President Trump’s 10-year revenue estimates would fall by at least $3 trillion with realistic economic assumptions
... [+]The Trump Administration claims its budget would sharply reduce the deficit by 2030 and eliminate it altogether by 2035, thanks in part to substantial new tax revenues driven by persistently strong economic growth. But under more realistic economic assumptions, federal revenues over the next decade would fall more than $3 trillion short of President Trump’s budget forecast.
Ben calculated the change in revenues only. Slower growth would also have important effects on spending. For example, lower-than expected revenue means more borrowing and significantly higher interest payments on the national debt. Safety net spending for programs such as Food Stamps or Medicaid would increase faster than the White House projects if the economy grows more slowly .
The lesson, of course, is that assumptions matter—a lot. Using optimistic economic assumptions to make future budgets look better is nothing new. After all, President Reagan’s famousbirthday next year. And Republicans accused President Obama of overly-optimistic projections as well. But the gap between Trump’s forecast and CBO’s is much greater than usual and exceeds even Reagan’s. the economy would grow at a 4.2 percent pace in 1982. CBO thought it would grow by 2.5 percent.
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