Presidents have long used creative math and budget gimmicks to create the illusion that the trillions of dollars in spending they propose will somehow wind up reducing the deficit. Donald Trump’s $4.1 trillion budget is especially ambitious: It combines many of the tricks his predecessors tried over the years, and adds a few of his own.
The White House said Trump’s request for fiscal 2018 would generate a fiscal surplus by 2027 after $3.6 trillion in spending reductions and $2.1 trillion in economic growth-induced revenue increases.
Those conclusions rely on phantom tax increases, unachievable spending cuts and unrealistic growth assumptions to avoid making hard choices that would be needed to get anywhere near a balanced budget.
Here’s how Trump’s team got the numbers to look like they add up:
No Tax Details
The administration’s biggest accounting sleight of hand is its failure to explain how Trump’s corporate and individual tax-rate cuts pay for themselves. The administration says it will reduce corporate tax rates to 15 percent and lower the top individual rate to 35 percent, but it doesn’t say what loopholes and deductions it would end to offset the revenue loss.
The independent Tax Policy Center estimated that Trump’s campaign tax plan would add $7.2 trillion to the deficit, while the nonpartisan Committee for a Responsible Federal Government put the cost at $5.5 trillion. The budget says the plan wouldn’t add a penny to the deficit, but it offers no detail.
David Stockman, former President Ronald Reagan’s budget director, said on his blog that since Trump has taken major tax deductions like mortgage interest and charitable giving off the table, the assumption that deep rate cuts will be offset isn’t justified.
"There are probably not enough politically achievable loopholes closers to fund even a 30 percent corporate and business tax rate," he wrote. "And even that would leave no room at all for personal tax cuts."
Steve Bell, who as Senate Budget Committee staff director helped consider Reagan’s first budget, recalled that Reagan in 1981 used a tax overhaul accounting move that may have been even bigger: a footnote promising "future savings to be identified," he said.