Obama: $1 trillion deficits 'for years'

An expensive economic recovery plan will add to the short-term federal shortfall. But experts warn the bigger problem by far is the long-term picture.

By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: January 7, 2009: 8:04 AM ET

Obama: 'Economy badly damaged'

NEW YORK (CNNMoney.com) -- President-elect Barack Obama is inheriting the worst economy in decades and says he'll need to "invest an extraordinary amount of money" to get it back on track. Indeed, Obama's first act in office will be to push through what is expected to be an $800 billion economic recovery plan. The stimulus package, combined with the $7.2 trillion the government has invested or loaned in the past year to combat the financial crisis, will add greatly to the federal budget deficit.

"At the current course and speed, a trillion-dollar deficit will be here before we even start the next budget," Obama said Tuesday. "And potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point."

On Wednesday, the Congressional Budget Office will release its 2009 budget and economic outlook, which will tell the deficit tale in black and white. A report from the Treasury Department last month found that the deficit in just the first two months of the current fiscal year exceeded $400 billion -- almost as high as it had been for all of fiscal year 2008. But Obama promises that his administration will also embrace budget reform and put a choke collar on the country's record annual shortfall, if not in the immediate term, then soon after.

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