congressional Republicans in an awkward way, since if Congress wants to enact a budget, they need to enact a real one with details filled in. Meaning they can't possibly match the unrealistic aspirations Trump has laid out for them.
http://www.cnbc.com/2017/05/23/the-...at-the-heart-of-trumps-budget-commentary.html
The underlying issue here, beyond Trump's habit of overpromising and general disregard for the truth, is the slapdash process through which his tax plan was released. According to Politico's Shane Goldmacher, Trump's economic team was busy working on the difficult problem of designing a revenue-neutral tax plan when someone showed him a New York Times op-ed by Steve Forbes, Larry Kudlow, Arthur Laffer, and Stephen Moore that argued Trump should forget about deficit neutrality and endorse a big deficit-increasing tax cut like he did on the campaign trail.
"Trump summoned staff to talk about" the op-ed, according to Goldmacher. "His message: Make this the tax plan."
Then we get to the double counting. Trump's budget also says the growth-boosting impact of his policies will generate an extra $2.1 trillion in federal revenue, even though some of that growth is supposed to come from tax cuts he already banked on to try to make his tax reform deficit-neutral. The White House doesn't say exactly how much of that extra growth was supposed to come from tax policy as opposed to other things, but taxes are clearly a centerpiece of Trump's growth strategy, so let's call it half and add $1.05 trillion to the $4 trillion to $6 trillion hole the Tax Foundation found.
Now rather than a balanced budget you have a $5 trillion to $7 trillion deficit — and that's under very aggressive supply-side assumptions.
Then two days later, on a Friday, Trump told the press that his tax plan would be ready by next week, even though his staff didn't have a plan. Consequently, they rushed out a blueprint based on his campaign plan and didn't worry too much about the fact that it isn't remotely deficit-neutral. The budget team, meanwhile, just plowed ahead as if none of that had happened and Trump was still working on a deficit-neutral plan.
Trump's White House is just going through the motions. They're supposed to release a budget proposal, so they released a budget proposal. Whether or not it makes any sense is a matter of total indifference to them. But they've now kicked the can to congressional Republicans in an awkward way, since if Congress wants to enact a budget, they need to enact a real one with details filled in. Meaning they can't possibly match the unrealistic aspirations Trump has laid out for them.
http://www.cnbc.com/2017/05/23/the-...at-the-heart-of-trumps-budget-commentary.html