The federal deficit hits a new high

The federal budget deficit will hit a record-high $482 billion in the fiscal year that begins Oct. 1, President Bush said this week, handing a giant headache to whoever succeeds him in the White House. Officials blamed inflation, declining tax revenues from slow economic growth, and tax rebates that drained billions from the Treasury. But the worst may be yet to come, since the estimate does not include the full costs of the wars in Iraq and Afghanistan or the bailout of Fannie Mae and Freddie Mac. “The real number,” said former Bush administration Treasury Secretary Paul O’Neill, is “upward of $500 billion and counting.”

Although the projected deficit is the largest on record in sheer dollar terms, it represents only 3.3 percent of the total U.S. economy. During the 1980s, the deficit peaked at 6 percent of the economy.

The Bush administration claims that this year’s $600-per-person tax rebate busted the budget, said the Los Angeles Times in an editorial. But the biggest culprit was Bush’s determination to launch a war in Iraq, which has cost hundreds of billions of dollars while Bush blithely cut taxes. Now the bill is coming due, and the American people—and the next president—are stuck with it.

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Don’t expect any straight talk from either John McCain or Barack Obama about how they’d tame the deficit monster, said Steve

Chapman in the Chicago Tribune. McCain has promised to “balance the budget” without raising taxes, but he won’t say what programs he’d cut. Obama is proposing $344 billion in new spending, but he has made only vague suggestions about how he’d pay for it. Face it: “Regardless of who wins, Washington will spend more,” and “we will continue to dodge the critical choices we face.”

But this irresponsible spending can’t go on indefinitely, said Jeanne Sahadi in CNNmoney.com. The government is “like anyone with a nearly maxed-out credit card.” The more debt it accrues, the more it has to spend just to stay current on the interest. Before long, that debt cuts into the government’s ability to spend money on anything else, from keeping bridges from collapsing to providing health insurance. Obama and McCain both have great ambitions for our nation. But deficits of this magnitude will “really put a crimp in any new president’s style.”