Tax receipts are continuing to grow significantly faster than spending, according to the Monthly Treasury Statement. As a result, if these trends continue, the budget will move into balance on July 3, 2008.
The 2008 presidential campaign and political conventions would consequently feature a lot of Porky-Pig-style stuttering by politicians who are already on record as to how “profligate” and “unsustainable” the economy is.
I really enjoy a good belly laugh, and this would provide one of the best-timed punch lines ever, in the entire history of both comedy and politics.
[UPDATE: Unfortunately, I won't get to enjoy that laugh. The trend lines didn't continue in the directions shown below; see the chart from a year later in this post.]
Click to enlarge.
Is there a blog post on how this date is calculated? Growth in federal receipts seems to be slowing down. The receipts for the first three months of fiscal 2007 have grown by 8.17% compared to the first three months of fiscal 2006. This is slower growth than the 11.71% growth in recepits for fiscal 2006 compared to fiscal 2005.
If receipt growth continues at this pace, receipts for fiscal 2009 (a full year ahead of the currently predicted budget balance date) will be $3.045 trillion. In order for fiscal 2009 to be in balance, federal spending would have to be contained to a 4.7% annual increase for the next three fiscal years. I don't see that as plausable at all considering the 7.16% annual growth in federal outlays the past four fiscal years.
Posted by: Stephen Reed | 13 January 2007 at 15:24
It seems to me that 8%+ growth in revenues when nominal GDP is growing at a 5-6% rate implies that the tax burden is increasing as a percent of GDP (bracket creep, I assume).
Is there any other possible explanation?
Posted by: Morgan | 14 January 2007 at 22:33
So, further tax cuts or increased spending? Which will it be?
Posted by: pawnking | 15 January 2007 at 08:02
If current trends continue.
Steve,
Current trends are? In other words what are your basic assumptions? No need to get in to minutia....but, there have to be some assumptions going forward. Oil price, 10 year treasury yield, unemployment rate, etc.
Posted by: Bob | 15 January 2007 at 13:11
If you gentleman will scan through the National Debt Category on the side bar you can find the background information to answer your questions.
Such as..
"I’ve received several emails asking how I’m generating the trends in the graphic above. It’s really pretty simple—and that’s by design, because I figured I’d probably get some questions about it. Each data point on the receipts and outlays lines is a 12-month total from the Monthly Treasury Statement; in other words, each point is a rolling fiscal year total. That deseasonalizes the data, which is critical for this kind of forecasting. After that, all I do is throw a straight-line trend off of the most recent twelve of those points on each line, then I figure out when the lines would cross. That identifies VG-Day, and this month’s trend lines point to April 4, 2008."
Posted on 11 May 2006
Posted by: CrashEx | 15 January 2007 at 20:30
It's like the Simpson's episode where the school briefly has an oil well ... "Can we get one of those guitars that's, like, a DOUBLE guitar?" [Approval Stamp]
Posted by: Kevin | 17 January 2007 at 17:26
I have $10,000 that says you're wrong. I'll offer 2-to-1 on the proposition that the federal budget will be in deficit for both FY 2008 and FY 2009. Put up or shut up.
http://www.samefacts.com/archives/lying_in_politics_/2007/01/budget_nonsense_from_right_blogistan.php
Posted by: Mark Kleiman | 18 January 2007 at 01:12
Wow, Kleiman has thrown down the gauntlet, eh? I wonder if there will be any takers? I doubt it, with the likely excuse being fear of the "fiscally irresponsible democrats" (nevermind the reality of those spendthrifty pigs that have been running the show, and the President's inkless veto pen).
Posted by: Dean Moriarty | 20 January 2007 at 11:19
Yay, Kleiman!!
Why is nobody asking how the budget can possibly reach balance in '08 when all expenditures in Iraq and Afghanistan so far have been off-budget?
Posted by: Wellstone | 20 January 2007 at 17:20
If current trends continue, the Mississippi River will dry up in about 4-5 months, and we'll finally be rid of all that bothersome water.
Source here: http://www2.mvr.usace.army.mil/WaterControl/new/layout.cfm
Posted by: Anonymous | 30 January 2007 at 11:15
Too bad for Kevin nobody took him up on the bet. A year later we see that 2008 deficit is a massive $410 b and 2009 is now projected at $400b.
I guess we'll see a $10T national debt soon.
Posted by: Scott | 10 February 2008 at 18:10