Actually, I believe that the largest surplus tends to be in April as can be seen in the chart on page 3 of the Treasury document at http://www.fms.treas.gov/mts/mts0308.pdf . In any case, it's sad to see that economists and Bush administration apologists are continuing the lie that the most important measures of our financial condition is the "unified deficit" and/or the "debt held by the public" as a percent of GDP. Neither includes the monies that are being borrowed from the trust funds, chiefly Social Security. It is projected that Social Security will need to cash in all of its government bonds by 2041 and I don't know one economist or government official who believes that the government can or will renege on this debt. And yet they see no reason to count it. We would do better to look at the current and projected gross federal debt as a percentage of GDP. Both of these are discussed further at http://usbudget.blogspot.com/2008_02_01_archive.html .

Of course, the couple of trillion dollars currently in the Social Security Trust Fund is not intended to fund all future benefits without continued payroll taxes. It is intended to supplement the payroll taxes. The last Trustees Report projects that this will need to begin in about 2015 and that the trust fund will be exhausted in about 2041. I would agree that Social Security should not expect a bailout from the general fund at this point. It should be reformed so as to put it on a glide path so that it can pay benefits with a continued payroll tax and the use of the trust fund. However, the general fund should likewise not expect a bailout from any of the trust funds. By concentrating on the unified deficit, we are, in effect, assuming that such a bailout will occur. Suppose that all trust funds (including Social Security) were allowed to invest their surpluses with private investment companies under the condition that it be invested in very conservative funds. In fact, suppose that those funds all invested in publicly-traded treasuries such that the trust funds had the same basic assets as they do now. The only difference in 2007 would have been that the deficit would have been 3.7 percent of GDP instead of the reported 1.2 percent of GDP (see http://home.att.net/~rdavis2/def09.html). Does this mean that this small accounting change would have made the deficit 3 times worse? Of course not! It would simply have revealed the deficit's true nature. In fact, the public and gross federal debt are likely to converge over the next few decades. Look at the projected debt held by the public in first graph at http://home.att.net/~rdavis2/pro2009.html. As can be seen, this debt is projected to skyrocket starting in about 2030. This is aided by the fact that the intergovernmental debt held by Social Security is projected to be fully redeemed by 2041. The government will have to borrow money from the public in order to redeem this debt. Hence, this intergovernmental debt will become publicly-held debt. In the end, there will be no real difference. In fact, looking at the gross federal debt as a percent of GDP gives a view somewhere between the overly-optimistic view presented by the publicly-held debt and the arguably overly-pessimistic view presented by the long-run budget projections. As I argue, at http://usbudget.blogspot.com/2008_02_01_archive.html, we should be looking at all three views. But at the very least, we should not be limiting ourselves to the most optimistic view.