And the Government wants to ‘fix’ a credit collapse by doing the exact same thing that got us in this mess in the first place… borrow money. Yet one more disaster in the making.

Congressional Budget Office projects $1.2T deficit for 2009

• Wednesday January 7, 2009, 12:04 pm EST

WASHINGTON (AP) — The federal budget deficit will hit an unprecedented $1.2 trillion for the 2009 budget year, according to grim new Congressional Budget Office figures.

The eye-popping estimates reflect plummeting tax revenues because of the recession and about $400 billion to bail out the financial industry and take over Fannie Mae and Freddie Mac. Last year’s deficit was $455 billion.

The CBO estimate released Wednesday also sees the economy shrinking by 2.2 percent this year and recovering only slightly in 2010, and the unemployment rate eclipsing 9 percent early next year unless the Obama administration steps in.

“The recession — which began about a year ago — will last well into 2009,” the CBO report says. The agency said “the ongoing turmoil in the housing and financial markets has taken a major toll on the federal budget.”

The dismal figures come a day after President-elect Barack Obama warned of “trillion-dollar deficits for years to come.”

CBO’s figures don’t account for the huge economic stimulus bill Obama is expected to propose soon to try to jolt the economy.

The shrinking economy has led to a sharp drop in estimated tax revenues of $166 billion, which is largely responsible for the deficit, along with big outlays from the Wall St. bailout.[...]