CBO says the deficit will reach $1.2 trillion this year. President-elect Obama says the red ink will continue to flow at this rate or faster “for years to come” unless policymakers “make a change in the way Washington does business.”
Obama is right, of course. And his words echo the message he used so successfully throughout the campaign. Change, he promised, that you can believe in. The problem is that the stimulus bill Obama is preparing mimics exactly the sort of cynical business Washington has been doing for decades.

CBO just posted its latest budget update. The headline number is a $1.2 trillion deficit in fiscal year 2009. That’s indeed alarming—especially considering that it excludes the $750 billion or so in additional stimulus that president-elect Obama promises.
But beyond the next couple of years, things don’t look that bad. The economy recovers, the Bush tax cuts expire, and by 2018, the budget deficit weighs in at a svelte $188 billion. Admittedly, this is still a big reversal from previous forecasts, which held out the promise of surpluses (not to mention the actual, real surplus on the books when President Bush took office). But a sub-$200 billion deficit doesn’t look too scary compared with the current situation.