A copy of President Bush's FY2009 Budget
A copy of President Bush's FY2009 Budget - 
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Kai Ryssdal: The two presidential candidates can talk tax policy and health care initiatives until they're blue in the face, but their best laid plans ran into an enormous obstacle today: the nearly half a trillion dollars in red ink that's gonna hit them the first time they sit down to do a budget, and that's before you even start adding in the wars in Iraq and Afghanistan.

From Washington, Marketplace's Nancy Marshall Genzer has a closer look.

Nancy Marshall Genzer: The White House's deficit forecast comes in at about $482 billion. That's around the size of the gross domestic product of Belgium.

What's behind the sky-high deficit? White House Budget Director Jim Nussle says it's . . .

Jim Nussle: Because of the bipartisan growth package or stimulus checks as well as slower economic growth.

President Bush's tax cuts and the wars in Iraq and Afghanistan also added to the deficit and the White House doesn't count additional tens of billions in war costs. Economist Gus Faucher of Moody's Economy.com says that's a mistake.

Gus Faucher: If we think that those costs are going to be ongoing then we really should say, "Look, how are we going to fund these rather than just borrowing and saying we'll pay it back in the future?"

The projected deficit is a record in terms of dollars, but the White House says it's only about 3 percent of our gross domestic product -- less than in the 1980s. Still, economist William Hummer says that's a poor excuse.

William Hummer: I agree with those who think that's too easy a way out. Spending is excessive.

Merrill Lynch says the government might have to sell a trillion dollars in debt next year to keep up that spending. Robert Bixby of the deficit watchdog Concord Coalition calls that daunting.

Robert Bixby: People look at the United States and they say, "They're fighting a war and they've got the health care and retirement costs coming up and they don't seem to be doing anything to get their fiscal house in order. Why should we lend them money?"

Bixby says those who do open their wallets may demand higher interest rates.

In Washington, I'm Nancy Marshall Genzer for Marketplace.