After years of fixating on the deficit, both Republicans and the media have missed the good news: The non-partisan Congressional Budget Office is predicting this year’s deficit will be the smallest since 2008.

If Congress does nothing, the amount the government spends more than it takes in will fall to $378 billion, a fraction of the more than $1.4 trillion budget deficit President Obama inherited from George W. Bush.

“This is not good news — or not unambiguously good news, at any rate,” writes The New York Times‘ Paul Krugman. “A deficit falling to probably less than 5 percent of GDP this year and well below that next year is MUCH TOO LOW for an economy whose private sector is still engaged in a vicious circle of deleveraging.”

Cutting spending when unemployment is high and interest rates are low makes little sense with millions out of work. The sequester is already punishing the unemployed, though the small amount it shrinks the deficit has already been dwarfed by increases in revenue.

And Republicans want to make the situation worse.

Despite the fact that the deficit is falling at its fastest rate since the 1940s, the House Republican Conference met Wednesday to plot its strategy for raising the debt limit. The House GOP invoked the Boehner rule — any increase in the limit must be matched by spending cuts — for the first time in 2011. The result was billions of dollars in damage to the economy through lowered consumer confidence and hiring.

According to The Hill:

Rep. John Fleming (R-LA), said that, for him and many members of the conservative Republican Study Committee, any deal to raise the debt ceiling would have to be tied to a budget that would balance in 10 years ‘at a minimum.’

As usual, the GOP’s demands for “cutting the deficit” are actually for “cutting spending,” since they refuse any plan that includes increased tax revenue, even if it comes from closing loopholes on the rich and corporations that pay little or nothing in taxes.

And you can’t hope Speaker John Boehner (R-OH) will be able to prevent his party from pursuing another crisis, given that he’s admitted that he’s lost control of his conference.

A recent poll found that only 6 percent of the American public knew the deficit was shrinking. The CBO’s report coming in the midst of scandalmania will keep the information from getting out, making another debt standoff more likely.

The truth is we’ve never had a short-term deficit crisis.

“Deficit doves are right to look at this report say it shows that deficit panic is unwarranted, and that policymakers should focus on boosting the economy instead of cutting debt,” Bloomberg‘s Josh Barro reports. “But they were right to say that before the report came out, too.”

The good news is that the deficit is shrinking so quickly — leading to a $113 billion surplus in April — that the date we reach the debt limit keeps being put off to further and further into the future.

But eventually we will need to raise the limit again, and that’s when the GOP will ignore reality and punish the unemployed some more.

AP Photo/J. Scott Applewhite