Trump Budget: Honest Math Error or Intentional Deception?

calamity · May 24, 2017

With Trump, you just never know for sure. But, either way, this is hilarious.

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.

...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.”

Donald Trump's Budget Makes A Really Basic Numbers Error | HuffPost

iguanaman · May 24, 2017

calamity said:
With Trump, you just never know for sure. But, either way, this is hilarious.

Numbers and math are not this administrations strong suit. LOL Like they have any strong suits.

SocialD · May 24, 2017

calamity said:
With Trump, you just never know for sure. But, either way, this is hilarious.

I don't think its a mistake at all. It might be overly optimistic. that budget depends on 3 percent gdp growth. Historically, before the Obama administration that is, we had an average growth rate of 3.5%. The Obama years averaged about 1.5%.
Ive heard Trump and some of his advisors believe we can get to 4% growth or even higher. Maybe.. maybe not.. but I think that they are just being very optimistic on the growth numbers as well as repatriation of corporate money from corporate tax cuts and tax holiday.

Rexedgar · May 24, 2017

iguanaman said:
Numbers and math are not this administrations strong suit. LOL Like they have any strong suits.

Lemme see, "honest" & "politician" hmmm........trick question?

calamity · May 24, 2017

iguanaman said:
Numbers and math are not this administrations strong suit. LOL Like they have any strong suits.

I'm beginning to wonder if they can get anything right.

MrPeanut · May 24, 2017

I think they were betting people would be too distracted by whatever the Trump story of the day was to actually pay attention. Then again, we saw how incompetent republicans were at their attempt to fashion an ACA replacement so maybe this is just another version of that.

calamity · May 24, 2017

MrPeanut said:
I think they were betting people would be too distracted by whatever the Trump story of the day was to actually pay attention. Then again, we saw how incompetent republicans were at their attempt to fashion an ACA replacement so maybe this is just another version of that.

Yep. I believe that Trump tried to pull one over on the people. Imagine that. :lol:

calamity · May 24, 2017

SocialD said:
I don't think its a mistake at all. It might be overly optimistic. that budget depends on 3 percent gdp growth. Historically, before the Obama administration that is, we had an average growth rate of 3.5%. The Obama years averaged about 1.5%.
Ive heard Trump and some of his advisors believe we can get to 4% growth or even higher. Maybe.. maybe not.. but I think that they are just being very optimistic on the growth numbers as well as repatriation of corporate money from corporate tax cuts and tax holiday.

At what point does overly optimistic become bull****? Serious question. We deal with salesmen here that over-project their "hit rates" all the time. It's standard, but some are so far off that it's problematic.

YorkshirePete · May 24, 2017

SocialD said:
I don't think its a mistake at all. It might be overly optimistic. that budget depends on 3 percent gdp growth. Historically, before the Obama administration that is, we had an average growth rate of 3.5%. The Obama years averaged about 1.5%.
Ive heard Trump and some of his advisors believe we can get to 4% growth or even higher. Maybe.. maybe not.. but I think that they are just being very optimistic on the growth numbers as well as repatriation of corporate money from corporate tax cuts and tax holiday.

Is this your 3.5?
can you post the data. Mine says under 3
Did you read Marc levinsons book? 1973 was the peak, everything has been tried, doubtful if it will be 3% ever again.
What is it now 0.7?
Blissfully dreaming 3-4 % won't make it so.
What will you do if it isn't?

Visbek · May 24, 2017

calamity said:
With Trump, you just never know for sure. But, either way, this is hilarious.

In terms of the double-counting: Even if it started out unintentional, it's been pointed out so many times that by now it's deliberate.

In terms of the supply-side nonsense, I have no explanation for that. It's failed over and over and over, so they really have no excuse for believing it. And yet, they certainly act like they believe in it.

YorkshirePete · May 24, 2017

YorkshirePete said:
Is this your 3.5?
can you post the data. Mine says under 3
Did you read Marc levinsons book? 1973 was the peak, everything has been tried, doubtful if it will be 3% ever again.
What is it now 0.7?
Blissfully dreaming 3-4 % won't make it so.
What will you do if it isn't?

Just saw, remember when we repatriated money last time? Companies bought back their stock, no new jobs

calamity · May 24, 2017

YorkshirePete said:
Is this your 3.5?
can you post the data. Mine says under 3
Did you read Marc levinsons book? 1973 was the peak, everything has been tried, doubtful if it will be 3% ever again.
What is it now 0.7?
Blissfully dreaming 3-4 % won't make it so.
What will you do if it isn't?

We'd be jumping for joy if it hits a sustained 2%, IMO. Right now, I would be stunned if Trump maintains anything near 1%...but, I predict a recession. He's that bad.

calamity · May 24, 2017

Visbek said:
In terms of the double-counting: Even if it started out unintentional, it's been pointed out so many times that by now it's deliberate.

In terms of the supply-side nonsense, I have no explanation for that. It's failed over and over and over, so they really have no excuse for believing it. And yet, they certainly act like they believe in it.

His dumbass voters believe it. In fact, they want to double down on it by lowering wages. So, "Yeay! More jobs. Oh...damn! Those new jobs do not pay **** or offer any benefits."

SocialD · May 24, 2017

YorkshirePete said:
Is this your 3.5?
can you post the data. Mine says under 3
Did you read Marc levinsons book? 1973 was the peak, everything has been tried, doubtful if it will be 3% ever again.
What is it now 0.7?
Blissfully dreaming 3-4 % won't make it so.
What will you do if it isn't?

1973 was not the peak. 1942 was the peak but that's another matter.
75 years of GDP growth .. from 1934 thru 2008 average GDP growth was 3.877% and even if you include 2009 thru 2017 the average is still 3.646%

During the 80s and 90s and even through 2006 we had quite a number of years that were 3.5 to 4.5%.
Sure there have been some off years but really its the last ~10 years that have sucked. the best year in the last 10 was 2015 with 2.6%.
I have no doubt good policy could increase growth significantly. Most of said policy has not yet been implemented.

Vern · May 25, 2017

SocialD said:
I have no doubt good policy could increase growth significantly. Most of said policy has not yet been implemented.

What policy is it that you think should be implemented? I hope its not "tax cuts" and "deregulating the banks". We've done that. President Obama did want a jobs bill after the stimulus ended that would have helped growth but that's exactly why republicans blocked it.

Mycroft · May 25, 2017

calamity said:
With Trump, you just never know for sure. But, either way, this is hilarious.

Mulvaney held a presser on the budget a couple days ago and a reporter asked about this Summers contention. Mulvaney was amused, but he addressed the issue. You can see what he said at 13:45 in this video:

Now...I'm not an economics wonk, so I cannot judge the veracity of Mulvaney's response, but what he said makes sense and he appears to be an intelligent, knowledgeable...and honest...guy. If I had to choose who to believe, I'd pick Mulvaney over Summers.

Critter7r · May 25, 2017

SocialD said:
I don't think its a mistake at all. It might be overly optimistic. that budget depends on 3 percent gdp growth. Historically, before the Obama administration that is, we had an average growth rate of 3.5%. The Obama years averaged about 1.5%.

ORLY??

Eisenhower (2.6%), Ford (2.3%), Carter (3.3%), Nixon (3.1%), and both Bushes (2.3% & 1.8%) were all below 3.5%, as was Obama (also at 1.8% right there along with Bush 2)

https://www.usnews.com/news/blogs/d...ich-presidents-have-been-best-for-the-economy

Ive heard Trump and some of his advisors believe we can get to 4% growth or even higher. Maybe.. maybe not.. but I think that they are just being very optimistic on the growth numbers as well as repatriation of corporate money from corporate tax cuts and tax holiday.

I'd rather we saw slow and steady increases rather than jumping up to 4% suddenly on the hopes of a brighter future with Trump, only to crash back to sub-1% growth when reality sets in.

ludin · May 25, 2017

SocialD said:
I don't think its a mistake at all. It might be overly optimistic. that budget depends on 3 percent gdp growth. Historically, before the Obama administration that is, we had an average growth rate of 3.5%. The Obama years averaged about 1.5%.
Ive heard Trump and some of his advisors believe we can get to 4% growth or even higher. Maybe.. maybe not.. but I think that they are just being very optimistic on the growth numbers as well as repatriation of corporate money from corporate tax cuts and tax holiday.

that is what I have heard as well. their forecasts are based on very optimistic results. which too me is a danger. if you don't meet that goal then it can come back to bite you.
then again the forecast is 10 years from now and there is nothing to say that any congress has to stick with that plan.

ludin · May 25, 2017

Mycroft said:
Mulvaney held a presser on the budget a couple days ago and a reporter asked about this Summers contention. Mulvaney was amused, but he addressed the issue. You can see what he said at 13:45 in this video:

Now...I'm not an economics wonk, so I cannot judge the veracity of Mulvaney's response, but what he said makes sense and he appears to be an intelligent, knowledgeable...and honest...guy. If I had to choose who to believe, I'd pick Mulvaney over Summers.

wow he nailed summers to the wall on that one.

ludin · May 25, 2017

Vern said:
What policy is it that you think should be implemented? I hope its not "tax cuts" and "deregulating the banks". We've done that. President Obama did want a jobs bill after the stimulus ended that would have helped growth but that's exactly why republicans blocked it.

government collects taxes based on economic activity. the rates are almost meaningless up to a certain point.
therefore it is in the governments best interest to promote pro-business idea's.

that means less red tape and less taxes on businesses. it means pro business policies that get them to expand and makes expansion easier.
it means passing items that promote small business growth.

Obama got his jobs plan billions of dollars all that went to all those shovel ready jobs that never appeared.

jobs bill is a temporary influx of work. that doesn't grow the economy. after it is over the workers are released and that is it.

OlNate · May 25, 2017

Can see where the stats guys in the thread are coming from, but if you're going to forecast growth, you can't just look at history, you need to look at future impacts. On the surface we have the noise - people will want to say Trump will bring on a recession because he's a dumbass, and while that's sort of right, it's not going to be his behavior that does it, but rather his mucking about with trade agreements, his foreign policy failures, and his isolationist tendencies. Given that the world is very much a global market, which will impact GDP gains more than anything happening at home, all of these things are going to be problematic to deliver the 3.5%.

Also, for the same reason (global economy determining local economy), there are things that will be out of his control that will prevent that growth number as well. It will be interesting to see if this will either vindicate Obama (though I'm not sure sucking as much as Trump would be considered vindication), or if it will seal his fate... Growth takes momentum, a lot would need to happen, both in and out of control of the POTUS, to basically double America's GDP in a year.......

fmw · May 25, 2017

Rexedgar said:
Lemme see, "honest" & "politician" hmmm........trick question?

I think the term is oxymoron.

DA60 · May 25, 2017

When the only way a politician can pay for a program is to use the pathetic, old excuse - 'the added growth will pay for it' - then you know they are fiscally incompetent.

Look you stupid idiots...you don't balance a budget by making pie-in-the-sky promises about growth.

You make it by taking the budget and cutting enough money from it to balance it - DUH!!!

And a 12 year old can see that the only realistic way to do it is to also cut defence spending as well as social programs.

It is the height of political cowardice and dishonor - imo - to cut food for the poor while you increase military spending DURING PEACETIME.
Especially so when you already outspend the next 11 largest military spending nations combined.

It's actually pretty sick.

'Sorry Tommy - less food for you so we at the government can buy more bullets that we don't need.'

Visbek · May 25, 2017

Mycroft said:
Mulvaney held a presser on the budget a couple days ago and a reporter asked about this Summers contention. Mulvaney was amused, but he addressed the issue. You can see what he said at 13:45 in this video:

Now...I'm not an economics wonk, so I cannot judge the veracity of Mulvaney's response, but what he said makes sense and he appears to be an intelligent, knowledgeable...and honest...guy. If I had to choose who to believe, I'd pick Mulvaney over Summers.

If so, then you're not doing so on the basis of... math. Let me spell it out for you.

The Trump tax cuts, before including the effects it will have on the economy, will reduce revenues by $2 trillion over 10 years. (Independent evaluators say it may be up to $5 trillion, but whatever...)

Mulvaney et al that the tax cut will pay for itself, because it will spark so much growth that it will generate an additional $2 trillion in tax revenues over 10 years.

(The reality is that this is pretty much impossible. Decades of evidence and history, on federal and state levels, make it very clear that the Trump tax cuts won't pay for themselves. But I digress.)

Next, we look at the spending bill. If we follow Trump's plan, spending will increase by roughly $3 trillion over 10 years -- including massive cuts to Medicaid, and decimating most of the safety net. This is due to higher spending on Social Security, Medicaid, military, border wall, veterans and interest.

The problem is that Mulvaney is saying that the same $2 trillion will pay for BOTH the lost tax revenue AND most of the increased spending.

They're double-counting that alleged $2 trillion boost from the tax cuts -- that almost certainly will never materialize in the first place.

The end result is that we are probably looking at increasing the debt by $4 trillion or more over 10 years.

Sorry, but hand-waving does not make this massive error go away.

Now do you see the problem?

johnhoffman · May 25, 2017

Rexedgar said:
Lemme see, "honest" & "politician" hmmm........trick question?

the very word trick is right

Trump Budget: Honest Math Error or Intentional Deception?

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