Let’s get this out of the way right off the top: Donald Trump says his new tax-cut plan will pay for itself. It won’t. Trump’s plan would reduce government revenue, most likely by trillions of dollars.
Figuring out how many trillion, though, is tricky. Despite decades of research and debate, there is still no consensus among economists on the best way to analyze how changes in tax and spending policy will affect the economy. That leaves the door open for candidates such as Trump to pick whichever estimate best suits their political needs.
In a speech in Manhattan last week, Trump laid out what he promised would be a “bold, ambitious, forward-looking plan” to revive the U.S. economy. Parts of it were certainly ambitious: Trump pledged to create 25 million jobs over the next 10 years — a figure, that, as Neil Irwin explained in The New York Times, would likely require dragging grandparents out of retirement (or perhaps bringing in more immigrants). Otherwise, there simply aren’t 25 million Americans looking for jobs.
When it comes to taxes, though, Trump was less bold. Or, at least, less bold than he used to be. The tax plan that Trump described in his economic speech represented a pullback from his original plan, released a year earlier, which would have slashed taxes by around $10 trillion over 10 years. The new plan would cut taxes by less than half as much.