Honey, we bankrupted the kids!

Worried that the global financial crisis combined with the Great Recession in the United States has bankrupted not just ourselves but our kids and their kids?

Good. You should be worried. Maybe then we’ll do something about the problem before it’s too late.

First, here’s the good news for those of us who live in the United States. (If you live in some other den of fiscal iniquity, just remember that the names of the characters may be different but the story is pretty much the same.)

The Federal budget deficit for fiscal 2010 (including a proposed $100 billion for new spending to create jobs) will be a record $1.6 trillion. This new record will beat the old post-World War II record (set in the distant past of fiscal 2009) by $150 billion. The 2010 budget deficit is equal to 11% of U.S. GDP. (For reference the budget deficit that has pushed Green into crisis is equal to 12.7% of Greek GDP.)

How can this possibly be good news? Because the new budget proposed by the Obama administration for fiscal 2011 (that’s the fiscal year that starts in October 2010) says the annual deficit will shrink to 4% of GDP by fiscal 2014.

And now for the bad news.

Ain’t gonna happen. At least not if we follow the spending and taxing policies laid out in the Obama administration’s budget.

Deficit to shrink by $80 billion to just $1.3 trillion: Now don’t you feel better?

This morning, January 26, the Congressional Budget Office (CBO) released new projections showing that–if current laws and policies remained unchanged–the federal budget would show a deficit of $1.3 trillion for fiscal year 2010.

That’s what passes for good budget news these days. The new estimate is down $80 billion from the budget office’s previous estimate.

Of course, as a percentage of the economy (as measured by GDP) the deficit would be the second largest since World War II.

And in the big debt picture an $80 billion swing is barely a drop in the bucket. The CBO projects that total (on budget) federal government debt will reach $8.8 trillion by the end of 2010.

But wait, the news gets better. (Well, maybe not  better. How about ‘funnier if it weren’t so important?”)