Federal deficit estimated at $407 billion

This is just another example of the Bush economy going straight down the drain. From the Washington Post:

Weak revenue growth and accelerated spending -- including an economic stimulus package that returned billions to taxpayers -- will drive the federal deficit to $407 billion in the fiscal year that ends this month, more than double last year's $161 billion, congressional budget analysts reported today.

With the economy expected to remain sluggish for at least the next several months, the next president will take office facing a projected deficit of $438 billion, budget analysts predict -- the largest in dollar terms in American history, exceeding the previous record of $413 billion in 2004. And that number could easily climb above $500 billion if Congress acts, as expected, in the coming months to restrain the growth of the alternative minimum tax, budget analysts said.

In January, congressional budget analysts had estimated the deficit would be only $219 billion by year's end. This summer, however, the White House estimated that that number was likely to spike to $389 billion because of new spending.

Of course, the stock market fell due to big worries in the financial sector. The Dow fell 279.68, or 2.43 percent to 11,231.06. The Standard & Poor’s 500 index declined 43.25, or 3.41 percent, to 1,224.54 while the Nasdaq composite index fell 59.95, or 2.64 percent, to 2,209.81. Much of the trading worries centered on Lehman Brothers inability to raise capital after suffering $8.2 billion in write-downs and credit losses due to the financial meltdown. But it is not just the traders' worries on Lehman Brothers. There is a link between these stories. The financial market is worried about the huge losses that could be incurred due to write-downs on the subprime mortgage debt, worries on the U.S. Treasury's bailout of Fannie Mae and Freddie Mac, inflation, and recession worries. The U.S. economy is deteriorating in a recession. The U.S. government is printing more dollar bills to finance this debt, to finance the bailout of Fannie Mae and Freddie Mac, and perhaps even increasing the inflation rate. Couple that with a recession, and you've got stagflation.