I am happy to say that I know Dean Baker, read his blog Beat The Press almost daily, and constantly learn from and am amused by his posts about how the media misreports economic news.  If you haven''t already bookmarked Dean's blog, stop reading this now and get that done.

(Okay, enough sucking up.)

But Dean and many other economists missed something important last week when they insisted last week that the nominal all-time high fiscal 2009 deficit projected by the Bush administration in its midsession review was not important and dismissed out-of-hand the reporting of that as a record.

They're right, of course.  The deficit as a percent of GDP is the meaningful number in terms of its economic impact.

Andrew is right on in calling all of the candidates to task for their fantasies of fiscal discipline in the face of such daunting challenges as the war, a weak economy, and the fiscal fiasco of the past seven years under President Bush 43.  John Brody of the New York Times and Jim Horney of the Center for Budget and Policy Priorities deserve public services award for bringing it all together in Brody's article Sunday.

Let's debunk the fantasies.

The New York Times has an article today by John Broder that will give anyone and everyone who watches the federal budget debate something to worry about.

So, in no particlar order...

Although it doesn't quote him, the article indicates that McCain economic advisor and former Congressonal Budget Office Director Douglas Holtz-Eakin says, ..."if the war and the personal and corporate tax cuts that Mr. McCain advocated added to the federal deficit and debt, so be it."

This is an outright admission that the candidate still in the race who considers himself to be the most fiscally conservative has little interest in government borrowing and sees no reason to limit his plans or deal with the budget hand he will be dealt if he gets elected.

The article also indicates that McCain "...plans to pay for tax cuts and modernizing the military by eliminating earmarks and wasteful spending from the federal budget."

The Treasury reported yesterday that the deficit for the first half of fiscal 2008 was $311 billion.

The official reporting is news only in the sense that it confirms what anyone who follows the federal budget for some reason has known for a long time: the federal deficit is increasing to record-high nominal levels.

The deficit for all of fiscal 2008 isn't likely to be double what was recorded the first half of the year because, as Pete can tell you in great detail, some of Washington's biggest surplus months occur over the last two quarters.  But with Congress seriously talking about stimulus 2.0 and some type of additional homeownership initiative, and with the economy still headed down compared to the projections on which the current outlook is based, a deficit approaching $500 billion is not out the question.

The front page, right column, above the fold story in today's New York Times confirms that before it leaves office, the Bush administration will likely not reduce troop levels in Iraq and Afghanistan much below current levels. That means that all of the budget projections for military spending for fiscal 2009 and at least 2010 are way below what the actual number will be. Even assuming no escalation, 2010 military spending and, therefore, the deficit, could be more than $150 billion higher than current estimates.

It wasn't that long ago that I was getting lots of calls from bond traders on Wall Street who needed career counseling. This was 1998-2001 when, for the first time in 70 years, the federal government had run 4 consecutive budget surpluses and there was talk about paying off the national debt by the end of the decade.