The US budget deficit is set to spiral higher this year, according to the nonpartisan Congressional Budget Office (CBO). The CBO estimates that President-elect Barack Obama will face a $1.2 trillion deficit in 2009, which may ultimately end up being much higher considering that this forecast doesn't even take into account the probable implementation of a massive fiscal stimulus plan. Indeed, there is speculation that the plan will add up to $775 billion over two years, with $300 billion devoted to tax cuts for individuals and businesses, and politicians are far more concerned with being remembered as the ones who saved the US economy from a second Great Depression, rather than being budget hawks. With the CBO also forecasting that the recession will extend well into 2009, echoing the sentiment of some Federal Open Market Committee members, and real GDP of only 1.5 percent in 2010, it's no wonder officials are striving to take drastic action soon.
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