The federal budget deficit will cross $1 trillion this year and the Congressional Budget Office (CBO) recently estimated that it will leap to $1.3 trillion next year and in every year after, but Treasury Secretary Steve Mnuchin is still telling Congress that Trump's tax cuts will pay for themselves.
Speaking to the Senate Finance Committee, Mnuchin incoherently said that increasing government spending is the cause of our deficit, not tax cuts, at a time when the Trump regime is calling for more spending and more tax cuts.
“Our analysis has always been higher than CBO. As I’ve said previously, we believe that the tax cuts will pay for themselves over a 10-year period of time, it’s how we score them,” Mnuchin said.
“Let me just comment that spending is increasing as well, but the trillion and a half dollars of tax cuts we have made will pay for themselves,” he said. [...]
The administration’s economic forecasts are far rosier than those of the CBO, many private economists and the International Monetary Fund, which predict fading stimulus from the tax cuts and constraints from an aging U.S. workforce.
It's "how we score them," Mnuchin says, and those are the key words here.
How do you score something and come to a conclusion based on factors that have literally never happened? You do it by plugging magic asterisks into your scoring model.
It was not that along ago when Mnuchin spoke at Davos where he lectured Swedish climate activist Greta Thunberg by telling her to 'study economics' before commenting on economic affairs, but Mnuchin is also a man who still believes in the revenue tooth fairy.
Mnuchin and others like him use a scoring model that is not based on any empirical history and that all but the most ideological college economics professors would probably strike with red ink if it reached their desk; writing a note that says 'how do you figure?'
Even if all of the GOP's wishes came true and we enacted all of their desired spending cuts, the deficit would still run hot because significant government spending itself is increasing revenue by supporting a significant amount of continued economic expansion at a time when factories are in recession and consumer spending is flat if not in the toilet.
We've covered this before, but I reiterate that the federal deficit would have been closer to $1.1 trillion in 2019 (and closer to $1.4 trillion in the coming years) if the Trump regime was not collecting almost $90 billion in duties (tariffs) on foreign goods each year.
I don't envy the next president. Just undoing the damage of Trump will be a full time job before any new, progressive policies are considered.