The U.S. bailout includes borrowing costs

WASHINGTON, Oct. 20 (UPI) -- The U.S. Congressional Budget Office estimates the federal deficit could reach $700 billion in the current fiscal year, which began this month.

Huge financial forces push or pull on the deficit number. The slowing economy means less tax revenue for the federal government and more outlays in terms of unemployment benefits and food stamps. The spreading war in Afghanistan and the war in Iraq -- costing $11 billion a month -- are also adding to the deficit, The New York Times reported Monday.

Scheduled outlays for the $700 billion financial bailout bill could push the figure up $400 billion by the time the next president takes office, the Times said.

"The next president will inherit a fiscal and economic mess of historic proportions. It will take years to dig our way out," said Sen. Kent Conrad, D-N. D., chairman of the Senate Budget Committee.

So far, markets have been willing to finance the country's debt, accepting interest rates of 4 percent or less, the Times said. Affordable within a $14 trillion economy, that puts the annual cost of the government's borrowing at $40 billion a year, the Times said.

The 2008 deficit was $455 billion. The national has topped $10 trillion.