I created a monster, and I don’t know how to kill it. So I guess I’ll just tread water and keep feeding it for a while, until I think of a way out.
Months ago, I started calculating the date when the unified budget would be balanced if the rolling-12-month spending and tax receipts trends continued. I’ve been updating it each month when the US Treasury issues its monthly statement.
Now I get a lot of emails asking with excitement if the “balanced budget date” has changed. The funny thing is, I hope we do not reach budget balance; if you’ve read my definition of “fiscal responsibility” you already know that I’d like us to level out the national debt at around 60% GDP plus-or-minus some wiggle room (20 points either way) then elect politicians who will figure out ways to keep it there for the next few hundred years. (Hint: growth-friendly policies will have to be a big part of their equation).
Anyway, we’re already in the “fiscally responsible” range. I’d like to see the deficit settle in at somewhere between 2-4% GDP. And guess what: We’re there, so I’m a happy guy.
Except for that monster I created. The people sending me those emails seem really excited that we just might get to a balanced budget someday soon. I guess that means I haven’t quite succeeded yet in redefining “balanced budget” to mean “the budget that results in no increase and no decrease in the debt-to-GDP ratio”—i.e., that we’re “in balance” when debt growth matches GDP growth. Everybody still thinks debt growth has to be zero, for some reason. That’s the monster.
So here’s this month’s food for that monster:
The tax/spend crossover date, if current trends continue, will be March 8, 2009.
Come to think of it, that’s still early enough to add an interesting dimension to the 2008 presidential campaign (namely, stuttering politicians), so I guess there’s at least some good news in there for me.
Here’s the updated chart; click to enlarge.
