The centerpiece of President Donald Trump's plan to revive the American economy is a package of massive tax cuts for businesses and households that the administration has promised will pay for itself. But after the White House released its budget this week, there's a lot of head-scratching over how that actually works.
Treasury Secretary Steven Mnuchin has repeatedly emphasized that the administration expects the tax cuts to kick the economy into high gear: Businesses will invest and hire more workers. Those newly employed workers will spend their paychecks. The economy will grow, and the government will ultimately reap the benefits through higher tax revenues as a result.
Mnuchin estimates that virtuous cycle — known in policy circles as "dynamic scoring" — will lead to sustained, 3 percent economic growth and generate an extra $2 trillion in tax revenue over the next decade.