President Donald Trump's budget proposal was formally released on May 23 and has already begun receiving harsh blowback from critics for several reasons. One specific piece of criticism is that the budget contains a glaring mathematical error. This error reportedly amounts to a $2 trillion oversight.
According to New York magazine, one of the Trump administration's goals is to balance the federal budget over the next decade. They propose doing so by enacting "the biggest tax cut in history." Their logic is that these cuts will not reduce revenue, but will increase growth enough to make up for any losses. In addition, the budget also reportedly assumes a $2 trillion increase in revenue which will allow the budget to be balanced in ten years.
There are reportedly multiple problems with the Trump administration's logic in regards to the budget proposal. New York magazine called the assumption that the tax cuts will stimulate enough growth to make up for the loss in revues a "fanciful assumption." In addition, Time reports that the economy would have to grow 4.5 percent over the next ten years, which is two and a half times the growth rate projected by the Congressional Budget Office.
However, even if one were to assume that the growth would balance out the tax cuts, there still appears to be a problem with the proposal.
In the way that the budget is written, the $2 trillion would both make up for the losses from the tax cuts and also generate enough revenue to balance the budget after ten years. In other words, the $2 trillion is being counted twice. Reportedly, the only way that this could work out is if the Trump administration assumes that the tax cuts will generate enough revenue to pay for themselves and also generate an extra $2 trillion. However, there have been no claims that the cuts will generate more than the lost revenue value.
According to Time, Trump's budget plan would not likely result in a balanced budget. Nonpartisan groups estimate that Trump's plan would cost the government between $3 and $7 trillion over the next ten years.
Following the budget's release, former Treasury Secretary Lawrence H. Summers discussed its characteristics in an op-ed which appeared in The Washington Post on May 23.
"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," Summers said of the budget toward the beginning of the piece.
Throughout the piece, Summers went on to explain the flaws in the proposal's logic and rounded out the article by stating that "the Trump administration has not yet made a significant economic pronouncement that meets a minimal standard of competence and honesty."