The federal budget deficit projection for 2006 shrank to $296 billion (story here). White House insiders are reporting that this is a good thing.

Compared to what? Well, compared to last year’s deficit, of course. Or compared to where the deficit was expected to go. But being proud of an accomplishment like that is a bit like congratulating yourself for successfully not driving your car into a brick wall.

Before anyone accuses me of being Eeyore incarnate, I’d like to note that the economy has been growing faster than many people expected, and surprises like that are always welcome. That’s the main reason the federal government has collected so much revenue – and it’s unlikely that the Bush tax cuts didn’t have something to do with that.

Yet it’s hard to find much solace in data that also show the federal budget has grown by a staggering 45 percent during the Bush presidency so far. (The national economy as measured by GDP has only grown by 30 percent.) And you just might realize the good news is also the bad news. On the one hand, the government collected more tax money. On the other hand, the government collected more tax money.

Government spending is still chewing on close to 21 percent of GDP. That’s still bigger than the 18 percent it consumed when Bush took office. In fact, that’s the biggest the budget has been in over 10 years — which is, conveniently, a point in history right before the Republican Revolution.

If the federal budget had grown from the day George W. Bush was inaugurated at the same annual rate it had for the six years before he came to office, the federal budget would swallow only 17 percent of GDP today. Balanced or not, seems to me a budget of that size would be much better than what we’ve got now. Maybe we should stop the bidding there next year.

In the meantime, the unfunded liabilities of federal entitlements have rocketed to over $85 trillion. That’s obviously a much bigger number than the current year deficit. And obviously a much bigger problem. Yet you don’t seem to hear too much about that from policymakers anymore.

Okay, enough of the gloom. You may now return to your regularly-scheduled happiness.