Why can't I have smart kids

I haven't seen an actually good explanation of why Trump's budget is one of the stupidest things ever published by anyone on earth, about anything, ever, so here I present such an explanation:

The Trump budget says this will happen.

1. Taxes will be cut bigly, and there will be BIG LEAGUE deregulation.

2. Hypothesis that you have to accept as true to even bother trying to understand the remainder of the document: this will cause 3% per year economic growth in the country (i.e., supply-side economics all over again, but this time the economy will grow instead of metastasizing and slugging along because no one buys anything because they don't have any money and because rent seeking companies and wealthy people do not "reinvest" those rents in the national economy by hiring people and making things, they instead hoard them and invest them elsewhere because that's what rent seekers do).

3. That 3% annual growth will create $2,000,000,000,000 (trillion) more in increased revenues, compared to our current system of taxation, from taxation over ten years.

4. The tax cuts will be revenue neutral because of the $2,000,000,000,000 in increased revenues from taxation during the aforementioned period of economic growth.¹

Obviously, that's a mistake. Here is the thought process in MSPaint form:



Raise your hand if you see the problem with this. . . . . . .

. . . . . the problem with this is that cutting taxes REDUCES REVENUE, which is exactly the same thing as saying that cutting taxes COSTS THE GOVERNMENT MONEY. If the $2T of purportedly increased tax revenue paid to the Treasury will render the cuts REVENUE NEUTRAL, that means the budget foresees a $2,000,000,000,000 shortfall in tax revenues due to the tax cuts that will be made up for, dollar for dollar, by the increase in tax revenue owing to economic growth. Put differently, the set of {what is taxed} under the budget is smaller than it would be under the current system of taxation, but the value of {what is taxed} is much greater, so that the AMOUNT OF TAX MONEY GENERATED IS THE SAME.

With me?

That means the $2,000,000,000,000 owing to economic growth is already SPENT to make the tax cuts REVENUE NEUTRAL.

But then wait, what about the EXTRA $2,000,000,000,000 more in tax revenues?

Those are a double counting mistake. They were already spent to make the cuts "revenue neutral." There's nothing left.

But the budget says they're still there.

+++++

Let me put it differently.

I want to buy an oil well for $50,000 and I believe that I will generate revenues of $120,000 by operating that oil well. An investor tells me that he wants to know how much I stand to earn from the oil well investment. I tell him $120,000. He asks me what about the $50,000 investment cost? I say "the $120,000 I will make from the oil well makes up for that investment cost, so I will have $120,000 of profit." He asks me if I expect to have $170,000 in revenue from the oil well, then? I say "no, just $120,000."

He stares at me oddly like most of us usually stare at CDL's posts, and then leaves.

This budget is EXACTLY the same. EXACTLY.



¹ So the fifth step that isn't there but is implied is literally:

5. So the $2,000,000,000,000 in greater tax revenues for the United States is FREE MONEY! Even though it was spent to reach revenue neutrality.

I still haven't seen a good explanation of why trumps budget is one of the stupidest things ever published on earth

And now, a couple of kickers:

1. Trump campaigned on abolishing the Estate Tax. His budget allocates $328,000,000,000 of the purported $2,000,000,000,000 in increased tax revenue to the Estate Tax, seemingly because without the Estate Tax he can't make the cuts "revenue neutral."

2. I keep putting "revenue neutral" in quotes. That's because I haven't even mentioned the POLICY reason this thing is ****ing ridiculous. WE ALREADY KNOW how supply-side tax policy goes. It does not generate economic growth. I have posted about this so many times it hurts to think about it (and it probably hurts you to think about it, too, if you bothered to read it). But this budget is only "revenue neutral" IF YOU ACCEPT that BIGLY tax cuts will inevitably spur a monumental, world-changing economic growth period. If that is not convincing to you - if you do not swallow that pill whole - then this budget is impossible NOT ONLY because it double counts tax revenues in a manner that really is pathetic, but because the revenues it foresees ARE A PURE FANTASY.

3. What this budget seems to ACTUALLY DO is reduce tax revenues by $5,500,000,000,000 over ten years while simultaneously claiming that the country will be $2,000,000,000,000 richer, with that $2,000,000,000,000 being free.

So, you know, that's kind of a problem.

Though I generally agree with point 2 on both posts which is clearly the most important thing

I think it's pretty important that the president is circulating a proposed budget in which $1 = $2 when you want it to.

Because even though it won't be enacted, it basically proposes bankrupting the government in the manner that I assume Trump managed to bankrupt multiple of his failed companies, which is apparently to have no clue that revenue - costs is something worthy of consideration.

Hoya, you always write horde instead of hoard

Friend lives in Osoffs county, said there are commercials non-stop for him.

Get the money out of politics takes a backseat to ideological warfare.

And that actually makes sense given that the money he does make is basically all con-artist scam money or licensing naming rights, of course his costs are negligible from his perspective, that's the point of running a hustle.

you are right, that is bad, thanks

The government doesn't have to balance budgets in the same way households or businesses do and can deficit spend forever. I'm not even saying this makes the budget ok but it's important to remember.

Algebra 101 at Trump University:

a = b
ab = b^2
ab - a^2 = b^2 - a^2
a(b-a) = (b+a)(b-a)
a = b+a
<a=b so...>
a = a+a
a = 2a
1 = 2

If you want to think of it in a negative light maybe some sort of elaborate hard to see indentured servitude.

Trump could give Hoya 10 million dollars and then instead of being a hot shot lawyer who is very productive and valuable to society he could just be a bum who posts rants on the internet, but he still is consuming resources produced by others.

In fact, with interest rates so low it might be that the US is taking on too little debt. I too would borrow tens of trillions of dollars if I could get effectively unlimited unsecured 10 year loans for 2.2% interest.

I understand what you're saying, but what you're saying is an enormously complicated proposition that you've raised before that I would note (1) is only sort of true, (2) requires significant management and limiting to be workable, and (3) seems to assume that because the government "can deficit spend forever" (itself actually a dubious claim) it can deficit spend in any amount forever without any negative consequences. And that is obviously wrong, unless you posit that U.S. monetary policy is immune to external influence and that U.S. citizens are not negatively impacted by inflationary spirals, which is crazy.

In before "if it was a risk the market would price treasuries accordingly and it doesn't so it's not a risk."

The fed dictates interest mostly so saying it's low and you could borrow is really weird. The government should borrow money from itself to collect interest from itself?

Dunno when I've ever preached a dogmatic faith in the market.

You definitely don't understand what I'm saying

Hoya there are people out there who write and talk about it way better than me so all I'll say is if you read up on MMT I think you'd find it quite useful in thinking about the ways government can implement policy and the real constraints they have

You're just saying I should consider "modern monetary theory," accept that it's right that the government can pay for anything in any amount anywhere if it wants to, and be happy, yes?

hell of an xpost

Yeah except I think it has many more implications than that

I'd encourage other posters here to read up on it as well although I'm not sure how many would be able to grasp it.

People on the net gotta stop calling that math in the budget a mistake when it's clearly an intentional lie/con. The president will sell everything america has to benefit his own coffers. Private roads/airports/waterworks/national parks/schools every god damn thing he can, he dgaf. All of these things are bad for the public, but obviously nobody cares.

I honestly don't think that one is an intentional lie/con, Mulvaney has been trying to defend it and all but admitted it's just a mistake.