Lakhota
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Donald Trump’s Budget Makes A Really Basic Numbers Error
Whoops!
The White House made a basic mathematical error when trying to prove that massive tax cuts would pay for themselves and then some, according to a leading economist who advised former President Barack Obama.
In a column in The Washington Post on Tuesday, Lawrence Summers, who directed Obama’s national economic council from 2009 to 2010, took the current White House to task for double-counting $2 trillion in revenue it predicts its tax cuts will generate.
President Donald Trump’s budget proposal assumes that the tax cuts it would enact for wealthy individuals and corporations, as well as its reductions in regulations, will create consistent 3 percent economic growth ― enough to generate $2 trillion a year in additional revenue.
That projection in itself is dubious; tax cuts rarely, if ever, spur enough growth to replenish the revenue they cost the Treasury. But it is nonetheless a prediction consistent with the supply-side economics that Republicans have been peddling for decades.
Where Trump’s budget team really got it wrong is in claiming that the tax cuts would both pay for themselves and close the existing budget deficit.
“This is an elementary double count,” Summers writes. “You can’t use the growth benefits of tax cuts once to justify an optimistic baseline and then again to claim that the tax cuts do not cost revenue. At least you cannot do so in a world of logic.”
New York magazine’s Jonathan Chait shoots down one plausible explanation for the error.
“Trump could be assuming that his tax cuts will not only pay for themselves but generate $2 trillion in higher revenue. But Trump has not claimed his tax cuts will recoup more than 100 percent of their lost revenue, so it’s simply an embarrassing mistake,” he writes.
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A normal person would be embarrassed. I doubt Trump is embarrassed.