On Wednesday, the U.S. Treasury released the second budget report of federal fiscal year 2014, and so far things are looking OK — not great, but OK. Total November outlays fell 4.8 percent on the year to $317.7 billion, and total receipts increased 12.8 percent to $182.5 billion, yielding a monthly deficit of $135.2 billion, down 21.4 percent on the year.
This fiscal year to date (which means just October and November so far), receipts are up 10.2 percent at $381.4 billion, and outlays are down 4.8 percent at $608.2 billion. The YTD deficit is down 22.4 percent, at $226.8 billion.
The ongoing deficit reductions are encouraging but nothing to write home about. The full-year fiscal 2014 deficit is expected to come in at $750.4 billion, which is actually above the fiscal 2013 cumulative deficit of $680.2 billion. In fiscal 2015, the deficit is expected to fall to $625.8 billion, the product of ongoing spending cuts and climbing tax revenues thanks to edits to the tax code and a healing economy.
Projections are just projections, though, and the actual numbers are likely to vary. The budget conference committee, a bipartisan committee established as part of the deal that ended the 16-day partial government shutdown in October, proposed a budget deal on Tuesday that could just be palatable enough to pass through Congress.
The deal provides for $63 billion worth of relief from the sequester over two years — $45 billion in fiscal 2014 and $18 billion in fiscal 2015 — split evenly between military and domestic programs. This is something that appeals to Democrats and which many Republicans can tolerate. The deal is also seasoned with between $20 billion and $23 billion in additional deficit reduction spread over 10 years.
The federal fiscal 2014 discretionary spending level would be set at $1.012 trillion and at $1.014 trillion for fiscal 2015. Given the enormity of the numbers involved, it’s hard to get excited about the changes.