The Congressional Budget Office sees the deficit growing to $407 billion for the year ending Sept. 30 and ballooning to $438 billion next year, with the takeover of Freddie Mac and Fannie Mae threatening to send it far higher.
Certainly the growing deficit is not going to help whoever occupies the Oval Office next time around. With unemployment at a five-year high of 6.1 percent and inflation sending the cost of food and healthcare ever higher, there are going to be more problems to deal with domestically than many had imagined just a year ago.
There has been more talk lately of a second economic stimulus package boosting the economy, even though the effects of this year's stimulus seemed fleeting at best.
Former Treasury Secretary Laurence Summers testified at a House Budget Committee hearing Tuesday in favor of a second stimulus package. The exact nature of this second stimulus hasn't yet been clearly defined. Summers backs measures that would help low-income families, with food stamps, unemployment insurance, changes in Medicaid reimbursement rules and funding to help pay heating bills.
But clearly, for any stimulus to have a broad effect, it would need to be distributed to a large part of the population, as happened with this year's stimulus checks and the tax rebates of 2001. Sen. Barack Obama, D-Ill., and John McCain, R-Ariz., have their own proposals for an economic stimulus, many involving tax cuts of various stripes.
The bursting of the housing bubble has prompted a search for ways to expand the economy once again. Any solutions are likely to involve billions more in government expenditures and, unless the economy somehow goes into overdrive, we can only expect the deficit to balloon even further.
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