In testimony to the House Budget Committee, White House Budget Director Mick Mulvaney called President Donald Trump’s new budget — called the “New Foundation for American Greatness” — a budget written “from the perspective of the people who actually pay for the government.”
New additions include a 10 percent boost in military spending and a paid family leave program. Mulvaney and other White House officials claim that the budget balances “for the first time in a long time,” Mulvaney said.
But people who’ve read the budget are blowing holes in the claim that it balances. Critics, including former Treasury Secretary Larry Summers, have pointed out that the budget double-counts $2 trillion in order to claim that it balances.
Trump’s budget assumes that his package of tax cuts will lead to 3 percent annual growth in the national GDP, almost five times the growth seen in the first quarter of this year (0.7 percent). That 3 percent growth rate is stimulated by the lower taxes proposed in the budget. The budget says these tax cuts will be revenue-neutral, meaning that growth and income will cover the cost of the lost tax revenue, to the tune of $2 trillion. But then the $2 trillion is also counted as economic growth for the purpose of reducing the deficit.
Essentially, the tax cuts would need to earn $4 trillion, not $2 trillion, to come close to balancing.
Mulvaney defended the budget in a Tuesday press conference, saying that he’s “aware of the criticisms and would simply come back and say there’s other places where we were probably overly conservative in our accounting. We stand by the numbers.”