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Montevideo, November 13th 2018 - 05:33 UTC

Economists point out serious math errors in Trump's budget proposal

Thursday, May 25th 2017 - 10:20 UTC
Full article 4 comments
“It appears to be the most egregious accounting error in a presidential budget in the nearly 40 years I have been tracking them,” wrote Larry Summers “It appears to be the most egregious accounting error in a presidential budget in the nearly 40 years I have been tracking them,” wrote Larry Summers
For conservative economist Douglas Holtz-Eakin, from the American Action Forum and ex director of the Congressional Budget Office numbers don't seem to match For conservative economist Douglas Holtz-Eakin, from the American Action Forum and ex director of the Congressional Budget Office numbers don't seem to match
The budget forecasts about US$ 2 trillion in extra federal revenue growth over the next 10 years, which it uses to pay for Mr. Trump's “biggest tax cut in history” The budget forecasts about US$ 2 trillion in extra federal revenue growth over the next 10 years, which it uses to pay for Mr. Trump's “biggest tax cut in history”

The White House has denied the president's budget proposal contains an “egregious” math error. Former US Treasury Secretary Larry Summers pointed out the spending plan double-counts US$2trillion. But White House budget director Mick Mulvaney told reporters: “We stand by the numbers.”

 Unveiled on Tuesday, the budget proposes deep cuts to welfare programs. Mr. Summers, also formerly chief economist of the World Bank, was one of the first to spot the apparent mistake.

“It appears to be the most egregious accounting error in a presidential budget in the nearly 40 years I have been tracking them,” he wrote in his blog. He said the spending plan was “simply ludicrous”.

The budget forecasts about US$ 2 trillion in extra federal revenue growth over the next 10 years, which it uses to pay for Mr. Trump's “biggest tax cut in history”. But that very same US$2 trillion is then used to reduce the budget deficit.

“My observation is that there appears to be a logical error of the kind that would justify failing a student in an introductory economics course,” Mr. Summers wrote.

A prominent conservative economist agreed there was a discrepancy. Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office, told Los Angeles Times the numbers “don't seem to match”.

But Mr. Mulvaney said during a press briefing on Tuesday that the alleged gimmick was done “on purpose”. “The money can be used to both reduce the budget deficit and offset Mr. Trump's proposed tax cuts,” he told reporters. He added: “There's other places where we were probably overly conservative in our accounting.”

That is not the only problem with President Trump's US$ 4.1tr federal budget, according to analysts on both sides of the political divide. It hinges on the country achieving 3% annual growth, but most economists say this is unlikely for the US.

The plan - titled A New Foundation for American Greatness - takes a hatchet to federal programs for the disadvantaged, such as food stamps, disability payments and healthcare.

Democratic lawmakers have savaged the budget, and even fiscally hawkish Republicans seem taken aback by the magnitude of the cuts. The austerity measures “are astonishing and frankly immoral”, Congresswoman Pramilla Jayapal told Mr Mulvaney as he testified to the House Budget Committee on Wednesday.

“This budget starts by taking away healthcare, then food, then housing, then education, then job opportunities,” the Washington Democrat said.

Former Democratic presidential candidate Hillary Clinton said the budget shows an “unimaginable level of cruelty” for millions of Americans and children. But the spending plan is likely to undergo substantial revisions on Capitol Hill before final approval.

Categories: Economy, Politics, United States.

Top Comments

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  • Pontefractious

    Alternative facts, Mr Summers, Alternative facts. Surely you realize by now that if you use Alternative facts, things don't have to add up any more.

    May 25th, 2017 - 12:03 pm +1
  • Don Alberto

    They voted for it. They get it.

    Congratulations bird brains of the Rust Belt!

    May 25th, 2017 - 11:16 pm +1
  • AustrOllOpithecus

    Bisley... Awwww, poor Trump! Wah wah wah wah!

    The political class despise Trump, the democrats hate trump, the Republicans dislike Trump too... The entire media is a against Trump...

    And let's not forget what Trump just said “virtually every country in the world takes advantage of America”

    Everyone and everything everywhere is against me... Wah wah wah wah wah wah wah!!!!

    I have never know a more pitiful and abject failure of a human being.

    Perfect representative of his country. :)

    May 29th, 2017 - 05:52 pm +1
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