The Shrinking Federal Budget Deficit

The media is full of stories about the federal budget deficit.  Most of the pundits tell us that the sky is falling and that out of control federal spending will ruin the economy and turn America in Greece.  This report from Goldman Sachs tells us that the sky is not falling and that America is not turning into Greece.  It has not been widely reported because it is not part of the conventional wisdom that passes for knowledge.  The federal budget deficit has declined faster in the last 12 months than it has in any period since the end of the Korean War.  Spending is down and tax revenues are up.  Part of the increase in tax revenues is due to economic recovery;  the rest is the result of fiscal policy.  The payroll tax has gone back up and some of the Bush tax cuts have expired.