Tuesday, May 23, 2017

Economists say Trump's budget proposal doesn't add up - latimes

President Trump’s inaugural budget proposal claims to eliminate the nation’s deficit in 10 years, thanks largely to faster economic growth that it projects will come from the president’s sweeping tax cuts.

Never mind the overly optimistic projections on economic growth. Or that Trump’s tax overhaul has not happened yet. Even allowing for both, economists say Trump’s budget still does not add up.

The administration is counting on generating $2.1 trillion in additional revenue over 10 years from better economic growth. But Trump’s budget proposal leaves out the cost, or the revenue lost, from the massive tax cuts. 

In other words, the economic gains that the administration has said it would use to pay for tax reform is apparently also being counted on to pay for deficit reduction. Some people call that double-counting.

The Committee for a Responsible Federal Budget has estimated that Trump's plan to cut corporate and individual taxes would cost the federal government about $5.5 trillion over 10 years, adding more than $6 trillion to the national debt.

Details of Trump's tax overhaul, however, are still being developed, and it's possible that the administration is assuming a revenue-neutral tax plan — although experts say big tax cuts never pay for themselves.

On Tuesday, Mick Mulvaney, Trump’s budget chief, did not provide a direct answer or explanation to questions about double-counting. Instead, he told reporters that “you have to make assumptions about a budget.” He went on to say that one of the assumptions that was not made was to take into account the uncollected taxes every year, which he said amounted to $486 billion last year.

The White House Office of Management and Budget sent Congress the president’s inaugural budget today, projecting spending and revenues over the next 10 years. The fiscal package, which include a partial "skinny budget" from March, reflects President Trump's priorities for the nation, but lawmakers are sure to reject many of the deep cuts in domestic and foreign affairs programs. 

The departments of State, Agriculture, Health and Human Services, Education and Housing, as well as the Environmental Protection Agency, are the biggest losers. The winners are the Pentagon and Homeland Security programs.

Even with the increases in defense spending and large tax cuts, the administration projects that economic growth spurred by tax cuts will erase annual deficits by 2027. Take a look at some of the numbers released today. - Read More

Economists say Trump's budget proposal doesn't add up


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