WASHINGTON (AP) -- The federal budget picture will look slightly better next week. Relatively speaking.
The White House plans to announce the federal deficit will still be a record breaker, at $1.58 trillion, for the current 2009 fiscal year. But the amount is about $262 billion less than officials predicted earlier this year.
That's mostly because the administration erased a $250 billion contingency fund it had penciled into the budget in case Wall Street needed more government help in getting out of the financial crisis.
While the numbers still represent a tremendous amount of red ink, they would give the administration the opportunity to say its policies have prevented a more extreme financial crisis and eliminated the need for further bank infusions.
Nonetheless, the deficit amount is a huge obstacle for an administration trying to undertake massive policy overhauls in health care and the environment. And the true impact of deficits lies in the coming years.
A slow recovery from the recession, as many economists predict, could test Obama's goal of cutting the deficit to $512 billion in 2013 and pressure him to call for deep spending cuts or increases in revenue through tax hikes.
Even at $1.58 trillion, the deficit this year would be three times larger than last year. A White House official, speaking on the condition of anonymity to discuss the report before its release Tuesday, said the report for the budget year that ends Sept. 30 also will predict Washington will spend $3.653 trillion this year. Revenue, however, would reach only $2.074 trillion.
They spent everything under the sun but didn't push another 250 billion for TARP Redux, and this is being considered good news.
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