Some of you may have heard of the ridiculous error in the Trump budget.
The error, in fact, is so ridiculous that you may have some trouble following the explanations. Matt Yglesias and Larry Summers, for example, managed to confuse me about something super simple. So how was I going to explain this to a bunch of incredulous Uruguayan economists?
Finally, here is what I told them.
- The Treasury Secretary published a bunch of tax cuts that would cost $4 trillion. But he then said: hey, no worries, the cuts will speed economic growth so their actual cost will be only $2 trillion.
- The budget director took that estimate and said: we have tax cuts that cost $2 trillion, but hey, no worries, the cuts will speed economic growth so their actual cost be zero.
Uh ... yes, the error is that stupid. Thus, it was weirdly hard to explain.
Your explanation is a whole lot clearer than any other explanation I've read. Thank you.
Posted by: JKR | May 30, 2017 at 02:39 PM
If you double-count something whose real value is zero, at least the double-counting isn't wrong.
Posted by: Matt McIrvin | May 30, 2017 at 02:40 PM