Compared to what Pete is forecasting for fiscal 2009, the $455 deficit 2008 deficit reported yesterday by the Treasury doesn't look that bad even though it was slightly higher than expected.

But the fact that $455 billion looks good in comparison to Pete's $900 billion deficit estimate, the more than $1 trillion I'm estimating, or the $2 trillion some are reporting doesn't mean that it's not newsworthy.

Deficits are sometimes necessary.  In the current very tough economic environment, the much-higher-than-ever-before-dared-to-be-mentioned federal deficit isn't causing that much heartburn.

But the additional government borrowing won't go away when the environment improves.  When the dust finally clears, the huge (10 percent or more) increase in the national debt will remain and be the budget problem of the day, year, and decade.

The signs are now unmistakeable: a second fiscal stimulus bill and the increase in the deficit and government borrowing that it will cause is now more likely than not.

This is a huge change from as recent as a week ago.  At that point the Bush position that the first stimulus should be allowed to go into effect before a second was enacted was commonly being accepted because a veto was considered to be certain.

But that was before the Bear Sterns deal was announced.

The mood in Congress changed almost immediately.  Bailing out a bank gave reprsentatives and senators permission to talk seriously about providing similar treatment for their constituents.  So all of a sudden, the homeowner bailout using taxpayer funds that wasn't happening seven days ago is now very much alive and well and living in Washington.