The Congressional Budget Office (CBO) is projecting a deficit of $642 billion for the fiscal year that ends September 30, which would be the smallest since 2008 and is down from over $1 trillion last year. The figure has narrowed thanks to the strongest influx of revenue since before the recession as well as large spending cuts, indicating mixed news for the economy.
The good news is that government revenues from October to July came to about $2.3 trillion, up 14 percent from last year and 8.1 percent during the same period in 2007. That figure is higher thanks to some higher tax rates and a slowly recovering economy.
But the number is also narrowing thanks to huge spending cuts, including the automatic sequestration cuts enacted in March. Those cuts are doing more harm than good to the economy. The CBO has estimated that canceling sequestration would add as many as 1.6 million jobs and increase growth by as much as 1.2 percent.
In fact, at a time of falling deficits, the congressional Republican focus on reducing spending even further, including those who endorse sequestration as a smart tactic, is completely misguided, particularly in face of the human suffering brought about by these cuts. Children have been kicked out of their Head Start preschool programs and other schools are making drastic cuts. The home-bound elderly are receiving fewer visits from Meals on Wheels. Low-income people have seen their Section 8 housing vouchers disappear. Domestic violence victims have fewer places to turn for help. The cuts will increase the number of homeless people at a time when rates had been on the decline.
Even some Republicans themselves may be thinking twice about pursuing drastic cuts. While House Republicans had proposed a budget with even steeper cuts than sequestration, when it came time to pass the particulars so many balked that it never even got a vote.