$ 2.1 trillion here $ 2.1 trillion there and soon you’re talking real money
I didn’t think they could shock me. Then I read that the Trump OMB made a $2,000,000,000,000 arithmetic mistake
Jon Chait explains “One of the ways Donald Trump’s budget claims to balance the budget over a decade, without cutting defense or retirement spending, is to assume a $2 trillion increase in revenue through economic growth. This is the magic of the still-to-be-designed Trump tax cuts. But wait — if you recall, the magic of the Trump tax cuts is also supposed to pay for the Trump tax cuts. So the $2 trillion is a double-counting error.”
Amazing, I thought. Also Chait is much better at snark even than Paul Krugman who made it sound boring “@paulkrugman
It appears that Trump budget involves two scoops of voodoo economics: faster growth *and* tax cuts without a fall in revenue as % of GDP”
But I was wrong. Chait and Krugman are discussing two different errors (3 scoops of voodoo). Mulvaney et al both counted 2.1 trillion twice *and* assumed tax cuts don’t cause any reduction in the ratio of tax revenues to GDP.
Binyamin Applebaum explains.
One example of the budget-ledger legerdemain: Mr. Trump has pledged to end estate taxation. His budget, however, projects that the government will collect more than $300 billion in estate taxes over the next decade. Indeed, the Trump administration projects higher estate tax revenue than the Obama administration did because it expects faster economic growth.
Mr. Trump, in other words, is proposing to balance the federal budget in part by simultaneously increasing estate taxation and eliminating estate taxation.
Then later and separately explains another error.
The budget’s presentation of the benefits of the administration’s economic policies also raised questions. White House officials said that tax cuts and other changes, like reductions in regulation, would push annual economic growth to 3 percent by 2020, well above the 2 percent annual average since the recession. The budget projects that the increase in economic growth will produce $2.1 trillion in additional federal revenue.
The Trump administration appears to be counting this windfall twice. It needs the money to offset the cost of the tax cuts, but in the budget, the $2.1 trillion is also recorded as a separate line item above and beyond the steady growth of tax revenues.
They are into deep Voodoo.
See also Larry Summers
There is always another housing bubble to blow up.
I see that all economists who have written about this double accounting error (Krugman, Delong, Summers, & others so far) keep referring to it as an error or mistake.
That’s not what it is at all.. it’s called propaganda (intent to mislead) and obfuscation with the intent to mislead. It gives the true believers who believe or want to believe there’s a pie-in-the-sky utopia (but that liberals won’t let them get there) more reason to believe when their (or any) leader tells them what they want to hear.
It’s been that way since humans congregated into a small tribe … religious leaders with their invented “prophets” from a god’s mouth to their ear) have been doing the same thing forever.
What else is new?
Basing a budget on economic growth that can’t be achieved is lying. But we have the same lies from DC for years. Today, everyone says Trump is a liar with a 3% growth forecast. Maybe so.
Obamo, on the other hand, built his budget around a 4% growth rate. But everyone loved Obama, so no one bothered to look at the fact he was bold faced lying.
“Mr. Trump, in other words, is proposing to balance the federal budget in part by simultaneously increasing estate taxation and eliminating estate taxation.”
Art Laffer drew his little cocktail napkin in 1974 after a lot of wine. Yes – the revenue maximizing tax rate can be zero if you are drunk as a skunk!
Bkrasting – and to think that Obama’s former CEA economists were blasted my the Bernie Bros for criticizing Gerald Friedman’s “model” that had GDP growth at 6% for an entire decade.
“The 2010-2013 forecasts are slightly more optimistic than CBO but much rosier — in some cases by well over one percentage point — than what the Blue Chip Consensus calls for.”
From Bkrasting’s comment on Obamo (WTF is this spelling BK). Look in 2009 we were far below full employment. So to suggest growth could be 4% per year for 4 years strikes me as conservative. Alas the GOP did all they could to undermine Obama’s attempts at aggregate demand stimulus.