by Calculated Risk on 7/07/2006 04:26:00 PM

Reader Steve points out that according to the Monthly Treasury Statement for May (June will be released soon), the YTD General Fund deficit has fallen slightly from fiscal year '05. He takes exception to my comment: "If someone says the deficit is falling - laugh (or cry). Its not true."

Of course I'm tracking the annual increase in the National Debt, and that is not falling. For the National Debt, the YTD annual increase in '06 is greater than in '05. See: June: Near Record Increase in National Debt

Last year on Angry Bear I pointed out the difference between the different methods of tracking the deficit: Another Budget, Another Disaster


Click on graph for larger image.
Note: Graph from last year.

There are at least three methods of presenting the deficit; the first is the “Unified Budget” that includes the annual surplus from Social Security Insurance (and the miniscule Postal Service Fund) in the total. The second is the “General Fund Budget” (the most used) that excludes the SS Insurance surplus, but includes surpluses from Military Retirement, Federal Employee Retirement and many other smaller trust funds. The third approach (my favorite) is to use the annual increase in the National Debt as the annual deficit.

As noted, the Unified Budget is worthless as a measuring tool. I'll stick to my favorite measure, but I'll also include the MTS report on the General Fund deficit.