Congress tackles bailout's bottom line

U.S. Capitol Building

TEXT OF STORY

Stacey Vanek-Smith: Lawmakers have been burning the midnight oil this weekend to hammer out the details of that $700 billion plan to save financial markets. Big fights are reportedly shaping up over bankruptcy laws and capping executive pay. Proposals for rescuing financial institutions go to Congress this week. Some analysts say the bailout could add billions to the federal deficit. Danielle Karson reports.


Danielle Karson: Mopping up Wall Street's bad assets may provide a more permanent solution to the financial crisis. But it also adds red ink to the federal government's balance sheet.

Bob Bixby: We're looking at a baseline deficit of over $500 billion for next year. And with the figures being tossed around now, that would be an astounding deficit of a trillion dollars.

Bob Bixby is with the Concord Coalition, a government watchdog. As Congress drafts a plan to shore up financial markets, Democrats may put up a fight to divert some of the money into another stimulus package. But Bixby says that creates another problem.

Bixby: Congress is going to have to take actions elsewhere in the budget to try to mitigate the effects. Everything Congress is thinking about doing, from tax cuts to a new stimulus program, is going to potentially add to the deficit even more.

And Bixby expects a bigger deficit and the interest charged on that debt will drive up interest rates.

In Washington, I'm Danielle Karson for Marketplace.

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