U.S. President Trump answers questions at White House on May 10. [Photo/Xinhua]

President Trump's economic team released their federal budget plan for the next 10 years. It combines wildly optimistic growth forecasts with cuts in public services and environmental protection measures; and it reduces corporate and personal taxes paid by the rich.

The day the budget was announced, economists worldwide were shocked about a basic calculating error which leaves a US$2 trillion hole in the budget.

The New York Magazine explains, "One of the ways Donald Trump's budget claims to balance the budget over a decade, without cutting defense or retirement spending, is to assume a US$2 trillion increase in revenue through economic growth. This is the magic of the still-to-be-designed Trump tax cuts. But wait — if you recall, the magic of the Trump tax cuts is also supposed to pay for the Trump tax cuts. So the US$2 trillion is a double-counting error." For example, the budget aims to cut US$300 billion in estate taxes over the next decade. Yet, it forecasts a rise in estate tax revenue from faster economic growth, leading to divergent assumptions of a simultaneous fall and rise in estate tax revenue.

The unofficially branded 'Taxpayer First Budget' affects federal public services primarily (while increasing military and national security spending): It plans to reduce the expenses on all kinds of public services by US$3.6 trillion over 10 years. Funding for Medicaid, the health-care program for low-income Americans, will be cut by US$800 billion.

The Supplemental Nutrition Assistance Program (food stamps) for the 44 million of America's poorest citizens will be cut by nearly 30 percent. Mick Mulvaney, Trump's budget director, claimed that these programs "spend other people's money" and asked for "compassion for folks who are paying for it."

The tax cuts are explicitly designed to serve the rich. Corporate tax rates will be reduced from 35 percent to 15 percent, non-military foreign aid grants will be stopped, and US$1.6 billion will be invested in the project to build the wall at the U.S.-Mexican border. Consumer finance protection measures will be removed and financial regulations relaxed.

The Urban-Brookings Tax Policy Center, a Washington D.C.-based think tank, found that "high-income taxpayers would receive the biggest cuts, both in dollar terms and as a percentage of income. Three-quarters of the tax cuts would benefit the top 1 percent of taxpayers, [who would get] an average tax cut of about US$1.3 million, 16.9 percent of after-tax income." Meanwhile, the poorest would only receive an average tax benefit of about US$50.

Trump's entire budget revenue projections assume a real GDP growth of 3 percent on average over the next 10 years. This is 50 percent above the recommendations of renowned economists: Jason Furman of the Petersen Institute, for example, found only a 4 percent probability for Trump′s assumed growth rate of 3 percent.

Trump's 'theory' is that large U.S. corporations and wealthy individuals will productively reinvest what they save from tax cuts. However, in the advanced capitalist countries, productivity growth has plummeted over the last 10 years, and employment and population growth has also slowed. As private-sector-led investments are not a sustainable source for economic growth, we expect the next global economic crisis to be likely within the next 5 years. Trump's 3 percent growth target will fail to materialize, and his actual spending plans will differ from his promises.