Larry Kudlow’s Revenue Deception

On the day the Trump administration released its fiscal 2020 budget, White House economic adviser Larry Kudlow misleadingly claimed that “overall revenues are up about 10 percent.” In fact, federal revenues are down since the Republican tax cuts became law.

Federal revenues were down slightly in calendar year 2018, the first full year under the Tax Cuts and Jobs Act, compared with the previous year, according to Treasury Department data. Federal receipts also were down slightly in the first five months of fiscal year 2019 compared with the same period a year ago, according to the Congressional Budget Office.

Kudlow, director of the National Economic Council, discussed federal revenue during a March 11 interview with Judy Woodruff, the host of PBS’ “NewsHour.” Earlier that day, the White House released its fiscal 2020 budget — which assumes stronger economic growth in 2019 than economic experts have estimated.

The White House budget expects real gross domestic product growth (which is adjusted for inflation) will be 3.2 percent in 2019 — nearly a full percentage point higher than the most recent median forecast of the Federal Reserve Board members and Federal Reserve Bank presidents. In a statement released Dec. 19, the Fed projected 2.3 percent growth in 2019.

Questioned about the budget’s rosy economic assumptions, Kudlow credited the Tax Cuts and Jobs Act, which President Donald Trump signed into law on Dec. 22, 2017, with strong economic growth in 2018 that he said will continue this year and beyond.

We asked the White House how Kudlow arrived at a 10 percent increase in federal revenues, but we did not get a response. We suspect, however, that Kudlow is cherry-picking one month of data, ignoring the longer-term trend that shows revenues have slightly declined since the tax cuts took effect in January 2018.