Whether you're inside or outside the beltway, you always have to be careful about saying that something is "only" $71 billion.
Nevertheless, the latest report from the Congressional Budget Office that the July federal deficit was $71 billion, $58 billion lower than the July 2011 deficit, is one time when the word "only" is appropriate.
Through the first 10 months of fiscal 2012, the overall deficit is $125 billion less than the $1.1 trillion in the same period last year.
The real question is whether this is good or bad news.
Politically, the latest CBO numbers indicate that the 2012 deficit will be substantially lower than 2011 but will still exceed $1 trillion. That means that the red ink will still be a campaign issue.
You remember "Seinfeld," the hit NBC show that proudly was about nothing?
If the show was still on the air doing original programs (It's obviously still on the air everywhere all the time in reruns), two federal budget-related events from yesterday no doubt would have inspired the writers and been the fodder for future episodes.
The first was the consideration and passage in the House of what was called the "Sequester Replacement Reconciliation Act of 2012." The fact that the bill was adopted by the House means...wait for it...absolutely nothing because it has no chance whatsoever of being enacted. And in spite of its name, it's not a reconciliation bill and even if it were enacted it wouldn't completely replace the spending cut -- the sequester -- that is scheduled to take effect on January 2, 2013.
Other than that it's very meaningful.
For the record, the vote was 218-199 and all of the ayes were Republicans. The no votes included 16 Republicans and 183 Democrats.
The Congressional Budget Office estimated subpar economic growth (2.3% real GDP CY11 4th Q over 4th Q and 2.7% CY12) and an FY11 deficit of 8.5% of GDP and FY12 of 6.2%. The deficit falls sharply to 3.2% of GDP in FY13 and to 1.6% of GDP in FY14 because of the budget savings of the Budget Control Act of 2011, S.365, and the assumed expiration of the payroll tax cut and extended unemployment insurance at the end of this year and of the Bush tax cuts at the end of next year. In my opinion, most, if not all, of the Bush tax cuts will be extended, adding 0.2% to 0.3% of GDP to the deficits. With the likelihood that the Joint Selection Committee on Deficit Reduction will deadlock and that most of its roughly 0.7% of GDP savings will be achieved by the January, 2013 sequester, the FY13 and FY14 deficits are more likely to be around 4% of GDP. See pp.26-7 for estimates of alternative policy outcomes.
The Committee for A Responsible Federal Budget has just posted a very handy side-by-side comparison of 32 deficit reduction plans. You can use this tool to compare any three at a time. This is Budget Wonk Heaven.
Of course, our problem is not a lack of plans; it's finding one plan that can pass both houses of Congress and can get President Obama's signature by August 2, which Treasury just reaffirmed today.
At Cheri Reidy's retirement reception at the Senate Budget Committee Wednesday -- She has put in 29 years of top-notch service to our country, starting at the desk next to mine -- I heard staff and members from both parties talking down: President Obama; leaders of the other party; leaders of their own party; and the futile 3:30 p.m. sequester briefing that interfered with final arrangements for Cheri's party. She was given a very warm and heartfelt sendoff in any event, but the gloom over the budget talks hung heavy.