"Madoff-level accounting fraud" - Obama economic advisor on Trump's budget

[highplainsdem]

Tweet thread this evening from Seth Hanlon, former Special Assistant to President Obama for Economic Policy:

Link to tweet

I’m not sure people truly appreciate the Madoff-level accounting fraud involved in Trump’s budget. Bear with me... 1/

The fraud here goes beyond “rosy” forecasts. It even goes beyond “voodoo economics”–the debunked theory that tax cuts pay for themselves. 2/

The Trump team proposed a $5.5 trillion tax cut just four weeks ago AND COMPLETELY LEFT IT OUT OF THEIR BUDGET. 3/

But wait – it’s actually worse than that. Not only is the $5.5 trillion cost of the tax cuts not included in the budget numbers… 4/

But the Trump budget claims $2 trillion in ADDITIONAL revenue from economic growth RESULTING PRINCIPALLY FROM THOSE TAX CUTS. 5/

So in other words, they are claiming that tax cuts WILL PAY FOR THEMSELVES—something no credible economist believes—AND THEN SOME. 6/

My former colleague @GregLeiserson predicted this double-counting, here: http://equitablegrowth.org/tax-finance/will-the-trump-administration-double-count-its-magic-asterisk/ … 7/

Bears repeating: Trump budget claims that the tax cuts, whose cost is est. by @BudgetHawks at $5.5T, will actually INCREASE rev. by $2T. 8/

So this is not a $2 trillion “magic asterisk.” THIS IS A $7.5 TRILLION LIE. 9/

It’s obvious why they’re hiding the cost of tax cuts. 10/

Putting $5.5T in tax cuts for wealthy ppl & corps alongside ~$4T in cuts to progs serving low & middle-income people wld not be popular. 11/

Nor would it be seen as fiscally responsible. 12/

So they brazenly just disappeared the tax cuts, allowing them to claim that the program cuts are “tough choices” for deficit reduction. 13/

These are savage cuts to Medicaid, to Social Security disability, to nutrition, to student aid, to people & communities left behind. 14/

In sum, this is the Bernie Madoff Budget. A massive accounting fraud, designed to fleece vulnerable people. 15/15


ALMOST FORGOT THE MOST IMPORTANT PART-You can help fight Trump's budget by sharing how cuts affect you. #HandsOff
https://handsoff.org/

[salin]

1. Important. Horrific trump budget.

K&R

[Tanuki]

2. Kicking for exposure. Thank you for posting this.

I am glad there are people like Seth Hanlon out there trying to shine a light on this and call it out for the criminal fraud that it is.

[sheshe2]

3. F**KERS.

Would like to see a spread sheet done on just how much the trump/kushner will be pocketing from all this. Billions would be my guess, just not sure what number to in front of the word BILLION.

[oasis]

4. K and R. Super important.

[Scurrilous]

5. K&R

[BigmanPigman]

6. Thanks for posting. I just wrote to them and shared my story.

[PNW-Dem]

7. I have an idea for who could be Madoff's cell mate...

By the way, nice analysis. Very insightful. Thanks for posting

[Duppers]

8. K & R

[dalton99a]

9. Government by con men

[Cha]

10. ALMOST FORGOT THE MOST IMPORTANT PART-You can help fight Trump's budget by sharing how cuts affect

you. #HandsOff

[Hamlette]

11. they've all drunk the Kool aide. We are screwed.

[Buckeyeblue]

12. Wait until the 45er's stop getting their checks

These types of cuts will decimate the economy. Do the Repugs think people take their disability check and stuff it into their mattresses? No. This is money that is spent to live, so the funds end up going to local businesses. Poor areas will become poorer. People who are barely making it will have no other choice but to help out family members who are homeless and starving.

But this, apparently, is what people voted for.

[Alice11111]

15. True.The trickle down doesn't trickle.It will stop growth after

the party's over. The poor won't be buying, even necessities, like shoes for the kids. Goodwill and second hand should do well.
The rich will spend the same as they do now, which is get everything they want, but maybe they will add a yaught.

Thus, the poor won't have the money to stimulate the economy, and the 1 percenters will do as they are already doing, but there won't be enough extra spending by enough people to get growth to 3 pc.

Eventually, growth, which Obama got to almost 2pc, from an undeclared depression, will go down. So, fewer jobs, and there will also be fewer because of technology.

The Saudis will hire some, when they rebuild our infrastructure, but then we have to pay them back through tolls and fees...which will slap the poor more.

Student loan reductions will keep the poor and middle class from going to college, and robots have taken many blue collar jobs. It's bad enough that many students have been burdened for life with the shady loans.

It is a recipe for disaster. The Republicans only see what is going to happen to their own pocketbooks.

[lindysalsagal]

13. Exactly what the gop would do with all 3 branches under their control. Monarchists. Liars.

And it's only going to last until enough fRump voters get pissed off enough to attend town halls and join us.

Holding. My. Breath.

[JHB]

14. K&R

[highplainsdem]

16. Politico piece yesterday on "Trump's magical budget math":

http://www.politico.com/agenda/story/2017/05/23/trumps-magical-budget-math-000444

But those figures are, at best, misleading and, at worst, a willful attempt to deceive Americans about the true fiscal implications of Trump’s agenda. The budget uses an optimistic assumption about economic growth, which few economists believe is realistic, and assumes the president’s tax plan is deficit-neutral, despite independent scores that the plan would reduce revenues by around $5 trillion. Worse, it double counts up to $2.1 trillion in revenue, a blatant accounting error. Corrected, the $5.6 trillion in savings could disappear entirely; in fact, Trump’s budget may even increase the debt.

-snip-

Trump’s most egregious budget gimmick occurs in the accounting of his tax reform plan. The White House includes the plan, which right now is just a one-page outline, in the budget but assumes the plan is revenue neutral. In the past, Treasury Secretary Steve Mnuchin has said that the tax plan will pay for itself through increased economic growth, a promise that economists have deemed unlikely. The Committee for a Responsible Federal Budget, a fiscal watchdog, estimates that the plan would actually cut revenues by $5.5 trillion, a figure that Mnuchin rejected at a congressional hearing last week. “We would never propose a plan that we thought would cost $5 trillion,” he said.

Mulvaney, in his briefing on Monday, said the administration assumed revenue neutrality in its budget “because it was, in all honesty, the most efficient way to look at it.” Otherwise, he said, the White House would have had to provide more details about the plan. In doing so, though, the White House is effectively admitting that its revenue baseline may be inaccurate, potentially by trillions of dollars.

The administration also makes an even more basic accounting error in its tax plan: it assumes that revenue generated through increased economic growth can both offset the cost of the tax plan and also reduce the deficit. In other words, the tax plan already uses any revenue generated through increased growth to offset cuts in the plan. But then the White House uses the same money, which totals up to $2.1 trillion, to reduce the deficit. This is as if a consumer decides to use a $100 salary bonus to pay a $100 cable bill and make a $100 car payment using the same money. In fact, of the $5.6 trillion in total savings, as much as 38 percent may come from this double-counting of revenue.