December 30, 2003

Not Just Rising Spending, But Falling Receipts

You find a lot of arcane but telling statistics when you go digging through the U.S. Treasury's Monthly Report. The report gives you general line items for Federal receipts and outlays each month of the fiscal year. In the November report, I note two developments: First, in the first two months of FY 2004, Federal spending is already at $366.5 million dollars--an increase of 2.5% from the same time last year. Second, it wasn’t just increased spending that drove the deficit higher. Receipts declined, too (the government likes to call them revenues…even though you don’t really have a choice about where to “spend” your tax dollars.) Total income tax receipts for FY 2003 were down 7.5% from the previous year. And corporate tax receipts fell 7% as well. Falling corporate tax receipts are to be expected in a down economy...lower profits, right? Hard to reconcile that with the image of a profitable recovery. Or higher stock prices. But more worrisome are falling income tax receipts. That means wage stagnation. And without wage growth, it's hard to see how debt burdens can expand without swamping consumers. In fact, without wage growth, it's hard to see how consumption can expand in ANY way but through more debt....


Post a Comment

<< Home