The federal budget deficit for Fiscal Year 2011 increased ever so slightly over FY2010, moving to $1.299 trillion, up from $1.293 trillion. The final number was actually below expectations, $347 billion below the estimate in the President’s February 2011 budget projection. Recall that the projection ballooned after last December’s tax deal, which extended both the Bush tax cuts and long-term unemployment benefits and added a payroll tax cut, among other extensions.

We’re in this upside-down world where the second-largest deficit in US history is actually below current needs, because of the depth of the recession and the need for federal spending to carry the economy. But it’s worth pointing out that, to the extent that the budget deficit shrunk from estimates in FY2011, it had nothing to do with reduced spending. Most of the spending cuts enacted by the current Congress in FY2011, like the ones from the April appropriations deal, will have effects in outlays further in the future. The current-year effects were relatively small. It was actually increased revenues because of better-than-expected employment statistics that reduced the deficit.

Revenue was $141 billion higher than in 2010. Spending was $145 billion above 2010, despite GOP efforts to cut the budget in the April spending deal. Many effects of those cuts are expected to be felt further down the road in terms of actually outlays.

There’s a lesson here. Conservatives like to say that the deficit can only be reduced by cutting spending. They actually don’t care about the deficit; they care about cutting spending, or more precisely cutting spending on programs or classes of people they don’t like. Their goal is to funnel spending to their favored contributors and friends. From a deficit standpoint, what actually accomplishes the goal, should you have it, of deficit reduction is increased tax receipts from expanded employment. This creates a virtuous circle: more employment also can reduce the need for certain services like unemployment insurance and food stamps, and if the automatic stabilizers contract, that too cuts the deficit.

What I’m after is the increased employment, not deficit reduction for it’s own sake, and obviously we’re light years from a good employment situation. But the lesson of the FY2011 budget is that the best deficit reducers are more economic growth and jobs. Even if you have to spend in the near term to get those jobs, it will pay off over time and perhaps even immediately. You simply cannot reduce the deficit to any degree with 9% unemployment and large trade deficits.  Indeed, with all the efforts at spending reductions the deficit didn’t budge. But even slightly better employment than the projections hacked $145 billion off the deficit.

A jobs program is the only way those deficit hawks will get what they claim to want. Somebody should let them know.