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« Wednesday Caption Contest: Part 55. | WILLisms.com | The Neatest Looking Spam Email Ever. »

Trivia Tidbit Of The Day: Part 329 -- Surging Economy Dumping Money Into Federal Government Coffers.

Strong Tax Revenue Growth-

According to the latest Monthly Treasury Statement (.pdf), in the month of April, the Federal Government ran a surplus of 118,851,000,000 dollars. That's nearly 119 billion dollars of surplus. In one month.

On the year, the Federal Government is still running a deficit of 184 billion dollars, but, folks, deficits are shrinking as tax revenues flood into the federal government. We will have surpluses in short order if these trends hold.

Indeed, revenue growth is nearly doubling spending growth so far this year (.pdf):


Remember that this is also on top of the same phenomenon last year, when revenues were up 14.6% and spending was up 7.9%.

When we have surpluses again (and we WILL have surpluses within a couple of years), do we want a tax-cutting party in office, or a party that loves Karl Marx? I'd prefer a flawed GOP over a socialist Democratic Party any day, especially the day we have surpluses again.

Of course, people are going to note that we'd already have surpluses if Bush had kept spending under control. That's true. We would. However, last year's spending growth of nearly 8 percent was fueled primarily by the major entitlement programs, Social Security in particular. The largest federal spending growth increases in recent years have been on national defense (to snap ourselves out of the false peace dividend of the post-Cold War 1990s), but mostly on locked-in entitlements from the 1930s and 1960s that have a mind of their own.

Here are the five areas with the largest increases in spending so far this fiscal year, relative to last fiscal year at a comparable point:

$25.573 billion - "Community & Regional Development" (Hurricane Katrina)

$22.482 billion - Net Interest on the debt

$17.224 billion - Social Security

$16.373 billion - National Defense

$13.420 billion - Medicare

Not all parts of the government are growing, though. Indeed, one encouraging sign is the drop in spending on "Income Security" thus far in FY-06. That would indicate that people really are finding work.

Bottom line: a booming economy is producing surging tax revenues for the federal government. When the American economy sees relief from high taxes, the American economy grows. When the American economy grows, the federal government collects more in taxes.

It's not rocket science.


Previous Trivia Tidbit: State Government Revenues Up.

Posted by Will Franklin · 10 May 2006 04:02 PM


119 Billion in one month is a good thing for our country! So why all the gripes? Partisan politics doesn't fit in the budget...

Posted by: Zsa Zsa at May 11, 2006 07:38 AM


Only half the story, my man. This is what happened in March:

The March shortfall between government income and spending was up from a $71.21 billion deficit in March 2005. While it was a record for any March, it was less than the February 2006 monthly deficit that was a record for any one-month period at $119.20 billion.

The March deficit figure easily outstripped Wall Street economists' forecasts for a $73 billion shortfall.

Department officials said March spending was exceptionally large because some benefit payments that normally would occur in April were made in March.

In March, all the lefties were saying I Told You So about the size of the deficit. But it was huge because of accelerated payments for April. So now April has a surplus because their payments were already made in March. So let's add the two to take away any confusion:

$119B (April Surplus) - $79B (March Shortfall) = $40B two month surplus.

So not only did this shut up the moonbattery of March, but is also a more accurate way of showing that revenues are outpacing spending despite the fact that our legislators think they are Paris Hilton on a shopping Spree in NYC.

Now the real question is to note how much publicity the March numbers got compared to the April numbers. Everyone was talking about March, but no one is talking about April. When in fact the true story is made by talking about both in conjunction with one another. And that is the problem with politics. You only hear your side's half of the story.

Posted by: Justin B at May 11, 2006 11:42 AM

Great point. I am excited about April's numbers, but I have seen some people erroneously suggesting that those numbers alone are grounds for declaring victory over deficits. Not so much. But it's still great news. Doing a rolling average is almost always a great idea when dealing with economic data.

Posted by: Will Franklin at May 11, 2006 11:49 AM

Damn, and then I go and grab the wrong part of the blockquote. =)

Even taking the entire year of 2006, the deficit is not as bad as the Dems hoped. Still on pace to be around $400B, but two years ago when the tax cuts were made, it was supposed to be over $550B.

Posted by: Justin B at May 11, 2006 11:49 AM

Actually, it'll be way shy of 400 billion. We're already 7/12 of the way through the fiscal year. From May through September, much less spending happens. In fact, we can probably expect 3 deficit months and 2 surplus months from here to the end of FY2006. The surplus months won't cancel out the deficit months, but they will bring us in in the 200-300 billion dollar range.

Posted by: Will Franklin at May 11, 2006 11:54 AM

Hey, I just stuck a post over at Rob Port's blog about exactly that. Notice how the media loves year over year comparisons when they show a negative. We are $40B ahead of last year. They love projections when they look negative too. But the exact same story for both months from reuters was twice as long discussing March's numbers and doomsday scenario.

FY2006 had an estimated deficit of $413B when the year started. It was almost $500B two years ago. But revenue growth, despite tax cuts, is making all of these dire projections come in false. And as a percentage of GDP, even if the deficit stays the same at $300B plus or minus, it is shrinking in a massive way because of the 5% GDP growth from the tax cuts.

So higher tax revenues from the GDP Growth, higher GDP growth rates from the tax cuts, and a deficit that is shrinking as a percentage of GDP due to growing GDP and simultaneously growing revenue. How is that possible? VOODOO Economics! And I thought the Bush Administration was all Conservative Christians.

Posted by: Justin B at May 11, 2006 12:19 PM

Someone threw the infamous Clinton-era surplus argument at me a while back, and my only response is that the last thing we want to end up with is surplus. Is that correct? I mean, it costs the Government more than it's worth to try to figure out what to do with it, right? Give it back to the taxpayers then - I guess.

Posted by: snowballs at May 11, 2006 03:43 PM

So the hell what?

I am still paying $2.89 a gallon for gas.

Good to see that someone still believes something is good happening in America.

Posted by: John Cobarruvias at May 11, 2006 07:47 PM

Quit crying about gas prices. I still see suvs. Thats the market at work. You have choices to make. Drive less. Move closer to work. Carpool. Use public transportation. If you are not making changes, I guess you can afford the gas brother.


Posted by: seth at May 14, 2006 01:55 AM