by Calculated Risk on 6/02/2005 08:46:00 PM

My congressman Christopher Cox (R-CA) is in the news as Bush's nominee to lead the U.S. Securities and Exchange Commission. So I will quote Mr. Cox on how to look at the budget deficit:

In a 1998 letter, Christorpher Cox wrote:

"... the surplus would disappear if Social Security payroll taxes weren't used to pay for other deficit spending. In 1998, Social Security payroll taxes exceeded Social Security benefit payments by $86 billion. If those extra payroll taxes hadn't been spent on other programs, the federal government would have shown a deficit of $16 billion for 1998."

Taking Mr. Cox' lead, here is the current Year over Year deficit number (June 1, 2004 to June 1, 2005). As of June 1, 2005 our National Debt is:

$7,775,553,817,632.01 (Almost $7.8 Trillion)

As of June 1, 2004, our National Debt was:

$7,187,557,826,891.12

The good news is the National Debt has only increased $588.0 Billion over the last 12 months. SOURCE: US Treasury

The bad news is the improvement is due mainly to one time events (mostly the Real Estate bubble). As Dr. Setser has noted:

Tax revenues seem to have outperformed in part because of capital gains on real estate (and also on the equities). In an asset-based economy, it increasingly seems that tax revenues are quite pro-cyclical, rising more than expected in good times and falling a bit more than expected in bad times. The revenues from the amnesty (actually a low tax rate) on the repatriation of profits probably helped too.

Click on graph for larger image.

For comparison:

For Fiscal 2004 (End Sept 30, 2004): $596 Billion

For Jan 1, 2004 to Jan 1, 2005: $609.8 Billion

For Feb 1, 2004 to Feb 1, 2005: $618.6 Billion

For Mar 1, 2004 to Mar 1, 2005: $635.9 Billion

For Apr 1, 2004 to Apr 1, 2005: $660.9 Billion

For May 1, 2004 to May 1, 2005: $648.8 Billion

For Jun 1, 2004 to Jun 1, 2005: $588.0 Billion

A decent improvement.