White House Budget Director Peter Orszag and Congressional Budget Office Director Doug Elmendorf have a problem: They can't revise their budget estimates quickly enough to account for the continued bad news about tax collections arriving daily from the Treasury Department. Luckily for them, but unfortunately for taxpayers, an establishment media obsessed with PDS (Palin Derangement Syndrome), TDS (Tebow Derangement Syndrome), and TPDS (Tea Party Derangement Syndrome) isn't paying any meaningful attention to the problem.
Back in August of last year, the CBO guesstimated that collections during fiscal 2010 will amount to $2.264 trillion. That guesstimate assumed a 7.5% increase over the $2.105 trillion collected in 2009, and clearly depended heavily on a revival in private-sector economic growth and employment.
Well, economic growth has occurred. The problem is that it's the government that has grown, while the private sector has shrunk. Additionally, according to the Establishment Survey published by Uncle Sam's Bureau Labor Statistics, seasonally adjusted total employment has continued to fall.
Thus, CBO dropped its estimate of fiscal 2010 receipts in projections it released in late January to $2.175 trillion. The collections guesstimate in the Obama administration's budget is actually a bit lower:
But it's very likely that both CBO and the administration are still way, way too optimistic. Collections for the first four months of fiscal 2010 have been absolutely dismal compared to fiscal 2009 (sources - Daily Treasury Statements of January 29, 2010 and January 30, 2009; Monthly Treasury Statement, December 2009):
Since fiscal 2010 in the real world already trails fiscal 2009 by almost $86 billion, receipts during the final eight months of fiscal 2010 are going to have to exceed fiscal 2009 by $146 billion ($86 billion plus the budget’s assumed $60 billion increase in FY10 v. FY09) for the administration’s receipts prediction to come true, and $156 billion for the CBO's number to come in.
Specifically, to make Orzag's number, the government will have to collect $1.477 trillion by the end of the year ($2.165 minus $.688), compared to the $1.332 trillion ($2.105 minus $.773) it collected during the final eight months of fiscal 2009. We're supposed to believe that following a decline of 11% during the first four months of the year, the last eight months will show an increase of almost 11% ($1.477 divided by $1.332).
Given the trend, it seems at least as likely that the government won't even collect $2 trillion by the end of the fiscal year. Even getting there would require a year-over-year drop of less than 1.5% for the rest of fiscal 2010 compared to the double-digit percentage declines we've seen thus far.
Whatever you want to call the ongoing fall in receipts (I'm leaning towards "starvation by so-called stimulus"), it should be news, and it virtually isn't.
Oh, and I almost forgot to tell readers that this year's receipts through four months are down about 20% from the first four months of fiscal 2008, during the supposedly economically awful administration of Bush 43.
A related post is here at BizzyBlog.com.