The budget deal in Congress declares two myths, one from time travel budgeting, the other from silence. When the “experts” project a deficit based on the current spending plan, 1. none of the money has been spent yet and 2. none of the spending tax money has come in yet. They aren’t only counting chickens before they hatch, they already have them buttered on the Christmas dinner table.
The spending projection assumes the previous year’s tax income. If tax rates drop, so does the projected income drop, proportionately. There is some “trickle down” account for the assumption that consumers may spend more and employers hire more since they have the funds not taxed, but they don’t consider synergy. They don’t use AI simulations to project the slew of companies who haven’t announced—but will anyway do—investment within the market. New companies will be capable of coming into being which weren’t able to without the new financial ecosystem. Those aren’t accounted for because they can’t be predicted. The forecast we have is based not on synergistic outcomes—AKA reality—but on comparing last years results against this year’s new methods—AKA time travel.
The second myth comes from silence, namely renegotiating trade agreements. Adjustments making the US market part of a two-way street will also bring new revenue sources—rather than a one-way street that screws the US economy into the ground. These are part of separate agreements already promised, already underway, but largely unfinished and unreported. Budget forecast about those factors are simply silent.
The budget forecast isn’t any accurate prediction of the future, but a kind of comparison for number geeks in black-tie offices. What actually happens is never known until it happens.