See what I mean

In earlier posts I've pointed out that the fixation on budget balances while ignoring the effects on the private sector was part of a blind statist mindset. Over on his blog Don Luskin makes the point:

First, federal tax receipts have undergone a more than complete recovery from their plunge between 2000 and 2003 -- not "a partial recovery." According to the US Treasury's latest monthly statistical report, November tax receipts were $138.4 billion. Add that to the previous 11 months, and you get a trailing 12-month total for tax receipts of $2.171 trillion. That's the largest amount ever collected in a 12-month period. In fact, we've been setting records every month since August, when we first surpassed the $2.105 trillion record set in April, 2001.

Second, it's probably not true that "Revenue remains lower...than anyone expected a few years ago." After all, the word anyone makes that statement an impossible claim on the face of it. The Congressional Budget Office, in it's August 2002 Budget and Economic Outlook -- written before President Bush's 2003 tax cuts had even been proposed -- expected $2.244 trillion in revenues for fiscal 2005 (the fiscal year just ended in September). In the CBO's latest budget update (October 6), it estimates fiscal 2005 revenues at $2.154 trillion. So if the CBO is "anyone," then yes -- revenues remain lower than expected. But barely -- only by $90 billion, or about 4%.

What's especially interesting about the CBO's analyses, then and now, is that back in 2002 they estimated fiscal 2005 GDP to be $11.936 trillion. In fact, it turned out to be $12.308 trillion -- $372 billion, or 3% higher. So let's put these numbers together. We get $90 billion less than expected in tax revenues. We get $372 billion more than we expected in GDP. Sweet deal, huh? I'd do that trade all day. It's an arbitrage! And what exactly happened in the intervening time between 2002 and 2005 that could have caused that wonderful thing to occur? Yep -- the 2003 tax cuts.

Just in case you missed it:

We get $90 billion less than expected in tax revenues. We get $372 billion more than we expected in GDP. Sweet deal, huh? I'd do that trade all day.

Again please:
We get $90 billion less than expected in tax revenues. We get $372 billion more than we expected in GDP. Sweet deal, huh? I'd do that trade all day.

Don't be trapped by those statist blinders!!