The Not-So-Good Federal Budget Outlook

Menzie Chin at Ecnobrowser supplied this chart from the Congressional Budget Office November Budget Review:

The red line is receipts, and if you are an optimistic sort, you might persuade yourself that the gap has gotten smaller and therefore will continue to shrink.

The fly in the ointment, however, is obvious. Receipts are a function of tax rates and incomes. The economy has been at full employment, albeit with stagnant wages. This is as good as it gets, and it isn’t good enough to close the deficit.

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