“Singapore’S Recurrent Budget Surplus The Role Of Conservative Growth Forecasts
Aided by strong economic growth the Singapore government has been able to keep both the tax rate and the government expenditure rate low and yet generate healthy budget surpluses year after year. Although the gap between the tax rate and the government expenditure rate is the obvious source of the surplus, this paper shows the presence of another subtle source, a surplus generated by conservative growth forecasts that lay the base for revenue projections. An omitted variable bias in a model based on the tax smoothing hypothesis led us to consider the role played by the growth forecast error in predicting the budget surplus. Our computations show that on average the underprediction of the tax base (GDP) must have contributed about $376 million per year to the realized budget surplus over the period 1990-2005. This appears to be simply a byproduct of the Government’s philosophy of “fiscal prudence”.
http://ideas.repec.org/p/eab/macroe/1646.html
Wouldn't it be nice, if we had a government that regularly UNDERpredicts goverment income in their budgets, and actually made money from interest on the cash hoard that the government had accumulated from years of running budget surpluses? We need a revolution in this country.
California can still make Billions of cuts. Start with the Coastal Commission and work it from there.