At the conclusion of his report on the federal government's July Monthly Treasury Statement, the Associated Press's Martin Crutsinger wrote that federal spending through the first ten months of the current fiscal year is "down 2.9 percent from a year ago," and that the decline "reflects, in part, automatic government spending cuts that began taking effect March 1."
Those "automatic cuts" represent only a very small part of the decline, as will be seen after the jump.
Spending through July 2013 was $2.895 trillion, down by $88 billion from the $2.983 trillion reported in July 2012. $87 billion of the $88 billion difference is due to year-over-year changes relating to "government-sponsored enterprises" Fannie Mae and Freddie Mac.
Even after adjustments for timing differences, those "automatic cuts" to which Crutsinger referred, also commonly referred to as "sequestration cuts," only represent a small part of the $88 billion difference, as detailed by the Congressional Budget Office in its almost dead-on advance estimate of budget results released last week:
As seen in the red box, 75% of the adjusted "spending" reductions of $116 billion occurred because the government has received $82 billion of dividends from the GSEs this year instead of having to shell out $5 billion in bailout money last year. The key figure is the -$24 billion in the green box, showing that spending related to the day-day-operations of the government through ten months is only down by 0.8 percent from last year. That $24 billion is only 21 percent of the timing-adjusted decline in spending.
These facts make one wonder why several conservative commentators who should know better, including Stephen Moore at the Wall Street Journal, have been crowing that "The Budget Sequester Is a Success; The Obama spending blitz is over." At best, it has plateaued. Additionally, considering that reported spending in the final two months of fiscal 2012 was $550 billion and that a typical month without special adjustments sees $290 billion or more in spending (13 of the past 22), it seems likely, barring "clever" year-end adjustments, that government spending on day-to-day operations will be come in higher at the end of fiscal 2013 than it did in fiscal 2012.
It's also useful to recall that last year's spending through just ten months is more than the government spent during all of fiscal 2008, and over $250 billion more than it spent in all of fiscal 2007.
At another point, Crutsinger looked at the full-year projected deficit:
The Congressional Budget Office has forecast that the annual deficit will be $670 billion. The Congressional Budget Office has forecast that the annual deficit will be $670 billion when the budget year ends Sept. 30, far below last year's $1.09 trillion. It would mark the first year that the gap between spending and revenue has been below $1 trillion since 2008.
Steady economic growth, higher taxes, lower government spending and increased dividends from mortgage giants Fannie Mae and Freddie Mac have helped shrink the deficit.
If he weren't toiling at the Obama keister-covering Administration's Press, Crutsinger might have told readers who don't remember five year-old budget numbers that the deficit in 2008 was $454 billion, and that this year's projected shortfall is still higher than any seen before Barack Obama became president.
As to Crutsinger's claim of "steady economic growth," I struggle to recall a time when an establishment press reporter, especially at the AP, has ever called growth averaging less than an annualized one percent during the past three quarters (1.7% in the second quarter of this year, 1.1% in the first, and 0.1% in the final quarter of 2012) "steady" during any other administration, Democrat or Republican.
Especially after considering population growth, the correct term is "barely noticeable."
Cross-posted at BizzyBlog.com.
