The Bush administration will leave the next president a record federal budget deficit, according to White House projections.
The new estimate for the 2009 deficit is $482 billion — and it's likely to end up even higher.
The estimate is larger than the Bush administration projected in February. White House budget director Jim Nussle cited two reasons for the negative revision: "The primary reasons that there will be larger deficits in 2008 and 2009 are because of the bipartisan growth package, or stimulus checks, as well as slower economic growth."
Slower growth means lower tax revenues.
But the 2009 deficit will almost certainly be larger than even the new projection. That's because the administration's budget for fiscal year 2009, which begins Oct. 1, includes only enough money to prosecute the wars in Iraq and Afghanistan into next spring or early summer, Nussle says.
"We built into the budget for this year $70 billion for 2009. We certainly understand that may not be the full cost of the war. That number is still being developed by the Department of Defense," he says.
Those additional costs could easily push the 2009 budget deficit over the half-a-trillion-dollar level.
While it would be a record in dollar terms, the projected deficit would represent just over 3 percent of the total output of the U.S. economy — the measure thought to be most relevant by economists. By that measure, deficits in the 1980s and '90s were much larger.
President Bush inherited a budget surplus when he arrived in Washington. But his tax cuts and the cost of fighting two wars have helped generate budget deficits every year since.