By Arnold Kling
Steve (“the skeptical optimist”) Conover writes
The two trend lines, receipts and outlays, confirm what I thought I had seen two months ago. Federal tax receipts are growing much faster than federal spending outlays: 15.2% versus 8.5%, respectively.
As a result, he sees a balanced budget by 2008.
I am not sure how he is drawing his trend lines, but I would not extrapolate from performance in a post-recession period. My guess is that the ratio of tax receipts to GDP was depressed during the recession of 2001-2002, and what we’ve seen in the most recent two years is bounceback from that.
Furthermore, I am more skeptical than optimistic about any trend in which spending and tax receipts are growing faster than GDP. I want to see GDP grow faster than government.