The latest projections show the federal government will have a more than $400 billion deficit this year. And next year. And the year after that.

In fact, the new Congressional Budget Office projections show the federal government running a deficit for the next ten years. This year they're projecting the deficit will be $407 billion, with further deficits of $438 billion in 2009 and $431 billion in 2010.

After that, the deficits are supposed to get smaller, but only because the CBO is required by law to assume that the Bush tax cuts expire on schedule in 2010. They may be required to assume that, but you shouldn't. Both presidential candidates have already pledged to extend the tax cuts in some form – John McCain wants to extend them entirely, and Barack Obama says he'll extend at least the cuts for middle-class taxpayers.

That's not the only assumption you shouldn't take at face value here. The CBO acknowledges that it didn't have time to consider the impact of the huge mortgage bailout of Fannie Mae and Freddie Mac, which could cost anywhere from $25 billion to $200 billion, depending on how it plays out. And there are some other fires that may need to be put out with bales of federal money, such as bailouts of strained state unemployment funds or the troubled auto industry.

The short-term situation is mostly about the economy. The CBO is estimating measly economic growth over the next two years and unemployment at six percent, which means tax revenues are going to drop. These government bailouts are driven by the need to keep things from getting worse. If the short-term problem was the only problem, then this wouldn’t be all that bad – eventually the economy will turn around.

But the long-term outlook remains, to use the CBO's favorite word, "unsustainable." The combination of rising health care costs and aging baby boomers are going to drive up the cost of Medicare and Social Security until they bust the budget. Plus, every time the government runs a deficit, coming up short in a given year, it has to borrow the money to cover its bills. That adds to the national debt, which is already past a staggering $9.5 trillion – and these projected deficits will add another $1.4 trillion to that over the next five years.

All this means that the next president is going to be working with some serious fiscal constraints which in fact may turn out to be one of the defining factors for the new administration. That's going to be true no matter who wins – and whether or not they're ready to acknowledge it.


3 comments on this entry

Re: The Deficit Train Picks Up Steam

Regarding the projected 2009 deficit, I understood that Mr. Nussle when it was announced said the deficit would be $492 billion but with only $70 billion included
for the Iraq/Afghanistan war. Add how much, $100 billion? We are now up to $592 billion and will probably end up at well over $600 billion when all is said and done.
President Dufous has left a really impressive house warming gift for whomever wins the race.


Re: The Deficit Train Picks Up Steam

That article is so great! Thanks for sharing it into us. I’ve learned something new. Tony Bernazard is making headlines. Tony Bernazard, the VP of Player Development for the New York Mets, right hand man to Omar Minaya, went off on a tirade at the Binghamton Mets, a Double AA subdivision of the New York Mets organization. He accused the players of being soft, molly coddled, narcissistic pansies. He lambasted the underage drinking and poor play in the side, even tearing off his shirt (ala Hulk Hogan), challenging them to a fight, and telling them they weren't worth the unsecured loans for their salaries.


Re: The Deficit Train Picks Up Steam

That article is so great! Thanks for sharing it into us. I’ve learned something new. Tony Bernazard is making headlines. Tony Bernazard, the VP of Player Development for the New York Mets, right hand man to Omar Minaya, went off on a tirade at the Binghamton Mets, a Double AA subdivision of the New York Mets organization. He accused the players of being soft, molly coddled, narcissistic pansies. He lambasted the underage drinking and poor play in the side, even tearing off his shirt (ala Hulk Hogan), challenging them to a fight, and telling them they weren't worth the unsecured loans for their salaries.


Syndicate content
найти человека по фамилии в спб здесь узнать точное местоположение абонента маинт крафт играть онлайн игры гонки онлайн симуляторы лего игры играть онлайн на сайте адресный справочник по фамилии имени отчеству тут игры онлайн бен 10 инопланетная тут телефонная база абонентов мегафон урал боровичи справочник телефонов любимые питомцы игры справочник телефонов чугуев поиск по фамилии адресу справочник телефонов адрес тут телефонная база города луги О сайтах и жизни гдз готовые Препарат для sitemap