The budget being proposed by President Donald Trump has a serious accounting error: it presumes that $2 trillion will be spent in two different places.
The proposal by the Trump administration would institute huge tax breaks, primarily to the wealthy. Some have rightfully criticized the math behind these tax cuts, saying that they will bring down revenues and ultimately drive up budget deficits.
The Trump administration has countered that idea, however, by insisting that the tax cuts will pay for themselves. That’s a lofty assumption on its own, and most economists agree that won’t be the case.
But Trump’s budget team is also insisting that the increased revenues (from, again, questionable growth resulting from the tax cuts) will help balance the budget over the next ten years.
That’s counting the same $2 trillion twice. Trump is claiming his tax cuts, which will cut revenues, will be paid for by the predicted revenue growth AND that the predicted revenue growth will balance the budget.
The accounting error isn’t the only concern that analysts have with this method of generating growth. As Jonathan Chait at New York Magazine writes, “It seems difficult to imagine how this administration could figure out how to design and pass a tax cut that could pay for itself when Ronald Reagan and George W. Bush failed to come anywhere close to doing so.”
He adds, “If there is a group of economic minds with the special genius to accomplish this historically unprecedented feat, it is probably not the fiscal minds who just made a $2 trillion basic arithmetic error.”
Trump’s budget would also find other cost-saving alternatives, one of which is supposedly “saving” money by not allocating any of the budget towards military spending in Afghanistan and the Middle East. There have been no plans put up by the administration so far, however, to end the U.S. involvement in those regions. The proposed budget also makes substantial cuts to social safety net programs, many of which currently benefit several voting blocs that supported Trump in his election last fall.