Monday , August 19, 2013 - 10:39 AM
Unless you experienced the sequester’s collateral damage — unpaid furloughs, canceled government contracts, the disappearance of a promised government job — the fiscal year so far has been pretty good. (It ends Sept. 30.)
The deficit for the first 10 months was $607.4 billion, 38 percent less than last year’s $973.8 billion deficit at this time, the government reported Monday. July’s deficit of $97.6 billion puts the country on course for the lowest deficit in five years.
The Congressional Budget Office estimates the country will end the fiscal year with a deficit of $670 billion, down from $1.09 trillion last year. As The Associated Press notes, it would mark the first time since 2008 that the gap between income and expenditures has narrowed to less than $1 trillion.
The government collected $2.29 trillion in revenue, up 14 percent, from the same 10 months last year. During that period, it spent $2.9 trillion, down 2.9 percent.
The progress was due to several factors. Some, such as steady economic growth, will last, we hope. Others, such as higher taxes and the Fannie Mae and Freddie Mac dividends, are at the whim of Congress.
One key element that’s unlikely to last is the sequester, the automatic acrossthe-board spending cuts that took effect March 1. Congress is chipping away at it as the cuts affect such areas as military readiness and medical research.
The improved figures have postponed a dangerous political flashpoint: the date at which Congress must approve an increase in the federal borrowing limit. Failure to raise that limit would push the government into default and increase borrowing costs by lowering the U.S. credit rating.
Senior House Republicans have sensibly said they will not play chicken with the debt limit, as the House did two years ago, to try to extract concessions from Democrats.
That still leaves the problem of the 2014 budget, which Congress has yet to pass. Conservative Republicans say they won’t vote for any spending measure that includes money for the universal health care reforms informally known as “Obamacare.” President Barack Obama is resisting deep cuts in Social Security and Medicare and demanding higher taxes on the richest Americans. Without passing all or part of the budget, or temporary spending measures, by Sept. 30, the government will begin shutting down — likely with the same disastrous political consequences that occurred the last time that happened, in 1995-96.
All of this makes for a standoff that will markedly decrease federal spending and make our budget picture look good — at the cost of piling up spending obligations that will have to be paid for down the road.
Only a fiscal masochist will enjoy this fall in Washington.