Joe Government added up the numbers at the end of June and found that the deficit for this year already has passed the $1 trillion mark. Go ahead and savor those dozen zeros for a moment: $1,000,000,000,000. And change.

As god-awful and depressing as that trillion-dollar hole in our national financial future is, it’s not as bad as was expected. No, really: If F. A. Hayek’s critique wasn’t enough for you, here’s the case against government economic planning: The actual plan was even worse. In fact, it was supposed to be about $80 billion worse. So, what happened? Sudden outbreak of fiscal sobriety in Washington? A little intelligent trimming here and there in the budget? The idea is almost funny — it would be funny, if not for the penury and economic ruination party.

No, spending was $11 billion higher this June than last. What actually brought that grim deficit down under the even grimmer projections was that there was a slightly stronger private environment than had been expected, and so business-tax receipts were up, significantly: “Receipts from corporate income taxes for the first nine months were $31 billion (or 31 percent) higher than the amounts collected during the same period last year,” reports the CBO. “That increase reflects higher taxable profits in 2010, resulting both from improved economic conditions and from lower depreciation charges. The increase in corporate payments in June could indicate that the September quarterly payments also will show strength because corporate receipts in those two months tend to move in tandem.”

(We personal-income taxpayers actually put a little less into the national kitty this time around, because so many of us are unemployed.)

Translation: Thank a corporation today for reducing the deficit a little bit.

I am no fan of naïve supply-siderism, the belief, all too common among Republicans, that tax cuts pay for themselves by creating economic growth. It’s a fine theory, and I wish it were true, but the numbers don’t add up. But what we should not and must not forget is that there are growth effects, and that you can achieve the desired effects of a tax increase — higher government revenue — through means other than increasing tax rates. You can also inflict the costs of a tax cut on the government without getting the benefits that come from reducing tax rates, something Congress manages to achieve more or less daily by doing stupid things that reduce growth in the economy: for instance, adapting a cumbrous financial-reform bill that fails to resolve the moral hazard at the heart of the Washington–Wall Street axis, fails to make the system safer, and fails to prevent future bailouts — but does cost the private economy a lot of money, which will cost the government, too, in the form of lower tax receipts. Obama and his congressional allies have us on a path toward a national debt that well exceeds the entirety of the U.S. economy, so we probably aren’t going to grow our way out of this. But growth in the private economy helps the public finances, too.

What’s most worrisome still is that shadowy intersection between public and private finance. For instance, the CBO reports that a big chunk of the income that helped to reduce the deficit this year — a $35 billion chunk, to be precise — came from investments made by the Federal Reserve. Go ahead and review those numbers: The growth in revenue from Fed investments was larger than the growth in revenue from corporate income taxes, during an alleged national economic recovery. Could there possibly be a downside to having the entity that manages the U.S. monetary system acting like a giant hedge fund? Back to the CBO: “Receipts from the Federal Reserve increased by $35 billion, primarily because the central bank has increased the amount of assets that it holds and has shifted to riskier, and thus higher-yielding, investments in support of the housing market and the broader economy.”

Let’s tighten in and focus on “riskier, thus higher-yielding, investments,” words that should make your nights longer and your fingernails shorter. TARP is basically played out, and things are supposed to be back on the path to normal, and the Fed is shifting, now, to riskier investments? Why? What are they up to over there?

They’re up to a lot — a lot more than its usual mandate of keeping inflation in check while the economy grows. There are indications that we may be on the verge of a double-dip recession, a specter that panics the pants off of every blue suit in Washington. The Fed usually tries to encourage growth by cutting interest rates, but it’s already cut them down to nearly nothing, and it is worried that it can’t keep real rates at basically zero indefinitely without hurting its credibility. But the stimulus hasn’t stimulated, unemployment is high, China is slowing, deficits are soaring, the markets remain woozy — how to encourage growth in such an environment when the handy rate-cut tool is taken away? The answer is: buying lots of crap securities, thereby injecting credit and liquidity into the economy while loading up the Fed’s balance sheet with a lot of dodgy junk. That stuff’s making money right now, but subprime-backed securities made a lot of money for a long time, too.

Fed governor Kevin Warsh gave a speech ringing the alarm bells on this, in the quiet Fed way, a couple of weeks ago, telling Rotarians in Atlanta: “Any judgment to expand the balance sheet further should be subject to strict scrutiny.” In other words: Keep an eye on these guys. Remember, as sand-poundingly dumb as the Wall Street guys may seem sometimes, the guys who work for the government are mostly the ones who couldn’t keep up with them.

– Kevin D. Williamson is deputy managing editor of National Review.