The Monthly Treasury Statement for January came out yesterday, and the trends are slightly better than the previous month’s. Here is the usual chart, showing when tax receipts will surpass spending if the trends hold (May-June 2008). Click to enlarge.
In each of the last six months, I've received quite a bit of feedback on this chart. So far, however, my favorite is from Mr. Mark Kleiman on January 17, 2007, in his blog. He put his analysis in a post under the heading "Lying in politics." His expert technical description of the chart described it as "some sort of linear extrapolation from noisy revenue data." His conclusion: "[I]t's complete garbage." Reason this is my favorite feedback: It tells me far more about Mr. Kleiman than it does about the chart. [Update: The list of people who don't understand what this chart is telling them is growing by the day. See this post by "PGL" at the Angry Bear blog.]
Mr. Kleiman and I now have a $1000 bet in play: If the lines cross on or before December 2009, I win; if not, he wins. The bet is nullified if a significant change is legislated for the capital gains or income tax rate structure before the bet is decided.
Although I still dislike the idea of balancing the budget, and will continue fighting deficit phobia with all the logical tools I have available, winning the bet would make a balanced budget mildly less painful for me. To win, all I need is for the trends to continue approximately as is for the next sixteen months. What my opponent needs is some kind of major shock, like a terrorist attack, recession, hurricane, tsunami, earthquake, etc. I like my side better; having to hope for bad news is not my preference. I'll leave that to the political hacks.
By the way, both sides of the bet are now in the hands of a neutral third party, invested in short-term government bonds—i.e., invested in a piece of the national debt. If I win, I will bequeath that piece of the national debt to my granddaughter. Remember, our grandchildren will inherit the national debt; I'm just trying to do my share to further the cause.