Obama Budget Cuts Point To Fights Ahead

Budget cuts detailed by the Obama administration Thursday set the President up for some fights down the road, WSJ's Jonathan Weisman reports. Despite cutbacks in 121 programs, the country's forecast deficit is still over a trillion dollars.

Federal Government Swimming in Red Ink

“The next president will inherit a fiscal and economic mess of historic proportions,” said Senator Kent Conrad, chairman of the Senate Budget Committee.

The New York Times - Like water rushing over a river’s banks, the federal government’s rapidly mounting expenses are overwhelming the federal budget and increasing an already swollen deficit.

The bank bailout, in the latest big outlay, could cost $250 billion in just the next few weeks, and a newly proposed stimulus package would have $150 billion or more flowing from Washington before the next president takes office in January.

Adding to the damage is that tax revenues fall as the economy weakens; this is likely just as the government needs hundreds of billions of dollars to repair the financial system. The nation’s wars are growing more costly, as fighting spreads in Afghanistan. And a declining economy swells outlays for unemployment insurance, food stamps and other federal aid.

But the extra spending, a sore point in normal times, has been widely accepted on both sides of the political aisle as necessary to salvage the banking system and avert another Great Depression.http://www.nytimes.com/2008/10/20/business/economy/20cost.html?partner=permalink&exprod=permalink