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The White House and the nonpartisan Congressional Budget Office said Tuesday that this year's federal budget deficit will top $1.58 trillion, less than projected this spring but still historically high — high enough to pose serious problems for President Barack Obama's agenda.
This $864 billion total covers all appropriations approved by Congress for FY2001 to meet war needs from FY2009 through the first part of FY2009, the current fiscal year.
Of that total, CRS estimates that Iraq will receive about $642 billion (74%),
OEF about $189 billion (20%),
and enhanced base security about $28 billion (3%),
with about $5 billion that CRS cannot allocate (1%).
As of February 2009, DOD’s average monthly obligations for contracts and pay were about $10.9 billion, including $8.4 billion for Iraq, and $2.6 billion for Afghanistan, a monthly average some $3 billion below last year.
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
In mid-January 2008, hedge fund Paulson & Co hired Alan Greenspan as an adviser on economic issues and monetary policy. This is the third private role given to Alan Greenspan, the first two being given by Deutsche Bank and bond investment company Pacific Investment Management (PIMCO). Greenspan advises Paulson & Co on economics issues surrounding United States and world financial markets.