Experts: Bailout could balloon deficit

BOSTON, Oct. 19 (UPI) -- It still remains unclear exactly how the U.S. government's bailout of the nation's financial industry will be bankrolled, experts say.

The Boston Globe reported Sunday that the $700 billion bailout will require the Treasury to borrow hundreds

of billions of dollars, adding to an already ballooning deficit.

Economists say the nation's deficit will top $700 billion in the current fiscal year, which began Oct. 1, up from

about $450 billion the previous year, the report said. Projections for next year too are gloomy.

The newspaper reported that the government will probably have to borrow some $1.5 trillion to keep operating, adding to a national debt of more than $10 trillion.

"When you start looking at the trajectory of the deficit and the debt, whoever is elected the next president will be handcuffed," said Rudolph Penner, senior fellow at the Urban Institute, a Washington think tank. "Taxes almost certainly have to go up at some point."

Borrowing money from abroad makes the U.S. economy more dependent on foreign governments and investors.

"It's important to get the economy off its back, but once we get through this, we have to deal with these big deficits," said Mark Zandi, chief economist at Moody's Economy.com. "You can cut spending or raise taxes, and we'll probably have to do both."